Tag Archives: Business Strategy

Plan A Winners/Losers, Coalition Yin/Yang and Time for Plan B?

June 5, 2011 By in Accountability, Business Strategy, Business Transformation, Central Government, Coalition, Cost Cutting, Cost Reduction, David Cameron, Efficiencies, Erik Pickles, Executive Interim Management, Executive interim management career, George Osborne, Interim Management, Interim Manager, Liberal Conservatism, Local Government, Mutualisation, Neoliberal, NHS, Outsourcing, People, Politics, Public Sector, Public Services Reform, Reform, Spending Review 2010, Thatcherism, Transformation Risk Tags: , , , , , , , , , , , , , , , Leave a comment

Last week’s US jobs data and today’s call in the Observer Newspaper from leading economists for a Plan B prompts me to share a few personal observations.

George Osborne’s Plan A has, by and large, been successful for large UK businesses: FTSE100 executives pay continues to climb and financial sector bonuses abound. Large businesses are sitting on vast cash reserves, have access to enormous borrowings (unlike small firms), and are continuing to run extremely lean, having outsourced and off-shored many non-essential jobs (this is especially significant in the US, where male employment opportunities in manufacturing and construction have effectively disappeared in a ten year decline).

The Plan A losers list is rather longer:

  • Record numbers of young people are excluded from the jobs market and risk having their futures’ blighted
  • Older workers who have been made redundant struggle to secure their economic futures without gainful employment
  • Record numbers of public sector workers lose their jobs as the economic squeeze tightens
  • Older retired people are seeing savings eroded with inflation and  probably suffer most from public services cuts
  • Current and future generations are facing pensions’ time-bombs, with prospects of inadequate income to cover their outgoings, forcing them into debt or to sell their homes, or economic dependency on family or state
  • Small businesses struggle against economic uncertainty and the big banks who have deprived them of finance

Plan A assumed Public Sector efficiencies, Private Sector growth and did not envision serious inflation in commodity prices. By and large, Public Sector funding cuts have led to reduction in front-line service, quality levels and capital investment for the future. Private sector growth has so far been a damp squib. Myopic policies from the Cabinet Office have deprived the economy of expertise to deliver enduring transformation, like professional interims. The Yin and Yang of the Conservatives and Liberals has so far stifled effective reform.

Fear of being treated like Greece, Ireland, Spain, Portugal and Iceland seems to be driving economic policy, where the neoliberal conservative policies of the IMF/ECB are causing vast hardship to the weaker members of society in these countries. For me, the only recent glimmer of common sense came from the Der Spiegel, when they proposed a Marshall Plan for Greece.

In my judgement Plan A was always too severe and should have been stretched over a longer time period (as proposed by the Labour Party – indeed the Obama administration has favoured the latter approach).

To reduce the pain and improve the chances of economic success in Plan B, I would propose less focus on neoliberal remedies, and to see Keynesian solutions given a chance, like properly validated capital spending programmes that will benefit future generations.

There is an opportunity for Nick Clegg to take the moral high ground in the Yin Yang of Plan B.

Public Services Reform: U-Turns, Banana Skins, the March of the Neoliberals and the Demise of the Professional Interim?

May 13, 2011 By in Accountability, Business Transformation, Central Government, Coalition, Consulting, Cost Cutting, Cost Reduction, Efficiencies, Erik Pickles, Executive Interim Management, Executive interim management career, Interim Management, Interim Manager, Liberal Conservatism, Local Authorities, Local Government, Mutualisation, Neoliberal, Outsourcing, People, Politics, Public Services Reform, Reform, Spending Review 2010, Transformation Risk Tags: , , , , , , , , , , , , , , , , , , , , 5 Comments

This week there have been two important events for me in relation to Public Services Reform. The first was personal and the second was public news.

Firstly, I have finished reading David Harvey’s excellent book entitled “A Brief History of Neoliberalism“. I thoroughly recommend this well researched and easy to read political-economic history of the last thirty years. The book provides an excellent insight into Margaret Thatcher’s public sector reforms, largely based on privatizing vast swathes of publicly owned industries (reversing Labour’s post World War Two nationalisations).  Simply, neoliberals believe that everything should be commoditized, with a market value, including public services. Neoliberalism is closely aligned to globalism (the antithesis of localism). Neoliberalism is a “theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade”.

The second event was to reflect on the Public Services White paper being delayed until July, despite being originally promised by the Cabinet Office for January. Some observers believe that there are three camps within the Coalition Government. The blue camp, which includes David Cameron and Oliver Letwin is reported to favour maximum outsourcing – in essence, this is the classic neoliberal remedy. The yellow camp which includes Danny Alexander and Nick Hurd favours new delivery models and is believed opposed to outsourcing. Finally, it is argued that there is a red camp led by Nick Clegg which is cautious about reform. There is speculation that the White Paper was pulled “for reflection” following the Liberal local election results, with Local Authority reform now being in serious disarray. Also there is new evidence that the Big Society is not understood by 80% of Councils. Before the dust settled, the Cabinet Office announced that  the “Big Society Bank gets the Green Light”.

Based on a leaked paper, it is argued that the Coalition is now opposed to wholesale outsourcing and favour reform, based on social enterprises and employee owned mutuals, with private sector involvement limited to joint ventures and not for profit groups. Unfortunately, the new delivery models recently took a hit below the water line, with Suffolk County Counsel’s ambitious plans for outsourcing and virtual local government imploding. The week has also seen criticism of the Coalition Government’s twelve month record on realizing real efficiencies, with mounting evidence of real cuts in public services resulting from financial constraints from the Treasury.

Also this week, despite the Cabinet Office’s draconian controls restricting consultants and professional interims, there is increasing evidence of the Public Sector letting increased consulting contracts. Professional Interims, the natural choice for top-class transformation professionals  (based on cost-effective delivery and risk reduction) continue to be marginalized.

Personally, I think that Public Services Reform is a ticking bomb and that based on David Harvey’s history, the neoliberals will prevail. For sure, some money will go into Big Society probably via the Big Society Bank. The big money will sooner or later follow neoliberal traditions and go to outsourcing, consultants, banks, and lawyers etc. Sadly, the Coalition Government whilst being pro-business, favours big rather than small businesses like professional interims. Wholesale outsourcing may be a secondary or tertiary choice but it will continue to stalk in the long grass and will prevail. There will be many detours, U- turns and banana skins along the way and I fear that the professional interims who once supported the Public Sector will remain marginalized. The Coalition Government seems to have little appetite for genuinely transforming Big Government but I predict that Big Society will ultimately be a side-show, leaving a clear field for outsourcing (just like the privatisations in Margaret Thatcher’s era).