Vir Cantium

I'm right, you know …

The Real Lesson From Madoff & Baby P: The False Security of Regulation

Today Lord Laming presents his second report into child protection services, and Bernard Madoff will plead guilty to fraud charges. So what could possibly link these two stories?

Let’s take a hypothetical situation ….

Something bad happens. Of course, everyone ducks for cover, so the government has to be Seen To Do Something. A regulator is set up and inspects the organisations and people responsible. Because this is about being Seen To Do Something, instead of actually doing something, this will involves procedures that can be documented (i.e. seen) which inevitably involves every inspector’s friend: the checklist. This isn’t to ensure that bad things don’t happen again – it’s to ensure that when they do, everything possible will have been done to prevent it.

Sorry, that should read “everything possible has been seen to be done” to prevent it.

So the inspectors tick their boxes, and so do those being regulated – after all, they need to be seen by the regulators to be doing things right. Thus more time is spent on satisfying the regulators, and the regulators spend time satisfying the need to be seen to regulate. Unsurprisingly, apart from the time spent on checklists, nothing changes on the ground.

Another bad thing happens. Of course, everyone ducks for cover (all having the documentation to prove that everything possible has been done and that it’s someone else’s fault) so the government has to be Seen To Do Something. They’ve already tried regulation, and that clearly hasn’t worked. So, obviously, more regulation is needed. So the regulations tighten, more checklists are required, and the regulators themselves must be inspected.

This isn’t to ensure that bad things don’t happen again – it’s to ensure that when they do, everything possible will have been done to prevent it. Sorry, that should read “everything possible has been seen to be done” to prevent it.

Another bad thing happens …

Getting déjà-vu yet?

Over time, the costs of regulation slowly mount – be it the time not spent in actually providing the core service, or the increasing headcount required to regulate, or to comply with the regulation, and even down to the office costs of the regulators and the regulators’ regulator. Then, a few years down the line, people start wondering where all their taxes are going, especially when bad things still happen and yet few people seem to actually take responsibility – largely because most of the intervening time, paperwork and effort has been spent covering backs.

Need I point out the links then, between the Baby P case, Bernard Madoff and every other failing of regulation that you can name? It’s OK though because, in the end, the regulation was all being done in the public interest. Their hearts were in the right place.

The lessons? Government can’t do everything, and when it tries it often gets it wrong. Regulation usually doesn’t work, because it doesn’t change the behaviour and culture of a system or the people in it – at least, not in the way it needs to.

Where there are differences between Madoff and Baby P is that Madoff was undoubtedly helped along by the false sense of security that regulation gave investors. He had himself been a regulator (as chairman of the SEC), he was complying with the regulatory requirements, he was being audited (audited badly, but at least that box was being ticked). One solution would actually be to scrap the regulation and let the buyer beware – if the regulators aren’t there to wipe your bottom then you have to learn to do it yourself and check you’ve done it properly.

Scrapping all regulation in the Baby P case clearly isn’t an option. The question is why didn’t the regulation work? Frankly, more regulation will not be the solution if those involved in the system aren’t doing their jobs properly. Here, one major factor must have been too much regulation taking too much time away from what should have been the business of protecting Baby P – like, one of the 60-odd visits resulting in more than a tick in the “home visited” box. There may well also be plain incompetence at the level of the visiting social workers and/or police and/or medical staff who saw him, but that will no doubt be filed under “need to improve inter-agency working” or something. The fact that there are too many agencies – too much government – may well not feature.

Will the lessons of Baby P result in better protection for future cases? Will Laming’s second report make a real difference – actually improving the quality of the people in the system and the work they do, or just lead to another layer of inspection, multi-agency bodies and paper on files? I hope it’s the former, but I’m not holding my breath. The first reaction of Ofsted was to get local authorities (such as my own) to sign a representation that they have told the truth to the inspectors. This, of course, is covering backs, and will not add one iota of protection to vulnerable children.

Yet we all know whose backs really need covering – it’s the children at risk.

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