Examination of Witnesses (Questions 380-399)
LORD MACDONALD OF TRADESTON AND MR DOUGLAS ALEXANDER MP
THURSDAY 18 JULY 2002
380. So monitoring and support are the key words here? On the one hand you are the head prefects. You keep an eye on what all these lads and lasses are getting up to, and you are reporting back to the headmaster about them, are you not?
(Lord Macdonald of Tradeston) No, I would be much more diffident in my description of our role. We simply try to support the departments. We are able to do that because there is no attempt to overshadow or to impose, so any talk about being enforcers is quite wrong. We work in a very supportive capacity. We need the goodwill, of course, of the Secretary of State and the Ministers and we work very hard in a whole number of different areas to try and ensure that that support is readily given.
381. I am not being facetious about it. Monitoring seems to me to be a very proper activity, having established the need for it, and for a department to know that they are being monitored through units, people whose job it is to do that and they know about the reporting system that is going to take place, quite clearly. If you look at Andrew Turnbull's paper, and what he is saying about his relationship now with the Permanent Secretary and so on, it is very clear that there is a different kind of monitoring going on here than was the case before, is there not?
(Lord Macdonald of Tradeston) It is a much more collaborative process perhaps than before and I think that is the important aspect of it. As I said, with a unit as small as the Delivery Unit, with only a couple of dozen people, you could not sit on top of departments trying to monitor them. That is not our role. What we try to show is ways in which problems might be monitored, where milestones can be used to measure, and in that way the department itself begins to pick up the expertise and take up the capacity as well, and begins to invest in it so that they can do most of these things for themselves. We do not see ourselves being in a permanent situation of monitoring departments. We are there to help enable them do it for themselves.
(Mr Alexander) As I say, I have only been in the appointment for a number of weeks but, speaking to ministerial colleagues outside the Cabinet Office, it was very clear that the Delivery Unit had established exactly, as Gus says, a collaborative and supportive role working with the lead Ministers in all these areas within those departments. In that sense I think it is a model of how I would intend to work, which is, as Gus said, far less grandiose than perhaps the characterisation you suggested. I think we can render assistance but recognise that ultimately it is Ministers who make the decisions.
382. Do departments now come to you and say, "Look: we are having problems in this area or that area. We are not going to hit our target if we do not put corrective action in. We need extra help"? Do they come to you and say, "We have got a problem. Can you help us sort it"?
(Lord Macdonald of Tradeston) They do not come to me directly in that way, but I think there was an understanding that began to grow that, while there were four key departments with a set of 17 objectives which we were trying to monitor in some detail across those four departments, it would be strange if you tried to keep the expertise that you were developing just inside that area. Other departments should benefit as well and therefore what has happened is that because of our close working relationship with the Treasury through the PSX process, the Treasury has begun to talk to departments about what we call in our jargon, `PSA Plus', which is to look at some of the more difficult areas of policy and think, "Is there anything that we have learned from the first year with the central units that could be migrated across to other departments as well?" That is one of the reasons why we look to expand the Delivery Unit in the months ahead and broaden the use of its techniques across the departments.
383. Listening to you, is there a feeling that this is a temporary arrangement and that once departments have got their delivery act together the central units are going to fade into the background or even fade away?
(Lord Macdonald of Tradeston) These units are so small relative to the whole of the Civil Serviceyou are literally talking about a couple of dozen people in the Delivery Unit and a couple of dozen people in the OPSRthat it would seem to me sensible, looking forward, always to have that capacity somewhere at the centre. The Office of Government Commerce, which reports to the Treasury, is a much bigger unit with a much larger brief and it plays a role now in Andrew Turnbull's new structures. The Office of the E-Envoy of course is a bigger unit too, but it has a larger remit outside our reform delivery agenda.
384. There is just one area I want to open up and colleagues will come in. We are interested in looking at what we call government by measurement now, the whole target stuff and league table rules and all this. As a result of what has been said this week we are now to know far more about how departments are doing in terms of meeting targets than ever before and are we are now going to apply the same principles to central departments as we have applied to schools, hospitals, social service departments? Are we going to have league tables at the centre, are we going to have beacon departments, are we going to have failing departments, are we going to have some departments taking over other departments? How is it going to work?
(Lord Macdonald of Tradeston) I do not think they are comparable, with respect, Chairman. You are comparing one school with another school or one hospital with another hospital. You cannot compare the Foreign and Commonwealth Office with the Cabinet Office. It would be difficult to find a ranking of that kind.
385. I am sure colleagues will want to come back to that. The final thing is on targets themselves. When I look at the White Paper that came with the Spending Review documents this week describing how this system is now to work, and the PSA system is described somewhere in here as the contract between the Government and the public, the problem is that if I read this paragraph called "Enhancing Accountability"this is in relation of course to PSAs and the whole thingwould any member of the public understand what is being talked about? Let me read this to you: "Most targets have been rolled forward in line with the new spending plans with adjustments where necessary to reflect experience. In some cases separate targets have been combined under a new headline target where they cover closely related areas. Some of the existing targets have not been included because they are an input into one or more PSA targets rather than outcomes in themselves. These will normally be included in the department service delivery agreement. A small number of headline targets will not be carried forward as either new PSA or SDA targets where they have already been or soon will be met or superseded by new targets or events." If this is our contract with the public what does the public make of that? Do you understand it?
