Civil Service Reform (5)
This is the fifth in a series of notes which provide more detail about, and comment on, the many attempts – some successful, most not – to ‘reform’ the UK Civil Service. It focuses on the so-called change programme introduced by the Conservative/Lib Deb Coalition Government shortly after they were elected in 2010.
The Coalition's Early Changes
Following the 6 May 2010 General Election, it was pretty clear that the scale of the economic crisis facing the incoming coalition would mean (a) that they would have little time or energy for civil service reform, and (b) that it was not a sensible time to make significant changes to the way central government is managed and organised. There were therefore no immediate changes - not even 'machinery of government' changes to the boundaries between departments' responsibilities. But the coalition's programme, published on 20 May 2010, did promise to "improve the civil service, and make it easier to reward the best civil servants and remove the least effective".
And there was little if any promise of reform when Prime Minister David Cameron addressed the civil service via a speech at the Civil Service Live event on 8 July 2010. The speech started with apparently genuine praise for the support that the civil service had given the coalition government in tis first few hectic weeks. The speech then developed into what was essentially a 'selling job' to encourage the civil service to throw its weight behind 'turn[ing] government on its head, taking power away form Whitehall and putting it in the hands of people and communities'. The speech included an interesting supporting argument that the increasing speed of transport and communications had, in the 1800s and 1900s, allowed the bureaucratic centralisation of knowledge and power in Whitehall. But, with the help of recent revolutions in communications and technology, the PM believed that we could now move into the (decentralised) post-bureaucratic age.
But the coalition's first significant announcement concerning the government machine was a rather weak echo of previous cost-saving drives (Rayner Scrutinies, Gershon's reports etc.) when it was reported in August 2010 that entrepreneurial retailer Sir Philip Green had agreed to examine government expenditure from the past three years to try to identify potential savings. In the event, Sir Philip sensibly concentrated on procurement practices, and concluded in October 2010 that the Government was failing to leverage both its credit rating and its scale. In particular:
- Basic commodities are bought at significantly different prices across Government departments.
- Multiple contracts have been signed with some major suppliers by different departments at different prices.
- The Government is the largest tenant/owner in the country, yet the use and management of space is wholly inefficient.
- Expensive IT services are contracted for too long with no flexibility.
Sir Philip had of course done the easy bit. The hard bit was to persuade Ministers, stakeholders and senior officials that the savings can and should be made. That process would require considerable determination and time, including substantial management time at a time when Ministers and officials had other priorities. In particular, Sir Philip wanted procurement to be centralised - a direct reversal of the policy of the previous (Thatcher) Conservative government which abolished centralised procurement agencies such as the Property Services Agency, HM Stationery Office (HMSO), and the Central Computer and Telecommunications Agency. Departments have therefore got used to managing their own procurement - even if they have not done it very well. So individual Ministers and Permanent Secretaries would not want others to make key decisions about mission-critical resources such as offices and IT. It would be a bit like expecting Philip Green's companies to recognise that they could get better deals if they were to procure premises, IT and stationery in partnership with M&S and Primark.
The December 2010 appointment of Bernard Gray as Head of Ministry of Defence's (MoD's) 20,000 strong procurement organisation represented a more serious attempt to shake up government procurement practices. A previous defence correspondent for the Financial Times, Special Adviser to Labour MoD Ministers, author of a highly critical report on defence procurement, and businessman, he was in an excellent position to understand the problems and do something about them. His appointment came hard on the heels of much criticism of the recently retired MoD Permanent Secretary who was said to have authorised the purchase of two aircraft carriers without being entirely sure that MoD had the money to pay for them. And it was reported that the higher reaches of the MoD were horrified by Mr Gray's appointment, whereas some civil servants were reportedly delighted that he appeared likely to take on the vested interests and inefficiencies within the MoD system.
But three letters in The Times of 16 December 2010 summarised the issues facing Mr Gray. One noted that '... the MoD has to meet many conflicting criteria. [Apart from having to buy complex, high quality and appropriate defence equipment, the MoD has to] shore up British industry, ...work with European governments to counterbalance too great a dependence on the United States, ... "rationalise" the British defence industry, and ... ensure employment in constituencies where ministers have a special interest.' The second letter drew attention to the problems caused by the fact that defence ministers usually have no military experience, the three armed services compete for power and resources, and so on: 'In summary, we have a high profile department engaged in a complex task, with no guiding mind or constancy of purpose, a constantly rotating management cadre, a restricted supply base and swingeing manpower cuts in prospect'. The third letter confirmed suggestions that it was commonplace for major defence contractors to submit unrealistically low tender costs (and for Ministers and officials to assume that they did so) because major procurement would otherwise not take place. One could only hope that Mr Gray had more success than his predecessors in tackling these external and internal political problems.
