House of Commons - Public Administration - Appendices to the Minutes of Evidence

Select Committee on Public Administration Appendices to the Minutes of Evidence

Memorandum by Prospect (PSR 29)

INTRODUCTION

Prospect, formed from the amalgamation of the Institution of Professionals Managers and Specialists and Engineers and Managers Association on 1 November 2001, is a trade union which represents over 104,000 scientific, technical and specialist staff in the Civil Service, research councils, other public bodies and an increasing number of private companies. Our membership profile has provided us with wide-ranging and significant experience of engaging in the type of issues which the Committee now seeks to investigate.

In our evidence we will concentrate on the central government, predominantly the civil service and associated NDPBs, although many of the principles will apply elsewhere in the public service. Our members cover a huge range of occupations and specialisms and for many of them the public service is the only place where they practice their skills. Many are involved behind the scenes on policy, advisory or regulatory functions or are in agencies providing scientific and technical research services and have little or no direct contact with the public but are nevertheless part of the government machine for delivering health and safety, defence, disease control and environmental protection. They include, for example, research scientists, health and safety inspectors and air traffic controllers.

The civil service which the present Government inherited in 1997 had changed out of all recognition to the one which existed in 1979. The Civil Service declined by one third between 1979 and 1997 and in the process was transformed from a unified civil service into a fragmented multitude of executive agencies, quangos and various outsourced contractors in the private sector. The Conservative Government's approach was dictated by an ideological objective of reducing public expenditure (public spending fell from 44.8% to 38.5% of GDP between 1979 and 1998); a conviction that private is always better than public provision; and a residual view of the state. As Stephen Dorrell, former Financial Secretary to the Treasury, said in November 1992:

"We are no longer simply looking for obvious candidates for privatisation. The conventional question was `what can we sell?' That question must now be turned on its head. Now we should ask ourselves `what must we keep?' What is the inescapable core of government?"

It is Prospect's view that this approach and the cuts, closures and fragmentation which resulted played a significant part in enabling the BSE and to a lesser extent the Foot and Mouth Disease crises to develop and in making the handling of them less effective than it should have been.

Prospect has no desire to turn the clock back. We wish to see an effective and efficient public service and as far as the civil service is concerned we have been arguing for reform since before the Fulton Report of 1969. Many of Fulton's proposals for reform were ignored and some of the basic principles he advocated still apply today.

A world class Britain needs a world class civil service. It needs to be equipped to grapple with the technically complex social, environmental, economic and other global challenges, in a climate of constant change. It needs to be more responsive, innovative and professional in its approach. But such an organisation depends more than ever on the quality of its staff, the degree of expertise and training they have or acquire, and their commitment to provide a high quality service to the public and their political superiors. Good quality staff in turn depend on good employee relations and personnel management, equal opportunities for all and the prospect of a rewarding career.

We support the Labour Government's commitment to modernising government and the partnership approach which has been adopted. Although we are disappointed that two of the largest privatisations to affect our members—the NATS and the DERA public private partnership—have taken place under the Labour Government despite the opposition of the public and most expert opinion in the case of NATS and against the background of major concerns expressed by politicians and by experts in military matters in Britain and abroad in the case of DERA.

Prospect, as IPMS, signed the partnership agreement in 2000 with the Cabinet Office establishing the framework within which we will work with Government and other stakeholders to deliver quality public services. In order to do this, however, certain conditions need to be met. These include:

— Adequate funding for public services.

— New public accounting and PBSR definitions which correspond to the realities of financing and managing a modern public sector.

— More flexible Treasury limits to enable the public sector organisations to compete effectively.

— Willingness to use a variety of forms of public company which can raise private sector finance for investment without hitting Treasury limits.

— Freedom of information and transparency in both public, private and voluntary sectors involved in delivering public services.

— Effective audit by Parliament and by public as customers and citizens to enable full accountability and feedback into policy.

