Better (Local) Government

Posted on: July 1st, 2017

Our latest report argues that we need a radical reconsideration of the future of local government.

It is becoming increasingly difficult to see any coherent vision from central, or for that matter local, government about the place of local authorities in delivering key public services: how they should be funded and how those responsibilities should be organised. The Better Government initiative has argued in the past for a compact between central and local government to codify and reinforce the relationships between the two, overseen by a Parliamentary Committee or, as some are now arguing, an independent body on the lines of the Office for Budget Responsibility.

Much has changed in the relationship between the centre and local authorities. Many of the changes have added layers of complexity which limit the number of people who feel able to engage in the debate.

It is time there was some discussion of what we want from local government in the future instead of the incremental isolated changes we have been experiencing. The delay in the Local Government Finance Bill, lost in the snap General Election, gives an opportunity to seek a new settlement for local government which looks afresh at the level of local service provision and how it should be funded and organised as a comprehensible and stable system for the future.

Capacity crisis in the Civil Service

Posted on: May 11th, 2017

In written evidence to the Public Accounts Committee’s Inquiry on the capacity of the civil service submitted in April we expressed grave concern that a much reduced civil service, faced with the additional demands of Brexit, will be asked to do a job that it is simply not resourced to deliver. Commitments in the election manifestos will further increase the pressure.

There is a real danger that civil servants will have to cut corners, with the institution as a whole suffering a serious loss of motivation and morale as it is castigated for the failures in policy and delivery that will inevitably follow.

We suggested a number of steps that could help to limit the damage:

• A “clearing the decks” initiative with all departments putting forward proposals for cutting, scaling back or delaying initiatives already in the pipeline.
• Consistent application of best practice rules and guidance to the remaining business with enhanced scrutiny to ensure that this is being done.
• Strenuous efforts by Departmental Boards and Non Executive Directors to avoid overstretch through the accumulation of new demands.
• Greater transparency through self-assessment of departmental capability reported to the Cabinet Office and high-level peer reviews by departments of each other’s capacity.
• A refocusing of the PAC’s work to concentrate more on the ability of departments to deliver the totality of the demands placed upon them.

The full submission can be seen on the PAC’s website at: http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-accounts-committee/civil-service-capability-and-the-revolving-door/written/52355.html.

All Select Committees have now ceased to exist until after the General Election but our evidence remains on the table and we have every expectation that consideration of this key topic will resume in the first Session of the new Parliament.

Lessons from Chilcot

Posted on: September 14th, 2016

Our paper on the Chilcot Report (http://www.bettergovernmentinitiative.co.uk/wp-content/uploads/2016/09/Chilcot-lessons.pdf) considers the lessons to be learned from the catalogue of errors it describes that arose from decisions taken without careful examination of the evidence and broadly-based collective consideration.

Chilcot clearly implies that senior officials have a responsibility to ensure that the decision-making process is handled properly and that they should be accountable for failure to do so. We agree. But under the present system they have no authority to go beyond simply implementing Ministers’ instructions on the handling of business.

There is a strong case for something like to the present arrangement for public expenditure, whereby an official who was told not to follow the processes for the conduct of business set out in the Cabinet Manual and supporting documents could seek a written direction which would be disclosed to the Public Accounts Select Committee and the Public Administration and Constitutional Affairs Select Committee.

Whose sovereignty?

Posted on: July 22nd, 2016

There was a lot of talk in the referendum campaign from the Brexit side about taking back control and re-establishing sovereignty to the UK. But there is a real danger that after Brexit, Parliament could become little more than a rubber stamp for a vast array of secondary legislation initiated by the Government to replace EU law with UK law.

In the campaign nothing was said about whether it was the sovereignty of the Government or of Parliament that was to be reclaimed. The debate on this is just starting: the question of whether the Government can initiate the Article 50 process to start the withdrawal clock without the approval of Parliament is the first to emerge. This article does not address that question instead it asks how the shifting balance of power between Parliament and the Executive may affect the way in which the detailed legislative changes are carried through.

This latter issue was addressed in a lecture by the Lord Chief Justice of England, Lord Judge, in April. In his lecture “Ceding Power to the Executive: Resurrecting Henry VIII”[1] he drew attention to the growing use of what are -erroneously- known as Henry VIII clauses in government legislation. The term refers to powers that give ministers the ability to change the law by delegated legislation, also known as statutory instruments (SI’s). Delegated legislation is certainly not novel, nor is it uncommon. Lord Judge quotes 170,000 such instruments being presented since 1950 Including 23,000 since 1997 and the rate is still growing. These instruments are subject to various forms of Parliamentary control. They may need specific endorsement – affirmative resolutions- or may be voted against – negative resolutions depending what is provided for in the authorising legislation. Some require no approval at all.

The majority of those instruments will have been confined to their traditional and uncontroversial purpose of elaborating the detail of legislation or amending variable factors such as interest rates, uprating charges or levels of penalties. Others, however, will have been concerned with transcribing EU directives, which have more significant policy implications. Despite assurances given when The European Communities Act was debated in Parliament in 1972, much European legislation is given effect to in the UK by statutory instruments under that act rather than by primary legislation. The principal difference between the two approaches is of course that while a Bill can be amended by parliament an SI cannot. In general Parliament can accept it or reject it but cannot directly change it. Rejection is a blunt instrument and has rarely been used: seventeen times since 1950 or 0.01% of all SI’s presented. The House of Commons has not rejected an SI since 1979.

It maybe argued that implementing EU directives in this way is merely efficient since there is no option but to adopt them. This is a fallacy: most EU directives allow for implementation to be adapted to suit national needs and indeed it is one of the most common criticisms that the UK’s approach goes further than necessary and that our implementation is “gold plated”.  The SI approach makes it difficult to examine these concerns.

Lord Judge’s concern, however, goes much further.  He points to legislation in the last ten years [2] which gives the Executive the ability to change and repeal both existing and future primary legislation, even constitutional legislation. He points out these were powers that the Parliament of 1539 denied to Henry VIII.

We do not know whether Lord Judge, speaking before the EU referendum, had any particular insight into the outcome, but his concerns could not be more relevant as we confront the daunting task of extricating the UK from the Union we have been a member of for 43 years. How are we going to deal with the mass of legislative change that potentially could be needed? Clearly all of the EU inspired law cannot be simply swept away, that would leave gaping holes in so many parts of our legal system. A more rational approach would be to legislate to keep everything unchanged at the point of exit – a giant saving provision- and to amend specific laws and regulations in the normal way following a proper policy making process. That may turn out to be too glacially slow for the political process to tolerate.  A more likely approach would be for a general saving provision for most things but a raft of changes in those areas judged to be most politically sensitive, like labour mobility.

The risk is that the Government will seek to mirror the European Communities Act 1972 in providing broad order making powers to repeal or amend “European” provisions, even though the activity is not analogous. How an existing provision is replaced or amended is quite different from transcribing provisions developed elsewhere.

The BGI has long argued for “good government”: policy and legislation developed with clear objectives, supported by evidence and analysis of its impacts and after consultation with those directly affected. Seeking to replace a significant body of law in a hurry carries risks that the replacements will be poorly thought through and with unforeseen side effects. While it is unlikely that Parliament could manage the necessary changes by primary legislation alone, the risks are intensified if the processes used rely on Statutory Instruments which Parliament cannot amend.

As Lord Judge has pointed out, the situation with delegated legislation was already tipping the balance of power from Parliament to the Executive.  Surely it is time for Parliament to reassert its sovereignty and insist that new processes are developed for handling EU exit at least. Parliamentary Committees, either the existing specialist departmental select committees or special “Brexit committees”, could be tasked with taking evidence from both ministers and those affected by proposed changes and empowered to propose specific amendments for ministers to consider or, if necessary, take to a vote on the floor of the House.

This goes further than the existing “super affirmative” order provisions by shifting the decision over whether to propose an amendment to a draft order, from the minister to parliament. But if we don’t want Henry VIII again that is no bad thing.

[1] https://www.kcl.ac.uk/law/newsevents/newsrecords/2015-16/Ceding-Power-to-the-Executive—Lord-Judge—130416.pdf

[2] Constitutional Reform and Governance Act 2010 and The Childcare Act 2016

One Man Two Governors: Accountability in the Modern Era

Posted on: March 1st, 2016

One of the checks and balances built into the UK’s unwritten and highly flexible constitution has been the direct accountability of permanent secretaries to Parliament for the value for money of public spending programmes as well as their regularity and propriety.

This device deliberately set up a tension in which a permanent secretary has two masters: his or her minister and, as Accounting Officer (AO), Parliament. Permanent secretaries have over many years had to steer between risking the displeasure of the Public Accounts Committee (PAC) and appearing obstructive to their minister. In the words of Sir Humphrey Appleby, when asked whose side a civil servant was on “when the chips were down”, their job was “to make sure the chips stayed up”.

This personal accountability requires a permanent secretary to advise against policy proposals which are too expensive, impractical, poor value or even improper. Permanent secretaries also have the duty of requesting a written direction from a minister who insists on an action that has one or more of these fundamental defects. The existence of this duty has in the experience of BGI members provided leverage with ministers to find a solution that avoided the problem, so the value of the accountability mechanism is not simply to be measured by the number of directions issued.

This dual accountability is meant to be potentially uncomfortable for officials in their relations with ministers, who do not always welcome being advised what they cannot do, whether by an AO or the courts. It depends on mutual trust and personal relationships that can weather disagreement. Willingness to speak “truth unto power” may also be affected by fear of the material consequences. In a world where AOs had security of tenure and were perhaps in their last job, taking a stand against a determined minister would have limited career consequences.

However, an important new report by Sir Amyas Morse and the National Audit Office has said that this system is breaking down. The report identifies the main cause of the change as: “The incentives on AOs to prioritise value for money are weak compared with those associated with the day-to-day job of satisfying ministers.“ The report goes on to suggest that AOs lack the confidence to challenge ministers “not least because it is seen as damaging to their career prospects”. It identifies a number of factors affecting the role of AOs: the greater involvement of ministers in executive decisions implementation leading to AOs being held responsible for things they have no direct control over, the greater involvement of ministers in the selection of civil servants, and the influence of special advisers.

The BGI has pointed to some of these concerns in its earlier paper Civil Service Reform – Hidden Dangers. The NAO could have added to their list of unhelpful developments, the greater ability of ministers to have senior officials removed or redeployed (potentially more influential than their role in appointments) and the reluctance of the PAC to investigate when directions are given to AOs who are concerned about value for money or other concerns. The PAC’s own contribution in pressing for, and achieving, direct accountability to parliament of Senior Responsible Officers (SROs) for major projects has also diluted the personal accountability of permanent secretaries for every activity within their departments.

Having helpfully pointed to the factors putting the system at risk, the NAO report perhaps pulls its punches when it comes to remedies, steering clear of contentious territory with ministers. Instead it merely recommends changes in the way objectives are set for permanent secretaries, which might be thought necessary but not sufficient.

The AO role is almost 150 years old and it is unsurprising that it has changed and developed. However, the need for assurance that public spending represents value for money; that public funds are not being spent for personal or political advantage; and that programmes are feasible has, if anything, got stronger. The solution does not lie in nostalgia. Accountability arrangements have to recognise the increased involvement of ministers in implementation, the growth in cross-departmental working and the devolution of delivery to often ad hoc collections of local authorities and other bodies, for example.

In raising this issue the NAO clearly wants to start a debate about accountability. The BGI welcomes that and will want to develop its views as the debate unfolds. The NAO proposes increased transparency. They would like to see much more use made of formal written directions where AOs are concerned about value for money and they would like these made public. That would be an important change, which would move directions from being a deterrent to a normal part of an accountability system. Without that change in perception, requests for directions could continue to appear either hostile or obstructive and raise fears in the minds of AOs about career consequences. Of course, if there continued to be little or no scrutiny by Parliament of any directions, this would weaken the value of any change.