Enhanced Departmental Boards
Another potentially far-reaching development was the December 2010 announcement of Enhanced Departmental Boards. (See note 3 in this series for a more detailed discussion of Departmental Boards.) Such Boards were intended by Ministers to be influential, although at least one academic wondered whether their creation had been encouraged by the Head of the Civil Service who may have seen them as a way of protecting civil servants against excessive ministerial intervention. There was certainly no suggestion that the enhanced Boards would become part of the constitutional reporting chain: civil servants remain accountable to Ministers who are accountable to Parliamentarians who are accountable to the electorate. Indeed, the announcement made it clear that "Policy will be decided by Ministers alone, with advice from officials. Boards will give advice and support on the operational implications and effectiveness of policy proposals, focusing on getting policy translated into results."
But eyebrows were raised by the statement that "As a last resort, if Non-Executive Board Members judge that the Permanent Secretary is an obstacle to effective delivery, they will be able to recommend to the Prime Minister, Secretary of State and Cabinet Secretary that the Permanent Secretary should be removed from his or her post."
The Coalition's Change Programme
- and job cuts
The UK's perilous public finances inevitably led to the Government announcment that there would be very sharp and fairly rapid reductions in government spending, in turn inevitably involving large reductions in civil service numbers. Total job losses were estimated at around 100,000 by 2015, out of a total of a little over 500,000 (not all of them full-time) as at late 2010 (see the Civil Service Numbers webpage to find out what actually happened.). Inevitably, too, the whole thing was described as a major change programme, a description which subsequently came under intense fire as the announcement was not accompanied by any written plan, nor preceded by any meaningful consultation. Lord (Andrew) Adonis published an interesting commentary in the FT in October 2010. Here are some extracts:
It is hard to exaggerate the pace and scale of change about to sweep through Whitehall, as part of wider public spending cuts unveiled in the comprehensive spending review. The critical question is whether this transformation is simply to be slash-and-burn, or whether the coalition has the ability to use the cuts to drive fundamental improvement - in particular to decentralise and modernise the civil service, ministerial and parliamentary machines.
There are few precedents, in Britain or abroad, for orderly downsizing on this scale and timetable. The Swedish and Canadian deficit reduction programmes of the 1990s did not lead to savings on remotely the same scale. Sweden deliberately avoided radical changes to the government machine, lest this undermine the implementation of programme cuts. In Canada much of the headline staff reduction came from transfers through privatisation and decentralisation. A repeat of the 1980s collapse in civil service prestige and attractiveness as an employer is also a real threat, so a focus on retaining and recruiting top talent is vital. A credible vision of a smaller but more effective Whitehall, as a place to build a career, is needed. New catchphrases are bandied about, from a ‘horizon shift’ (thinking long-term rather than short-term) to ‘open-source policy-making’ (engaging with outsiders in new and more productive ways), but few expound these with conviction, or even know what they mean and how they could improve government.
As the [Comprehensive Spending Review] unveils significant cuts in areas such as welfare and local government, the coalition’s Big Society agenda envisages charities, communities and individuals doing more. Yet this does not easily translate into fewer tasks for central government. Devolving power and budgets to academy schools and GP practices requires intensive Whitehall support, essentially replacing one local delivery system with another. In welfare, it will be a huge job for civil servants to carry through reforms to benefits and allowances. Early administrative savings are speculative at best.
It is also important that the cuts agenda does not deflect from wider reforms. First, the civil service and ministerial merry-go-round needs to be ended, with project management skills improved. In 2009, I became the fifth transport secretary in barely three years. In my previous three-and-a-half years as schools minister, I served under three secretaries of state in a department renamed and reorganised twice. This is no way to run the country. It is a similar story with the civil service, which is often far from permanent or expert, despite its image. As schools minister, driving forward the multibillion pound academy schools policy to replace failing schools, the biggest single obstacle I faced was the weakness of the Whitehall machine. In eight years I saw six directors of the academies programme come and go, for reasons entirely divorced from the requirements of the programme. All were capable, but policymaking and project management skills were often lacking.