— Robust procedures for disclosure, review and management of conflicts of interest.

— A shared vision and coherent framework which links policy and execution.

— A civil service more professional, innovative and proactive in its approach.

In our answers to the questions we will elaborate on these key issues.

QUESTIONS

PRINCIPLES AND STRATEGY FOR REFORMING PUBLIC SERVICES

1. What should be the principles guiding the reform of public services?

As far as the civil service is concerned the constitutional position of British civil servants was established almost 150 years ago following the Northcote-Trevelyan report. Since Britain has no written constitution or legislation on the status of civil servants, the framework within which the service operates is a combination of various written authorities and conventions. The three main principles underpinning the modern civil service are:

— Ministerial accountability through Parliament.

— The objectivity, impartiality and political neutrality of the civil service and of civil servants.

— Fair and open competition in the recruitment and promotion of civil servants.

Traditionally the British civil service has also been a unified service. The concept was strengthened in the 1968 Fulton report leading to common methods of recruitment and integrated structures for pay and grading across all grades and levels. But the last fifteen years have witnessed an accelerating break-up of the unified civil service, through devolution to departments and agencies and the extension of private sector involvement in the civil service via contracting out, strategic partnerships with private companies, the Private Finance Initiative, privatisation, and the growth of "spin out" companies.

During this process the civil service unions have sought to defend the key principles of impartiality, integrity, objectivity, selection and promotion on merit, and accountability through ministers to Parliament. These principles were designed to produce equal treatment for all citizens, on their merits and without undue regard to considerations of profit and loss. We believe these basic principles are still valid and must be protected and enhanced. It is vital that these values, now embodied in a code of ethics, should be built upon, disseminated widely, and extended in appropriate form to all who perform government functions whether public bodies or private contractors.

Within that broad context, however "What matters is what works." Prospect takes a pragmatic approach to whether a service should remain in the public sector. We say they should be performed in the most appropriate place, and this should be judged on merit. To make such an assessment we need to have criteria by which to judge the appropriate structure for government services (See Question 8). However, our experience informs us that what works in public services is seldom "for profit" provision, precisely because most services are inherently unprofitable designed as they are to apply to all citizens, on their merits and without undue regard to considerations of profit and loss. Put them in the private sector and unless they are very closely regulated access to services will become governed by ability to pay, rather than need, and unprofitable areas will be eroded and may eventually disappear.

In reality, most decisions on private sector participation or outright privatisation of public services have not been based on "What Works" but on ideology under the Conservatives; and since 1997 it has been largely governed by Treasury constraints and particularly the refusal to change the definition of the PSBR to exclude expenditure on capital investment. In the case of the National Air Traffic Control Service, for example, it is a service which pays its way on the basis of charges but because of the Treasury spending limits, and in this particular case a "black hole" in the budget inherited from the Conservatives, money for investment could only, it was argued, be provided by the private sector.

A positive strategy for reforming the public services must include adequate investment in infrastructure and in skills and not be primarily motivated by cost saving.

2. Does central government have clear principles and an effective strategy for reforming public services? Does it need to have a strategy at all, or is it better to let public bodies make their own arrangements for improving services?

Since the 1980s we have witnessed what some commentators have called a hollowing out of the state. Government functions have passed to a variety of agencies: some remain formally within the civil service; some have been privatised completely; some have been contracted out for finite periods; some have been allocated to quangos of various types; some have been given to voluntary bodies and charities. It is our view that no obvious strategy or criteria has been used to determine any of the above.

For example, during the Conservative administration the areas which happened to come under Michael Heseltine were privatised wherever possible. For example, all the public sector research establishments in DOE and DTI were privatised except for the small National Weights and Measures Laboratory. But they were privatised under a wide range of mechanisms including trade sale (NEL), flotation (AEAT), company limited by guarantee (LGC, BRE, TRL), and Go-Co (NPL).

