What is the aim of the tax system?

I was reading an article by Polly Toynbee recently about inheritance tax, the argument being about it being a tax on already taxed income, that people have worked hard through their lives to accumulate and the evil tax man is preventing them from giving their children a nest egg, versus a tax on the rich that hardly anyone (with a bit of advance planning) will have to pay anyway.

Which started me thinking – what is the aim of the tax system?
1. Is it a means of redistributing wealth from the rich to the poor? Toynbee says; “The top 1% of the population owns 23% of everything. The bottom 50% owns just 6%. If you take homes out of the equation, then the top 1% owns 63% of everything – the bottom half just 1%”. But if you take this aim to the extreme, then the tendency of really rich people to leave the country, and rob the tax system of their money altogether presumably increases.
2. Is it to fund public services and the political ideology of the ruling party? The current government appear to be pumping more money than ever into the political football called the NHS, yet don’t appear to be getting the results that such a large injection of cash warrants – some hospitals are in big deficit and laying off staff despite the money injection – some student nurses appear to be qualifying and then unable to find jobs. The whole system seems out of kilter, perhaps because of the relative short time between elections meaning money gets pumped in quickly without the real long term thinking required to make effective and efficient use of the cash.
3. Is it to drive our behaviour in certain directions? For example, “green” taxes. Toynbee writes: “Petrol taxes would have to be raised by 18p a litre or airline ticket taxes quadrupled (to replace inheritance tax). These might sound greenly desirable, but they would hit the least well off drivers hardest and those who use budget airlines…… (And) the main problem is that if green taxes had a deterrent effect, then the tax take would fall and other sources of income have to be found.

So, I suppose you drive your tax policy in the direction of whichever aim suits your political view. And, like many systems, there are conflicts to be considered between differing aims that have to be balanced and optimised, so far as they can be.

Leaner - A380 or Dreamliner?

I see the A380 Airbus is claiming to be greener by transporting huge numbers of people (up to 800) between airport hubs, and people making "spoke" onward journeys by smaller aircraft or other modes. The Boeing 787 Dreamliner is smaller 290 passengers, but it is claiming better green credentials in terms of litres of fuel useage per 100 passenger km, and also that it will fly people direct to the local airport, rather than the hub and spoke.

The "which is greener" debate will continue, but which is leaner? The A380 is effectively batching people and incurring waste at the hub airports (Boeing estimates that between 30% and 50% of all traffic at hub airports is just passing through, and adding to the already congested operation at such places) - whereas the Dreamliner model sees fewer delays as people travel directly to a point much closer to their ultimate destination.

Royal Mail - Junk Mail and Customer Service

So a postman with the Royal Mail has been suspended for telling customers how they can avoid receiving non-addressed junk mail such as adverts and money-off coupons for the local Pizzeria.

Why have they done that? It's a piece of received wisdom that no-one likes receving junk mail, so surely the Postman was just doing a piece of thoughtful customer service?

On the other hand, the Direct Mail industry tells us that this sort of junk mail actually works, and delivers a relatively high take up of offers amongst recipients. We actually use the money-off coupons. So our behaviour as customers would seem to tell a different tale from what we say?

And of course, this form of mail is quite lucrative to the Royal Mail, and subsidises them to keep delivering first class letters for 32p. Without it, the Royal Mail would go down the pan, or letters would be more expensive. Interesting example of customer behaviour and a systems thinking issue.

What is the Aim of the Post Office?

I signed a petition recently complaining to the government about the various threats to local post offices. I was pleasantly surprised to receive a letter from my MP confirming that he had presented the petition in Parliament, and attaching a copy of the Hansard record.

It started me thinking about “What is the Aim or Purpose of the Post Office in the Modern World?”

I suppose its purpose in years gone by was to provide access to the postal system, and to be an agency for all sort of public services – TV licenses, Road tax, pension and benefit cash payments and so on. And I suppose the modern world has come along to multiply significantly the means by which such services can be accessed: email and telephone, competing carriers, multiple outlets for stamps, PayPoints for bill payment, direct debit, and of course the internet.

Opponents of Post Office closures will, I guess, point to the social benefits of the network; access for some people (perhaps older, perhaps less well off, perhaps otherwise less able) who may be left unable to source cash and other services; a place at the heart of the community where people meet especially in rural areas; also in rural areas provides the core around which the business of a rural shop might revolve.

So does that mean that the real remaining purpose for the Post Office is solely to provide such service for the otherwise disadvantaged? Or can the Post Office derive a new purpose for the 21st Century which makes it a dynamic business as opposed to a simple social service?

NHS at Bolton - there's two sides to every story

I've received some anonymous comments on the NHS Bolton/Toyota story - I think they're worth Blogging as they show that there are at least two sides to every story!

