Select Committee on Public Administration Minutes of Evidence

Examination of witnesses (Questions 960-979)



Mr Turner

  960. What is the obstacle?
  (Dr Clark) There are obstacles. There are clearly understandable cultural difficulties. The people who have gone into the Civil Service traditionally expected a job for life. That is changing radically. There are problems about pay, problems about pensions. They are nitty-gritty issues. I believe we should be able to overcome them if we change our mind set in the way in which we look at this.

  961. Is not the heart of the matter the final salary unfunded pension scheme? Once a civil servant has been in there ten years he is never going to want to push off; he is locked in. Similarly, to get people in from outside costs a huge amount for them to get any kind of attractive pension.
  (Dr Clark) There are problems of course.

  Mr Turner: They should unitise the pension schemes.

Mr White

  962. Is it not the case that the PSA's fundamental weakness, excellent initiative though it is, that Parliament still allocates its budget by department? Is that not one of the issues that we need to get away from, departmental budgets and the whole question of the Treasury rules that go back to the 1920s and beyond? Is that not a fundamental blockage now in trying to get an entrepreneurial spirit into the Civil Service?
  (Dr Clark) Yes, I think it is. When one stops and thinks, there are two departments that go into every other department. There is the Treasury that goes in with big boots, one might say, and then there is the Cabinet Office which goes in with advice and information technology to try and advise departments how to make best use of their scarce resources. I feel that we really need to think very carefully—this will be a red hot issue, I guess—about changing the Cabinet Office to an office of the Prime Minister. I think that may be the only way you can drive through horizontal management. As a follow-on from there, you make a designated budget to make that a cross-departmental large department.


  963. In Michael's book he calls the Cabinet Office "a bran tub".
  (Mr Heseltine) The worst department that I ever served in.

  964. "A glorious confusion of responsibilities".
  (Mr Heseltine) Oh, it was just a dumping place. I have forgotten now what it was I got rid of. We had occupational health people and HMSO. HMSO was an absolute scandal. That went. We had a car pool. I was not prepared to take them on. They are still there; of course they are. I took one look at the thing and I said, "There is practically nothing here we need to be doing. Let us privatise the lot." It was a race against the election. I knew that the next government would not do it so I had to do it.

  965. So when you heard David Clark describe this new role for the Cabinet Office and you look at your memory of it, is this a vision that you can subscribe to?
  (Mr Heseltine) I am glad you think things have improved so much.
  (Dr Clark) I did not say that.

  966. I saw you nodding somewhere in that exchange, Lord Simon. Do you have a different view on the role of the Cabinet Office?
  (Lord Simon of Highbury) If you have great departments of state which are vertically organised, as the previous questioner was asking, how do you get better horizontal management of resource and application of strategy despite that vertical structure. The answer is that you have to have a strong centre. The question is, as we were saying earlier, how you organise it. Do you make the strong centre partially representative of the Treasury financial system and partially representative of what is the co-ordinating centre of government, the Cabinet Office, and partially strategic, which is presumably what the Prime Minister's office does, and all the young chaps think about strategy and formulation of the plan for the future. Somehow you have to pull all those three together. Having them operating separately is not getting a synergistic view of resource allocation coming through the single department budgetary system however good the Treasury is. This is because you are not marrying together the strategic political objectives with the flow of resource. Somewhere that has got to happen within the system. It either happens informally or formally. At the moment it is not formally structured in organisational terms.
  (Dr Clark) I used to think about it like this. We had the Strategic Policy Unit in Number Ten to try and think strategically. We had this strategic media unit, whatever they call it, to try and bring together the corporate message of government. The one thing we were always lacking was a strategic—and I use the word "strategic" here—management policy for government, not for the Civil Service but for government, to try and cope with this horizontal issue. That is the key issue we are facing, quite simply.
  (Mr Heseltine) I just want to make one important qualification. Of course the Cabinet Office consists of its own activities but also a very significant body of people seconded from other departments. I wish to distinguish absolutely between what I said about the Cabinet Office permanent activities and what you might call the secondees who are amongst the cream of the Whitehall officials. I personally do not go along with the idea of a Prime Minister's Office. I think it is quite incompatible with Parliament and the way things happen. It will simply involve the Prime Minister in everything that goes wrong.

