UK: PROFILE - SIR DUNCAN NICHOL - NHS CHIEF EXECUTIVE.

UK: PROFILE - SIR DUNCAN NICHOL - NHS CHIEF EXECUTIVE. - Part tycoon, part mandarin - the departing NHS chief has shown steeliness and an ability to take knocks in the recent shake-up.

by Andrew Davidson.
Last Updated: 31 Aug 2010

Part tycoon, part mandarin - the departing NHS chief has shown steeliness and an ability to take knocks in the recent shake-up.

Ask Sir Duncan Nichol, Bradford-born chief executive of the National Health Service and a lifelong civil servant, if he is something of a grey man and, not surprisingly, he bridles.

That, he counters, sitting sideways across an armchair in his first-floor Whitehall office, is a matter of perspective. 'Compared with a conventional permanent secretary I would not be a grey man,' he says thoughtfully, the Yorkshire roots still audible in his accent. He has a point. Nichol is no ordinary Sir Humphrey. As boss of Europe's biggest employer and overseeing what must be one of the world's biggest turnovers - £26 billion and rising - his Northern steeliness, plus just a reassuring touch of grey, must come in useful.

Now 52 and nearly five years in the post, Nichol has helped oversee the greatest shake-up in the health service since the war. Out went the old-style consensus management where low-grade administrators charged round trying to keep high-grade doctors happy; in came a whole raft of modern business nostrums: greater pressure on cost-efficiency and customer satisfaction, the introduction of 'internal markets', the separation of key functions like purchasing and service provision, and, of course, the increasing use of snappy titles like chief executive and general manager.

It has not been a smooth transition. Some, both inside and outside the service, are still seething at the enforced changes, arguing that you cannot apply market doctrines to the basic tenets of caring and curing. Others, especially those working in conventional businesses, remain unconvinced that any amount of fancy tinkering will change the nature of the beast. The last few years, they note, have still been dotted with high profile examples of cash squandering on a massive scale.

For the critics, the health service will always be a lumbering, money-gobbling, state-propped leviathan. So few people are happy with things as they are. But it was ever thus: the constant scrutiny of the Press, the incessant wrangling over pay and conditions with a huge labour force, the interminable demands for accountability from politicians, the very life and death nature of the business have all led some to conclude that running the health service, while probably one of the most important managerial jobs in Britain, is also among the most thankless of tasks. If nothing else, Nichol, a short, grey-haired man with big glasses and a tight smile, has impressed colleagues with the calm determination he has shown in the face of this enormous pressure. He is no stranger to controversy.

The peculiar stresses of the job were highlighted during the last election, when he found himself embroiled in political wrangling after giving an interview to the Daily Mail. He supported the Government's health service changes and rebuffed Labour accusations that the service was slowly being privatised. The interview caused a storm. As the Mail itself observed, 'For a civil servant - expected to serve under a government of any political persuasion - to come out so forcefully on such a sensitive subject is unheard of'.

Some thought it a shade naive of Nichol to show his head above the parapet. Looking back, he says he has no regrets. He was left in an unusually difficult position. 'Let me put it bluntly, there were a significant number of people in the service who wondered what I thought about and where I stood on the speculation. There were two ways of looking at it: either I was conniving with or condoning a policy that hadn't been made explicit, or I was being fooled, in which case, how come I didn't know about it? I thought it was time to nail some colours to the mast.' Of course his quotes were taken out of context, and it had not been his intention to criticise the Labour Party. But old hands know that he should have been more careful about giving the interview - which, intriguingly, had been sanctioned by the Secretary of State. Did he expect to keep his job if the Labour party had got back? 'I wouldn't have expected to be able to carry on,' he answers with candour. 'I had taken a position, like any manager, that I had to evangelicise the changes. I had to sell them, which is the point of leading. If everything was suddenly going to be turned in the opposite direction, I don't think I could have said, "Fine, no problem with me."' It was, he says, a 'very difficult' time, but he survived. He knows that health will always be a political football, and in his strange hybrid role - part mandarin, part tycoon - he is more likely to be saving the own goals rather than banging them into someone else's net. Similarly, he had no qualms about fronting the ambulance dispute in 1989, during which he frequently defended the NHS's - and hence the Government's - position on television when ministers were nowhere to be seen. People questioned his role, speculating that the Government was perhaps getting too keen to politicise its civil servants. Nichol is clear, though. 'I didn't regard it as something I shouldn't be doing. It was major national issue of safety. I was head of the service. I needed to be seen and was seen.'