(Lord Macdonald of Tradeston) Chairman, speaking as a former journalist, I would have been able to re-write it, I think. It may be that the way it is written is simply for a professional audience where there are assumptions made about
386. It is a contract with the public, it says.
(Lord Macdonald of Tradeston) Yes, but I think that it is a contract with the public that clearly has to be taken by the departments and put into plainer language and rolled forward if you like into the public domain in a way that is much more comprehensible. I do not dispute at all that it is very dense and in places would appear to be difficult to understand unless you are coming at it with a very technical understanding of the acronyms and so on.
387. It is not just the language. It is the fact that, unless people have confidence, unless the targets have credibility and are properly evaluated, the system just will not be seen to work for people. Getting that right and getting it into a form that is understandable and checkable becomes very important, does it not?
(Lord Macdonald of Tradeston) You touch on something that is extremely important in all of this, Chairman, and that is the fact that we have five million people employed across the public sector. If these targets are to be meaningful to them they have to be understood at every level of organisation, and that is a huge challenge. I believe that Government is looking at ways in which we can get information down through communication plans. Douglas in particular will be involved in this area, to try and make sure that people do know what their targets in their organisation are in language which they can understand and can pass on to their customers, to the citizens.
(Mr Alexander) I was conscious when Gus described himself as a former journalist that I am a former lawyer and no doubt we could incur a great deal of legal expense in interpreting the particular paragraph you read out. I think the more general point that has to be drawn out in the particular example that you cite is that there is a risk, frankly, given, as I prefaced my remarks by recognising, that government is a complex organisation, that you may talk about something, which I regard as being quintessentially understandable, that is, a desire to drive forward our expectations and improvements in schools and hospitals and other services which people encounter every day of their lives, in a language which can appear overly technocratic. As a politician working at the centre in the Cabinet Office I regard one of the challenges that we have in communications terms is while we are ensuring that we take forward that process of reform of organisation, as Gus has described it, we should always have a weather eye to exactly the point that you observe, which is that we need to be able to make sense of it for, I have to say, political reasons as well as reasons of good governance, that there is an interest in making transparent not just individual policies but actually meeting the goals that lie behind those policies and indeed the values which are the foundations from which those goals emerge. Actually I think that is one of the challenges for politicians which is distinctive from some of the work that is carried out by officials in this regard.
388. What after a year do you see the role of Ministers being?
(Lord Macdonald of Tradeston) The role of the Minister, as ever, is of course to be accountable to Parliament for what is going on inside the Cabinet Office, to ensure that we can call upon the resources of the Cabinet Office and make sure that they are deployed in the areas that we believe fit the priorities of the Government. We believe too that, as Ministers, we should work closely with our officials and that we should liaise with other officials and politicians right across Whitehall to try and establish the right kind of positive working relationships. I think we have had some success in that in the first year.
389. But do you not think that at the new centre the role of Ministers is going to be superseded by Cabinet Office advisers, through Mulgan and Thomson and Barber and so on, because the role that is going to be taken up as pushing the centre agenda ground forward will be done by a sort of intellectual group of people in the centre with Ministers being told where, what and how to think and that a very important part of the brief will be the background put in from these groups?
(Lord Macdonald of Tradeston) I do not have fears in that direction. As Douglas has said, we were both appointed to the Prime Minister, we report to the Prime Minister. We are in a position to know his mind on these matters, but we are also aware that we are supporting the rest of Government. There are over 30 Cabinet committees and I am a member of 19 of them and Douglas is on 16 of them, so we have a fairly broad involvement in trying to take Government policy forward. Therefore I do not think that the breadth of that information and the political insight that we would hope to bring to it could easily be replicated by officials.
390. That is an enormous amount of bodies you sit on between the two of you. How do you achieve it? Here you are in the centre ground. There do not seem to be a lot of people out there. You have got 20 roughly in each of these groups. You have got you guys sitting on just about everything else. Is not the other way of looking at this that you might lose control of the situation if you have got too much to do?
(Lord Macdonald of Tradeston) Fortunately we are supported by very good officials.
(Mr Alexander) To echo Gus's words, we draw on the expertise of a great deal of outstanding officials, but of course, as we are scrutinised before a committee like this, the allegation can be laid that we are either too powerful or not powerful enough. It depends on the questioner. I think it is fair to say that, given the evidence that was presented to you by some of the people that you have mentioned in your question, they themselves were keen to emphasise that ultimately advisers advise and Ministers decide.
391. That is why we are looking at this, to see what the balance is. Of course, if you get the balance wrong and your targets wrong,we were talking about targets. Let us just look at those for a second. You were talking about the way targets are achieved. You have had a year. How do you think your targets are coming on? Are you hitting the targets that you were expecting to hit?