Greater transparency in project design and implementation would also help accountability. The NAO is right to identify as a weakness of current arrangements that they often leave AOs formally accountable for things they are unable to control. Where ministers are actively involved in the detail of policy implementation, the decisions they make on “policy” grounds, especially in mid-implementation, can have profound effects on costs and timescales. In our earlier report, the BGI suggested that the wider application of standard project management techniques, both to large scale projects and policy development, with formal sign off by ministers on project design, combined with rigorous change control mechanisms, could lead to better informed decision making and clearer accountability.

It is, of course, the case that government has for many years not resembled the Victorian model with a permanent secretary sitting atop a – small – silo like department, responsible and accountable for all that is done in its name. Departments are very much larger, so is their scope of business. Delivery, including the design of delivery, is increasingly provided by diverse providers including agencies, quangos, academy schools, and private businesses, charities, local authorities and consortia which may include any or all of those. Surely the most constructive contribution an AO can make to parliamentary scrutiny today is to ensure that a comprehensive accountability framework exists in his or her areas of accountability; that those who are accountable have a proper understanding of their role in ensuring value for money and are held to account for it, both by the Principal Accounting Officer and by Parliament.

Designing and then implementing such frameworks is hard to do. It is also a distraction from the pressing task of keeping the minister happy. Perhaps that is why the NAO reports that only 7 of the main 17 departments has an accountability system statement and only one of those shows any evidence of being used in practice rather than as a box ticking exercise.

The changes to public services introduced in the last 10 years and continuing have been far reaching. They have introduced new players in both the public and private sectors and in the process have disrupted, sometimes deliberately and sometimes incidentally, established working cultures and expectations. Since many of the changes have been introduced nominally to improve value for money, it is disappointing that they seem not to have been accompanied by efforts to measure their impact on that or to ensure clarity about accountability for outcomes.

The Dark Side of the Deficit

Posted on: January 29th, 2016

What is forecast to cost £386bn this financial year: up by a sixth or £50bn compared to 2012-13? The answer is the cost of tax expenditures and structural reliefs from the main money spinning taxes 1.

Given the focus on deficit reduction and the fact that the deficit is broadly the gap between what the government spends and what it collects, it is surprising how little public attention is paid to the income side of the debate beyond the politically “safe” contest of the parties to outbid each other on reducing tax evasion. Forgoing income does not carry the same stigma as spending it.

Of course some of these costs are structural, the largest one being the income tax threshold, and reflect the way the tax is designed to work. Other expenditures and reliefs are long established and politically risky to address. The VAT exemption for food, created with the introduction of tax in the very different social conditions of the 1970’s, is a good example, yet the costs of that relief this year are projected at £17.4bn, an increase of £1.6bn in just 3 years. The default position in thinking about this is that it is “wrong” to tax the essentials of life. But at a time when obesity, driven in part by over consumption of the wrong types of food, is recognised as a major social problem and one third of food purchased is thrown away uneaten, is it impossible to have a debate about the blanket exemption of food from VAT? A more limited exemption could both nudge people towards healthier food choices and create funds to support comprehensive arrangements to provide food to those who genuinely cannot afford to eat properly.

Or take another example: capital allowances to encourage investment by business. These are projected at £22bn this year, up by £3bn in 3years. Here the question is more – are these allowances working and do they represent value for money? The general consensus is that UK business is underinvesting and much of the investment that is happening is not supporting the type of investment the government says is needed for the UK’s future prosperity. That is perhaps why the basic allowance scheme is supported by a plethora of smaller schemes for particular sectors and business type.

This multiplication of reliefs is itself a problem. An NAO report in November 2014 identified a total of 398 tax reliefs. Half of those seemed to have the objective of supporting some economic or social purpose and more than half of those had no cost data estimated or published. As the NAO points out, this introduces immense complexity to the tax system and is itself a source of tax avoidance and evasion. Critically this lack of transparency does not enable or encourage analysis of the effectiveness of the reliefs. There is now a mechanism, through the Office of Tax Simplification, to address the issue of complexity but what about value for money in existing and proposed future reliefs?

Tax reliefs are, of course a valid means to deliver policy outcomes, but in line with the BGI’s view on all policy and legislative developments, they should be subject to the same disciplines. There should be a clear objective and identification of alternative ways to address them including where appropriate the relative merits of a spending programme rather than a tax relief. There should be consultation with those who will be affected, and those that have to implement it; and a proper impact assessment of the benefits and costs. Tax reliefs should not be chosen because “they are not public spending“ since their financial effects are the same. These views are not dissimilar to those of the NAO whose report, dealing only with the administration of tax reliefs, said:

“We believe that effective administration of reliefs would require HMRC to:

  • collect, analyse and report information about their costs and benefits;
  • where relevant, review the extent to which they are achieving their objectives;
  • identify and intervene to tackle risks to the exchequer, including evidence of abuse;
  • have sufficient governance in place to manage its overall administration of tax reliefs, share knowledge and good practice, and achieve proportionality;
  • be accountable as the custodian of the tax system for providing evidence to policy-makers and Parliament where tax reliefs are not working as intended. “

No doubt they would take a similar view on the discipline to be applied to the creation of new taxes and reliefs.

The Autumn Statement in November 2015 did include a number of proposed changes to tax reliefs along with costings checked by the Office of Budget Responsibility. These were, with a few exceptions, minor maintenance changes and did not suggest any concerted effort to review reliefs equivalent to the effort or political will applied to finding expenditure reductions.

In part this relatively low priority for looking at the income side of the deficit divide reflects a political and philosophical bias in favour of low spending and low taxes, although the autumn statement did include tax increases through a new apprenticeship levy and by lifting the cap on local council tax to fund social care and the police.

There is, however, a structural reason why tax is treated asymmetrically when considering the deficit. A department wishing to spend money needs to have the agreement of the Treasury and will be expected to answer essentially two key questions: does this represent good value for money and does it represent better value for money than spending the same sum somewhere else? In the current climate the Treasury approach may be a bit more broad brush, but those questions will essentially underlie the discussions about how much of a Department’s expenditure ambition is affordable.

When it comes to tax, however, the Treasury is judge and jury in its own cause. It reserves matters of taxation to itself, feels no obligation to consult and never has to face cabinet colleagues in Committee or the Star Chamber. In a compelling article for the Institute for Government, Jill Rutter 2, herself an old Treasury hand, called for an end to the special treatment of the Treasury in relation to tax. She identified six ways in which the Treasury avoids the scrutiny imposed on others. These include the lack of cabinet committee discussion of tax proposals, the lack of a cash limit, no scrutiny by the Regulatory Policy Committee and a reluctance to be held accountable. The Treasury is currently in dispute with the NAO about whether tax reliefs come within their remit at all since they are all sacrosanct as expressions of policy.

There are many elements that contribute to better government, but at the heart of the process must be the establishment of clear objectives and the marshaling of available resources to achieve those in the most effective way. If our systems push us to look for one club solutions and do not allow for an open debate about whether a problem is best addressed by a tax relief or a targeted expenditure programme we are making life harder than it needs to be and that is already hard enough.

Notes:

  1. See HM Main Tax Expenditures and Reliefs December 2015
  2. See also her piece for the Social Market Foundation

Provision Of Services By The Third Sector: A Discussion Note By The Better Government Initiative

Posted on: January 19th, 2016

This note discusses the case for greater use of the third sector to provide public services. More work needs to be done on the value-for-money provided by charities when performing public sector contracts but the Better Government Initiative thinks it likely that expanding the sector’s role would bring advantages in terms both of better outcomes and lower costs. Government would, however, need to change its policies in order to create the conditions in which the sector could increase its contribution. There are also issues for the sector itself to address.

1. The Spending Review decisions announced by the Chancellor of the Exchequer on 25 November 2015 will require both central and local government to think imaginatively about how to maintain the quality of public services provided by those programmes for which resource allocations have been cut and those which, even if resources are to be held stable or increased, may not be able to cope with rising demand eg adult social care. The Better Government Initiative believes that as part of its strategy for maintaining the quality of essential public services while reducing the deficit the Government should consider the case for making make more use of the third sector. This note considers the possible advantages of increasing the involvement of charities and not-for-profit bodies in the provision of public services and some of the problems which would need to be overcome.

2. The third sector has in some respects had a poor press in the last year or two because of criticism of some of its fundraising methods and of the remuneration enjoyed by the chief executives of some leading charities. There are legitimate issues here but they are in our view tangential to the question explored in this paper. The collapse of the charity Kids Company has also cast a more substantial shadow over the sector, raising issues about public funding, governance and financial control.  Serious though the failings at Kids Company undoubtedly were, we do not believe that the way in which it was managed, led and governed is typical of the sector as a whole. Moreover Ministers rejected civil service advice that the charity was no longer a proper recipient of public funds. We nevertheless believe that in view of recent public concerns, the present is a good moment to consider the case for the sector’s involvement in public service provision and some of the issues that affect its performance.

3. This note is concerned only with those situations in which services provided by central or local government or by statutory agencies are replaced or augmented by the voluntary sector and not, for example, with charities whose main object is campaigning or whose focus is predominantly overseas. And, although there are 190,000 charities plus a great many other not-for-profit bodies in Britain, this note is mainly concerned with the minority which are of sufficient size to provide public services at some scale.

Why use the voluntary sector to provide public services?

4. The voluntary sector has advantages over public authorities and the private sector which might enable it, at least in theory, to provide services more cost-effectively. In general it has less complex and expensive governance and management structures, it can draw to a greater degree on voluntary effort and it often has lower overheads than public sector agencies or private companies. Also it has the advantages over private sector providers that it does not need to make a profit (though it may well seek to generate surpluses to apply to its charitable objectives) and that it enjoys favourable tax treatment.

5. Just as importantly the sector’s use might bring other key benefits, including greater responsiveness, innovation and the ability to gain the trust and support of its client groups. Its responsiveness comes in many cases from a greater understanding of, and empathy with, the needs of users of its services than other providers usually achieve. This is driven by its charitable objectives expressed as a commitment to help those in need. Most charities try to ensure that their policy-making and service design is closely informed by the experiences and views of their beneficiaries. The most successful include service users in their governance structures in order to ensure that they do not lose sight of their needs.

6. Charities’ ability to innovate derives in part from the same source – their understanding of what their clients want. But it is also a function of smaller scale, flexibility and openness to change which are not characteristic of many public services. The ability to gain greater trust from their client group comes in part from the simple fact of their being neither government nor business, but also from the fact of their often having worked with the same client group for many years and having gained their confidence over an extended period.

7. By contrast, government departments often think of service provision from their own viewpoint, seeking to satisfy narrow objectives which may not take sufficient account of what the service user actually needs or wants or of the fact that those needs will often cross departmental boundaries. Consequently, the way departments deliver services sometimes simply doesn’t work and the voluntary sector, with its ability to think holistically, could in these circumstances often do a better job.

8. Because charities enjoy these advantages, it might be argued that in competition with the private sector the latter is at a disadvantage. However, the private sector has advantages that the third sector generally does not, such as the ability to raise capital and take greater risk. Overall, provided that the voluntary sector offers lower costs or better outcomes, or both, we doubt that its being in competition with the private sector would be a matter of public concern.

Why has more use not been made of the voluntary sector?

9. Successive governments have for these reasons been keen to make more use of the third sector and much good work has been done in this field. However, they have generally found it difficult to create the conditions in which charities can make a sustained long-term contribution. Short-term contracts, frequent changes of policy and an inability to understand charities’ cost structures and their ability, or more accurately inability, to carry risk have not helped. The prime and sub- contractor model has led to too many cases where charities have been involved in consortia with private contractors to government in which the private sector has reaped most of the benefits. More recently, the pressures on public expenditure have led to relentless reductions in contract prices hitting very hard those charities that are heavily reliant on public funding for the bulk of their finance. And there would be some challenges for the third sector itself if it were to become a more substantial contributor to the provision of public services.