NEED FOR A COHERENT AND CO -ORDINATED APPROACH

It is essential to have a coherent strategy and co-ordinated approach. If the organisation is fragmented and has a wide variety of ownership structures even for very similar services it makes it extremely difficult to operate as a coherent entity. The customer-contractor principle and the tendency to focus almost exclusively on price can lead to the neglect of long-term capabilities. Government by contract may provide a degree of flexibility for switching between sources of supply or attracting new skills but it does not provide the long-term collective memory required to maintain continuity. The funding cuts, privatisation and contracting out have had a major impact on the ability of government to co-ordinate effectively and to offer impartial advice in response to emergencies such as the BSE or FMD. As Peter Riddell pointed out in relation to the FMD emergency MAFF received much of the blame and certainly struggled to keep pace with the outbreak.

Times

THE NEED FOR INTELLIGENT "CUSTOMERS" AND DECISION-MAKERS

It is also crucial to have within government "intelligent" or "informed customers". In the science and technology context they were described by Sir Peter Levene and Professor Bill Stewart, then Chief Scientific Adviser in 1993 as follows:

"The informed customer should identify whether research needs to be carried out, have knowledge of the organisation capable of carrying out the work, assess the merits of alternative contractors and evaluate the end result. They note that the range of expertise required is unlikely to be found in one person and that the function needs to be properly resourced."

As a result of the privatisation, contractorisation and expenditure cuts there was a continued decline in departmental funding for science and technology and an associated decline in the number of scientists still left in government to act as "scientifically intelligent" customers and decision-makers and to provide support in depth to the scientific advisory and regulatory structures. The latest "Science Engineering and Technology Statistics 2000" on SET expenditure and SET personnel in government show a decline of 25% from 1986/7 to 1998/9. The implications of this decline and other factors for scientific capability in government could be seen in the Council for Science and Technology report "Review of Science and Technology Activity across Government" of July 1999.

"In the course of our review it became clear that overall the Government attaches considerable importance to the way in which S&T are used by departments. We saw examples of good practice in all the departments we visited, but we were not convinced that any department was really staffed, organised, or sufficiently aware to make the best possible use of science and technology in delivering their short and medium term objectives and targets; and in formulating their strategy for the longer term. We are concerned that the resulting weaknesses in their ability to understand, and to respond to, rapid change in the external world create an increasing risk that wrong decisions will be taken, with potential for substantial damage and costs to Government and society"

The implications in the context of BSE and FMD have been picked up by the Chief Scientific Adviser, Professor David King who almost as soon as he was in post found himself advising the Prime Minister on the handling of the FMD outbreak. He said that the cuts in spending and staff in both MAFF and BBSRC and the privatisation of Public Sector Research Establishments (PSREs) had removed many sources of advice and experienced scientists until senior policy making positions both within science and more generally. As he said in a recent "Nature" article,

"The net result is that we've lost a fair amount of the science base from within the civil service, so we don't have these people bubbling up into top positions. The problem with an organisation that out sources all of its resources is that, if it does it too rigorously, it no longer knows even what questions to ask."

A similar stripping of essential scientific and professional expertise has also occurred as a result of the privatisation of DERA from the Ministry of Defence. Establishing and retaining such an "intelligent" customer or decision-maker resource within government is even more necessary where privatisation and contracting out have taken place. Expertise has to be acquired which could previously be obtained through the in-house research establishments. These costs will be substantial if the job is to be done properly, but they are essential if departments are to commission the research and professional advice on which good quality decision-making depends.

Similar considerations apply to another technically complex area - information technology. This has been a favourite target for contracting out, e.g. in the Inland Revenue where EDS was allocated a major contract covering a key part of the system. But such contracting out also requires a highly intelligent customer to specify the requirements. Indeed, many IT system failures can be attributed to the faulty translation of highly complex needs into a satisfactory computer specification. To contract out both the technology and the function itself magnifies these problems and reduces the ability of the department to specify its own needs in future, or even to be aware of what is possible. Such capacity will pass into the hands of the external contractor placing the civil service at a severe disadvantage both functionally and in terms of future costs.

