The recent spell of hot weather has been unusually long and, although welcome by most, there have still been a few things recently that have got people a tad hot under the collar. None more so than a spate of reports of highly remunerated managers that are seemingly getting away with overseeing poorly performing, yet vital, services.
Unsurprisingly the regional water companies have been at the forefront of complaints. As with previous spells of prolonged warm weather, it has led to the predictable calls for water rationing and hose pipe bans from the heads of the various water companies. However, contrary to what the water companies will have us believe, the fact is, despite the warm spell, there is no real shortage of water with the main problem being one of supply and infrastructure instead.
Indeed, according to Ofwat, the water industry watchdog, more than 3.3 billion litres of treated water, around 20 per cent of the nation’s supply, is lost through leaking pipes every day. That’s enough water to meet the daily needs of around 22 million people. If that wasn’t bad enough, despite massive revenues, the situation of leaking pipes is actually worse than it was a decade ago.
Despite this, the bosses of the now privatised water companies have personally banked over £58m in pay and benefits over the last five years. With the board at United Utilities alone said to have pocketed £180million in dividends with CEO Steve Mogford, reported to have earned a staggering £12millon pounds over the past 5 years despite his company losing a quarter of its vital water supply through leaks.
Let’s not forget too the recent debacle on the Thameslink Railway. Here passengers had to witness the head of the rail networks operations take up two seats in an overcrowded and already delayed train and, to make matters worse, was reported to tell other passengers to stay out of his section if they had the temerity to ask if he could remove his luggage from the adjoining ‘vacant’ seat!
It certainly begs the question “what exactly are these people doing to be paid so handsomely?” Any chump can charge a fortune for supply, pocket the money and then tell customers to start rationing and quit moaning when supplies get short. Competent managers however, would have fixed the leaks in the water pipes and ensured there were enough seats to accommodate the passengers on their trains. Regrettably though, this institutional malaise is not just restricted to the utilities companies or the railways, it affects almost every vital “public” service. It doesn’t matter whether provision is a public sector organisation or a public-private partnership, the result is generally the same. Managers are paid colossal sums of money, but invariably take very little responsibility or accountability for the failures under their stewardship. Aptly illustrated by the recent Carillion calamity. Until they do, things are unlikely to improve.
An entrepreneur who risks their own money on a business venture and then reaps the rewards of their hard work is one thing. However, those in the public sector or private-public partnerships don’t have the same risks, competition or revenue raising issues as a typical commercial enterprise, because when things go wrong the customer or taxpayer tends to foot the bill and the public is expected to simply grin and bear it. Why? Why should we be expected to accept a situation where people are given excessive rewards for sub-standard performance?
They get away with it, because they can and this cannot be allowed to continue. It’s simply unacceptable for senior managers to be awarded huge pay, perks and knighthoods while abdicating any responsibility or accountability for the performance of their various organisations. The current management and oversight structure of public service provision has no checks, balances or, most importantly, any real incentives for performance accountability. In some of the larger public companies, for example, shareholders are now starting to challenge board room excesses and seeking to curtail or even overturn pay and perks that are deemed unjustified. We need to do the same with organisations providing vital public services too; the official regulators need to be beefed up with more powers to intervene and overrule the board room and, where necessary, remove directors and managers that simply fail to perform or attain realistic key performance indicators. There needs to be an end to unrealistic and undeserved employment contracts that allow for a situation where people are awarded exorbitant “golden goodbyes” when leaving or dismissed for incompetence or gross misconduct.
Furthermore, I would suggest regional oversight committees be established for those public service providers that are not overseen by a regulator. These committees would be made up by a cross section of knowledgeable individuals selected and governed similar to magistrates or a board of governors or trustees. To be effective, such committees would need “teeth” and be able and willing to “bite” when required to do so.
Naturally, such proposals will be very unwelcome by those they’re aimed at. Well, my answer to them is this; if they don’t like it, they can always go out and take their chances in the fierce and competitive world of the capitalist economies. After all, if they’re as good as they claim to be, there shouldn’t be a problem, should there?
This article was first published in the Newcastle Journal 2nd August 2018