Others have suggested that it is this ability to take knocks without complaint that has made Nichol a valuable asset to the three secretaries of state he has worked under: Kenneth Clarke, William Waldegrave and Virginia Bottomley. 'It is not the worst job in Britain,' corrects one health service specialist, a friend of Nichol for 30 years. 'That would be working down the sewers or something like that - but it is probably the toughest in the country. Duncan, though, always had a blend of qualities peculiarly suited to it: intellect, stamina, a sense of strategy, an ability to get on with people. Oh, and you can add courage to the list, too.' Born in Yorkshire of Lancastrian parents, the son of a traction engineer who built trains for the Indian railways, Nichol was educated at Bradford Grammar and then St Andrew's, where he read modern languages. His decision to plump for hospital administration was guided more by luck than judgment. Firms like Ford had brought their graduate trainee circus through and left the young Nichol unimpressed. Then the careers' office showed him a letter from another graduate; he had stumbled into hospital administration and was really enjoying it. Nichol took a look at some of the hospitals nearby, and was hooked.

Like many on the health service career path he moved around early on, gaining experience - no one region is like any other in the problems that managers face. Starting in north east London in 1963, he worked his way through positions at St Thomas's and Manchester Royal Infirmary, before stints at Manchester South and Salford led to a regional administrator's post at Mersey RHA. By 1984 he was regional general manager of Mersey, and on course for the chief executive position of the NHS management executive five years later.

In that time the service has changed out of all recognition from the one Nichol joined as a fresh-faced graduate. He now heads a management executive team that reports direct to the Secretary of State. Below is a tier of regional health authorities,run by managers who report to Nichol, and chairmen who report to the Secretary of State. Strategy is laid down by a policy board which includes politicians, executives and doctors. They have settled on five key areas of action - coronaries, cancers, mental illness, HIV/Aids and accidents - within which targets are set. While these objectives are decided at top level, financial organisation and power is increasingly devolved down to individual 'trusts' and areas.

It is all sound textbook stuff, and much of it - specifically the spelling out of objectives - is seen as Nichol's initiative. Whether it can easily - or logically - be applied to a public service, especially one dealing with matters of life and death, is another matter. One upshot is that some doctors, the former elite of the system, have felt increasingly marginalised. Is this the administrators' revenge?

Nichol looks slightly exasperated. It is not a question of doctors losing clout, he says. Indeed it is not even an issue of who has lost and gained power. It is simply part of the crucial development of executives from admin-istrators to managers, as prefaced by the Griffiths Report 10 years ago. 'The Griffiths Report gave birth to general management, which meant that we did not operate on the basis of consensus management any more - doctors and nurses sitting as equal partners with the people making the decisions - but you had a sense that the buck stopped with the general manager. Performance, as well as performance-related pay, is now judged on that basis. The manager is not following that organisation but leading it, providing a vision of where it goes to, and taking professionals along. Perhaps some doctors regard that, in your terms, as a loss of status and power ...' They certainly do, but managers would argue that the increases in efficiency and effectiveness have made it worthwhile. If only they could prove it. One of the problems that has long dogged the health service, especially as it has turned more towards established management techniques, is just how to judge success. Where's the bottom line?

'You're right,' says Nichol. 'We are in some difficulty measuring our results. We judge it by intermediate measures. We have set out our stall in terms of promises to the public in the Patients' Charter: we intend to cut down waiting times, develop a more responsive service, treat people as customers, provide a more personal service, measure the public reaction to see how we are doing and measure the hard bits, the waiting times and so on. Then to publish those, show who is doing well and give an account to the public on service.

