Management Consultancy and the British State a Historical Analysis Since 1960 Management Consultancy and the British State

Antonio E. Weiss Management Consultancy and the British State A Historical Analysis Since 1960 Management Consultancy and the British State “Antonio Weiss’ new book fills an important and intriguing gap in the literature. It also helps us to answer a vital question: how was it that management consultancies came to wield such influence across British government—from transport to health care, and from education to the very organisation of central and local government themselves? Using newly-released or discovered archival papers from the industry itself, from government, individuals and political parties, he shows that their ability to move across and around the vague borders between the British state and the world of private advice were absolutely central to their relative success. Given this inter- disciplinary approach, this book should be of interest and use to historians, political scientists, sociologists, public policy experts and practitioners alike.” —Glen O’Hara, Professor of Modern and Contemporary History, Oxford Brookes University, UK Antonio E. Weiss Management Consultancy and the British State A Historical Analysis Since 1960 Antonio E. Weiss London, UK ISBN 978-3-319-99875-6 ISBN 978-3-319-99876-3 (eBook) https://doi.org/10.1007/978-3-319-99876-3 Library of Congress Control Number: 2018958004 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer International Publishing AG, part of Springer Nature 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Acknowledgements I owe a huge debt of gratitude to the Department of History, Classics and Archaeology at Birkbeck, University of London, not only for being an excep- tional institution in which to learn and study, but also for granting me an Arts and Humanities Research Council Award for the research which forms this book. I am also indebted to the Eric Hobsbawm Scholarship Fund, whose generosity enabled my research to take a much broader geographical focus when consulting archives. My supervisor at Birkbeck, Frank Trentmann, was unstintingly helpful, insightful, supportive, and accessible throughout. I am also grateful to the support and advice of Jon Lawrence, for earlier research on this topic conducted whilst at the University of Cambridge. Glen O’Hara’s comments, feedback, and encouragement have been greatly appreciated, and made this a better text. Jacqueline Young and Marcus Ballenger have been superb throughout the commissioning and editing process. On a personal note, I would like to thank Sir Alcon Copisarow for his inspiration, Carol for her support, and Amber for always keeping me company. I have had the privilege—and faced the challenges—of writing a history of a period and topic through which I have lived and experienced. Since 2008, I have worked as a management consultant to UK public services, and since 2014 I have served as an elected local government councillor in a London borough. This book is consciously not self-ethnographic in any way, yet I am aware these positions, rightly, mean the onus on impartiality and risk for potential biases are even greater in this research. I have sought to mitigate this risk throughout. With this in mind I lay open my work to critical review and discussion, and hope—in some small way—it helps to further our under- standing of both management consultancy and the postwar British state. v Contents 1 Introduction 1 Bringing the Consultants (Back) In 3 States and State Power 11 Unlikely Guests 16 A Heterogeneous Global Industry 21 Definitions and rameworksF 25 Structure of the Book 29 Methods and Sources 32 2 Planning, 1960s–1970s 49 Scientific anagementM and the Emergence of Management Consulting in Britain 50 The Rise of the British enerationG 56 Putting Planning in the State 60 Distrust of the Civil Service 68 The Management Consultant’s Lament 78 Reviving British Industry 82 The Decline of the igB Four 85 3 Reorganising, 1970s: The 1974 National Health Service Reorganisation and McKinsey & Company 97 The Arrival of the Americans 99 American “Know-How” 101 Friends in High Places 104 Case Study: The 1974 NHS eorganisationR 107 vii viii Contents 4 Automating, 1980s: Arthur Andersen and the Operational Strategy 149 The Accounting Generation Emerges 151 Losing the Lead in Computerisation 160 Case Study: The Operational Strategy 164 Chronology of the Operational Strategy 167 Chalk and Cheese 176 