High-profile escapes, riots and suicides characterised Derek Lewis's tenure as director general of the prison service and led to his dismissal. Andrew Davidson gives the condemned man another chance to explain the mitigating circumstances.
When Derek Lewis was appointed director general of the prison service three years ago, it is fair to say that just about everyone was surprised. Here, ostensibly, was a man running a tiny satellite TV station, a manager who had very publicly been pushed out of his last big job, who had never been round a prison in his life, being asked to take over the country's most difficult and controversial public service. What was going on?
At the press conference announcing the appointment, Kenneth Clarke, then home secretary, explained that he wanted Lewis to bring 'modern management methods' to the service, which had just been given a new independent life with 'agency' status. Three years later the service is in disarray, Derek Lewis is out of a job and the current home secretary, Michael Howard, is being sued for unfair dismissal - probably not the modern management methods either Clarke or Lewis were hoping for. 'No,' shrugs Lewis ruefully, 'I am not sure there was a very clear view of that anyway.' That, of course, is one of the reasons why Lewis is so angry about getting fired, even though others have already dismissed his attempt to introduce private-sector values into a public sector service as a sorry shambles (See Heller on Management, p21). It has happened to Lewis before. Five years ago, at the age of 44, he was dumped as chief executive of Granada, the now-thriving television and leisure group, after heavy loss produced similar recriminations.
He admits himself that the Granada experience may have influenced his action in suing the home secretary. When we met, Lewis was busy popping up on TV, radio and in the newspapers to argue his case. He is also quite keen, you suspect, to let Management Today readers know he is back in the job market again.
But though he must be under considerable personal strain, he doesn't show it. Tall, lean and earnest, he sits in the offices of his public relations company - another move that caused jaws to drop in Whitehall: whoever heard of a fired man taking on a PR firm? - appearing quite unflustered and determined. There is about him an air of quiet, pedagogic command - no surprise perhaps, as both his parents were teachers. Certainly his purpose is clear: he wants to explain just what went on at the prison service, and to establish that there is another side to the story other than the off-the-record briefings peddled by the Home Office.
For which, however you view his business record, you have to admire him. Many in a similar position might have slunk away with their tails between their legs, and a large cheque in their pockets but Lewis is determined to argue his case that a good manager should be allowed to manage, without interference. The story of his 30 months in Whitehall, and his enforced exit, are enough to send a chill down the spine of the most public-spirited business executive. Yet however hard-done-by he may feel, Lewis, with a wide range of management experience which takes in Ford and Imperial as well as Granada, knows that the damage to his reputation may still be considerable.
For coping with the perception of failure isn't easy. The Learmont report on the escape of three dangerous prisoners from Parkhurst last year, which led to Lewis's dismissal, was scathing about his attempts to modernise the prison service. 'Any organisation which boasts one Statement of Purpose, one Vision, five values, six goals, seven strategic priorities and eight Key Performance Indicators without any clear correlation between them is producing a recipe for total confusion and exasperation,' said the report. Yet senior prison service managers say Lewis has been shabbily treated.
Who's right? It is perhaps instructive that the same divided view of Lewis's abilities holds sway in the business world. Former colleagues argue that he is one of the most able executives around, an expert at building businesses and patiently sorting out complex problems.
'Derek is highly intelligent, inspires good loyalty and is a great corporate risk taker,' says Bill Andrewes, former head of Granada's leisure division and now chairman of a new venture, Two Way TV.
'He is a workaholic and an absolute straight arrow,' says James Arnold-Baker, another old friend and managing director of the Oxford University Press. Arnold-Baker, formerly boss of BBC Enterprises, helped Lewis set up the TV station UK Gold, a launch which proved highly successful and resuscitated Lewis's career after Granada.
Against that, there are others who say, quite bluntly, that Lewis's move to the public sector was the act of a worried man, a former captain of industry trying to restart a flagging career in the limelight. He is not a natural communicator, they say, nor a good political operator and too in love with the textbook nostrums he learned in his post-graduate days at London Business School. 'Lewis's face looks weak,' summed up the political commentator, Lord Wyatt; a trite judgment, but not to be underestimated in a political world dominated by TV news. Such scrutiny is the price of failing so publicly - twice.