'On value for money we have said that we intend to get more out of each pound each year. We have an efficiency target of 2% per annum, and have been doing it for some time. No other country in the world has held its unit costs at fixed levels. We have held our labour at an increase of around 1% or so, against an average increase in Europe of labour in health of around 20%. We have also put managers on short-term contracts with performance-related pay. People do have contractual entitlements but those not meeting it do go. This is a much tougher system; we have made it very clear to managers that on one or two issues, like waiting time performance, they are at risk.' Yet the public perception remains that the NHS is not run as cost-efficiently as the average public or pri-vate company. The headlines don't help: Waste Attack on NHS Chief, NHS Chief Rebuked for Aids Cash Abuse, NHS Chief Quizzed on Wasted £10M ...

The health service is always news, of course. As Nichol says, it has to be managed in a goldfish bowl. Even so, the sort of stories that make the headlines - parliamentary criticism of NHS procurement policy, the shifting of Aids budgets into building programmes by two health authorities, and the squandering of £10 million in the West Midlands on a failed attempt to set up new computer systems - imply that the control systems imposed by the lean, mean NHS management executive are not exactly working smoothly. It is clear that Nichol has felt the criticism. He has no time for the simplistic suggestion that the health service should be turned over to private sector bosses - 'there's no room for a Hanson or a Goldsmith as it stands at the moment' - but it does look as if the changes are pulling in different directions. People want a chief executive to lead from the front, and occasionally carry the can, but they also want more autonomy passed down the system and tight government control of the purse-strings. Something has to give. As detailed health decisions are vested increasingly in trust boards, says Nichol, then it doesn't make sense to hold the NHS chief executive personally to account for the detailed operations of any unit.

'I am not saying that the affairs which have drawn criticism are below me, or not accountable to me, but if one is getting involved in detailed decisions about a service in one part of the country, or the price of something bought somewhere else, then I think we are beginning to waste time.' But where do you draw the line? Someone has to answer for where the money is going. The 'goldfish bowl' element of the job doesn't make it any easier. Stories about NHS profligacy and inefficiency are grist to the mill of Fleet Street, which is never slow to play up its favourite stereotypes.

'We run a business which has a vision, some strategic objectives, plans and priorities which feed into these and are discharged down an executive structure which is clear,' says Nichol. 'We may not have a profit motive but we are concerned with the productivity, quality and motivation of the people who work for us. So there are similarities between us and other businesses. The key difference is that whatever we do can be peered in on by a whole variety of observers.' Those who haven't experienced the combined charms of Press and Parliament might be sceptical about Nichol's assertion that it really makes that big a difference, but it's plain from his manner that he means it. 'I'm not talking about giving a general account to shareholders, but people commenting on a day-to-day basis on the way in which we run our business.' Then there are the various Parliamentary committees he has to appear before: select committees for health, public accounts committees, the parliamentary ombudsman. 'At the end of the day the Secretary of State and myself are responsible for everything that moves within the health service. That means I am subject to a significant number of parliamentary appearances.' Is that one of the reasons why he has already announced that he has had enough, and is moving on in March. 'No, it was always a three-year job with a possible two-year extension,' he explains with typical thoroughness. 'It never occured to me that I wouldn't extend my job, to lay firm foundations, nor did it occur to me that I would ever seek a further three-year term. I have other ambitions.' Those ambitions include developing a second career in higher education. Next year he takes up a newly-created chair in health studies at Manchester University, and some believe that he has his eyes set on a vice-chancellorship. For now, the new post will allow him to see more of his home in the Wirral (at present the average Nichol week consists of two days in Whitehall, two in Leeds where the management executive is based, and one on the hoof). His work at Manchester will also include some valuable consultancy for the business school. With every first-world country agonising over the future shape and size of its health service, his expertise will no doubt be in high demand.

Does he leave the health service in good shape? The jury is still out but Nichol has no doubt that the basic character of the service will remain the same into the next century. 'It will be publicly funded from a general taxation base because that is the efficient way to do it. But it will come under more significant pressures from an ageing population and the advances of high technology medicine - what it can do and what it can afford to do - and it's going to be extremely tough.

'Even so, the system we have put in place will be dealing in a more explicit and open way with setting the needs people have, and putting some priority on what should be provided - because not everything can. It will also secure a more responsive service, one that is tuned-in to the people who use it, and one that, because of the internal market, will be a lot more efficient than it is now.' Of course there is always the possibility that the Government will change, and a lot of what Nichol has done will be undone by those who believe passionately that he has helped to impose the wrong imperatives. His legacy then may not even be left for history to judge.

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