Mr Campbell

  967. Like the President.
  (Mr Heseltine) Yes, it is a presidential system and we are not a presidential society. This Government has not yet seen the rough end of politics. The economy has been very benign for the last three years and so the idea of all this centralism and the Prime Minister can take all these political decisions has grown up. It is when the Prime Minister's back is against the wall and everything depends upon his or her determination that the rough end of politics bites. It is very important for, if you like, the Prime Minister to be able to get above the fray and to be able to dispose of Cabinet Ministers without them being able to say, "But you told me to do it, sir". I personally saw the process at work. I have never seen it successful. If you want a strategic view of government of some sort then you put one of your best ministers in charge of getting it. If you do not put the minister in charge you are not going to get officials to do it. If you put a lot of special advisers in to do it they are going to be resented and rejected by the officials anyway, and I happen to think that all these special advisers, the political ones, are going to be the Achilles heel about this Government's neck before long. I would get rid of all those. One of the worst things that has happened has been the politicisation—and we have played a part in it, nothing like the present Government but we did have the political advisers—of government. I would get them all out. Special advisers are quite different.


  968. You are tempting us down a path that we do not want to go down just now.
  (Mr Heseltine) It is not your field.

Mr White

  969. We are one of the most deregulated countries in terms of regulations but also one of the most complained about, mainly because of the language of regulation and parliamentary draftsmanship. We had a regulation yesterday at the Joint SI Committee which was 15 lines long, one sentence. Is that not part of the problem of the modernisation of government, that we are using language within government and mechanisms that are totally disconnected from the ordinary lives of people? Is that not an issue that if we are going to modernise government we need to tackle? Is that not one of the reasons why when a minister is coming in from a business environment the experience is not a very happy one?
  (Mr Heseltine) I was responsible for the bonfires of controls and I never, if I now reveal the full truth, had that much faith in it as an initiative. It is quite interesting that today I saw that there is a survey that this country has come out top as one of the best places to do business, and one of the reasons why it is one of the best places in which to do business is the lack of regulatory climate that exists here. Anyway, all of us pay lip service to getting rid of waste in the public sector and cutting this, that and the other, and I really was not persuaded that there was that much mileage in it, so I put the gamekeepers in charge of the game and I brought John Sainsbury in, because he was extremely articulate on the subject of what we could deregulate, and he brought in a lot of other people. After John we had Francis Maude. I would not like to claim that we had actually done that much but I was totally persuaded by the end of the day that there was not that much more that one could do. There were one or two quite interesting things. There was a huge battle between the Treasury and the Department of Social Security over the fusion of the VAT collectors and the National Insurance people. They fought like tigers when we tried to bring these two things together. The fact is that in a civilised society you are going to have regulations and you are not going to starve people and you are not going to burn them and you are not going to allow the kids to be mucked around by paedophiles or whatever it may be, and any politician that thinks that you are going to get rid of the whole edifice of a modern, sophisticated society is just making populist statements. There is a limited amount that you can do. The other thing about this regulatory thing is that so much of the total numbers of regulations that are paraded in the more extreme newspapers are simply the regular updating of inflation rates or whatever it may be, the social security rates or the local government orders that Parliament has said will be updated every year, so there is a great raft of these things that has to go through every year almost automatically. They are not regulatory at all in the sense that they are bureaucratic intrusions. We did our best and we did do some good work with building societies and things like that, but there is not a great reservoir of controls out there that you can safely get rid of.