Yet a good manager learns from his mistakes. In 1991, when Lewis left an ailing Granada, it was described as the toll demanded by the City for backing a new rights issue, which is generally shorthand for saying the company's merchant bank insisted on it. Since then, Lewis's replacement, Gerry Robinson, has acknowledged that many of the tools for Granada's consequent, spectacular recovery were put in place by the Lewis regime (and, perhaps pertinently, one of Robinson's first acts was to change merchant banks). Granada insiders have also suggested that a less honourable executive than Lewis would have dodged the blame and laid it squarely on the shoulders of the Granada chairman, Alex Bernstein.
Lewis didn't, and took his punishment with surprising equanimity. So is this why, second time around, he is doubly determined not to be 'scapegoated' again? 'No,' he says, 'the circumstances at Granada were very different. I was influenced by it, perhaps, but it was not the determining factor.' When Howard asked him to resign in October, he says he simply had to fight his corner. 'If I accepted what he wanted, I knew there would be a lot of behind-the-scenes briefing and that I was agreeing with what was said and was, in your words, slinking off with my tail between my legs, acknowledging that I had got things badly wrong in the prison service.' He hadn't, he says. Indeed, according to others who sat on the prison service executive board, he was on the verge of seeing the full benefits of his two-and-a-half-year shake-up of the service. Hence his dismay at what he saw as Howard's abrupt rewriting of history. But that is to jump ahead of the story.
When Lewis was appointed director general of the new prison service back in 1993, many were baffled as to how he was chosen, and indeed why he should want the job in the first place. The answer, it transpires, is deceptively simple: the Home Office had hired the same headhunters, Saxton Bamfylde, which Lewis had used to fill senior positions at Granada.
For friendship's sake, says Lewis, he spared Anthony Saxton an hour to listen to what he had to say about the job. At the end of it, he was hooked and put forward for interview. He says he took the job, after weeks of discussing it with his wife, because he knew if he didn't, in 10 or 15 years' time, he would regret it. It was also obvious to others that he was kicking his heels at UK Gold, a small satellite station showing classic shows from BBC and Thames TV.
Whether he was the best suited of the candidates, or simply the only businessman of stature Saxton could get to listen to him, is hard to tell. It's unlikely that many executives with blue-chip experience would be interested in either the flak or the salary - £125,000 plus bonuses - that went with the position.
Lewis arrived three months before the prison service was to become an agency. On his second day he went round his first prison: Brixton. He remembers being struck by the claustrophobia, the smell and the strange good humour of those inside. That is when he learnt that prisons do not work by coercion alone - there simply aren't enough staff for that. 'Prisons only work because the majority of prisoners have accepted their punishment and want to get on with it as quietly as they can,' he says. 'It's a very delicate balance. You get riots when the normally silent majority feel they are being unjustly treated.' It was to prove a very pertinent point, he discovered, when dealing with a home secretary for whom law and order, and getting tough on criminals, suddenly became a priority.
More shocking at first, though, was the way the whole system was managed: governors ran prisons as private fiefdoms; executives allocated resources from the centre with little input from those receiving them; and major capital projects were signed off with no attempt at value engineering. 'The quality of management in the service was truly appalling,' says Lewis. 'There were so few of the standard management tools and processes, yet it was an organisation spending £1.6 billion a year.'
