Examination of Witnesses (Questions 60
- 79)
THURSDAY 11 MAY 2000
SIR ANDREW
TURNBULL, MR
JOHN GIEVE,
MS MARGARET
O'MARA AND
SIR STEVEN
ROBSON
60. It was merged, I suppose.
(Sir Andrew Turnbull) Yes.
61. Who took that decision?
(Sir Andrew Turnbull) I put that proposal to the Chancellor
and he agreed it. We discussed the logic behind it which is that
in a world of globalisation there is not the United Kingdom and
then something which is the international economy. If you are
looking at issues of macro-economic policy there are a number
of areas of, effectively, peer review. There is a peer review
process both for micro-economic policy and macro-economic policy
in the European Union. There is a peer review process in the OECD,
the Economic Policy Committee, where there is a periodic examination.
Likewise the IMF. The people who are conducting policy domestically
should then be the people who present that abroad.
62. Would that change have occurred if Sir Nigel
Wicks had not retired?
(Sir Andrew Turnbull) It might have done. His retirement
meant that we had to consider whether we replace him like for
like. That prompted a re-examination of this issue and so we have
decided to bring the two together.
63. If I can just ask Mr Gieve. Do you not think,
having heard the discussion between yourself and Mr Fallon, it
would be sensible that the budget team and the team that deals
with public service agreements were just amalgamated?
(Mr Gieve) Are you inviting me to seek an even bigger
empire?
64. The Treasury is rather an imperial institution.
(Mr Gieve) You were talking about more personal imperialism
than that. I have done both jobs actually and I found both quite
testing so I am happy as things are, but obviously you could draw
the boundaries differently.
65. Yes, but it is not the question I was asking
you. Forgive me, it would not have been proper to ask you about
your personal happiness. I was asking about something slightly
more systemic, as I saw it anyway.
(Mr Gieve) Does it make sense to split these two?
There are two different functions and at the moment they are brought
together by Andrew. You say could you merge the two as the international
side and the monetary side on the macro side have been merged?
I do not see the same sort of reason for making the merger. In
one case looking back over a period of years we have transferred
monetary policy out of the macro team to the Bank of England or
a large chunk of it and that has changed. I think if we were still
responsible for monitoring monetary policy there would be an argument
of the work burden of doing the two jobs.
66. You are slightly going back to a previous
question.
(Mr Gieve) No, I am not. What I am saying is that
one of the considerations in that case was the weight of the two
jobs and because one of the major functions has shifted it makes
sense to draw these together at managing director level. I do
not think the same considerations apply on the budget side which
has the whole of tax policy and tax benefits which is a very full
agenda and the public services side. I do not think there is a
comparable reason for saying those should be joined under a single
managing director. I am not saying it is impossible.
67. Has it ever been talked about?
(Mr Gieve) Yes, the structure of the organisation
is talked about from time to time in the management board.
68. The non-executive director on the management
board does not figure in any of this. What is the role of non-executive
director on the management board? What do they actually do?
(Sir Andrew Turnbull) I think I want to clear up something
here. We are not attempting to making the analogy between our
management board and the board of a plc and hence the role of
a non-executive director of a plc. The non-executive directors
of a plc are the shareholders' representatives and they are part
of holding the executives to account. Very often below the plc
board there is a management executive board. The Treasury Management
Board is analogous with the Executive Board and what we have done
in bringing in a non-executive director is bring in a source of
external advice and insight. She is not part of the accountability
process in the way that a plc non-executive director is. There
are different accountability processes, from us to ministers,
from ministers to Parliament and so on. What do we get from having
a non-executive director? We have chosen someone who is from a
consulting background who has done a lot of work, 50/50 public
sector organisations/ private sector organisations, so the kind
of issues that we are facing of personnel management, of management
of performance appraisal, of the way in which we communicate within
the organisation, she would have seen literally dozens of times
in other organisations and is able to draw on that experience
and say, "I would not do it this way" or "Why don't
you try doing it in some other way." So it is a valuable
external source of advice and wisdom rather than part of the accountability
framework.
Mr Cousins: Thank you.
Mrs Blackman
69. Turning to people in the organisation, how
have you managed to shed quite a significant number of staff over
the last few years and yet at the same time expand responsibility
for expenditure and other functions?
(Sir Andrew Turnbull) Firstly, there were some transfers
of responsibility in 1994-95, I would hazard a guess, when some
50 or more were transferred. The rest is partly a process of efficiency.
There has been a substantial de-layering of the upper echelons
of the organisation. There used to be permanent secretaries, second
permanent secretaries, grade twos, grade threes, fives, all in
a management hierarchy.
70. Yes, but my point being that for whatever
reasons there are far fewer now and yet the functions have expanded
quite significantly so how has this been managed? Are you at optimal
strength now?
(Sir Andrew Turnbull) No, not at optimal strength
because we have not filled all the vacancies that we have but
I am taking steps, in particular through increasing our graduate
recruitment, to fill that.
71. Could you say how many vacancies you intend
to fill? What is the deficit at the moment?
(Sir Andrew Turnbull) In the direct graduate recruitment
we made offers to 27 and have got acceptances from 19. The size
of the intake is a measure of the shortfall. This is at graduate
level, range D in our terminology.
72. Right. Are you short of specialists? Is
that an area you would identify as opposed to generalists?
(Sir Andrew Turnbull) We certainly find that attracting
economists and retaining economists is difficult. This is a very
competitive market but I think we have rather changed our thinking
about other kinds of specialists, people who can help us on discussions
about industrial questions, the Post Office or BNFL. Increasingly
we look to get those kinds of specialists by going out into the
market-place, hiring someone for the time that they are needed
and basically retaining them on a project basis and we are looking
increasingly to do that.