(Lord Macdonald of Tradeston) If you go back to 1998 and the first Comprehensive Spending Review, there was a set of targets that were put forward then and the great majority of those have been achieved. The process started off with about 300 targets in 1998. It came down in 2000 to I think 160, and this week it has been reduced to around 130 PSA objectives if you like. There are other targets that follow from that. I come from a management background and therefore, apart from very short periods, I have always worked in big companies, so it does not surprise me that you have a capacity if you like at head office, nor does it surprise me that to manage properly you have to measure. We are trying to measure fairly comprehensively but I hope not in a way that distorts. You have this dilemma which in business would be largely invisible. If you set 100 targets for a work force, in an ideal world would I not be right in saying that 50 would be achieved and 50 would be missed if they were properly stretching targets? Probably as a practical business man you would say, "Let us try and set these so that they can achieve maybe 80 per cent of them, if we can get the judgements right, because we do not want half the workforce going around demoralised, saying, `I have failed'", so you are very likely looking for an 80/20 ratio. In government, of course, people anticipate that 100 per cent of targets must be met, but if they were they would not be well set targets, by definition. The difficulty with politics of course is, hit 80 per cent and you will not get 80 per cent of the credit. You will get attacked by the Opposition on the 20 per cent you have missed.
392. Let us look at the ones you have missed, nobody in particular because that is not what we are here for. If you have missed and then you have to take it up with the department, you have to make sure that that department either finally discover why they have missed or resolve the miss. How do you do that because then it is the Minister's responsibility, or is it the Delivery Unit's responsibility to hit that target?
(Lord Macdonald of Tradeston) We have a public expenditure process, a PSX process, and that is the Cabinet Committee on which I sit, chaired by the Chancellor, that monitors the development over the Spending Review period by each department. The Prime Minister also holds regular meetings every six weeks or so with the Secretaries of State to look at some of the key areas in terms of targeting and that is where the Delivery Unit and the OPSR and others come in. We help to put together with the department an agenda which says to the Prime Minister, "there are maybe half a dozen issues here, Prime Minister, that the Secretary of State wants to raise with you or you want to raise with the Secretary of State. Here is the background information. Here are the graphs and the trends and the milestones, all the information you need." We then sit back and the Prime Minister and the Secretary of State, supported by his officials, have a discussion about why targets are being missed or met.
393. So what do you do? Do you name and shame the department which has missed it? Somebody must be accountable for missing targets because you set the target from the centre. Is it not the responsibility then of you to also say, "Look; they have missed that target because . . ." or "This is . . ." or "They are not capable"?
(Lord Macdonald of Tradeston) The targets are set in this process of consultation with the departments through the PSX process. As I say, many of the meetings are chaired by the Chancellor, some are chaired by the Chief Secretary of the Treasury and I, as it happens attend nearly all of them. The departments will work with the Treasury, and indeed with the Delivery Unit, increasingly to say, "How do you want to set these targets in a way which is truly challenging?", and therefore the setting of the targets is a collaborative process and the setting of the targets for the 2004 Spending Review will probably begin in the next few weeks.
394. So who is responsible for the targets? The Prime Minister?
(Lord Macdonald of Tradeston) No. The targets are the responsibility of the department, of course, and we try to support them in achieving those.
395. Are they set by the Prime Minister and the centre?
(Lord Macdonald of Tradeston) They are set in agreement with the Treasury, and of course the Prime Minister as the First Minister.
396. Are they set by the Prime Minister? Why are they being set by the Treasury? Have you got other targets you are trying to hit? Surely the Prime Minister is where the buck stops?
(Lord Macdonald of Tradeston) No, I am sorry. I should have perhaps explained that these 130 Public Service Agreements are set by the Treasury in discussion with the departments and with the involvement of central units as appropriate. Once those are set the Prime Minister is able to say, "There are a dozen (or a couple of dozen) of these targets that look to me particularly important and perhaps particularly difficult. Can we try and keep sight of those in my regular meetings with you?" So we would have perhaps four or five particular targets for the Home Office that the Prime Minister would want to see consistently monitored for his regular six-weekly or two-monthly meetings. The PSA would be what the Prime Minister was monitoring but that PSA would be set by the Treasury.
397. It seems to me that the centre is the Prime Minister. Underneath the Prime Minister is the Cabinet Secretary and the Ministers and if this is all delivering up to the central point, which is ultimately 10 Downing Street and the Prime Minister, is it the Prime Minister's department? Is that what you are saying?
(Lord Macdonald of Tradeston) The Cabinet Office is the department that supports the Prime Minister but it also supports collective government. It supports in general terms the drive for reform and delivery and it also supports our efforts in security and intelligence, so we have four functions, one of which is to support the Prime Minister.
398. Before you leave that, Ian, because we are trying to log the system as we go along here now, these key PSAs that the Prime Minister does his regular stock takes on, are these ones that we all know about or are they ones that he just picks?
(Lord Macdonald of Tradeston) They are ones that in the past year he has felt to be particularly important.
399. But these are entirely internal to the system? These are not public?
(Lord Macdonald of Tradeston) Yes, they are now public. The Treasury makes them public and I think we will be updating every six months now.
1 Witness Correction: priorities. Back