10. There is an existing concordat between government and the third sector – the ‘Compact’ drawn up in the late 1990s – which was intended to deal with some of these obstacles but it has had a limited impact. There has been little appetite in government for effective arrangements to secure or monitor compliance by departments with its provisions. As a result, there is much scepticism in the third sector about whether departments are serious about treating it as a useful partner and any attempt significantly to extend use of the sector would need to start by rebuilding trust. It would also need to acknowledge that the voluntary sector has its own, valid, objectives and priorities and should not be seen just as a contracted subordinate delivering services on government’s behalf.

11. We suspect that the lack of an adequate information base about the cost-effectiveness of using the third sector has been a further constraint; neither government nor charities themselves have collected information systematically. There is little published data about the value-for-money which the sector provides when delivering public services. It may be that despite the theoretical advantages described in paragraph 4 above, third sector bodies’ difficulty in achieving economies of scale or the levels of efficiency of which the private sector is sometimes capable limits – perhaps severely – the circumstances in which they can deliver services at lower cost than the public or private sectors. Cost should not be the only factor, of course: quality of outcomes matters too and might justify using the third sector even if its costs were higher. But information about comparative outcomes is also often lacking. One would expect the answers to these questions to vary between different sorts of services. We believe that work is needed to bring together and to analyse the available information on cost-effectiveness and that either the Government should commission up-to-date research or that the National Audit Office should be asked to carry out a study in this area.

Issues for government

12. Previous use of the third sector as contractors both by central and local government suggests that there are some important obstacles that would need to be overcome if the scale of public service provision by the sector were to be increased significantly.

What does government really want?: Governments usually say that they want to encourage innovation and experiment in public service provision – to ‘let a thousand flowers bloom’ in order to find new and better ways of doing things. But in practice the demands of public accountability lead to inflexibility, frustrating Ministers’ stated aims. Reconciling this conflict requires a change of mindset in government, together with a more sensitive – and complex – appraisal system for contracts.

Capacity: charities generally do not have a lot of spare capacity – their financial model does not allow it. There will be some spare capacity at present in some sectors as a result of the cutting back of services by local authorities in recent years and the consequent loss of contracts by charities. If there were to be greater reliance on them, they would need to be given time to build up capacity, almost certainly some support to do so and the certainty of long-term contracts.

‘Scalability‘: scaling up innovative and high quality provision by particular charities operating on a small scale is a major challenge. The larger charities may be capable of it, certainly if providing a service across the area of a discrete local authority. But many will not. It may be necessary to encourage and enable different charities operating in the same field to form consortia or to involve the private sector, but it would need to be on a basis that recognises the reality within which most charities exist and not on terms which fundamentally favour the private sector and disadvantage charities. It may also be necessary to accept that provision by charities can work in some parts of the country but not in others.

Standards: government or local authorities, as the case may be, will want to set minimum standards of provision but should not be over-prescriptive and should not seek perfect consistency of provision everywhere. The latter is not achievable by large numbers of voluntary bodies and would in any event tend to stifle innovation, which ought to be one of the strengths of a charity-based approach.

Contracts: framing contracts in a way that enables the third sector to bid successfully is essential. Failure to do this, by both central and local government commissioners, has long been an obstacle to the sector’s achieving its full potential for public service provision. It will often be necessary to package services in a way which matches the size of the voluntary bodies expected to deliver them. And the administrative burden and costs involved in setting up and managing contracts must not be dis-proportionate. Many charities currently spend very large amounts of time and resource simply coping with the bidding process.

Risk: most voluntary bodies do not have the financial capacity to bear high levels of contractual risk in the way that private companies contracting with government are expected to do. This includes vulnerability from uncertainty about future volumes of work or the effect of payment by results and the risk that funds could be withdrawn arbitrarily at short notice, leaving a voluntary body with commitments it cannot sustain. Public sector bodies using the voluntary sector need to use contractual models which impose levels of risk which the sector can reasonably be expected to bear and no more. Partnership with private companies which are capable of carrying risk may provide part of the answer provided, as mentioned above, that this is done on terms which are fair to the voluntary sector partner.

Accountability: use of the third sector on a large scale may well raise issues of accountability for government and local authorities. Central and local government, and Parliament also, need to understand and acknowledge the extra challenge of ensuring a reasonable degree of accountability which arises when operating through a large number of providers, many of them small. Government needs to work with the sector to ensure that participating charities can observe minimum essential rules on use of public money and provision of information about how money is spent and with what result. But this needs to be done in a way that does not over-burden the voluntary sector, making it impossible for it to deliver the advantages – responsiveness and innovation – which ought to flow from its involvement.

Funding cuts: charities should be no more immune from the challenge of delivering their services more cost-effectively than any other providers, public or private. But the reality currently for many charities is that successive rounds of very substantial funding reduction have left them at a point where their senior managers and trustees are having to ask themselves increasingly whether they can any longer deliver their services at even minimum levels of quality, safety and acceptability. For many the well is now dry; their only option appearing to be to hand back existing contracts and cease to bid for new or repeat business.

Freedom of Information: there have been suggestions that the FOI Act should be extended to charities. Where such bodies are providing services under contract to a public authority, it is right that the arrangement should be transparent and that full information about it should be publicly available. But applying the Act to the third sector would in our view be both unnecessary and very damaging. The public sector finds dealing with FOI requests labour-intensive; most charities do not have the free capacity to take on a burden of this kind and we should not impose it on them.

13. One could argue that in view of some of these difficulties, rather than seeking a contractual relationship with third sector bodies, government should simply grant-aid them to carry out specified roles. While we see a case for grant-aid in some circumstances, we do not argue that this is invariably the better approach. But we are clear that if the sector is to be able to compete successfully, the conditions for it to do so have to be created.

Issues for the voluntary sector

14. There are also issues for charities themselves.

Dependency: many charities are campaigning organisations as well as providers of advice and services to those whom they seek to benefit. They want to be able, if necessary publicly, to criticise government and public policy. Financial dependency on government through public contracting may inhibit the campaigning role and for some charities – or, more importantly, their supporters – that risk would be a significant obstacle. There may be structural solutions to this problem, eg campaigning and service provision to be undertaken by separate but linked charities. But the better solution may be to rely on good, mature relationships – for both government and local authorities on the one hand and charities themselves on the other simply to acknowledge that such tensions will sometimes arise and to accept from the outset that they should not be allowed to interfere with the service provision role.

Delivery and standards: notwithstanding what we have said above about not expecting a multiplicity of charities to provide exactly the same service everywhere, minimum standards would have to be met and charities operating in a particular field ought to cooperate so as to share best practice and new ideas. This would be a challenge for a sector in which charities are often in competition for funding and where willingness to cooperate cannot be assumed. There may be a role for government, perhaps working through the NCVO, to encourage and enable working together.

Mergers: according to the Charity Commission there are some 190,000 charities in the UK. Many are, of course, run by a single individual or family but, even leaving these aside, there are still very large numbers. One of the main umbrella organisations – the National Council of Voluntary Organisations (NCVO) – has some 11,000 members. If charities are to achieve a scale, efficiency and durability which will allow them to deliver successfully in the present highly constrained funding climate more takeovers or mergers are going to be necessary. But these are no easier to carry through successfully than they are in the private sector, particularly given that trustee boards may often be constrained by their own charitable purposes and articles of association; and there is no ‘acquisitions’ culture in the sector.

Working with the private sector: some charities find working with private companies difficult because, for instance, they find the private sector’s ethos or its disciplines uncongenial. The third sector needs to be ready to acknowledge the strengths of the private sector and to be willing to compromise in order to produce effective partnerships drawing upon the best attributes of both sectors.

Conclusion

15. It is possible that there would be significant benefits for both government and service users in greater use of the third sector to provide public services, with lower costs or better, more responsive services. We believe that research is needed either commissioned by the Government or undertaken by the NAO to improve understanding of the advantages and disadvantages of third sector service provision.

16. Assuming such research did indeed show that there would be benefits from greater use of the third sector, there would be real challenges for both sides if those benefits were to be realised. For its part, government would need to acknowledge the realities within which the sector operates. It should also recognise that it would have to rebuild trust and to demonstrate that it was serious about achieving a better relationship with the sector. It would have to help the sector to scale up its activities and to be flexible. Even more fundamentally it would need to recognise that without sustained long-term funding models at levels which enable charities to operate successfully, aspirations to see a greater role for the third sector in public service delivery would inevitably be still-born. For their part, charities would need to accept the inevitability of change, the legitimate demands of the public purse for a reasonable degree of accountability and for greater efficiency and be willing to accept that dependency is an issue, but that it is one that can be managed provided that both parties are committed to making the third sector’s involvement in public services work.

BGI

January 2016

Top public sector jobs – the truth?

Posted on: January 19th, 2016

Chief Executive, HM Revenue and Customs

Following the decision of the present incumbent to step down from her post applications are invited for the role of Chief Executive, HM Revenue and Customs. Applications will be particularly welcome from those currently working in the private sector.

The work of HMRC is of critical importance to the well-being of the nation. As such the post holder will find him or herself subject to intense and unrelenting public scrutiny, totally unrealistic expectations, hostile and frequently uninformed media criticism, much of it of a highly personal nature, and sustained abuse from members of the Public Accounts and other Parliamentary committees. Despite being outwardly supportive Ministers are likely to continue to demand deep and largely arbitrary resource reductions but will be highly unlikely to accept responsibility for any resultant organisational failures. When things go wrong, as they assuredly will at some stage however dedicated, professional and hard-working you are, you will almost certainly be left to carry the can.

In return the reward package that you will be offered will be a fraction of what you could earn for roles of similar size and responsibility in the private sector with intense hostile public scrutiny of any bonus, expense or pension payments that you receive. Appointment will be for three years in the first instance by the end of which you may well see your reputation irretrievably damaged. Re-appointment at the end of your first term is therefore extremely uncertain.

Applications should be sent by the closing date of……………… to……………………….’
 

The one certainty is that this is not the job advert that anyone will see for the shortly to be vacant post of Chief Executive at HM Revenue and Customs. And yet, while somewhat caricatured for effect, it is in all its essentials true. Small wonder that leading figures in the recruitment consultancies used by government to fill senior public sector posts say that it is becoming ever harder to persuade serious candidates even to consider putting themselves forward for such posts. Nor does there seem any prospect of this changing any time soon. While it is undoubtedly right that senior public servants should be held to account where they fail, the level of knee-jerk and gratuitous hostility and opprobrium faced by those in the most senior public sector positions, be they in central or local government, NHS Trusts or other public bodies, has probably never been higher. At the same time, driven by the mantra that no public servant should ever be paid more than the Prime Minister, the already very large gap between private and public sector remuneration levels for posts of comparable size and responsibility continues to grow.

Does any of this matter? Despite it all someone will be found who is willing to take on the role of HMRC Chief Executive and they may be good or lucky enough to succeed. And some of what is included in the spurious job advertisement above is, like the weather, simply unavoidable. But arguably it does very much matter. We are and will remain hugely dependant on our public sector leaders to deliver for us the core services on which this country depends be that in health, education, justice, the police, central and local government and much else besides from flood prevention to counter-terrorism. If in the future we do genuinely want to attract some of the very best people in this country – be they currently in the public or private sectors – to be willing to take on these roles then we need all of us, in government, Parliament, the media and the wider public, to embark on a serious re-examination of our current, debased and short-sighted, attitudes to public sector leadership. We need to be prepared to challenge our own, and others’, stereotypes and look to see how, over time, we can once again make senior roles in the public sector genuinely attractive. None of this will be easy but it is both urgent and necessary.

It is a cliché to say that we reap what we sow. What is almost certainly the case is that if we systematically deter the most able in our society from putting themselves forward for the most senior leadership positions in the public sector we will in the end get the public services we deserve.