73. So is that your main strategy for recruiting
economists at the moment or when it comes to retaining graduates
and the graduate strategy as well?
(Sir Andrew Turnbull) When it comes to economists
we employ about 100. We basically try to recruit those and take
those onto our books. It is other things like people with expertise
in finance or in particular sectors where we would look for expertise
in relation to a specific project.
(Ms O'Mara) We can take those either on fixed-term
contracts or secondment. We quite often go out, for instance we
have been taking through the Bill on the financial markets, and
there we wanted particularly legal expertise which is not something
we would normally want, so we went out to a legal firm and got
a secondment in on that basis. So it is a variety of approaches.
(Sir Andrew Turnbull) Another area which is a deficiency
across the whole of the Civil Service is project management and
our initial response was to create the Private Finance Task Force
and most of those are people we took on on a short-term basis.
Malcolm Bates' second report then told us this was an unsound
way to resource an on-going responsibility to have a team of people
who then go back to their organisations if they are on secondment,
or go off and find other jobs. And then you have got to recruit.
And one of the driving forces of creating Partnerships UK was
that we wanted to create a permanent organisation because we saw
this as something which was not simply an ephemeral need. It is
going to be there on a long-term basis and we have got to staff
it on a long-term basis. We will find it easier to set up in partnership
with the private sector a private sector organisation so that
they can recruit people in the market and get them to work for
a public purpose. That has given us access to a lot of very talented
people but we would have found difficulty with recruiting within
the existing Civil Service framework on Civil Service terms.
74. Recently you have recruited two very senior
members of staff externally. Is there a policy on that now for
very key senior staff that you will pursue that particular format?
(Sir Andrew Turnbull) There is a Civil Service-wide
policy that we will increase the number of open competitions across
the Civil Service as a whole. In 1999-2000 I think there were
something like 107 open competitions. At a guess roughly one-third
of those were people who were internal Civil Service candidates,
one-third came from elsewhere in the public sector (a lot of those
from health authorities) and one-third came from the private sector.
We are aiming to increase that in the next couple of years by
at least 50 per cent. So one has to decide when a post becomes
vacant or a new post is created, how do you fill it? Do you simply
have an internal promotion, a Service-wide competition or an open
competition and the pressure is to move up and up that hierarchy.
Over time there will be more movements into the Civil Service
from outside. At the same time there will be more movements out.
There is also a growing market in returnees, so to speak. Richard
Broadbent, recruited to Customs, started in the Treasury, left
in 1986 and has come back. The Electricity and Gas Regulator was
in DTI and has come back. The Telecoms Regulator was at DoE for
a time. We are trying to get a more permeable system whereby people's
view of their career is that a lot of people will be recruited
as graduates and a lot of people will go all the way and stay
in the organisation as a long-term career but with secondments
in and out, but the proportion of people who come in mid-career
or right at the top is also going to grow.
(Mr Gieve) Can I say something about the two posts.
Those are in the Public Services Directorate and, apart from the
wider policy in the Civil Service, it seemed particularly appropriate
in that area to draw on a wider breadth of experience. One of
the posts has gone to someone who spent most of their career in
local government and we were very keen to get someone into a senior
position of the Treasury who had that wider managerial experience.
The other comes from New Zealand and we were quite keen to get
someone who had been involved in their public sector reform to
bring an outside perspective into ours, so there was a domestic
reason as well as a Civil Service-wide reason.
75. The phrase David Lipsey used was, "If
the Treasury continues to pay peanuts they will get monkeys".
The point he was making was that the levels of pay are insufficient
to attract people of quality. Would you buy that?
(Sir Andrew Turnbull) We do struggle. That does not
necessarily mean that the answer is to raise all pay scales by
a third or something.
76. It must be an issue of competition, you
are up against people working in the private sector?
(Sir Andrew Turnbull) This competition with the wider
labour market is going to grow. It will be more and more difficult
to treat the Civil Service as though it was a self-contained system.
Historically, people came in and served on it and popped in and
out, and you could run a system of pay that was largely confined
to the Civil Service. It is getting more difficult. We have to
find ways of rewarding, in particular, the better performing people
with performance pay systems which make proper differentiations.
We cannot do that by driving down the pay of people who are performing
a satisfactory job for us. There is also the question of how fast
you promote people. The Treasury is now pretty un-hierarchical,
it is pretty competitive and there are quite a lot of older people
who have seen themselves overtaken by talented younger people.
It is more competitive in that sense. We bring people on and get
them to higher salaries earlier in their careers than would otherwise
be the case. They are five or six years younger on average than
the Civil Service average.
77. To what extent is the effectiveness of the
Treasury reduced by the un-representation of women and ethnic
minorities?
(Sir Andrew Turnbull) It is a serious problem. I think
men are something like 58 per cent of the department as a whole,
but 78 per cent of the senior Civil Service. The message we draw
from that is twofold; firstly there are certain skills and experience
that you get from having a workforce that represents the population
as a whole. The insight you will get will be better and more soundly
based if the organisation is closer to the society that it is
trying to influence. Secondly we are not tapping all available
talent.
78. I could not agree with you more. I am wondering
how you are going to get from A to B. In your report I know recruitment
is about 40 per cent now and the composition is reasonable, but
not at senior Civil Service level, 19 per cent is the figure given,
and I am really not clear, at the pinnacle, how many women are
represented?
(Sir Andrew Turnbull) In grade five and above?
79. How many grades are there?
(Sir Andrew Turnbull) Grade five and above for the
Civil Service as a whole is about 3000 people.
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