What lessons should we learn from this great Dome disaster?

'Cronyism has to go: It is the enemy of competence, and it sends the wrong signals right down the line'

It is almost too easy to attack the whole venture - to be snide, to jeer or, perhaps more properly, to be outraged at the waste of it all. But that is ultimately unhelpful. What we need to do is to turn a £800m white elephant into a £800m education programme for governments. Then the money won't, ultimately, have been wasted.

It is almost too easy to attack the whole venture - to be snide, to jeer or, perhaps more properly, to be outraged at the waste of it all. But that is ultimately unhelpful. What we need to do is to turn a £800m white elephant into a £800m education programme for governments. Then the money won't, ultimately, have been wasted.

Governments, plural? Yes. Labour is catching the blame for the scandal, as it should. It has been arrogant and incompetent. But do remember that the Dome was originally conceived under the Tories, and was eagerly pushed by Michael Heseltine. Labour's mistake was not to can it when it had the opportunity, reportedly because a newspaper columnist persuaded the Prime Minister that Euan would love it. But aside from the obvious conclusion that one should not take newspaper columnists, ahem, too seriously, what are the underlying long-term lessons?

I suggest that the Cabinet should commission a small group of its more thoughtful civil servants to do the job properly, with the remit to look forward at what can be learnt rather than backwards at what went wrong. As a first stab, here are a dozen suggestions of what might be learnt.

One: governments should avoid running large commercial projects. All such projects involve large risks and constant adjustments to market demand. It is very difficult for non-commercial entities to be flexible enough to adapt to either of these situations. It may seem obvious to say that, given the global retreat from nationalisation, but this seems to be a lesson that needs to be relearnt again and again.

Two: people have an abundance of choice. They can spend their money in a vast variety of ways. At the time of the Festival of Britain in 1951, they did not have many other places to go to. Now the Dome has to compete with a host of other attractions, from other theme parks, through video-game arcades, to the Tate Modern or a weekend on the Continent.

Three: as people become more accustomed to exercising choice in leisure, they will want choice in other areas where the public sector is a monopoly or dominant supplier: schools, health care, social security etc.

Four: if the Government is to cope with this increase in choice, it will have to become more competent in managing near-commercial activities. That means changing the way it makes appointments, and the way it manages its appointees.

Five: as a result, cronyism has to go. One of the surprising aspects of this government - given that it is run by fundamentally decent people - is the extent to which it relies on "friends of Tony". To say that is not particularly to get at poor Lord Falconer, who will now go through the rest of his life as the ex-flatmate of the Prime Minister who mucked up the Dome. That is deeply unfair to him, partly because the Dome was already mucked up before he arrived and partly because, as a barrister, there was nothing in his background that enabled him to turn it round. You would not appoint a business executive to defend a case in the High Court. It was unfair to appoint him: he merely did not have the judgement to decline the appointment.

But the general charge of cronyism does stand, and cronyism is the enemy of competence, for it sends the wrong signals right down the line.

That leads to point six: the need for competence. Politicians still seem to feel that they should deliver ideology and passion - they say they will "fight" for this and that - when what people will increasingly want is simply competent governance. That does not mean that politicians should behave like business people. Rather, it means both that they should be more orderly in the way they make appointments and more orderly in the way performance is monitored. I suspect that whatever politicians do, the boundary between the public and private sectors will shift further towards the latter over the next 30 years.

Point seven is that competence even in one field of commerce is not the same as competence in another. For really difficult jobs, there may be only half a dozen people in the world who fill the bill. British Airways scoured the globe for someone to pick up the pieces after Bob Ayling, and found the right person in Australia.

But getting top talent to work in the public sector requires changes in the way government operates. Point eight is that such change is essential. I bumped into an economist friend this week who works in both the private and public sectors. The conversation turned to the contrast.

"The trouble with government work," he said, "is that you are messed about for months and then it takes ages to get paid."

Among many other people, no doubt, I turned down an invitation to advise on the Dome (they wanted advice on the money zone) precisely because I felt I would be mucked about and then not be paid. Anecdotally, this seems to be the experience of most of the people involved in the project. But the problem is more general. I don't think anyone in government realises the bad reputation of the public sector as people to do business with.

Lesson nine is that governments should understand what economists call "opportunity cost" - what else you might do with resources if you did not use them in a particular way. If the Dome had not been built, the arts across the land would have had an enormous injection of funds. Hundreds of worthwhile projects would have happened. This principle applies to all spending, yet in their speeches, politicians never admit to this. They say "we will spend money on so and so", without also saying "and that means we will have to spend less on this, that and the other", or "and this means you will have less to spend in the shops or on your holidays".

It would be dispiriting to end on a negative note. So lesson 10 is that there are things that only the public sector can do. I suspect that using the badly contaminated site of the old Gas Board is one. The public sector damaged the land so it ought to reclaim it, but it has done so and only it was prepared to pay for that. When the Dome is eventually dismantled, that bight of the Thames will eventually have a sound commercial future. Something good will emerge from the mess.

Expensive lessons, sure - but less expensive if they are fully learnt.