Leigh Lewis

The Omnipresent Osborne

Posted on: October 12th, 2015

The Better Government Initiative has previously been very critical of what became known as “sofa government”. This informal style of government emerged under New Labour and was characterised by decisions made without proper consideration by self-selecting subsets of ministers and advisers – often without the participation of affected ministers or the formal recording of decisions.
While this may have added pace and drive to the centre of government, it made for bad decisions and poor implementation. We were relieved when, of necessity, the coalition government returned to more normal forms of collective decision making, for all the reasons set out in our report on Cabinet Government: http://www.bettergovernmentinitiative.co.uk/wp-content/uploads/2013/06/Cabinet_Government.pdf
Now the coalition is gone and we have seen the re-emergence of a sofa government tendency. Except now it seems that we don’t even need the sofa – an armchair will do since the only person sitting on it is the Chancellor of the Exchequer. This summer has seen the Chancellor announcing rail schemes in Birmingham, devolution deals in Manchester and Sheffield, Defence programmes in Faslane, and nuclear energy, transport and cultural exchange programmes in China. All of them, it seems, while wearing a hard hat and a high-vis jacket.
The only announcements other ministers get to make seem to be those the Chancellor doesn’t care about or are bad news, such as cancelling railway projects and scaling back support for renewable energy. It is only then that we are reminded that other cabinet ministers are available.
The politics of all this seem clear enough. The Chancellor is staking his claim to replace the Prime Minister at some stage in this Parliament and wants to demonstrate the breadth of his reach and vision. The fact that his colleagues are prepared to accept the situation simply shows that he is seen as the clear front runner and being obstructive now will likely be career limiting once the Chancellor is (even more) in control of political patronage. Alternatively they are paying out rope.
The question is whether it is good for government? The answer to that turns on whether the Chancellor is merely announcing decisions reflecting the outcome of a proper policy process or a personal agenda cooked up with a small band of confidants. The suspicion is that a bit of both is happening.
George Osborne is not the first Chancellor to have ambitions to use his position to go beyond the traditional role of minding the public finances and blocking the extravagances of his colleagues. Gordon Brown’s Treasury too was proactive in promoting policy changes across government, but was perhaps more inclined to leave public announcements to the responsible Secretaries of State.
The strength of effective cabinet government is that it enables policy decisions to be driven by a shared political strategy and take account of the broad range of interactions with other policies and programmes. The object is to enable one policy area to develop without damaging others or, if that is not possible, to allow the consequentials to be taken care of.
One wonders how far policies like the Living Wage or the attempt to engage the Chinese in investing in nuclear power stations and other UK infrastructure has been subjected to proper collective consideration. The rationale for reducing the cost to the taxpayer of in-work benefits by reducing subsidies to employers seems clear enough, including to the Labour Party, which had similar proposals in its election manifesto. If, however, the state itself is a significant employer of those who stand to benefit, in the health service and social care for example, then the implications for budgets or, more likely, service levels could be significant. They should have been identified and handled as part of the initial policy process. All the indications are that the proposal was not discussed with affected colleagues. Still less was there any consultation with business about the proposed pace of change and how they are likely to respond, as the Government’s new lead non-executive director, Sir Ian Cheshire, has pointed out.
The “devolution” to the cities – the Northern Powerhouse Project – is strongly (and curiously) closely associated with the Chancellor rather than the Communities Secretary. Unlike the Living Wage it did not appear out of the blue. Some of its elements, like the City Deals, flow directly from programmes developed under the Labour Government. Others, like the requirement for strong City Regions under elected mayors, go back at least 25 years to Michael Heseltine on his return to government. He remains involved still. The scale and longevity of this project mean that collective decision-making processes have been operating at some level although it is evident that the wider implications – e.g. for devolution to Scotland and Wales and the EVEL proposals or for the National Health Service – remain works in progress.
Big ideas need a strong patron, but good government needs clarity of objectives, proper consideration of options and an examination of costs and benefits. Ideas-driven policy pushed by an over strong individual is going to take short cuts and risk arriving at half-baked solutions.

Letter to the Sunday Times on machinery of government changes

Posted on: April 28th, 2015

Learn from past mistakes and don’t tinker with ministries

If senior civil servants are creating a blueprint potentially to scrap or merge up to nine government departments, we hope their advice to incoming ministers will properly reflect the lessons of previous changes to the machinery of government (“Nine ministries face axe”, News, last week).

In our experience as former civil servants now involved in the Better Government Initiative, such changes often cost money rather than save it. They waste effort that could have been better used on other ways of improving the efficiency and effectiveness of departments. They would divert Ministers and top management from addressing the key challenges facing an incoming government.

One of the good things about the coalition has been its refusal to tinker with departmental boundaries as a form of political theatre.

Bringing together the separate offices and secretaries of state that currently cover Scotland, Wales and Northern Ireland makes sense. Functions relating to education, industry, energy, and so on can be parcelled up in many different ways but such reshuffling does not in itself save money.

“Super-ministries” may offer marginal savings, at the risk of ministerial overload and muddled responsibilities. One of the suggestions, merging the Home Office and the Ministry of Justice, could compromise the rule of law.

In government, as elsewhere, collaboration across organisational boundaries is worth more than structural change in getting things done. If changes are to be made, they should be accompanied by publication of the business cases that underpin them.

Richard Mottram,
Chairman, Better Government Initiative

Impasse in a coalition – and how it should be resolved

Posted on: March 25th, 2015

New rules are needed where a Coalition Government finds it impossible to apply collective responsibility. The BGI believes that where one of the parties wishes to announce a policy which has not been agreed collectively the following rules should apply:

I. where the policy affects the interests of other departments their Secretaries of State should be consulted;
II. the Treasury must be consulted about any proposal with major cost implications; and
III. in making an announcement the Minister concerned should state whether the policy is supported by the whole Government or just by his own party.

Why do we need these rules? Collective responsibility has become an important constitutional principle in the UK because, without it, the citizen and others dealing with the Government, including foreign governments, find it difficult to tell which statements from the Government represent its policy and which do not. Also Parliament would find it difficult to hold the Government as a whole to account.

In order to give effect to collective responsibility important Government decisions are best made collectively, but the experience since 2010 suggests that the parties to a coalition may sometimes find it difficult to operate within the normal framework for collective decision-taking. The Coalition Agreement said that collective responsibility would apply “save where it is explicitly set aside” and the current Programme for Government lists five such subjects. However, there have been instances where one or other party has made announcements on other, non-specified matters purporting to represent Government policy only to be publicly criticised or even repudiated by its coalition partner. On occasion the parties have appeared to take markedly different lines on the same issue, for instance on the review of Parliamentary constituency boundaries, the future of welfare reform, press regulation, green energy and, repeatedly, anti-terrorism policy.

Despite the frictions within the Government evident from these public disagreements, the present coalition has proved remarkably durable. In 2010 many people saw it as a short-term expedient which might founder once the electoral interests of the parties diverged. In practice, despite sometimes strong disagreement and much public criticism of each other, it has been in the interests of both parties to avoid breaking up the Government. It may be that some degree of fractiousness is inevitable in coalitions.

It is highly desirable that where parties are considering coalition thought should be given at the outset not just to their joint policy programme but also to the processes by which they will resolve their differences in government and the consequences if they cannot agree. This is an area in which they could look to the civil service for help with deciding the ground rules. There is evidence that that the two parties thought about this issue in 2010: see, for instance, the emergence of the ‘Quad’ as a forum in which party-political differences could be addressed. It may be that the problem has been less the architecture than the willingness of both sides to adhere to it. The Lords Constitution Committee (in its 2013/14 report on the constitutional implications of coalition government) recommended that future coalition agreements should include a description of these processes and we agree with this.

Looking at the way in which coalition governments work in other countries, it is clear that practice varies a lot: thus, in Germany they have operated tightly with little if any public disagreement, whereas in Israel, for instance, coalitions tend to be very loose, even disorderly, with sharp public disagreements.

We think it best if in the UK the parties can agree to operate within the normal rules governing collective responsibility and decision-taking. These are most conducive to cohesive government and to well-judged decisions recognising that many issues cross departmental boundaries. They should not be set aside frequently or lightly. However, judging from the experience since 2010, it is probably unrealistic to expect rigid adherence to these rules throughout a full-term coalition government, especially once a General Election approaches. One party may develop proposals on which it insists which are simply unacceptable to the other. But also something turns on the nature of the agreement between the parties: if, for instance, it has been agreed that one coalition partner will have freedom of action in one policy area and the other in some other area, the normal clearance rules may not readily apply.

Even in these cases there needs to be some mechanism to avoid unforeseen collateral damage to other departments’ responsibilities. So there would need to prior warning of an intended policy and an opportunity for colleagues to draw attention to any difficulties for their own departmental interests, together with a mechanism for resolving these problems. And there would need to be enough time for proper consultation to avoid one party “bouncing” the other.

It is also essential that the requirement to consult the Treasury before any public commitments are made to policy proposals with major cost implications should be respected. This would be especially important where the costs stretch beyond the period covered by announced spending plans.

At times under the present Government it has not been clear whether announcements of new policy were supported by the whole Government or just by one of its constituent parties. So it is important that in cases where the Government has not reached a collective position on an issue this should be made explicit publicly.

The Lords Constitution Committee recommended that collective responsibility should only be set aside where the Cabinet as a whole agrees to this i.e. an agreement to differ. This seems to us to be very desirable but it may be unrealistic. At the very least, however, one would expect the two party leaders to have discussed any disagreement and there certainly should be no surprises. Our rules proposed above seem to us to be the minimum necessary to maintain effective government.

Avoiding the Omnishambles

Posted on: March 1st, 2015

Over the summer break we published a series of “thoughts for an incoming Government”. These have now been combined in our latest report “The Next Government”, which will be the subject of a mid-March conversation organised by the BGI with principal speakers Lord Falconer and Dominic Grieve MP.

The report, drawing on the experience of our members of working at the most senior levels of government, identifies a number of practical steps that a new Government can take to avoid repeating the sort of “omnishambles” mistakes of policy and delivery that have been the subject of so much criticism in recent decades.

The report covers:

A good start – constructing a programme that is realistic and thoroughly prepared.
A functional Cabinet – restoring the Cabinet’s ability to provide strategic leadership to the country.
Running a Government – working as a team in the careful preparation and implementation of policies.
The civil service – a more effective relationship, built on mutual trust, that nurtures the development of key expertise.
A ministerial “cabinet” system for Britain? – the need to resist the temptation to set up parallel hierarchies with confused accountability.
Coalition – practical steps to construct an agreed programme and resolve differences when in government.

The proposals are not rocket science, and they are obviously sensible. But how likely is it, given the pressures of today’s media, that a new Government will be able to resist the temptation to rush forward with a host of ill-considered commitments?

Two Cheers for Stable Government?

Posted on: January 30th, 2015

It is in the nature of myths that they have the ability to persist long after contradictory evidence should have demolished them. One such is the myth that the coalition government has reduced the churn in ministerial appointments and that the most pressing problem to deal with is the churn in civil servants. The latter is undoubtedly a concern and our recent report on the deployment and development of senior civil servants offers suggestions for how to calm the pace of senior management change in departments. However, the evidence is that the churn of civil servants is as well as, and not instead of, a churn in Ministers.

The foundation of the myth rests on the fact that David Cameron did not have a discretionary reshuffle in 2011 and that the holders of the central cabinet posts: PM, DPM, Chancellor, Home Secretary and, until the 2014 reshuffle, Foreign Secretary have not changed.

Analysis in the Institute for Government’s Whitehall Monitor 2014 shows that after 2011 David Cameron was very much back in the reshuffle business. He has now made 3 unforced reshuffles in 5 years compared to the 4 made by Tony Blair in his 9 years – Blair did, however, have a number of forced reshuffles to contend with, some of which were fairly extensive. At Cabinet level the outcome is that six Departments, including the Treasury, have kept the same political leadership, seven have had two Secretaries of State and six have had three. (As an aside, these figures seem to pose a problem for those arguing for Ministers to have a direct choice in the appointment of Permanent Secretaries on the grounds that personal chemistry is important.)