Mr Trend

  970. Michael has answered almost all my questions without my having to ask them. Perhaps I could ask David Clark something. When we were talking about making government work better at the centre and about the horizontal business and the apparent extension in prime ministerial power in a number of different ways, setting up task forces, and all the political and special advisers and so on, did it seem to you in your experience of government that the Cabinet system was increasingly under stress and that we were heading towards a presidential style of government?
  (Dr Clark) Again I think there is a difference between the strategy, which is politics, and the delivery of policy advice, which clearly is the civil servants. I take slight issue with Michael. I accept that you can argue the case about whether there should be a Prime Minister's Department and we can make the point that we are not presidential, but Prime Ministers' Departments do operate in Australia and Canada quite effectively. In a sense you therefore have the collegiate nature of Cabinet ministers, which I think was Michael's point in a sense, that this Government has not yet felt the full ill winds of politics and therefore the Cabinet members and the collegiate nature of the Cabinet has not yet been put under stress. I think that is fair comment. In addition to that there is the issue of the strategic management of how you get departments to work together. It really is a nightmare. This is Andrew's problem about why do we not have more industrialists. These things are management but it does mean at a local level that you are probably going to take some very adventurous thing that Michael was trying to do and perhaps think about it. As I say, you can say to local government, "If you can put a decent bid in and you think you can do it better, why do you not run this service for us?", and bring things under this proper management structure straightaway. The problem is trying to get civil servants to work out how they are going to share their budgets. You need some strategic management.

  Mr Trend: We have recently (referring to Mr Heseltine's advice before he even gave it to us) asked for an organogram for the Cabinet Office, and we got one and it was completely incomprehensible.

  Mr Tyrie: Could you make it a task, Lord Simon, to produce us an organogram that is comprehensible?

Mr Trend

  971. What it is possible to see as time goes by is who has got the power and who has got the ear of the Prime Minister, how they are working through the system in a horizontal way, the different networks that are at work in government which seem to me anyway to undermine the idea of collegiate development.
  (Dr Clark) The Cabinet Office has another disadvantage. Because it is an advantage to have the cre«me de la cre«me of civil servants seconded in, it does mean they are in for two or three years and then they go, so there is not often a collective memory in the Cabinet Office that you may have in another government department. That is a problem which again we have got to try and tackle and overcome if we are going to have a proper strategic management. I come back to my point that these are very radical reforms, possibly from the outside if we are going to tackle this.

Mr Wright

  972. I do not necessarily subscribe to the view which has been mentioned by one or two people that people who go into the Civil Service do not expect a job for life. I think certainly at the lower end of the scale, people in local government would probably expect a job for life, and indeed I have seen many people in that experience. What concerns me is one of the statements you made, Michael, that some left to go into the private sector at the top. Is that not one of the problems, that the people we need to keep within the Service itself do leave for the private sector, not necessarily because they have got problems with the service delivery but more specifically because of the attraction to the private sector because of the increase in their wages that they could probably get?
  (Mr Heseltine) You are taking a very God-like view of your rights to control people's destinies. I think people are free to make decisions and they will go where the pastures appear greener for them, and so they should. The challenge should be for the Civil Service to create jobs and career structures and remuneration packages which can attract people back as people leave. That would be very good.

  973. Are you satisfied that the career structure is actually in place because you also mentioned that people are brought in from outside from the private sector into the Civil Service and presumably on that basis they were headhunted?
  (Mr Heseltine) Yes. I had no trouble with that. I can think of one or two people who said no but there were special circumstances then. I found it relatively easy to get the sort of people I wanted, on a short term basis I have to say, but two of them stayed actually. Peter Levene stayed. He came in 1984 and he was there at the end in 1997 in various roles. The public sector is the most wonderful place to work. It is a very exciting place providing the job definition is attractive and it can easily be. In a sense you may be back on the thought that I was trying to expand on, that when you get into the executive agencies you probably do get lots of people saying it will be a nice, safe place to be. If you recruit people whose attitude of mind is, "This is a nice, safe place to be", you will get nice, safe people and that is not quite compatible with what we have been talking about, which is a rather more adventurous and dynamic society. It is very easy for politicians to talk about adventurous civil servants. They do not want adventurous civil servants. They want civil servants who do as they are told because otherwise you have got someone doing things on your behalf that you are accountable for that you do not want done. It is very important to understand exactly what you want from civil servants. What I want from civil servants is the effective delivery of targets which are politically set.

  974. How many civil servants would you say had left the service because of a dispute with yourself whilst you were a minister?
  (Mr Heseltine) Dispute with me? It is not possible to have a dispute with me. I am the most reasonable man.


