Friday 5 August 2016

Plain Speaking in the FT - For Once

Newspapers in thrall to advertisers are very rarely a good source of writing on the failings of corporates.  The way the FT berated itself (after the event, of course) for having failed to finger the Enron thing brewing was pitiful to behold.

And I'm by no means a fan of the FT's Nick Butler: but for once he has written plainly and truthfully.
Nuclear safety ...  yeah, right
... the experience of Hinkley Point demonstrates that civil servants and ministers are not well equipped to negotiate complex commercial deals against corporate entities with highly developed skills who are able to employ every device, including slick PR techniques against them. On Hinkley the UK negotiators were rolled over.
There will be few projects as large in scale as this one but there are several — including HS2 and the third London airport — where huge amounts of money are at stake. The failure of the Hinkley negotiations, which is commonly acknowledged now in Whitehall, has encouraged the new leadership of the civil service in their desire to develop much higher levels of expertise in key disciplines cutting across their outdated 19th-century structure. They deserve complete support from Mrs May and her ministers. These skills are needed now more than ever because of Brexit ...
We could have done with a bit more of this three years ago - the Telegraph was the worst, seemingly a paid mouthpiece of EDF around that time  ("slick PR techniques ..." - yes, and totally unsubtle advertising cash).  But they've all come over from the Dark Side nowadays.  Better late than never ... 

"On Hinkley the UK negotiators were rolled over" - ain't that the truth.  And his Brexit point is the right macro-conclusion, too.



Anonymous said...

And in a shock revelation, it has been announced that Governments make a pigs ear of any investment especially IT ones.

As as solution, it is recommended that they should never be allowed near any cash whether it is via tax, borrowing it or printing it.

Next fantasy

andrew said...

Ignoring the negotiation.

To be fair, it is not that governments are generically worse than the private sector at doing projects.

It is that the private sector typically do projects that can be well defined and are carried out over a short timescale and there are many opportunities to walk away and do something completely different that makes money.

The public sector often do projects that are not well defined and are carried out over a long period of time and once started there are few real opportunities to walk away.

I put the reason for failure as much down to the management (the Ministers / Govt) as the employees (the civil service)

Blue Eyes said...

Andrew I agree but things like Hinkley and HS2 show why such projects should be left for the private sector to sort out.

If the government wants a new rail line built it could put out a design, build, operate tender as is done in other countries. As ND has explained so well on here, the state's interference in the energy market over the last 10-15 years has been criminal. We don't need planning and guidance; just set a carbon emissions tax and let the market decide how to generate the leccy.

Laban Tall said...

"the state's interference in the energy market over the last 10-15 years has been criminal"

Imagine how criminal it was in 1948!

Or 1919.

Suff said...

Agreed blue
Why do we allow these decisions to be made by people with no understanding of basic market/ economic principles of the purpose Have no experience of the logistics of how to carry out the project, who come from a risk free background where there is no repercussions for failure and who's consideration for budget limit is how high you can piss. The article states that the people we pay huge sums of money to do a job, are incapable of doing it. We can't sack them so instead we will need to retrain them or more likely, they will be given the responsibility of hiring and controlling, another layer of super professionals, to do the task they still have no understanding of.
Who do we get to make the decisions. As Andrew states our private sector is notoriously bad at management ( but not surprisingly, good at convincing the government otherwise and extorting money from them)and the current state of corporate protectionism and government handouts has only exacerbated the problem. We need to wean ourselves off the government is responsible for everything myth and free the real economy to generate the real growth that drives private investment. As you say, for the macroeconomic decisions, the market sees a specific need in ten years for X, here's a plot of land get on with it.
In response to your helicopter post. What pet project would be the biggest growth driver to the economy? A real bonfire of the quangos. We've been told that sir Humphrey needs to be paid x00000k and have a garaunteed pension because that's what his market value would be in the private sector. Well let's put that to the test. In six months your department will be shut down (not moved off the books to a newly formed private consultancy with you as CEO) and all the government hand outs will be stopped. So the first lump of money will be for short term unemployment benefit ( Sir Humphrey won't have a problem finding a similar job?)
Airports. Cut carbon tariffs for all flights outside of London. If you want to create a powerhouse in the north and truly open the country to world markets, first thing you need are direct flights for business travel to any of the existing airports.
Rail. The first priority before spending a kertrillion on anything (it's two metal rails on concrete sleepers ffs) is take the recently and existing unemployed, two days a week and clear sidings of all the rubbish. The pigsty that is the current rail system is the first thing tourists and future investors see when entering the country(the same goes for the rest of country).
Roads. Prioritize speed from A to B and not accident statistics.Introduce a new one JCB to one clipboard fanatic policy and then fix the existing system. Close all vehicle access to schools and bring back the green cross fella. Introduce more cycle paths and where possible move the utilities from under the road to under the pavement.
Cut pointless intrusion by the state, business rates to the high street, national insurance and vat.......
If we want to protect badgers, foxes and our green spaces then stop importing people. We have more than enough to keep busy. Close down the health and safety department and give evolution a chance. Removing all the speed bumps and the new Pokemon should reduce the heard a bit
I ramble