In the junior ranks the story is worse. Only 19 ministers have lasted the course of the Parliament in their original role. Some “specialist” Ministers, like the Pensions Minister, have kept their posts, but the government is now on to its fourth housing Minister.

Some departments have fared better than others. DWP, which experienced ministerial mayhem under Labour governments, has shown considerable stability under this. But it is the only department apart from the Treasury to have retained more than 30% of its original ministers. Others, like BIS and DfE did well until the 2014 reshuffle.

While this dents the myth of Ministerial stability, does it matter that the coalition government seems to have behaved much like its predecessors? Arguably it does when this continuing instability in Ministerial appointments is accompanied by the current high levels of churn in the civil service. It is very hard to build effective teams and carry through coherent programmes when hardly anyone present at the outset of a project makes it through to implementation. Maintaining a clear vision and delivering effective programmes needs continuity of ownership and accountability.

There is another downside to churn among ministers. It nurtures the well-documented effect of “Ministers in a hurry”. Ministers who know they have maybe one, or at best two, years to make their mark are less likely to welcome policy making that requires extensive research, analysis and consultation. They are more likely to have a bias towards immediate legislation to raise their profile within and outside Parliament – whether legislation is needed or not. Even a cursory examination of the impact statements provided for most government Bills shows that most frequently the only options considered are do nothing or do what the minister has proposed. Ministers in a hurry are also less likely to see implementation of their predecessors’ initiatives as their top priority.

Of course there is a role for reshuffles to remove those who are failing, develop those who show promise, and rebalance the collective skills of ministerial teams. One interesting feature of recent reshuffles has been an increase in the number of Ministers with portfolios in more than one department, perhaps intended to improve co-ordination between policy areas which might in the past have been dealt with by larger changes to departmental boundaries. The absence of large scale departmental restructuring is something the Prime Minister can take genuine credit for. But if these shared roles are indeed part of a wider approach to more holistic government it would be good to see some exposition of that and some monitoring of its effectiveness.

The scale of the changes in the 2013 and 2014 reshuffles particularly suggests that the motivation for carrying them out had less to do with genuine team management than a more traditional exercise of Prime Ministerial patronage in the interests of party and political management. This aspect of reshuffles is rarely commented on in the press and it is difficult to see how, within our constitutional arrangements, we could get away from it. But the balance between those considerations and putting in place ministerial teams with appropriate knowledge, experience and expectation of a tenure long enough to see through key changes needs to be more openly recognised, especially by a Government intent on focusing on delivery by the civil service.

Senior civil servants

Posted on: January 7th, 2015

In its latest report the Better Government Initiative recommends that five key steps should be taken to overcome serious deficiencies in the deployment and development of senior civil servants:
• first to ensure that the newly appointed CEO for the civil service, who reports directly to the Head of the Civil Service/Cabinet Secretary, is formally designated as the Head of Human Resources for the civil service;
• second to vest in him the explicit responsibility for operating a succession planning system for the senior civil service based on the fundamental principle that the interests of the government and the civil service as a whole outweigh those of individuals and departments;
• third to revisit the approach to filling senior appointments to reflect key lessons from best practice in the highest-performing private sector firms, both in the UK and elsewhere;
• fourth for the Prime Minister to explicitly seek the commitment of both individual secretaries of state and, crucially, of the lead non-executive directors in departments, to the successful implementation and operation of these arrangements, and for the Head of the Civil Service to hold departmental Permanent Secretaries to account accordingly;
• finally, and in parallel, to set out a clear expectation that senior individuals will remain in post long enough to see through key policies and programmes and will only in exceptional circumstances be moved, or allowed to move, before these are delivered.

Financing Scotland

Posted on: December 19th, 2014

BGI’s latest report – “Financing Scotland: Is there a workable financial settlement for Scottish devolution?” – points out that the airy assurances given in the heat of the referendum debate that financial devolution could go ahead while retaining the Barnett formula may not prove so easy to deliver in practice.
The formula was introduced in 1978 as a simple population-based system for allocating Scotland a share of changes in UK public expenditure. It doesn’t say what is the right level of UK resources going to Scotland (and Wales and Northern Ireland). It just says what the change should be. If £100 is added by the Treasury to spending in England on an activity that has been devolved to Scotland, then Scotland gets X% of that added to its block grant – where X is the population of Scotland relative to England, currently around 10%. So the increase in spending per head in Scotland in cash terms is roughly the same as England – but the base level of the block grant is just what spending happened to be when the formula was introduced, plus years of subsequent adjustments.
The settlement recommended by the Smith Commission and welcomed by the PM will mean that more services (employment and training provision for example) will be devolved and so will fall within the scope of Barnett. Some welfare spending will be devolved for the first time. Scotland will be given the revenue from income tax in Scotland and a share of VAT revenues, and powers to change income tax rates and thresholds.
Where does all this leave Barnett? Suddenly an obscure but very simple formula has been caught up in a welter of complicated adjustments and indexations. Can it take the strain?
The first source of tension will be the devolution of some welfare spending. This is currently outside Barnett because the numbers on benefit may move differently in Scotland to England for all sorts of economic, social and demographic reasons. Smith proposes limiting devolution to only a small slice of welfare spending which is not much influenced by economic conditions: benefits for carers and disabled people. The proposal seems to be that an amount equal to current spending on these benefits in Scotland is added to the block grant outside Barnett and then ‘indexed’ in future. It is not clear what it would be indexed to or whether there will be any provision for future adjustment
Second, the devolution of tax powers and revenues will introduce considerable complexity. The Smith plan is that an estimate should be made of Scottish income tax receipts and receipts from the first 10% of VAT. This should be paid by the Treasury to Scotland and the block grant correspondingly reduced. And ‘future growth in the reduction to the block grant should be indexed appropriately’.
This seems to mean that total Scottish revenues from the UK, which now consist of roughly £28 billion of block grant, would in future be made up of perhaps £11 billion of income tax and £5 billion of VAT, leaving only £12 billion or so of block grant driven by Barnett. It is not at all clear why the reduction in the block grant would be indexed, as proposed by Smith, or to what.
Even more complex is the handling of UK changes to income tax. Suppose the UK increases the basic rate while Scotland leaves its rate unchanged and that the proceeds of the UK increase go to fund a mix of defence (non-devolved) spending across the UK and health (devolved) spending in England. Scotland would appear to gain the benefit of stronger UK defence without paying anything towards it. And if Barnett applied to the increase in health spending the Scottish block grant would benefit from that too! Smith says ‘changes to taxes in the rest of the UK, for which responsibility in Scotland has been devolved, should only affect public spending in the rest of the UK.’ But no explanation is given and no mechanism is outlined to achieve this. And in practice of course receipts from specific taxes are almost never linked to changes in specific spending programmes.
Finally, change will inevitably focus attention on the Scottish ‘advantage’. On a simple measure of public spending per head that is widely quoted Scotland gets 19% more than England. But stripping welfare spending out of this calculation increases the advantage to 27%.
In conclusion, the Barnett formula has proved pretty robust over past decades but perhaps the key to its survival has been that it is so simple that it has been able to tick over in the background without too much challenge. But it is hard to see Barnett surviving when it comes under the spotlight. The new constitutional settlement, and the financial settlement which it rests on, must surely deserve wider debate.

Next Steps backwards?

Posted on: November 24th, 2014

Mention the ‘civil service’ and most people immediately think of the Whitehall stereotypes. Perhaps not bowler hatted Sir Humphreys but pretty close: probably something to do with working with Ministers.
The reality of course is that the overwhelming majority of the 400,000 or so civil servants are working in Jobcentres and tax offices, prisons and passport offices. They are delivering a wide range of public services and never go near Whitehall or Ministers. The proportion who work in and around Whitehall with some occasional Ministerial contact is probably less than 20,000 or 5%.
What is the best way of organising and running the services provided by these 380,000 civil servants outside Whitehall? It may be that the best answer is to put them under the control of the top Whitehall civil servants who are very good at advising Ministers, but rarely have experience of large scale delivery of services to customers. But on the face of it that is pretty implausible.
The team of efficiency advisers under Sir Robin Ibbs who advised Mrs Thatcher in the 1980s came up with a different approach. These executive functions of government they argued should be formed into sensible units or agencies which could be run more along business lines. They needed clear objectives and performance measures and managers who understood how to deliver quality services efficiently. And they needed enough day to day freedom to focus on their customers.
The ‘Next Steps’ White Paper in 1989 started a reform which within 10 years had moved over half the civil service into agencies. Familiar brands including Jobcentre Plus with around 90,000 staff, the Passport Office, the Child Support Agency, and the Pension Service all adopted this model.
Most assessments, including a 2002 Cabinet Office review that I jointly chaired, concluded that the agency model was working well. It gave these activities a clear business focus; made their activities more transparent and accountable through their own accounts and annual reports; and was generally thought to have improved efficiency. The Labour Government embraced this key reform which had been initiated under Mrs Thatcher.
It is ironic then that the current Conservative-led coalition is now dismantling this reform. Jobcentre Plus and the Pension service have gone, although the branding is still used. The Border Agency was closed in 2013 and in October 2014 the Passport Office was integrated into the Home Office which now has no agencies.
Why the change in stance? And why has a government allegedly committed to bringing more business disciplines into the public sector apparently drawn back from this business- inspired model?
This seems to be driven in some cases by a view that greater efficiency can be achieved by cutting out the overheads associated with agencies, each of which would have their own corporate functions perhaps duplicating those in the core department. There is a lot of sense in looking hard at these costs but there are ways of sharing these services without tearing up the agency concept.
In other cases it is about accountability. It’s a natural instinct for a Minister to feel “if I’m going to be blamed when something goes wrong [in issuing passports for example] then I need to bring this more under my direct control”. But a bit of reflection should convince that this is an instinct which should be resisted.
The doctrine that Ministers should be held personally responsible for every failure in a department, however distant and minor, has never made much sense in theory or practice. Departments are administrations which work within a political context and direction set by Ministers. It is reasonable to hold officials rather than Ministers accountable for failures in administration. Ministers should look for assurance that the right people and systems are in place but should not feel they need hands-on control. The more control they assert, the more they will attract blame for failures.
There are also perhaps misunderstandings about the nature of accountability for agencies. Agencies are simply units of the civil service. They remain accountable to Ministers through heads of department just like any other civil servants. They have no statutory foundation separate to that of the Department. So if Ministers are unhappy with what an agency is doing they can challenge in exactly the same way as for any other part of the department.
In these respects agencies are different to non departmental public bodies (NDPBs) which often have a statutory foundation if they have executive functions and generally do not employ civil servants.
The great advantage of the agency model is that it is clear who is in charge of this administrative activity – the Chief Executive – and hence managerial accountability is strengthened without changing the political accountability.
Sadly, Robin Ibbs died in July this year. It would be a great shame if his vision of efficient customer facing management of public services dies too.

Adam Sharples
November 2014

Thoughts for an incoming Government: coalition

Posted on: September 19th, 2014

With 8 months left for the UK’s first peacetime coalition government strategists in the main political parties will be thinking hard about how to prepare in case they need to form another one next May. A report by BGI member Sir John Elvidge published today http://www.bettergovernmentinitiative.co.uk/reports-and-papers/coalition-government/ draws on his experience as Permanent Secretary to the Scottish Government to identify factors that will enhance the prospects of success of a future coalition.

Before the election – make sure policy statements take account of the possibility of working in coalition with other parties.

The key difference between single party and coalition governments is that the policies of the latter can only be finally settled by negotiation. In countries where coalition government is the norm pre-election statements of parties’ future policy propositions are framed with an eye to an initial negotiating position with potential coalition parties as well as an attempt to win votes.

Pre-election contacts between the parties can also help to prepare the ground for negotiations. In the preparations for the 2003 election for the Scottish Parliament there was clear evidence of thought being given by senior politicians to the big ticket items which would be the subject of trading in negotiation of a new coalition agreement.

