Anatole Kaletsky
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What lessons should be drawn from the string of disasters suddenly befalling Gordon Brown and his unlucky successor as Chancellor, disasters that have demolished in two months the reputation for economic competence that the previous Blair-Brown Government took ten years to build up? I can think of four. The first is about proportionality. The second is about responsibility. The third is about focus and priorities. The fourth is about politics and a fatal flaw in Gordon Brown's personality that many people suspected all along.
Starting with proportionality, it is knockabout fun to ridicule government computer schemes, and the unions are having a field day denouncing civil service staff cuts, but we must not throw the baby out with the bathwater. While the loss of the HMRC discs was certainly a serious mishap, it does not mean that the Government was wrong to try to save public money by eliminating 30,000 jobs through the merger of the Inland Revenue with Customs & Excise.
Still less does it demonstrate that the whole programme of “e-government”, which has computerised tax forms, driving licences, passports, health information and criminal records is fundamentally misconceived. Many of these bureaucracies are now working more smoothly and dealing with customers more quickly than in the days before computerisation. They are generally more efficient and easier to deal with than similar agencies in America, Germany or France.
Moreover, they now compare quite well with comparable private sector bureaucracies such as telephone companies, utilities, banks or airlines. A phone call to the HMRC or the Passport Agency is probably as likely to be answered promptly — and by an employee who is both courteous and can offer a useful answer — as a similar call to a utility or bank. Of course, the government bureaucracies are unpopular, but so are the telephone companies and banks. Large bureaucracies that handle millions of inquiries every year will always make mistakes, simply by the laws of statistics. What they need is inbuilt systems to prevent inevitable mistakes spinning out of control and becoming big disasters. This is the key not only to the HMRC fiasco, but also to the far greater disaster of Northern Rock.
The real outrage at HMRC was not the decision by “a junior official” to post a disc with 25 million tax records through the unprotected internal mail; it was his ability to access and copy these records without going through an elaborate security procedure. It is not good enough to say, as Alistair Darling did on Tuesday, that this official broke management guidelines. The design of the HMRC computer system should have made it physically impossible for him to do so. In the same way, the design of Britain's financial regulation should have made it legally impossible for Northern Rock to get itself into such an overextended position that it needed a £30 billion taxpayer bailout to avert a collapse in which depositors would have lost their savings.
This brings us to responsibility. A junior official at HMRC may have been directly culpable in the case of the missing discs, but true responsibility is clearly located farther up the hierarchy. What ought to be challenged is not the principle of computerising information, nor the decision to merge Revenue and Customs, nor the cuts in staff. The obvious problem lay in the way that HMRC computers were designed and managed, which would seem to pin the blame primarily on the computer boffins, many of them working for private consultants, rather than civil servants themselves.
But in reality the chain of responsibility must be followed farther. Just as the FSA and the Bank of England were regulating Northern Rock within a system designed by Gordon Brown in 1998 to satisfy the criteria that he considered most important, computer consultants design systems to achieve objectives ultimately specified by ministers. The question therefore is how much importance ministers attached to security and how this was defined.
The key question in allocating responsibility, therefore, is about priorities and focus. Priorities, because the need for data to be secure in the HMRC computer had to be traded off against other desirable features such as convenience and cost. Focus, because security could never be imposed as an absolute requirement, any more than cost or convenience. It was therefore necessary for somebody to decide which aspects of security were particularly important and which could be more readily compromised.
This issue of focus relates to a worrying general trend in British public administration — and one that seems to be accelerating under Mr Brown. Britain's data protection regime will prevent you finding out when you last paid your own utility bill unless you can remember an obscure password, yet it fails to prevent 25 million bank accounts being disclosed. This happens, at least in part, because Britain's data protection laws are so broad and comprehensive that they lose the distinction between important security requirements and pettifogging bureaucracy. The upshot is that the data security laws are widely flouted and despised.
As the Government's information commissioner, Richard Thomas, himself said in a recent interview: “Sometimes data protection gets dismissed as something which is rather bureaucratic, it stops you sorting out your granny's electricity bills. People grumble about data protection, but boy is it important in this new age.”