  975. Andrew Tyrie raised a point about Civil Service pension arrangements as to whether that was an insuperable block to this free movement in and out. I thought I saw Lord Simon nodding vigorously in assent. Would that be a common view, that that is a real issue to be grappled with?
  (Lord Simon of Highbury) I was nodding when Andrew was asking the question and listening to Michael Heseltine's answer. I thought the direction was going to be a conversation that we need more flexibility in the reward structures. Because we are coming out of a long term career structure into a much more flexible structure within the Civil Service which the private sector had to come to terms with earlier. I do not think for a second that the Service has come to terms with it yet. When I look at the report of the reforms that have been undertaken over the past year, the Report 2000, Richard Wilson's excellent document, I think it is very strong on leadership, very strong on the planning system and very strong on performance management. But if you read it, it is relatively weak on incentive and payment because it is very difficult to change the structure quickly. It needs quite a lot of courage at ministerial level and it needs quite a lot of inventiveness. I am not saying that you can pay the public sector like the private sector. You cannot. It would be too expensive and you would not find the grounds. But I think there has to be more flexibility and one of the flexibilities is the way that pensions are handled. That is why I was nodding. I think it needs a lot more work than that to think about how to make the system more adaptable to transfers.

Mr Campbell

  976. I remember many years ago when I was a young lad in the Labour Party listening to ministers like Tony Benn who used to get up on the rostrum and say, "I have got civil servants who will not do this, will not do that". The question here is: can civil servants resist the political will of their political masters? Is that a fallacy or do civil servants try and buck the system when it comes to the political decisions?
  (Lord Simon of Highbury) Can I answer from very limited experience as a minister? Just as in the private sector you will find occasions when your advisers are trying to tell you that what you want to do is probably not the best course, I found it usually the same as in the private sector: you listened to their advice and if you continued to disagree with them you told them what you wanted to happen and they would do it. I had absolutely no feeling or experience that what I wanted to do was being baulked by the Civil Service at all. What they do want to do is make sure that you have understood the risks of the decision that you are taking. They are very good at that. But if you have been trained in risk management, which most people in the private sector have, then it should not be a problem. But I would say that civil servants spend a lot of time on risk and they do not take very many. Risk management is the greatest difficulty within the system. Michael said earlier that they are cautious and they are cautious because they have never had a lot delegated to them and have never learned much to take risk and be responsible and accountable for it. The answer is that I never found them thwarting the political decision you wanted to take but sometimes cautious about its outcome.

  977. Is that the reason why we are getting so many political advisers now in government?
  (Lord Simon of Highbury) To try and move the system more quickly?

  978. Yes.
  (Lord Simon of Highbury) I have never had one so I would not know. I found it quite reasonable to move the system myself.

  979. As a minister, Michael or David, would you rather have a civil servant advise you or one of these special advisers or a political adviser? What would be the best? Is the Civil Service being pushed to one side because it has been political in the past?
  (Dr Clark) I think they give completely different advice. I found it reasonably easy to take a decision because I knew the buck stopped with me. You try to listen to the advice from your civil servants and also listen to the advice from your political advisers. I had two political advisers. One was young, very much Labour Party, and the other was a very respected former Professor of Politics, probably the leading expert on freedom of information in the United Kingdom. When he spoke he did it with such authority that even civil servants were pushed to challenge him. You have different forms of advice and certainly civil servants always accepted what you asked them to do at the end of the day. They made it quite plain on occasions, especially on appointments, that they did not agree. I found it was one issue where they would keep putting forward names which were the great and the good and I did not always think they were the right sort of people. I think the whole post-Nolan and Neill (and in my day Peach) situation is that I put much greater power into the hands of the civil servants when it came to making appointments. That is up to ministers to be quite clear that the names they are considering are acceptable and have been cleared for integrity. As I say, we used to put them through the Peach system so that we could make our own decisions. I do not think the Civil Service were greatly enamoured by my White Paper on freedom of information. I thought that did make the whole relationship between the minister and the civil servant and the general public a very different relationship. It was a very challenging relationship. I just got the feeling that they were not exactly enamoured by it. I am not talking about my own civil servants who were dedicated, a separate group of people, but the other departments, other Permanent Secretaries in their weekly meetings were not enamoured by that aspect of it.

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