Negotiating a coalition agreement – consider the need for flexibility in the light of expe-rience and make sure the civil service fully understands what has been agreed.

Experience in United Kingdom and devolved governments so far fits the model of negotiating the policy content of a coalition agreement before the formation of the Government, with a parallel process of negotiating at least some key points about Ministerial positions, for exam-ple the number of Ministerial posts to be held by each party.

The involvement of civil servants in the coalition forming process in Scotland in 1999 and 2003 helped to ensure that an accurate understanding of the policy intentions behind the wording of the coalition agreement could be communicated to the parts of the civil service responsible for taking action, thus reducing the risk of subsequent accusations that the way in which agreed commitments were implemented was not consistent with the negotiations.

United Kingdom coalition agreements have tended to be highly specific, reflecting an implicit view that locking the coalition partners into a fixed deal is of greater importance than preserving flexibility. An alternative model placing greater emphasis on a shared set of guiding principles, as exemplified to some degree by the 1999 coalition agreement in Scotland, eases the task of evolving policy positions in the light of experience.

Governing – have systematic arrangements in place to resolve differences of view.

Mechanisms to resolve differences of view are of even greater importance in coalitions than in single party governments. An important part of the coalition negotiations should be a clear set of ‘operating rules’, for example about disciplines of collective responsibility, disclosure of civil service advice to Ministers of both parties and Ministers’ responsibilities to ensure that all significant policy developments are exposed to collective consideration. The more successfully the coalition partners have integrated their engagement in the operation of government, the more likely it is that they will be able to renew and refresh their policies without the need for a formal process of amending the coalition agreement.

There appears to be much more frequent need for the use of mechanisms to resolve differences in the current United Kingdom coalition government than was the case in the coalition governments in Scotland and Wales where the frameworks negotiated at the beginning of those coalitions sought to reduce the scope for continuing tensions over the life of the governments.

The end phase – ensure that the inevitable tensions in the last year of a coalition are managed successfully.

As a coalition government enters the final year before an election there is a tension between the continuing responsibility on the parties to govern together and the desire to differentiate from each other in their presentations to the electorate. There is also the challenge of having a shared track record in government but a desire to claim a distinct ability to influence the future. The model established in Scotland, which offered the coalition parties the opportunity to engage with the civil service in ‘separate space’ free from the obligation for civil service advice in relation to government business to be shared, showed that the tensions are capable of being managed successfully.

Thoughts for an incoming Government: a ministerial “cabinet” system for Britain?

Posted on: September 12th, 2014

Would the introduction of a cabinet system on continental lines – equipping each Secretary of State with a team of political advisers which would be his or her interface with the Civil Service and would drive policy development and implementation – improve the quality of British government? There are signs that the main political parties are interested in such a system, which is used in several European states and in the European Commission. The present Government has taken a tentative step in this direction by accepting the principle of extended Ministerial offices, comprising a team of special advisers and civil servants under the Minister’s immediate direction to undertake policy development.

Commentators discussing the cabinet system tend to concentrate on its supposed advantages. It is worth also considering its disadvantages in our political context. One can see the attraction of cabinets for those who chafe at the limits on the number of special advisers and believe that Ministers need around them a bigger team of like-minded people who share their political views. But the Better Government Initiative believes that there are some strong countervailing disadvantages:

• A cabinet system confuses accountability. The responsibility for delivering what the Secretary of State wants lies with the Permanent Secretary. If the members of the cabinet instruct officials, the Permanent Secretary’s authority is undermined. That is a recipe for muddle.
• It marginalises the rest of the ministerial team in a department. High-performing departments usually have cohesive ministerial teams in which the junior ministers help the Secretary of State to drive his programme. If this task falls to members of the cabinet it is not clear what the function of the ministerial team is. Indeed, there would be less reason for having so many Ministers. This is a point which has received no attention in the media.

Our experience suggests that Ministers get the best out of their civil servants when they know and are known by them. The civil service needs to understand directly what a Minister wants and have the opportunity to discuss it with him or her. It is unhelpful, indeed damaging, if the conversation is conducted through intermediaries. There is much supporting evidence of this problem in the conduct of recent Governments.

A large team of people who play a key role in the conduct of government but who are neither elected nor selected by open competition lacks legitimacy. This is the main reason why successive Governments have accepted limits on the number of special advisers. Moreover if each Secretary of State had a cabinet composed in whole or in part of people with a party political background, this would greatly increase the “revolving doors” problem: the risk that people would use information obtained while working in government for personal gain while subsequently working in the private sector.

In our experience the most successful Ministers have been those who build a strong and open relationship with their civil servants in which the Minister is clear about what they wish to achieve, is demanding but is prepared to listen to advice even if they do not take it. The Civil Service will be keen to help such Ministers carry out their programme both because it is very aware of its constitutional duty to do just that and because it responds to clarity of purpose. Special advisers have an important role to play as members of such a team because, understanding the political objectives of their Minister, they can help the Civil Service to develop and implement policy. They can also undertake work of a party political character which is not appropriate for civil servants to do.

It is not clear to us that a cabinet system would produce better results. The experience of its use elsewhere in Europe is not that encouraging. We have written more extensively about some of these issues in our report: Civil Service Reform – Hidden Dangers? (September 2013).

‘How to be a minister – a 21st century guide’

Posted on: September 6th, 2014

‘How to be a minister – a 21st century guide’ written jointly by BGI member Sir Leigh Lewis, a former Permanent Secretary, and former Cabinet Minister John Hutton was published on Thursday.

The book, which Leigh and John believe to be the first about government to be co-authored by a former minister and former mandarin, sets out a survival guide for a new Secretary of State. It can be obtained directly from the publishers, Biteback, or from booksellers.

Thoughts for an incoming Government: the Civil Service

Posted on: September 5th, 2014

The UK needs a high-performing Civil Service but at present the service is not in good shape. A Government with determination and imagination which values the Civil Service could return it to what it once was and can be again – a high-performing organisation that helps Governments to achieve their objectives and ensures that Britain is well governed. We believe that the Civil Service needs a Government which will both champion and challenge it.

We would like to see Government seek a compact with the senior leadership of the Civil Service. It should offer a relationship built on mutual trust. The service has changed radically in recent decades and in many ways for the better – it is much more open to ideas and talent, has in many areas real expertise not found elsewhere and has tried hard to improve its project management skills. The public do not understand this because it is so rarely acknowledged by those who seem not to accept the principle of a permanent and impartial Civil Service recruited on merit. Nevertheless we readily accept that a lot more needs to be done to make the Civil Service once again fit for purpose, including:

• internal accountability needs to be strengthened and poor performance less readily tolerated;
• delivery and project management are still not as good as they should be;
• in its efforts to improve delivery the Civil Service has tended to underplay the importance of what should be its other core skill, namely policy formation;
• the high turnover of staff at all levels, in part driven by promotion incentives, militates against the development of expertise (it also undermines accountability). On average longer postings are needed;
• the distribution of talent and skills cannot simply be the result of the quasi-market in jobs that are internally advertised and subject to competition. There needs to be a better balance between departments’ ability to use their assets to meet their needs and the interests of individuals and also better succession planning;
• the Civil Service needs a workforce strategy designed to produce over the long term the range of skills that it requires. While it will always be necessary to bring in skilled people at all levels, especially at the top, all large organisations which enjoy long-term success grow much of their own talent.

We believe that a programme along these lines would help to restore the Civil Service’s effectiveness and reputation and would deserve the Government’s support. In return Ministers are entitled to expect high quality support and a Civil Service which does its very best to achieve the outcomes that the Government seeks.

Ministers should recognise that it will not be possible to build a high-performing organisation if they continue constantly to carp about it in public. In recent years that criticism has sometimes been couched, as regards Permanent Secretaries, in highly personalised terms.

Thoughts for an incoming Government: running a Government

Posted on: August 29th, 2014

Each of the political parties is beginning to consider how it will organise government to implement its policies if elected at the 2015 General Election. The Better Government Initiative believes that there is a handful of fundamental things that a Prime Minster needs to get right in the organisation and running of the Government if it is to be a success. The party leaders should be thinking about these issues now.

First, government is a joint endeavour in which success depends on team effort. The Prime Minister needs to run the Government as a team and to encourage a spirit of mutual trust and cooperation between Ministers. The Prime Minister should deal with the Cabinet on that basis and encourage Secretaries of State to manage their ministerial teams in the same spirit. Competing priorities between departments are inevitable; ‘departmentalitis’ is not.

Second, the relationship between the centre and departments needs to be right. Only the centre can develop, maintain and articulate an over-arching strategy for the Government. The Prime Minister needs around him a team capable of producing that over-arching strategy and of ensuring that departmental strategies fit into it. While that team should be capable if necessary of challenging departments on the biggest issues, it should not micro-manage them, not least because it does not have their specialist expertise
.
Third, good government acknowledges the fact that most issues are inter-connected and all the most important ones cross departmental boundaries. Major issues are often best looked at in clusters and the aim should be to achieve policy coherence in those clusters. Governments have tended to compartmentalise issues (e.g. focusing on the NHS instead of health more broadly). There are a number of things a Prime Minister can do to tackle this. He or she might consider preparation of a plan with a clear list of priorities not confined within departmental boundaries, as tried recently in New Zealand. Related groups of issues need to be considered properly through the tried and tested Cabinet Committee system, not settled bilaterally outside it. And there are other, complementary approaches, most used to some extent by recent Governments, which will help – Ministers with responsibilities in more than one department, inter-departmental objectives, shared budgets and so forth.

Fourth, effective policy-making has a number of essential elements. Departments need to be thorough in their use of evidence and research, the analysis of risks and the assessment of costs, benefits and fiscal impact. They need to publish clear statements of what they propose to do and why and what alternatives they have considered. They need to consult properly, not just go through the motions. And there must be systematic evaluation of success. Where legislation is needed Parliament should be given time to examine it fully. We support the recommendations of the Political and Constitutional Reform Select Committee for the adoption of explicit standards for the preparation of legislation and the establishment of a Legislative Standards Committee.

Fifth, machinery of government changes need to be avoided if possible. Many Prime Ministers seem not to have understood just how destabilising, disruptive and expensive constant tinkering with the structure of departments can be. If the next Government wants effective implementation of its programme the worst thing it could possibly do is to make extensive machinery of government changes.

We have written extensively about all of these issues in our two published reports: Good Government: Reforming Parliament and the Executive (November 2010) and Good Government: Mid Term Review (November 2012).