The point missed by Mr Thomas — just as it is missed by the panjandrums of health and safety and racial equality and employment rights and consumer protection and a host of other desirable regulatory objectives — is that people and social institutions, including even bureaucracies such as the HMRC or the FSA, will only accept a certain amount of regulation and government interference. If attempts to interfere with everyday life pass beyond this threshold, then intelligent regulation can quickly degenerate into mindless box-ticking, which only distracts attention from real dangers.
It is therefore essential for regulators to concentrate their attention on the big issues that are really important — protection against wholesale data losses of the kind at HMRC, protecting the taxpayer against enormous losses of the kind now threatened by Northern Rock — while leaving individuals and organisations as free as possible to get on with their lives.
If this is true of regulators, how much more true is it of the politicians who direct them. This is where we come to Gordon Brown's fatal flaw. Instead of making big decisions about the essential functions of government — foreign policy, law and order, energy and environment — Mr Brown seems to have an irresistible urge for fidgety interventions in every aspect of everyday life — banning plastic bags, creating tax subsidies for cycle commuters, introducing identity cards, saving jobs at Northern Rock.
The more Mr Brown engages in such micro-management, the more he will be sucked into one fiasco after another. That way lies ridicule and political defeat.

Anatole Kaletsky writes for The Times Comment pages on Thursdays. One of the country's leading commentators on economics, he was formerly Economics Editor and is now an Associate Editor of The Times. He has won many awards for his financial and political journalism. Before joining The Times, he worked for 12 years on the Financial Times
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What is this reputation for economic competance you talk about. Massively raising the tax burden to no effect. Running Europe's largest budjet defecit when times were good.
Competant not
David, Harrogate, UK
If Britain had had a simple identity card systemwith a passport type photo with a card issued bý an office in a police station, say, as is in some European countires, the threat of identity fraud would be scarcely ever happen.
It is laughable to those living ion the continent that you can open a bank account with a utility bill and an old statemewnt found in a skip.
Simon Baguley
Baguley, Munich, D-Bavaria
Quite! It should not be possible for junior employees to burn CDs of such data. We live in the leaky age. Ministerial leaks, police leaks, etc. How long before some unscrupulous employee with a grudge decides to boost his redundancy pay by selling data to whomsoever?
Howard, Warrington,
All well and good saving public money by reorganising staffing levels, but make sure those that are left are up to the job and paid accordingly!
Wen, Oxfordshire, England
The alternative would be far worse, policies made on the hoof, 3million unemployed, 25% interest, strikes galore, recession.. ........the 70s and old Labour.
Phil, Preston,
As an expat Kiwi, I don't see the UK civil service as being any less competent than ours, but increasing levels of reliance on IT systems and equipment which can package and compress data on a hitherto undreamed-of scale, equipment that looks little different to the low-powered and low-functionality gear that most of us have become familiar with over the last few years, almost inevitably leads to disasters if robust security procedures are not put in place, followed to the letter and constantly checked.
As an example, some years ago the New Zealand government attempted to have a comprehensive national Police computer system (INCIS) built by IT contractors. The project was eventually abandoned after the cost kept blowing out without any practical or sensible results. And NZ has a population of just over four million!
Attempts to create a national database to implement ID cards in the UK is a political dream. The reality would rapidly become a nightmare of epic proportions .
Colin Kendall, London, Middlesex
It seems as though Britain is becoming 'Banana Republic'. Everyday we hear another debacle headline, from the Home Office chaos to Department of Health, sheer frustration of people that incompetence culture is becoming norm for this government.
H.Marph, London,
The flaws in the HMRC are nothing to do with the computer systems. Every computer system will have database administrators who will, and must have, access to all the data. The flaw is in the procedures for transferring the data outside the HMRC department that owns it. Those procedures will be laid down by the civil servants in charge, not the boffins. These procedures will then be routinely ignored when urgency is raised as an issue by another department with sufficient clout. This is human nature, you can't change it. You will always be disappointed if you expect a computer system to be 100% secure. The national Identity Card Register will leak like a sieve and become the primary source or obtaining false IDs.
