Scandals don't dent reverence for the BBC and the NHS

My latest column in The Times:

The latest report into Jimmy Savile’s astonishing freedom
to roam the wards of Stoke Mandeville hospital will not lead to the
end of the National Health Service. Nor will the forthcoming report that apparently finds a
“systemic cover-up” of the unnecessary deaths of babies and mothers
at University Hospitals of Morecambe Bay NHS Foundation Trust
between 2004 and 2013. The NHS itself will survive these scandals,
as it survived the Mid Staffordshire hospitals scandal of
2005-2008. The immortality of large public-sector monopolies is a
given.

Likewise, although the Jimmy Savile affair has caused crises and
resignations at the BBC, nobody for a moment believed that the BBC
itself would close. But why not exactly? Private firms that get
into this much trouble generally do vanish, by takeover or
bankruptcy. Castlebeck, the company that ran the Winterbourne View
care home where scandalous treatment was exposed in 2011, went into
administration two years later. Pollypeck, Enron and Barings no
longer exist.

Of course, neither the BBC nor the NHS deserve to be shut down
because one criminal was allowed free rein by one set of managers
in years past. There are plenty of good people in the NHS and the
BBC who do not deserve punishment for the sins of others (though
the same was true of Barings). But private companies know they have
no guarantee that they will continue to exist — and it affects the
way they behave.

Perhaps a form of mortality for public bodies would be a good
idea. After all, knowing what we do about self-justification in
public bodies, the NHS and the BBC might well be on course to last
as long as the Church of England.

Indeed, as this analogy suggests, it is not just that public
institutions survive scandals; they continue to be admired. The NHS
is generally considered an object of devotion. We are touchingly
grateful that it saves lives, even though that is what we pay it to
do, through the nose. The terrible cruelty and chaos of the Mid
Staffordshire and Jimmy Savile affairs does surprisingly little to
tarnish the halo, as the coming election campaign will
demonstrate.

The BBC, despite experiencing “a succession of disasters of its
own making” remains “a widely admired and trusted institution”, in
the words of John Whittingdale, chairman of the
House of Commons culture, media and sport committee. His committee
recommends continuing to pay for the BBC through a flat tax on
televisions that hits the poor relatively harder, even though that
is “becoming harder and harder to justify” in the internet age.

Amid plenty of dross, the BBC makes some fine programmes — but
so it should with £4 billion a year in predictable income. The NHS
provides some fine care and cure — but so it should with £100
billion a year in guaranteed income. Aldi, Morrisons and Waitrose
reliably provide lots of remarkably affordable and often fine food
without any guaranteed income but we don’t treat them with
devotion. Quite the reverse: we moan about them.

Imagine if a large supermarket firm had maltreated, and
sometimes killed, its customers in one of its stores the same way
as the NHS had done in Mid Staffs and Morecambe Bay. That company
would have lost its chief executive immediately, been deserted by
its customers, found itself hammered on the stock market and then
been taken over by its rivals — and rightly so. The best a grocery
firm can hope for is to be taken for granted; it is never going to
be celebrated at an Olympic opening ceremony.

Of the 100 firms that made up the FTSE 100 in 1999 when it last
peaked at the current level, 22 no longer exist at all: including Allied
Domecq, BAA, Corus, Cadbury Schweppes and EMI. The possibility of
extinction by takeover or bankruptcy leads businesses to seek
perpetual innovation and reform. This generates improving living
standards for consumers.

Imagine if you are chief executive of either a private company
or a public institution. In both cases you are faced with the
choice of funking change or embarking on an exhausting and
dangerous course of pushing people into new ways of doing things at
some risk to your own job. In a private company, the possibility of
corporate death nudges you towards the latter course. In a public
institution, not so much.

That is one reason the internet, though its embryonic form was
invented in the public sector, did not explode upon the world until
private firms started using it. That is why post offices failed to
invent mobile telephony, the BBC did not invent social media and
the NHS does not develop most drugs. That is why private sector
productivity has increased markedly in the past 15 years while
public sector productivity has not budged an inch.
(Parenthetically, I keep asking people how it is conceivably
possible not to increase public-sector productivity in the age of
the internet, and I have yet to hear a convincing answer.)

Mortal public institutions do sometimes exist. One of Margaret
Thatcher’s best ideas was that of the urban development
corporations — local planning monopolies with limited lifetimes
charged with transforming city centres. Some were outstanding
successes and it was the acute awareness of the
roughly ten-year deadline that helped them to be so.

Conversely, there are also immortal private institutions, such
as General Motors, or maybe HSBC — firms that are considered too
big to fail and therefore know that they will persist whatever
happens. These grow to resemble public institutions such as the BBC
and the NHS in their gigantism, their lack of innovation and their
tendency to block the process of creative destruction by which
innovation spreads to the benefit of consumers.

As public sector bodies proliferate in number, some way of
making them mortal is not a bad idea. If you were starting from
scratch, and acting in the best interests of the taxpayer, you
might award the franchise to run public broadcasting, national
healthcare, perhaps even the defence of the realm, the civil
service, the legal profession and the established church, to the
best bidder every five or ten years, just as is done with rail
franchises and the national lottery — or, for that matter, Ten
Downing Street. Of course, the BBC and the NHS (and those other
institutions) are much too big for that to be conceivable. Too big
to fail, in a phrase.