Thoughts for an incoming Government: a good start

Posted on: August 22nd, 2014

All newly-elected Governments are keen to implement their manifesto commitments as effectively as possible. There is often a tension between the undertakings which the parties need to give in their manifestos in order to win a General Election and effective implementation of their policies once in Government. However, the Better Government Initiative believes that there is a number of things that the political parties should consider as they plan their policy programmes for the 2015 General Election which will help to ensure that they can achieve effective implementation if they form the next Government.
The key to effective implementation of a new Government’s programme lies in realism about what is achievable and thorough preparation – acknowledging that there are limits to what a party in opposition can do by way of preparation before it gets into government.
Setting aside the question whether a policy is strongly contested politically, those which require ambitious and far-reaching reform are always difficult to implement. A high degree of complexity will compound the difficulties. A department’s capacity to deliver what a new Government wants may be overstretched if it is required to implement major changes in a number of areas simultaneously, especially since most departments have been drastically reduced in size since 2010. If in order to work a new policy requires significant culture change – on the part of the public sector workforce or still more the public itself – this will greatly increase the challenge to successful implementation. If a Government wants effective implementation it must prepare the ground thoroughly.
It is entirely understandable that a new Government should want early and effective implementation of its programme in order that the benefits are apparent by the end of the Parliament and none of the above is to say that implementation of an ambitious programme is impossible. But the chances of success will be much improved if certain conditions are met.
• First, the proposals need to be kept as simple as possible. Complex proposals require more legislation, both primary and secondary, which takes longer to draft, they will involve more elaborate implementation plans and they are harder to explain to those who have to deliver them and those affected. Complexity will especially be an issue if major IT systems have to be amended or replaced. And Ministers should try to avoid repeated changes to their policy as it is implemented.
• Second, Government needs to prioritise so as to concentrate initially on what matters most and on doing it well. This is what successful private sector organisations do. Some policies, even though important, may have to wait until later in the Parliament.
• Third, proper preparation is essential. That means working out a proposal in as much detail as possible, consulting those affected and, if culture change is needed, winning their support. A start needs to be made as soon as possible. Preparation cannot be left until a few months before the election, still less until after the election. An example from 1997 – the New Deal – shows the benefits of thorough preparation and consultation in opposition which enabled the policy to be realised quickly and effectively. Another from 2010 – reform of the National Health Service – shows what difficulty a Government can encounter if it forges ahead with a policy which has not been the subject of thorough preparation before the Election.
Parties in Opposition face greater difficulty than those in Government, which can call on the Civil Service to help to prepare their programme. Opposition parties can look to their own resources to do this work and can no doubt get help from sympathetic think-tanks. But we believe that there is a strong case for the present Government to allow them early consultation with the Civil Service. The existence of the Coalition Government means that both of the other main parties will have access to Civil Service advice as they prepare their future programmes; it is reasonable that the Labour Party should also have access and on a more substantial basis than in the past. With the advent of fixed-term Parliaments, there is no reason why such assistance should not be available now.
Of course, whether such access is granted or not, the Civil Service will make plans to implement the programmes of all three parties as best it can but, without the Prime Minister’s agreement, the resources devoted to this will be limited and the Civil Service will not have the opportunity to influence the development of Labour’s thinking or fully to understand it.
Major changes to services provided by the parts of the public sector outside departments’ direct control (i.e. most public services) present special challenges. Experience suggests that effective implementation of proposals which are opposed by the relevant public sector workforce will be difficult. This is especially so in areas where the influence of professional groups is strong. Their compliance and, if possible, support is desirable. They need to be consulted early and persuaded to back change or at least not to oppose it. If successful implementation depends on culture change among workforces as big as those in the NHS or schools, this will be hard to achieve and will take time.
The task of winning hearts and minds can be shared with the Civil Service and with senior management in the organisations concerned, but is first and foremost one for politicians themselves. Whitehall very often cannot require compliance from these groups: they have if possible to be persuaded and that process needs to start well before an election.
If much of the above seems obvious, it is nevertheless surprising how rarely previous incoming Governments have taken these lessons to heart.

Thoughts for an incoming Government: a functional Cabinet

Posted on: August 15th, 2014

Following the recent reshuffle, the number of ministers attending Cabinet meetings has expanded yet further to 33 – 22 full members of Cabinet plus 11 others with the right to attend.

With the Cabinet Secretary, note-takers and members of the Prime Minister’s staff who attend, there are now over 40 people present. So many that not even all the ministers can get a seat at the Cabinet table.

This is plainly ridiculous. The function of the modern Cabinet should be to act as a team to provide the Government with strategic leadership and co-ordination. It is simply not possible to have a serious conversation between 33 people, with a football team of onlookers. And allowing a large number of junior ministers to be present is unlikely to add much to the discussion which Secretaries of State cannot bring.

It suggests that the Prime Minister is not using the Cabinet for its proper purpose. Granted it is no longer primarily a decision-taking body: most collective decisions are best taken in the specialist Cabinet Committees. But, if Government is to function successfully, the Cabinet needs to be a forum in which senior ministers can discuss frankly and privately the big issues of the day.

The Better Government Initiative believes that the effectiveness of the Cabinet is being undermined by this ballooning excess. While the process started with the Blair and Brown Governments, under which more junior Ministers were given the right to attend Cabinet meetings, matters have if anything got worse under the present Coalition despite all the talk of making government more businesslike.

Attendance at Cabinet meetings should be determined by the need for the most senior ministers to act as team and provide strategic leadership to the Government, not by the Prime Minister’s desire to confer patronage, by junior ministers’ wish to enhance their status or by presentational sops to ministers denied full Cabinet status.

Realistically we are probably stuck with this absurdity until the election. But the incoming Prime Minister, of whichever party, should restore Cabinet to being a significantly smaller and more manageable body. Only full members of Cabinet should attend, together with the smallest possible secretariat. Only then will there be a chance of encouraging frank and private discussion and restoring the Cabinet’s effectiveness.

BGI broadly welcomes the decision to combine the posts of Cabinet Secretary and Head of the Civil Service

Posted on: July 16th, 2014

The Better Government Initiative welcomes the decision to combine the posts of Cabinet Secretary and Head of the Civil Service and to create the post of Chief Executive for the civil service reporting to him. The present arrangements with a three-way split in responsibilities between the Cabinet Secretary, a part-time Head of the Civil Service who also has another permanent secretary role, and a separate Permanent Secretary of the Cabinet Office are confusing and lack credibility both with ministers and the civil service itself.

There are still some questions to be answered, however, about what is now proposed.

First, the new post of Chief Executive, who can concentrate full time on improving the performance of the service, will be a key appointment. It is vital that whoever takes it on is selected on merit and has a thorough understanding both of the full range of skills and experience needed for successfully developing and implementing government policies and of the civil service values, now embodied in statute.

Second, to improve career planning and talent management across the service – a key task – the Chief Executive needs to have authority and credibility with permanent secretary colleagues. It must be a top-level post, including membership of the Senior Leadership Committee.

Third, it seems odd that the Chief Executive rather than the Cabinet Secretary should be accountable for the performance of the Cabinet Office (though this may become clearer when more details are available).

Since there is now less than a year to go before the general election the Opposition should be consulted on the new structure and at the end of the selection process before an appointment is made.

Main themes from the BGI’s Ditchley Conference: Sir Richard Mottram’s summary

Posted on: July 8th, 2014

The aim of this conference was to look ahead to next May’s general election and beyond. What challenges would a new Government of whatever form face? What lessons could be learned from the coalition experience?

The Conference report sets out some of the points that emerged in the discussion. I might briefly set the scene on some of the underlying issues that struck me and my BGI colleagues.

First, there was a recognition that the world around us was changing quickly whether in terms of technology or how people engaged with each other and with government. Power was being distributed. Whatever the outcome of the Scottish referendum, there would be a profound impact on our constitutional arrangements and muddling through might no longer do (although there was no appetite for a written constitution). Governing at the UK level may be about to get harder.

Secondly, while international comparisons suggested we could take pride in the integrity of our system of government, there was an uneasy feeling that in a scorecard based on the incidence of “blunders” we might have a worryingly high score in comparison with other advanced “western” nations. It would be helpful to get a better sense of whether this is the case and, if so, why? Some of the answer might lie in the pace of politically-driven change where a more considered, evidence-based approach might well yield dividends. There were also awkward questions about how we recruit, develop and move around the system both politicians and civil servants.

Thirdly, there was recognition that government is not a business or a collection of businesses but that it might have something to learn from how the best businesses align and embed objectives across the whole of their organisation and build mutual commitment to success. The separate “tribes” in government, parliament and the judiciary did not interact enough, informally as well as formally, and too much of the debate around accountability was about buck passing and blame. What would a culture of success look like (recognising the asymmetry in the world of politics, as refracted through the media, in interest in success as opposed to failure)? While the “trust” word may be in danger of overuse, there were clearly big trust issues that needed to be tackled.

Lastly, there was a suggestion that much of the discourse of government in the last 30 years had been based around rather crude versions of nostrums about public management linked to equally crude understandings of the discipline of economics. This era might be drawing to a close. We had, for example, to ensure policymaking and delivery were linked together. Markets were potentially better than monopoly, whether in terms of delivery by public, private or third sector delivery agents, but this required considerable skill in commissioning and market making and regulation.

Trust on Trial

Posted on: April 10th, 2014

BGI member Leigh Lewis, writing in The Political Quarterly, warns that although the Government’s plans for the civil service as set out in “One Year On” include many welcome ideas for improving efficiency and effectiveness they risk failing to address the current lack of trust between some ministers and their civil servants and, in respect of the proposed “Extended Ministerial Offices”, could undermine the ability of the civil service to speak truth unto power.

Evidence to PASC on civil service impartiality

Posted on: March 24th, 2014

BGI’s evidence to the PASC inquiry into civil service impartiality and referendums stresses that if civil servants are to continue to serve governments of different political complexions and retain the confidence of the public they must not be required to act in ways that appear to compromise their political impartiality.

Recruitment for the civil service should preserve political independence

Posted on: February 17th, 2014

The BGI has today submitted its response to the Civil Service Commission’s consultation on its review and updating of the recruitment principles for the civil service. Our key points were as follows:

• We strongly support the Commission’s emphasis on maintaining the core values of the permanent civil service, including political impartiality, which now have statutory force. We believe that the new recruitment principles should give even firmer emphasis to this essential requirement.

• Permanent civil servants’ commitment to the government of the day is institutional and not personal to any administration or Minister. Special advisers are in general politically committed and are accordingly subject to certain constraints on their use of public resources. We are concerned that the exception now allowed for recruitment of certain members of Extended Ministerial Offices may blur this distinction and create a new class of civil servant, appointed like special advisers but not subject to their constraints.

• Of the options proposed for the appointment of heads of department, we prefer Option 2, i.e. that where the independent panel assesses two or more candidates to be of ‘equivalent’ merit then, with the agreement of the First Commissioner, the Prime Minister should be empowered to choose between them after consulting the Secretary of State concerned and the Head of the Civil Service.

• However, there are risks in this approach if a too lax definition of ‘equivalent’ is adopted. We would prefer the tighter expression ‘equal’, accompanied by explicit guidance on what that means in practice, emphasizing that it is likely to be exceptional.

Government determined to resist constructive PCRC proposals

Posted on: December 9th, 2013

The House of Commons Political and Constitutional Reform Committee (PCRC) have expressed their deep disappointment that the Government has abandoned a pledge in the Coalition Agreement by rejecting the PCRC proposal for a House Business Committee.

The Better Government Initiative has always supported the establishment of a House Business Committee on the lines proposed by the Wright Committee, so we share the PCRC’s disappointment.

The Government seems determined to resist constructive proposals from the PCRC that are designed to improve the workings of Parliament. The latest rejection follows the recent rejection of PCRC proposals for a Code of Legislative Standards and a Legislative Standards Committee, which we also strongly supported as a way of achieving better government.

We urge Parliament to continue to press the Government on these three proposals and hope that the Government will ultimately reconsider its position on each of them.

Liaison Committee should stick to its guns

Posted on: November 14th, 2013

Today’s written evidence from the BGI to the Liaison Committee’s inquiry following up its earlier report on Select Committee effectiveness, resources and powers urged the Committee to press the government hard on the need for agreed legislative standards and a Parliamentary Committee to back them up.
Last year the Liaison Committee asked the Political and Constitutional Reform Committee (PCRC) to undertake a review of legislative standards. The PCRC produced a thoughtful and well-argued report recommending the setting of explicit standards for the preparation of legislation and the establishment of a Legislative Standards Committee to monitor their consistent application. The report was summarily dismissed by the Government.
We think the Liaison Committee should stick to its guns. The government’s response to the PCRC report was unconvincing. There is a clear need for additional measures in this area to support Parliament’s constitutional duty to hold the Executive to account.

Lords, Lobbying and Legislative Standards

Posted on: November 7th, 2013

This week the House of Lords once again forced the Government to back down on key legislative proposals. This time it was Part 2 of the Lobbying Bill that seeks to limit spending by third parties, including charities, on issues that might influence voting intentions at an election. As drafted, the Bill could prevent a charity whose policies were more acceptable to one party than to another from carrying out its business.