Anonymous comment 1

Superbug cases at hospital soar by nearly halfBy Jane LavenderTHE number of people infected with a potentially deadly superbug at the Royal Bolton Hospital has gone up by nearly half.Rates of Clostridium Difficile, which can cause severe diarrhoea and is especially dangerous to the elderly, have increased from 208 in 2004 to 297 last year, according to Government statistics.And the number of people infected with MRSA, which is an infection in the blood, has also gone up from 17 between April and September last year, to 19 between October, 2005, and March this year. From April to September, 2004, there were just 14 cases.

Anonymous comment 2

17, 19, 14? Surely that's just variation

Anonymous comment 3

Threat of strike at cuts hospitalBy Jane LavenderUNION bosses at the Royal Bolton Hospital say they are prepared to hold a ballot on industrial action in a bid to protect patient services.Senior UNISON members say they are horrified at plans for £8 million worth of cuts at the hospital.

Anonymous comment 4

Like Toyota? They're having a laugh.

Anonymous comment 5

Well they can't take it down now can they. That would say even more.

NHS - 250 steps to discharge a patient!

This picture appeared in The Times recently, showing that more than 250 different interactions took place to discharge a patient with complex health problems. With the NHS trying to adopt "lean", one process involving a routine blood sample was reduced from 309 steps to 57 with just simple changes.

They want to "improve service by better understanding how patient demand varies, and identifying and removing the valueless activities that create bottlenecks in the system.

Early results of a study in Bolton showed the lean method helped to cut by a third death rates for patients having hip operations, reduced paperwork in the trauma unit by 42%, and halved the amount of space needed by the pathology dept.

The Chief Executive of Bolton hospital trust said "When we started out, some people were very sceptical. But I've never seen anything that energises staff in this way".

The Government keep saying that the NHS must increase productivity and cut waste before they can justify more public funding. At least in this pilot study, hospital chiefs seem to have understood the new definition that Productivity = maximise customer satisfaction and eliminate waste and rework.

NHS - thinking like Toyota

"Chief Executives of NHS Trusts vowed yesterday to adopt the techniques of Tesco and Toyota to save lives and reduce costs by introducing the principle of "lean" management pioneered by successful companies. By eliminating unnecessary processes, the NHS could speed a patient's progress from A&E to the operating theatre.......

The approach was tested in Bolton hospitals, where mortality rates were cut by at least a third after services were redesigned around the needs of patients instead of the convenience of staff.

(Guardian 15th June 2006)

Toyota or Toyoda?

True or False?
Toyota changed its name from Toyoda in 1937 because when written in Japanese it not only looks better, but it only needs eight brush strokes - a lucky number in Japan.

(from Summer 2006 "If." - The Toyota magazine)

Well... is it true or false? Doesn't say. And I thought Seven was the Japanese lucky number!?

Call centre technology - steam driven

I was watching an agent in a call centre of a mobile phone company. Lots of technology to help - information screens, agent script, extensive intranet, and so on. In a lull between call rushes, she switched to screening emails. Each email is assigned to a different "business stream", each of which have differing Service Level Agreements for responding to email. Her first action was to identify the Business Stream: then refer to a fairly dog-eared piece of paper sellotaped to her workstation, being a list of the "due by" number of days in which a response is promised; then she referred to her desk calendar and counted forward 10, 15, or 20 days according to the Business Stream and entered that date alongside the email on her screen; then she would allocate the email to the appropriate team for response.

No value added there then!

An Insight into one company’s changed culture because of SPC

An Insight into one company’s changed culture because of SPC

Sample job - circulars editor

Before SPC
1. Manager decides improvement/change is required
2. Manager calls in Organisation and Methods Section to analyse job and recommend efficiencies
3. Manager introduces O&M staff to job holder
4. O&M ask job holder to record activity (number of circulars edited during 2-week period)
5. O&M observe jobholder in action (job holder anxious to impress, does not like to be seen to be 'slow')
6. O&M analyse stats of 2 week activity period and compare with observations
7. O&M draw conclusion that even allowing for 'difficult' tasks and unspecified 'down time' jobholder can achieve an average of 'X' editing jobs per day.
8. Jobholder recognises this is 20% to 50% more than currently achieved
9. Manager receives report
10. Manager suggests that jobholder provides a report and strategy for achieving this projected average turnover (this is called empowerment and 'ownership), timescale 2 days
11. Jobholder works late and at the weekend to come up with a scheme which might work.
12. Manager says "excellent! - that can go on your objectives for the rest of the year"
13. Jobholder gets depressed
14. Jobholder works longer hours to achieve 90 % of target by year end
15. Manager understands the difficulties jobholder experienced and only reduces potential bonus by 5%
16. Jobholder resolves to look for another job

The SPC way
1. Data capture - at several points in the life of the document
2. Control charts identify whether process is stable/non-stable and whether particular 'jobs' cause atypical action times
3. Process maps (deployed style)
4. Periods of delay and inactivity in the life of the document identified
5. Further investigation to understand "the voice of the process"
6. Process changes proposed and studied - and piloted
7. Further process changes proposed and implemented
8. Data capture continues
9. Control charts indicate improvement or otherwise
10. Manager involved throughout
11. Jobholder 'comfortable' that improvements are genuine and sustainable
12. Agreed Objective is to follow and implement the Improvement Statement
13. Jobholder and Manager spend much time persuading others that the Objective is SMART
14. The process is improved and the jobholder goes home at nights!!

