While the incentive mismatch remains a lethal issue today, an added tragedy is that the quality of the civil service has also deteriorated, as testified by the fact that so much government legislation is riddled with errors, internal inconsistencies and other problems. The bureaucracy has lost much of its competence. The "Rolls-Royce" (yet deeply flawed) civil service of yore no longer exists. The situation is even worse in quangos; the biggest problem is a lack of managerial ability among senior people. Few of those in positions of power have real, private sector operational knowledge.Having worked in it back the the good ol' days, I have to giggle at the idea that the civil service was ever a "Rolls-Royce". As to it not being corrupt, that's up there with the NHS being "the envy of the world" and Britain "punching above her weight" in international affairs among the blinding conceits that make it almost impossible to change even the most evidently dysfunctional British institutions.
Many intelligent, altruistic and principled people work for the state. But the average competence of civil servants is in decline. Our antiquated and over-centralised system of administration remains outstanding only in one respect: it is not corrupt. But other than that, it now resembles a cross between Yes, Minister and The Thick of It, a modern-day, coarser and horribly plausible satire developed by Armando Iannucci, where the political-spin-doctor-civil service establishment is hilariously depicted as idiotic, gutless, incompetent and power-hungry.
The civil service is institutionally corrupt - and it cannot be otherwise. It is exasperating how culpably ignorant the British commentariat is about Public Choice theory and the concept of Rent Seeking, in particular as it applies to government bureaucracies. It's really quite easy: all you have to do is to look at government from the perspective of individual bureaucrats and politicians, and assume that each acts in a self-interested way.
Somehow our benighted society has bought into the idea that simply by becoming a civil servant, all the greed and selfishness that supposedly characterizes human behaviour in every other walk of life is washed away as by the blood of the lamb. The Orwellian mantra "public good, private bad" seems to be accepted without question, when even a moment's thought should reveal that private corporations cannot force you to buy their products, whereas "public" corporations like the BBC, the NHS and all the other monopolistic services provided by the state not only can but will also persecute you if you seek alternatives.
If monopoly is a "bad thing" in the private sector, how can it be a "good thing" in the state sector? Even worse than that brain-washed conceptual blindness is the utter stupidity of refusing to see that government regulations supposedly designed to protect employees in fact favour large, established corporations by suffocating competition and by raising the cost of entry.
Why do you suppose retired politicians and senior civil servants walk into well paid jobs with the corporations they supposedly regulated for the public good while in office? Because of their ability? Don't make me laugh.