The proposal came out of the blue, without consultation with those affected and just as Parliament was rising for the summer recess. The House of Commons Political and Constitutional Reform Select Committee (PCRC) held unusual recess hearings. It reported on 5 September that the Bill was flawed and asked for it to be withdrawn for pre-legislative scrutiny. The Chair of the Committee, Graham Allen MP, said: “This Bill is an object lesson in how not to produce legislation. There was little or no consultation with those affected. There was no pre-legislative scrutiny. And the Bill is now being rushed through the House in a way that indicates a lack of respect for Parliament.”

As these things go, that is a pretty tough condemnation. But it was water off the back of the Government who pressed on with the Commons stages, completing them all in 5 weeks over the Party Conference season.

Earlier in the session the PCRC had produced a special report designed to avoid just these sorts of problems by setting agreed standards for the preparation of legislation and creating a Legislative Standards Committee to monitor the application of those standards. The Government response from Andrew Lansley was dismissive of the need for either the standards or the Committee: “It is the responsibility of government to bring forward legislation of a high standard and it has comprehensive and regularly updated guidance to meet this objective.” Guidance does indeed exist. The problem is that the Government observes it when it is convenient to do so and ignores it at other times.

This is not the first time that a major Government Bill has had to be “paused” while problems are sorted out. The BGI view is that if we are going to improve the quality of our legislation, and avoid the kind of shambles we are now seeing with the Lobbying Bill, we have to have clear standards consistently applied.

The House of Commons is beginning to show that it is prepared to be less supine than in earlier years. Hopefully the PCRC will be prepared to follow the example of the House of Lords and insist that Parliament is not asked to deal with badly prepared and presented legislation. The PCRC should not take “No” for an answer to its proposals on legislative standards.

Fewer reshuffles and fewer ministers?

Posted on: October 10th, 2013

I don’t know what will be included in the weekend red boxes of the newly reshuffled ministers, but I’m fairly confident it won’t include the latest book by Ivor Crewe and Tony King about government blunders.

That is a shame because the book includes some good advice for newly appointed ministers about the dangers of ministerial reshuffles and ministerial activism. It also offers some balance to the fashionable view that the failures of government can be laid at the door of obstructive and incompetent civil servants, although they – rightly – do not escape all blame.

To give the Prime Minister credit, he has not been an over-enthusiastic reshuffler. Limiting the latest exercise to posts largely outside the Cabinet is helpful, although when taken with last year’s exercise some departments will still have experienced significant churn – Defra now has no ministers with a full year’s service for example. The loss of knowledge and continuity at ministerial level creates problems for both the design and implementation of policy, let alone accountability for the outcomes.

The real risk identified by Crewe and King lies in the nature of these junior ministerial posts as career development opportunities for aspiring politicians. Statistically, newly appointed ministers know they have no more than 12 to 18 months in which to make their mark, whether that is staking a claim to further preferment or just leaving behind something tangible to mark their passage. The odds are stacked against them.

The chances are they will be appointed to look after an area of policy with which they are largely unfamiliar. They will probably get little guidance from their Secretaries of State about what they should prioritise. There will be legacy projects from their predecessors that at best need finishing off and probably a lot more. The moment of change is often a time for civil servants to reveal their concerns and reservations about current projects that will have to be dealt with.

There will be a torrent of requests to meet myriad representative and trade bodies, each with requests for action to meet their current concerns. The temptation to get stuck in, take decisions and be active is almost overwhelming. Against this the timetables of properly evidenced and consulted policy making will seem frustratingly slow and the temptation to cut corners will be real.

New ministers may be lucky. They could join a Department where ministers work as a team, delivering clear priorities set by the Secretary of State with matching departmental resources allocated. But that is rare. The advent of coalition government, and the trend to appoint junior ministers of both parties to “keep an eye” on what the party running the Department is up to won’t encourage team working.

There is very little discussion in government proposals on civil service reform of the opportunity offered by coherent ministerial teams providing political leadership to government departments to improve overall performance. The focus is instead on increasing the support available to Secretaries of State through Special Advisers and Extended Ministerial Offices (“cabinets” presumably sounded too European). As we argue in our paper “Civil Service Reform – Hidden Dangers?” there is no fundamental objection to increasing the immediate support to Secretaries of State, if that is what they want, subject to a number of safeguards. But if we go down that route it does raise questions about the point of junior ministers.

The UK government has around 120 Ministerial posts. France, which does run a cabinet system, has about a third of that number.

Of course from a party management point of view, having a large number of ministerial posts at his disposal gives the Prime Minister a great deal of leverage which goes beyond those who are office holders to those who have hopes. We shouldn’t of course forget the mirroring which now goes on in the Opposition where shadow ministerial teams are at least as extensive as the government’s.

The net result of all this is that a large proportion of the most able and energetic Parliamentarians are either in Ministerial or shadow posts, or hoping to be so. Ambition or collective responsibility will limit their activities as Parliamentarians as a result. The supine performance of Parliament in holding the Executive to account is also identified by Crewe and King as a significant factor in the blunders of past – and present – governments.

I don’t suppose we will significantly reduce the number of ministers, but if we are keeping them, there has to be more to it than party management and work experience.

Phillip Ward

(a member of the BGI’s Executive Committee)

Civil Service Reform – Hidden Dangers?

Posted on: September 6th, 2013

This report, published today warns that some aspects of the Government’s proposals for civil service reform could substantially weaken the role of the civil service in helping to ensure government acts at all times with propriety, so that the resources of the state are not misused for personal or political advantage.

The BGI does not believe that the civil service should be immune from criticism. We have our own ideas to offer on where the civil service can and must do better. But some of the changes being championed could have far-reaching, undesirable consequences.

Successive administrations have recognised that the civil service as an institution does not simply belong to the government of the day. A more careful analysis is needed of the risks involved to the role of the civil service in our constitutional context. If major changes are contemplated they should be addressed on a cross-party basis through Parliament, as recommended in yesterday’s report by the Public Administration Select Committee, or another inquiry process.

Nick Monck

Posted on: August 27th, 2013

We were saddened to hear of the death of Sir Nicholas Monck. He has been an outstanding contributor to our work, both rigorous and inventive in his approach to issues, and unfailingly good company. Nick will be sorely missed.

–  Richard Mottram

High quality legislation? Trust the Government!

Posted on: August 22nd, 2013

We were pleased when, back in May, the Political and Constitutional Reform Select Committee of the House of Commons (PCRC) produced a report endorsing the BGI’s long-standing proposals for setting agreed standards for the preparation of legislation and establishing a Legislative Standards Committee to ensure they are met. But in the traditional deck clearing before the Parliamentary recess in July came the unsurprising, but still disappointing, Government response rejecting the proposals outright.

The response was not surprising because the Executive in the UK has an unusual degree of control over the Legislature and governments – regardless of party – are reluctant to fetter their freedom of action. However the grounds on which the proposals were rejected were curious: essentially that standards were not necessary because the Government already does everything that standards might require and codification would risk creating a meaningless tick box approach.

Yes, the elements of good policy making and legislation like the gathering of evidence, consultation and the preparation of impact assessments are done some of the time and to some degree because they are covered by Cabinet Office guidance to departments. But they are not done consistently well enough and the Government seems reluctant to put its own house in order. Experience shows that without standards agreed with, and moderated by, Parliament there will be a constant stream of legislation that is poorly prepared, may not work or not achieve the intended outcome and will need early amendment.

What we are looking for is better policy making and better legislation. There may be alternatives to the specific proposals we made that would achieve a similar result and be more acceptable to the Government. Perhaps there is enough recognition of the need for effective processes in the Government’s response to offer some hope of improvement, especially if the PCRC decides not to take a flat “No” for an answer.

What chance a House Business Committee?

Posted on: July 19th, 2013

Good government depends upon the right relationships between the Executive and Parliament.
In that context, we supported the establishment of a House Business Committee as recommended by the Wright Committee. They proposed a Committee which would make decisions about the use of Parliamentary time other than backbench time, while recognising that the Government must have sufficient time to carry forward its legislative programme. Such a Committee would strengthen Parliament by increasing the transparency of decisions which at present are taken through the ‘usual channels’ and not formally recorded.
We were delighted when the Government committed itself in the Coalition Agreement to setting up a House Business Committee. But we were then disappointed as the Government appeared to move away from this commitment.
The Political and Constitutional Reform Committee (PCRC) has been taking stock of progress on the Wright Committee recommendations and published its report on 18 July. Taking account of the range of views expressed to them, they now recommend a consultative House Business Committee. They say that this form of House Business Committee would enable the Government to redeem its Coalition Agreement pledge to move forward on the lines suggested by the Wright Committee while ensuring that its programme is considered in a proper and timely way.
We would have preferred a House Business Committee which took decisions as recommended by the Wright Committee. But we hope that the PCRC recommendation of a consultative House Business Committee will enable progress to be made. We agree with PCRC that their recommendation is ‘an immediate practical option’. And we look to the Government to take early steps to implement it.

Sleep-walking into politicisation

Posted on: June 18th, 2013

Sir Leigh Lewis, speaking at the launch of the IPPR’s paper on the future of the civil service on 18th June, warned against the dangers of sleep-walking into politicisation of the civil service.

“Internationally there are essentially two models of bureaucracy in a democracy. At one end of the spectrum there is the UK model in which a largely permanent, non-political Civil Service supports the government of the day. At the other end is what might be termed the ‘West Wing’ model in which almost all the senior positions that matter, other than amongst the military, are held by political appointees. Clearly either can work and both have their advantages and disadvantages, and their histories.

What I am much less clear about is whether it is possible to have a half-politicised bureaucracy which is where, as I read it, the report could take us. I suspect that like being half pregnant it may not in practice be an option, and certainly not a stable one.

Clearly we have already moved to some degree towards a more politicised bureaucracy in the UK, not least with the advent of Special Advisers. But essentially we are still very close to the non-politicised model. By contrast the report’s recommendations, if implemented, would take us a lot further along that road.

In this respect I do not believe that the proposed change in the means of appointing Permanent Secretaries would be the game changer. But I do believe that the creation of what the report calls ‘Ministerial Offices composed of Ministerial Staff’ could well be. The report recommends that such offices, with no limit on their size, should comprise a mix of civil servants, political appointees and expert advisers appointed from outside the Civil Service. Crucially all would be personal appointees of the Minister with the possibility also of the Secretary of State creating a political Chief of Staff role.

The report’s authors maintain that by virtue of such Ministerial Offices including some career civil servants they would avoid becoming purely political on the French ‘cabinet’ model. With respect that seems naïve. What creates politicisation is not the wording on the employment contract – civil servant or special adviser – but the environment in which people work. In practice such offices, and those working within them, would be almost bound to become extensions of the Minister’s personality and beliefs. The real risk is that counter arguments, difficult facts and embarrassing truths would be much less likely to reach the table, as would officials willing to tell it as it is.

The report also recognises, but dismisses, the risk that such offices could become political cocoons cut off from the rest of the Department and cites the model of how the Treasury was run under Gordon Brown as showing how such a model can work effectively. By contrast many would say that it was that model, under which most very senior Treasury officials had no access whatsoever to the Chancellor, which illustrates the very real risks of the cocoon. Would the 10p tax rate episode, for example, ever have happened if there had been a wider range of views and facts round the table before that decision was taken?

In one of their boldest claims the report’s authors say that they believe that their proposed reforms, if implemented, would pose ‘no risk’ to the core traditions of the UK Civil Service. That is a big claim and I, for one, am far from convinced. The risk, it seems to me, is that, taken as a whole, these measures could both marginalise and politicise the Civil Service.

Some may, of course, say ‘excellent and about time too’. And it is absolutely true that there are arguments for moving much closer to a ‘West Wing’ form of government just as there are arguments against. But if we are going to do that surely it needs to be a conscious and clear choice, not least because there would almost certainly be no going back from it. My worry about some of the report’s proposals is that we could end up sleep walking into considerably greater politicisation and only realise that we were there after we had arrived.”