David Alexander, Bristol, England
I live in Hong Kong where we have an excellent identity card system. The public support and endorse the system. Indeed the i/d card is a much sought after document. Amongst other things it ensures a speedy automatic passage through immigration, is extremely difficult, in fact almost impossible to forge and ensures that illegal immigrants here are speedily rounded up.
Despite Hong Kong's proximity to the Mainland where millions seek entry into Hong Kong we do not have an illegal immigrant problem. I have advocated this system for the United Kingdom over the past couple of years, suggesting ministers should come over here and see how effective it is. However at the same time I have doubted the ability of New Labour to put such a scheme in place, given their ineptitude and liking for handing contracts to cronies and party donors rather than issuing tenders to find those best equipped to do the job. This latest shambles underlines how well founded those doubts were.
B. J. Carroll, Hong Kong, China
No-one has ever voted for this man. And yet he leads. This is the essential problem with our system. The french has the right idea.
Ben, London,
I believe that the government will eventually get through this bad patch and that it will be the opposition who will suffer in the longert term. Quite rightly from their point of view they take every opportunity to try to portray GB as weak and distrustful whereas in fact he has made mistakes, like any new prime minister (it's a substantially different job from Chancellor) but is basically strong and resolute. Cameron is good for a headline but what he do differently?
Mickey Smith, Amsterdam, The Netherlands
Was it not the way that when serious errors were made in a Minister's department then the Minister concerned took responsibility and resigned? We did not need Alistair Darling to say that he did not make the error himself and therefore wouldn't resign. He should do the honourable thing and go. However, we have had a bunch of megalomaniacs in charge for ten years now and they won't be inclined to give up their power. On the other hand, when they do fall they will fall a long way.
It seems to me that the only PM to become such a non-person as quickly as Tony Blair was Harold Wilson!
Roy Shaw, Bristol,
All organisations are dysfunctional to some degree.
To be successful as an organisation (or at least convincing), you need a good front man who can smooth over the mistakes made in the back room.
Unfortunately for them, New Labour's front man retired recently.
MarkS, Leeds,
The main problem with the Brown administration is Brown himself. Does Britain really want a Prime Minister with "psychological flaws"? Can we be confident that he weighs up problems in a balanced rational way, consults with appropriate people and is not consumed by his personal ambitions. Politicians, with their lies and half-truths and spinning, are suspect enough as a breed - but throw in Brown´s "flaws" and the prospects of ultimate disaster are frightening.
Robert Hutchins, Guadix, Spain
A thoughtful article from Kaletsky. The fiasco of the lost discs are the direct result of NuLabour's persistent authoritarian--nannying really--streak. They can no more desist than my mother-in-law! Still, a good parent allows children to grow up. Brownâs micro-managing tendency infantilizes.
And the children duly make dumb mistakes.
Mary Cunningham, London,
Policies made "on the hoof" in response to Labour policies that bequethed 2.6 million unemployed, dead bodies unburied in Liverpool, thousands out on strike asking for a 40% payrise, a three day working week and a television blackout after 10pm. A "recession" that reversed Britain´s fortunes as the sick man of Europe, killing inflation that had been building up under successive governments, and a foreign policy that gave Britain an Iron Lady - and a role in the breakup of the murderous Soviet Union - and not a lap dog. Harry is right, if we were to suffer this again, we would indeed be "far worse" off.
Daniel James, Oxford, Oxfordshire
Brown amd Blair's so called ten year record of economic competence has been a smoke screen all the way along avidly endorsed by most of the media. The whole can of worms is now unraveling begining with Northern Rock. No economy can survive on the unprecedented debt levels that Blair and Brown have built up over the past ten years. It's just basic economics.
chris, woodbridge, suffolk
Hi,
A psychogram of Mr. Brownâs momentum to power is his ability (or disability) to delegate taking a roller coaster on the success of others. In computing a disk mostly gets damaged through a âHead crashâ we have a human equitant. Tacking reference to the resent events is it indifferent that individuals, families or people stand necked before the world because poor data management.