Lewis cites his first board meeting when he asked for a financial report. He was told by civil servants - despite being an agency, the administrative centre was still staffed by civil servants on 'tours of duty' - that there wasn't one. An account was given at the end of the year of how money allocated by Parliament was spent, but no regular financial report to the board was made. At the second board meeting he was asked to approve a three-page paper listing capital projects adding up to £250 million, the year's capital budget. 'I said, "What are they? How do I know these are things we should be spending money on, what are the other priorities? I'm not going to sign off £250 million on that amount of information". They said, "No, no, you shouldn't worry about these things, just approve it".' Likewise when he asked to see individual spending proposals setting out justification and alternatives he was told that they didn't want to trouble him with that sort of thing. 'Those decisions were being taken by a relatively junior civil servant outside the management line in headquarters, and that, for example, is what got the prison service into deep trouble over the fence alarms at Parkhurst. They were not installed, against the wishes of line management, largely because someone in a job with no responsibility at all for security was taking these decisions off-line.' The question, of course, was just what 'modern management methods' were suitable for transferring to a 'business' that is essentially still a public service? 'You can't run it like a business,' agrees Lewis. 'It's about people, but it's also about money. You just have to be selective about what you do or do not use.' So is it really a job for a business executive? Yes, he says, because while there are a lot of good people in the service with governing experience, and a lot of people at the centre who are good at dealing with ministers, there is no one with operational experience in managing large organisations. It is certainly, he felt, easily within the capabilities of his experience at large organisations like Ford and Granada.
And, he continues, many of the tools of well-run businesses - financial planning, accountability and motivation, clear methods of measuring success - can obviously be used if you get the structure right. The main difficulty is sorting out the right balance of objectives because in the prison service, unlike any business, the objectives are multiple and conflicting: security, control, making sure time in prison is used usefully, reducing reconviction rates. And they are constantly reshuffled in order of priority by the politicians.
For example, says Lewis, when he was hired by Ken Clarke, after the Strangeways riot and the subsequent report by Lord Justice Woolf, the emphasis in the service was on reducing overcrowding, ending slopping-out and getting prisoners out of their cells. Then after the Labour leader, Tony Blair, attacked the Tories for not being tough enough on crime, Howard swiftly changed the emphasis to prison as punishment. Understandably, listening to management saying one thing and politicians saying another, the prison service's 39,000 staff get confused, says Lewis. There is really no analogous situation in the world of business.
But wasn't it ever thus? The real problem, Lewis agrees, is putting the service through such radical change just as law and order becomes the key political issue. Yet one inevitably stems from the other. Add to the pot the deep mistrust governors had for an outsider who they believed was on a privatisation drive, union-management relations stuck in the 1960s - the first letter Lewis got from the Prisons Officers Association contained the immortal line, 'We will not allow you to brutalise our members' - and a deliberate political fudging of just where the home secretary's responsibilities started and ended and it is clear that revamping the prison service was a Sisyphean task that was probably beyond any captain of industry.
Yet, according to his supporters, Lewis stuck about the job as best he could. He did overhaul financial accountability, he successfully charmed governors onto his side, he stood up to the union and he created an environment for the private sector to show what it could do for the service - running court escorts and prisons - in a way that, after initial glitches, could be integrated into, and beneficial for, the system. The figures prove it was working, they say: escapes down, cost of building and refurbishing down, targets hit.
And his management team backed him to the hilt. Within hours of his ultimatum from the home secretary, eight of the 11 members of the Prison Board, the service's senior management, marched into Howard's office to protest. Two non-executive directors later resigned. All were sympathetic to Lewis's decision to dig in.
But the public perception of the service with its high-profile escapes, suicides and riots was of something teetering on the brink of collapse. And indeed if you read the Learmont report it is completely at odds with what some inside the service say is really happening. Was it just a problem of external communications? 'No,' says Lewis, 'I doubt whether external communications could have been better handled. Part of my brief was to become more visible publicly and give an account of the service.' The difficulty, according to others, is that public presentation is the weakest part of Lewis's armoury. The same quiet sincerity that impressed many on his prison visits made him sound weak and ineffectual on the likes of BBC 2's Newsnight and Radio 4's Today. It also did little to impress General Sir John Learmont, who produced the security report, and who was clearly deeply sceptical of the sort of modern business jargon which Lewis warmly embraces.
Was there also a clash of personalities between Lewis and Howard? 'No,' says Lewis, affronted. 'I have never had a problem in my life getting on with people I work with.' He was simply asked to take the blame for something which he felt was not his fault. According to Lewis, the home secretary had constantly fiddled about with new initiatives, delaying what the service wanted to implement.
