Feb 1, 2015

Animal spirits: Cabbie, to the future or we’ll be in a rotten state

Last week I failed to get a job. I suspect I was passed over because I represented too much radical change, and the board couldn’t cope with that prospect.

At so many of Britain’s institutions, the leadership talks of transformation — but doesn’t really do anything about it, opting for a delusional policy of maintaining the status quo, while pretending they are not.

A classic case is the taxi trade. London’s black cabs have been resisting modernisation for decades, led by their union, the LTDA. For years they fought upstarts such as Addison Lee and continued to champion The Knowledge, despite the ubiquity of satnav systems in cars. Now Uber, the $40bn behemoth from San Francisco, poses an existential threat to the old economic model for taxis everywhere. Ferocious lobbying and legal battles are raging in London and elsewhere, attempting to resist the advance of technology and to protect entrenched interests. I do not like Uber’s style, and its valuation is barmy, but I suspect the eventual outcome is not in doubt. If London’s iconic cabs lose their dominance, they should blame their union bosses, and old-fashioned regulators, for failing to adapt to a changing world.

I sat on the independent panel appointed by the government last year to examine the fate of England’s public libraries. We received more than 200 written submissions, visited dozens of libraries and met many experts.

Our 3,500 libraries are vital community hubs that do much more than simply lend books. They help with literacy, job hunting, start-ups, digital access and other council and civic services. But their traditional role is in decline, and they must rapidly evolve both their offer and the way they are organised if they are to thrive.

Library professionals argue that libraries are in crisis because of spending cuts. That may be partly true but, overall, public libraries are not efficiently managed, and too often don’t meet modern needs. Perhaps half of England’s libraries have no wi-fi, and most have woeful websites. More than 70% of the entire national library budget goes on paying the salaries of administrators and librarians — while their pension payments absorb much more than the annual book and technology budgets.

Meanwhile, there are 150 library authorities delivering the service across England alone — with few taking advantage of joint procurement, IT systems, streamlined administration and so on. Many are local fiefdoms — seemingly resistant to merger, collaboration or improved delivery models for political reasons.

There are exceptions. In Suffolk, the local authority has contracted out the provision of library services to a charity, established by the librarians and local users. It has kept all 44 branches open and increased opening hours, while delivering significant savings to the council — and taxpayers. Similarly, York has tendered its libraries to a mutual partly owned by its citizens.

There are now more than 100 public service mutuals, employing 35,000 people and delivering £1.5bn of public services. If the vested interests such as unions and left-wing politicians can overcome ideological objections to pluralism, there is hope.

I’m fortunate in that I’ve spent three decades in the fast-changing world of hospitality. The restaurant and bar scene has few constants, save that shifting tastes rather than tech- nology tend to drive the rise and fall of different operations, and that competition only ever gets more intense. Such rough and tumble is useful coaching for the threats and opportunities offered by the 21st century across most of society.

If we do not reduce our government deficits and reform our public sector, then Britain is doomed to relative decline. We cannot compete with powerhouses such as China unless we deliver better value to the taxpayer in areas such as education and health. As John Micklethwait and Adrian Wooldridge argue in their book The Fourth Revolution, there is a global race to reinvent the state, and the winners will enjoy better lives. Intelligent government embraces the productivity gains to be derived from technology, and picks different providers where they promise choice and efficiencies. The depressing exit of Circle from Hinchingbrooke hospital must not suffocate the idea that the NHS can never be improved. It is a bureaucratic leviathan costing £120bn a year — and is surely capable of achieving more for less.

I helped to create the family of academies sponsored by the RSA, so I have seen how the revolution in our schools is working on the ground.

I also chair Career Colleges, a new non-profit initiative that provides vocational training for 14 to 19-year-olds. Innovation in education is vital if we are to equip our workforce with the right skills.

Disruption is a fact of life in business. Companies that ignore new rivals generally go broke. Governments typically operate monopolies, so are not subject to such market forces. But nations and institutions that don’t adopt a culture of constant renewal face a bleak future.