The downsizing unveiled this week represents one of the biggest challenges faced by British government since the second world war. Without fundamental changes on these lines, it will simply be about cuts not improvement.
Some months later, on being questioned by the Public Administration Select Committee (PASC) in March 2011, Cabinet Minister Francis Maude and his supporting officials said that they were seeking "intense change" and a "dramatic change in culture". "The civil service will inevitably become much smaller, flatter and less hierarchical, as it should do." They said they would like to see senior civil servants managed in a more centralised way, and were looking at ways of making the fast stream (recent high-flier recruits) more interchangeable between departments.
But the PASC hearing included a lively debate about whether the 'change programme' would be successful without some sort of plan. Francis Maude and his officials, including Gus O'Donnell, Head of the Civil Service, said that there was "no blueprint" and proposed to implement the changes "for the first time without a White Paper", although there would shortly be a White Paper on Public Sector Reform. "A lot of this is just common sense - not revolution". They wanted to "reduce the audit culture which stops good as well as bad things". And the budget cuts would invigorate the service by encouraging innovation. As an example, the freeze on marketing spend had led officials to devise innovative ways of reaching their customers.
PASC Chair, Bernard Jenkin, and other committee members were openly sceptical. Surely every successful change programme needed to be planned? "Having a plan is an act of leadership." In response, senior official Ian Watmore declared that he was a change expert, recruited from the private sector, and saw no need for a plan. An example of a good but unplanned change would be that civil servants would now be encouraged to work in temporary project teams, rather than in fixed hierarchies. Gus O'Donnell added that "change will only be successful if it is being done by them, not to them".
It was hard to know whether to be impressed or depressed by officials' performance at the PASC. At one level, they were only doing what they had been trained to do, which was support their plan-averse Minister. They were certainly aware that, in contrast to what they told the committee, the changes were being done to them not by them, and that the need for speed meant that departments did not have time properly to reconfigure their structures or re-prioritise their activities. Instead, there was much senior official parroting, throughout Whitehall, of the line that 'we will still be able to carry out all our previous duties: we'll just work more leanly and efficiently'. They were aware, too, that those leaving the civil service would be those who could be offered a generous package (i.e. the more experienced officials) or those most capable of finding a job in the private sector (i.e. the younger and/or more entrepreneurial officials). There would be lots of exceptions, of course, but it was unlikely that the end result would be a better qualified and more effective official machine.
Most striking of all, it was highly unlikely that Ian Watmore's previous employers, Accenture*, would have endorsed his advice that you don't need a plan to carry through a successful 'intense' and 'dramatic' change programme. Indeed, I don't suppose that Ian Watmore believed it either. (There can't have been many civil service appointment/promotion panels that have not asked their nervous candidates about change programmes, and instantly eliminated anyone who said that they would recommend proceeding without a plan. One wonder what Mr Watmore said when he was appointed!)
*Accenture's website was then highlighting the following advice about 'The Change-Capable Organization' (emphasis added): Companies can no longer afford to think about organizational change as something separate from everything else they do. They now have to be 'change capable' all the time. This doesn't mean developing some Zen-like culture or leadership capability of always being present in the moment. All the rigor, methods and metrics we've come to expect from the field of change management are still necessary. What it does mean, however, is that those approaches must now be integrated into the everyday operations of the enterprise. What companies have to avoid is the situation where they put in place a major new strategy or market initiative, and only later think about the workforce, leadership and culture programs needed to help everyone perform in new ways and to support the change.
On the other hand, however, what else could they, or Francis Maude, say to the committee? Money had to be saved very fast, and there was perhaps no time for proper planning and consultation. Alligators and swamps come to mind. But, if that is what they believed, it is a pity that they didn't feel able to say so - and perhaps this was yet further evidence of the need for there to be a serious look at the relationship between Parliament, Ministers and the civil service. No-one, surely, could have been happy with the quality of the PASC discussion.
Enemies of Enterprise?
Civil servants' moods were not improved when, a few days later, the Prime Minister announced that there were three "enemies of enterprise" including "the bureaucrats in government departments who concoct those ridiculous rules and regulations that make life impossible, particularly for small firms." Yet again, there was no recognition that – although over-regulation is certainly a big problem (see http://www.regulation.org.uk) - all regulations are signed off by Ministers and go through a Parliamentary process.
The next, the sixth note in this series focusses on subsequent calls for fundamental civil service reform.