The most important figures are unknown or unknowable

One of Deming's paradoxical quotes is "the most important figures that one needs for management are unknown or unknowable. David Walker picked up this point recently in the Guardian with an article about how difficult it is to measure productivity in the service sector. For example (in the NHS) "measuring the cost is a damn sight easier than evaluating the output. Just counting the number of patients a consulant sees gives no scope for assessing the quality of the episode or illustrating the improvement that might result, in the long run, in their lives"
It's a problem in policing, too. "Officers on patrol are very unlikely to spot or stop a crime, which makes their productivity seem unimpressive. But a glimpse of a patrolling officer is highly valued by members of the public. They might still feel good even if they registered the "unproductiveness" of the officer in terms of detection of criminals.
Deming lists "Running a company on visible figures alone" as one of the Deadly Diseases of Management. "A company may appear to be doing well, on the basis of visible figures, yet be going down the tubes for failure of the management to take heed of figures unknown and unknowable".

Infuriated by BT automated-answer so-called Customer Helpline?

Possibly one of the least customer-friendly things that big companies do these days is only offer automated answer facilities for customer helplines - "for so-and-so press 1, for something-else press 2...."

BT is one of the worst offenders in this respect, but a guy on Richard Hammond's 5 o'clock show today has found a way to beat it. If you dial 150, ignore what the woman says, and keep pressing the * (star) key in response each time she starts speaking - after six repetitions you beat the computer and actually get to talk to a human being.

So if enough customers do this, maybe BT will get the message about proper customer service!

The waste of customer delays at a Hilton Hotel

Two of the "Seven Service wastes" are delay on the part of customers waiting for service, and opportunity lost to retain or win customers.

I experienced both of these at the Hilton Hotel off junction 15 of the M40 today. I was meeting a colleague and we both ordered a simple club sandwich for lunch. They took over an hour to arrive, and complaints on our part after 45 mins and 60 mins. Nobody bothered to come and explain about the delay, and complaints were met with "the hotel is busy today, sir".

Even worse, the hotel has implemented car park charges. We had to queue to get a ticket to exit the car park, the machine was not working properly - it was not accepting credit cards, and the ultimate insult was that the cumulative delays meant we were pushed into a higher charge band for using the car park.

We shall not be using Hilton Hotels again!

Toyota - they must be doing something right

Toyota, so often held up as the very epitome of World Class organisations, must be doing something right. The Times 4th Jan 2006 reports that Toyota recently announced production forecasts that would push the company past General Motors to become the biggest car maker in the world.

And it's not only Toyota - Nissan and Honda have also achieved years of record profits.

And their success spreads through the supply chain. The same article says that there is a £3billion expansion drive to solidify the position of Japan's steelmakers ahead of Russia to be the world's greatest exporter of steel. In fact, Japan exports more than the US, Britain, China, and South Korea put together already.

Over the years, the fortunes of the Japanese steelmakers have ridden high on the success of the Japanese car industry. The Times says that the big steelmakers will be directing their big expansion plans towards Nagoya, the city where Toyota is based.

The finest employees? What do the people think?

I couldn't resist taking this photo in the staff entrance lobby of a Marriott Hotel in California.
I wonder what the people who work there think of it? Is it exhortational and patronising? Or is there something happening there that means the people really believe it? And how does that show in the service given to customers?

Police crime numbers up - BCS crime numbers down!

You only get the numbers that your data collection system is designed to deliver. And when making judgements about the figures, you have to bear in mind the context in which the data was collected. This extract is taken from an article published in The Guardian Oct 14th 2004.

“Michael Howard was complaining about the British Crime Survey. “The most reliable crime statistics, those recorded by the police – show that crime in England and Wales has risen by 850,000 in the past five years”, he claimed.

But police statistics bear little relation to the reality of crime trends. The BCS shows unequivocally that major types of crime have fallen dramatically since 1995; vehicle crime down by half; house burglary down by 47%; assault down by 43%; the list goes on.

Recorded crime has gone up because the police have changed the way they count crime. In 1998 the “counting rules” were changed. In 2002 a new national crime recording standard was introduced - they previously rejected victims’ reports of crime if they doubted them: under the new standard, these are taken at face value. Both changes inflated the numbers police looked at as recorded crime.

But statisticians have always known that only a proportion of crimes get reported to the police, and only a proportion of these find their way into police records. The BCS trend is simple, and quite different from the police numbers: people’s personal experience of crime rose from 1981 to 1995 and then fell back again to near 1981 levels. Violent crime involving firearms is rare but rising; e-crime is surging. But the headline trend for crimes that affect everyone’s daily lives is downward.