The Turn from Full Employment 181 The Hybrid State in Action 185 Impact on the State 187 5 Delivering, 1990s–2000s 199 The International Political Economy of State eformR 203 In Search of the Reinvention of Government 206 The Rise of Outsourcing 209 The Prime Minister’s Delivery Unit 220 Retrenchment and Consolidation 230 The Competencies of the Modern State 234 6 Conclusions 249 The Governmental Sphere and the Hybrid State 250 Power, Consultants, Politicians, and Sir Humphrey 254 The Future of the History of Consultancy and the State 263 Appendix 1: Key Characters by Chapter 269 Appendix 2: Detailed Selection of Consultancy Assignments by Generation 279 Bibliography 313 Index 349 List of Figures Fig. 1.1 Total estimated UK public sector expenditure on management consultancy, 1963–2013. (Compiled, collated, and analysed by the author. Pre-1979 figures based on company returns in MCA archives. Boxes 22, 23, and 24. Post-1979 all “public sector” work was recorded as such by MCA firms. Post-1979 figures from MCA annual reports. RPI inflator figures from Office of National Statistics. Estimates of MCA returns as a proportion of total UK consultancy market from MCA Annual Reports. Assumptions used in calculations: (i) all public sector work equates to work recorded under Board of Trade classification of “Public administration and defence,” “Local government,” “Government department,” and “Miscellaneous (other public sector) services” work; and (ii) where total industry estimates are made, public-private sector split of work undertaken by non-MCA firms is assumed to be the same as for all MCA member firms. MCA annual company returns do not classify nationalised industries as “public sector” work, meaning work in these industries is likely to be understated.) 4 Fig. 2.1 The origins of the Big Four. (Dates and connections derived from Kipping, “American Management Consulting Companies”, 201–203) 53 Fig. 2.2 The growth of the technical class. (Data from Guy Routh, Occupation and Pay in Great Britain 1906–60 (Cambridge: Cambridge University Press, 1965), 15. Notes on data: (1) includes surveyors, architects and ship-designers; (2) includes statisticians and economists; (3) includes editors and journalists; (4) commis- sioned officers) 81 ix x List of Figures Fig. 2.3 The rise of managers in Britain. (Data from J. F. Wilson and A. W. J. Thomson, The Making of Modern Management (Oxford: Oxford University Press, 2006), 18) 81 Fig. 3.1 The “tripartite” structure of the National Health Service in England and Wales, 1948. (Adapted from Webster, The National Health Service: A Political History, 21) 98 Fig. 3.2 McKinsey study team work plan. (TNA: MH 159/384. “Meetings of Steering Committee.” November 11, 1971) 115 Fig.3.3 The reorganised ationalN Health Service in England, 1974. (Adapted from Hunter, “Organising for Health: The National Health Service in the United Kingdom”, 108) 117 Fig. 3.4 The National ealthH Service in England, 1997. (Department of Health, Departmental Report (London: The Stationery Office, 1997), Annex E) 118 Fig. 4.1 DHSS expenditure on social security benefits, 1982–1983. (CAB 129/215/3, “Public Expenditure: Objectives for 1982 Survey,” Memo by Chief Secretary, Treasury, July 8, 1982, 122–123) 150 Fig. 4.2 “For the Man Who Has Everything…the Fabulous Desiccated Calculating Machine.” (©British Cartoon Archive, University of Kent, Arthur Horner, New Statesman, December 17, 1979. Reproduced with the kind permission of the estate of Arthur Horner) 161 Fig. 4.3 IT services by MCA member firms, 1973–1996 (selected years). (Author calculations from MCA annual reports) 164 Fig. 4.4 Social security organisational structure and staff numbers, October 1981. (Derived from Geoffrey Otton, “Managing social security: Government as big business”, International Social Security Review 27, no. 2, (1984): 165–168) 169 Fig. 4.5 Existing and proposed computer structure for the Operational Strategy. (Derived from Social Security Operational Strategy: A brief guide (London: DHSS, 1982), 9–11) 171 Fig. 4.6 Unemployment rates and percentage of the population below 60 per cent median income, 1976–2009. (Author analysis based on figures from Institute of Fiscal Studies (from which the proportion of the population earning under 60 per cent median income is used as a proxy indicator for poverty levels) with data from HM Treasury and Office of National Statistics (for unemployment rates)) 182 Fig.

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