The Regulatory Policy Institute Research Group

Lao Tzu’s advice and UK Post Office governance

The Tao Te Ching is an ancient classic of Chinese Daoism whose authorship is conventionally attributed to a certain Lao Tzu. It contains advice on how to be a Sage, a person with sagacity. Significant sections are clearly directed at leaders in governance.

One of its passages is as follows:

“Plan for difficulty while it’s easy.

Manage the great while it’s small.

The world’s most difficult affairs begin in easiness.

The world’s greatest affairs begin in the small.

Surely frivolous promises inspire little faith.

When things are too easy, difficulty awaits.

Therefore the Sage accepts difficulty so things in the end aren’t hard.”

A succinct translation from the original, poetic prose might be: ‘detect, scrutinise and address emergent risks early, when the magnitudes of their consequences are still small’. And it is abundantly clear that this was not done in the case of the Post Office’s dealings with its thousands of sub-postmasters, leading to outcomes that an English judge has described as the most widespread miscarriage of justice for a long, long time.

The Post Office is a publicly owned enterprise and, therefore, ultimate responsibility for its supervision lies with government. Ministers and civil servants are, of course, entrusted with many different responsibilities and tasks, and have only limited bandwidth available to deal with them. Delegation is inevitable, and UK governments have long struggled with the challenges this poses.

An enduring approach for public enterprises has been based on the arm’s length principle – government should not interfere in the operational management of the enterprise, as first enunciated by Herbert Morrison in the 1930s — although it is a principle that has been very frequently breached. The thought was that the Board of the relevant enterprise would act as ‘high custodians’ of the public interest in managing its affairs and could be left alone by ministers to just get on with things.

The former minister who is the eye of the storm of media coverage of the Post Office’s assault on its own sub-masters, Ed Davey, now leader of the Liberal Democrat Party, has referred to the arm’s length principle in defence of his own indifference to the pleas of the sub-postmasters. It is, however, a very weak defence.

In privately owned businesses, owners entrust operational decisions to management, but retain a role qua owners in monitoring and assessing the overall performance of management itself (surveillance). They do not simply accept everything that a management says is true and correct, which is what seems to have happened in this case.

In this case, senior Post Office executives succumbed to a severe dose of collective myopia, wilful or otherwise, in terms of the roll-out experience of the Horizon accounting system across its network, subsequently arguing there was “absolutely no evidence of any systemic issues with the computer system.” With management refusing to look at things it did not want to see, it is certainly no good for government to itself turn a blind eye and claim that ‘I/we were lied to on an industrial scale’ in seeking exoneration, since that simply indicates that the ownership function of government has not been performed. It amounted to the blind leading the blind, hardly a desirable feature of good government or corporate governance.

One aspect of the events that has come to public view is the way in which the Post Office management led individuals to believe that their own problem was a special case, when as early as 1999 it had been brought to the attention of government at its highest level that there were problems with the software being used to record transactions.

This suggests ‘Might this be a systemic software problem?’ would have been the obvious question to ask at an early stage by an astute government minister, and it wasn’t.

As we have argued in recent blogs and papers, the failure to ask simple questions like this points to a deeper and wider systemic failure of government in its entirety. It is a structural problem: governance is ‘half-brained’. It lacks the sort of surveillance capacity that is built into lateralised animal brains. ‘It can’t see the wood from the trees.’

Lao Tzu, on the other hand, starts with a vision of the wood (the Dao), “the mother of ten thousand things.” There is interest in the individual ‘things/trees’, but that always comes with an over-arching interest in how they relate to the larger whole the ‘Dao/wood’) and how manifestations of that whole change over time, it being always in a state of flux. The Tao Te Ching is an ancient example of cognition that is superior to that embedded in modern structures of governance, which seem to be characterised by severe sagacity deficits.

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