Regards Dr. Terence Hale Zandvoort
Terence Hale, zandvoort, Holland
"The more Mr Brown engages in such micro-management, the more he will be sucked into one fiasco after another. That way lies ridicule and political defeat. "
The more? He can't help himself - micro-management and complete control is Brown's junk, his vampire's blood. Without it, he is nothing. So it will continue, and please God or whomsoever it will bring him down, and the whole built-on-sand edifice of New Labour, crashing to the ground.
Ben Towers, Evesham, England
Anatole, you write "While the loss of the HMRC discs was certainly a serious mishap, it does not mean that the Government was wrong to try to save public money by eliminating 30,000 jobs through the merger of the Inland Revenue with Customs & Excise."
but fail to add, that they made a complete horlicks of it, that they werte told by those who know that it would be a total horlicks, and it was. Wishes and good intentions are all very well, but if you are a bunch of idiots, you may well not implement them well.
And they are a bunch of idiots.
Economic competence? Where did that idea come from. I give you,
Gold sold at rock bottom prices after the fire sale was pre-announced.
Wholesale private pension theft (now amounting to £150 billion, according to a leading City actuary, to pay the massive public pension requirements.
PFI - a shambles for the future, and the present.
Tax credits. Say no more. Again, Brown was told this would not work.
House price boom. Public debt boom. !!!
Jeremy Poynton, Fromeville, 51st State
This is an excellent article which equally could have been written about a lot of our Health and Safety legislation. It should protect us against serious issues at work ,but is being used, in the case of minor accidents, to sue organisations thereby pushing up insurance costs and bureaucracy. We need to re-invent the concept of acidents and personal responsibility for spotting likely causes.
Colin MacMillan
Colin MacMillan, Redditch, Worcs
Britain is feeling guilty about forcing Tony Blair out. So Britain is trying to transfer the guilt to Gordon Brown.
Paul Francis, Brisbane, Australia
Someone said he 'GB' was psychologically flawed..! I wonder why..?
Laughing aside.. It's a real shame, I was a believer in New Labour under Blair, the longest period in history of economic growth, when Blair went i knew they pressed the self destruct. I think they became far too complacent, in removing Blair.
I'd like them to recover but it's hard to see under the current leadership.
The alternative would be far worse, policies made on the hoof, 3million unemployed, 15% interest, recession..
Harry , Nottingham, England
It is all rather simle to me. The more data, or key data (NI number) you want to download on one disc, the higher up the authority and ability to do so has to be. Nothing can replace common sense and our focus on PC (thats political corretness not Personal Computers) has distorted our ability to think!
Richard, Plymouth,
Exactky. Take health, for example. As a surgeon, I am subjected to a new Diktat called 'the 12 week pathway'. It sounds perfectly reasonable, but patients don't present themselves as neatly parcelled boxes with 'cut here' typed on the side. As a consequence, we looked at throughput, and decided that my practice can only see x number of patients per week. Patients without a clear surgical treatment option are sent back to the GP with an explanatory letter. As a consequence, we are now 'under investigation' by the Dept of Health for rejecting 'too many' GP referrals.
The net result of this micromismanagement will be myself and many other surgeons leaving the NHS, whilst the next generation of would be surgeons avoid entering specialities like my own because of the problem described above.
wilson, london, uk
A well reasoned article on the disasters affecting the Brown
government. However it can be summed up in one word,
incompetence.
Denver Watt, Osaka, Japan
The present problems are only the latest in a long series of dreadful gaffs and huge waste by this administration. The management of all these government departments is seemingly of a very low order but ministers are to blame directly.
The truth is that there are probably now too many managers and the lines of responsibility are often difficult to trace. As all these managers try to grapple with the increasing number of minsterial edicts, targets and those lovely half baked and ill thought out 'initiatives', it would appear that they cannot concentrate on the basics. Named individuals should be made directly responsible for facets of each department
There is only the government to blame for this. Until some of these incompetent and self serving ministers are made to bear the direct responsibility that their departments and their title, pay, priviledges and pension command then these problems will continue to accumulate. Mr Brown should make some very high profile sackings now.
Diddly Do, Liverpool,
"That way lies ridicule and political defeat. "
You know, it just might all be worth it after all. Go for it, Gordon.
P Orphyry, Skipton,