In the end, it all came down to a fundamental difference of opinion over the appropriate level of involvement of the home secretary in operational matters. When Lewis had joined it had been made clear: the home secretary sets policy, the head of the prison service runs operations. But no one, Lewis later realised, bothered to define the distinction properly. 'I heard an MP give one definition,' says Lewis. 'He said the home secretary must have the right to intervene when he wants to. By the act of intervening that thing becomes a policy matter, which is a wholly impractical way of running anything.'
But is that fair on Howard who, as home secretary, has to be able to interfere when he feels necessary and has to have the final say on who he trusts? Perhaps, considering his quiet shelving of the Sheehy report on the police and his lack of patience with Lewis, Howard is not as convinced as others in the Tory party about what modern management methods can bring to the public sector? Certainly there are so many contradictions going on that it is impossible to get a clear view of what is really happening in the prison service. All that is undeniable is that the number of people being put in prison is still going up rapidly and that is going to cause a whole new set of problems.
The prison service is going to find it very hard to get anyone with significant business experience to take the hot seat again. At the time of writing Lewis has been replaced by Richard Tilt, a former governor, on a temporary basis. No one is quite sure what will happen with regard to the reforms initiated by Lewis. It may be that his real contribution to the service cannot be fairly judged till the dust has settled. In the meantime Lewis is out of pocket and out of a job, although the former condition may be fixed quickly if, as expected, the Home Office decide to settle his legal action out of court.
But to lose two big jobs in five years must take its toll. 'It's pretty unpleasant,' he agrees, his slate-blue eyes never wavering. 'You have to look back at your own conscience and your own record and ask yourself if you are satisfied with what you did. In the case of Granada I was satisfied with 75% or 80% of what I did. The prison service I would give a much higher rating of satisfaction.' Does he think he is employable again? It is an awful question to ask but after the pounding he has taken, Lewis will not be immediately attractive to many large companies that operate in the public eye. 'I would hope I'm employable because in practical terms what I now have is a range of experience that is pretty hard to match,' he says. 'I'm keen to get back to work as quickly as possible, I'm a very active sort of person, and still only 49.' He expects to get involved with the prison service again, at a later date, in some capacity. As he says, it is something that gets into the blood.
He stacks his notepad and pens back in his briefcase, and dons his jacket again, saying he has to get to a meeting with his lawyers. I wish him well. Perhaps his friends in the headhunting business can sort something out for him. But then again, as one of his former colleagues put it to me, with friends like that ...
1946 - Born 9 July
Educated Wrekin College, Telford; Queens' College, Cambridge; London Business School
1968 - Graduate trainee, Ford Motor Company
1978 - Director of finance, Ford of Europe
1982 - Director of corporate development, Imperial Group
1984 - Financial director, Granada Group
1988 - Managing director, Granada Group
1990 - Group chief executive, Granada Group
1992 - Chairman, UK Gold Television
1993 - Chief executive and director general, HM Prison Service.
What People say
'It's a mystery why, at 46, after a tolerably successful business career, he (Lewis) wanted the job. The next mystery is why he got it, lacking any conceivable qualifications.'
Lord Wyatt of Weeford
'Michael thought Lewis's position was untenable. There was no way he could reject the Learmont report findings. And there was no way he could say he accepted the report and also keep Lewis in the job.'
An 'aide' to Michael Howard, quoted in The Sunday Times
'(There is) a great deal that needs to be put right - spanning leadership, structure, the management chain, and the ethos of the service.'
Sir John Learmont in his report on security in the prison service.
'Derek is not a charismatic person. He is quiet, sincere and genuine and I think he comes over very well.'
A former prison service colleague.
'Derek's strength is developing new businesses which is maybe a different mind-set to squeezing cash. He is imaginative and courageous, but probably not as Machiavellian as you need to be in some companies at some times.'
Bill Andrewes, chairman of Two Way TV, former chairman of Granada's leisure division.