REBUILDING GOVERNMENT CAPACITY

It is therefore essential that a close link be maintained between departmental policy-making and its execution. Many executive arms of government are multi-functional, and to compartmentalise their various tasks into separate institutions, especially if privatised, removes a wide range of capability from the remaining core. Above all it is vital that there should be a critical mass of professionally qualified staff within the government machine not only on professional and technical SET work, but also to bring a professional and technical dimension to more general decision-making in the civil service. The impact of the customer-contractor principle and the need to rebuild technical and professional capacity within the civil service are dealt with in more detail under questions 8 and 14.

A PARTNERSHIP APPROACH

As far as developing strategies for reform are concerned these should be done in partnership. A good example is in the Ministry of Defence where after a history of contentious privatisations and "contracting out" of work the trade unions and management have evolved a joint approach towards improving efficiency in the department and assessing the options for improving performance in-house before any commercialisation options are considered. In addition training on "performance improvement" is being given as part of the partnership approach. The new guidelines on commercialisation options make it clear that there is to be no pre-disposition either way for in-house or PPP solutions. All of these developments are part of the Better Quality Services Initiative within the Directorate of Business Improvement within MOD.

3. Do the devolved institutions and local governments have clear principles and effective strategies for reforming public services? Could there be a role for strengthened regional institutions?

Our comments in questions 1 and 2 would also apply to regional and local levels. No doubt, strengthened regional institutions would make a difference, however effective democratisation of the process essentially depends on transparency, which has been all too lacking with regard to the Private Finance Initiative, for example, at every level. Whereas the public financing of public infrastructure can, in principle, be scrutinised by the electorate, the details of privately financed deals are too often shielded from independent scrutiny.

As far as efficiency and effectiveness are concerned devolution undoubtedly adds extra hurdles for communication and execution and provides scope for conflict. So there must be co-ordination to avoid confusion. It is vital that UK wide co-ordination of standards and enforcement can be achieved and expertise called upon easily, particularly on matters of health and safety such as e.coli 0157 and BSE.

BALANCING DEMOCRACY AND EFFECTIVENESS

In cases where executive authority lies with the devolved institutions there could potentially be serious divisions on policy and execution if the government of the UK and the Scottish Executive were from totally different parties. At the moment there are clearly tensions and anomalies arising from different priorities and policies e.g. in student grants and policies towards financing elderly nursing care. But this can be creative and help show how different way of doing things might work. In the case of agriculture, for example, the Scottish system is much more "joined up" with most of the educational, advisory and research services involved in the food chain still in the public sector; whereas in England and Wales they are much more fragmented. This may help explain what appears to be greater speed and effectiveness in handling disease outbreaks north of the border.

It is also important that resources are not spread too thinly or produce wasteful duplication. In the case of Regional Development Agencies, as the latest DTI Review recognises, there needs to be a rationalisation of modes of delivery and strengthened back up so that the roles can be carried out effectively. There has to be a balance between local democracy and influence on the one hand and effectiveness of the service on the other.

4. What would be the consequences if there were significant differences between the policies adopted by central, devolved, regional and local government on public service reform issues?

It is not really a case of "what would be" but what has developed already. We have already spelt out in answer to Questions 1 and 2 how we believe the fragmentation of central government has been detrimental to the delivery of policy and the co-ordination of activities. But there is also a crisis of public confidence and accountability. As Richard Mottram, Permanent Secretary at DTLR has said, a principal challenge facing government in the future is the reconstruction of those networks through which government had previously secured policies and public assent.

As far as devolution is concerned, as we have said in Question 3 there already are serious divisions of policy arising from the devolution of executive authority which can be creative and experimental as well as posing problems. But it is essential that coherence and co-ordination is maintained as far as possible in order to optimise service delivery.

5. How do we know if public service reform is effective?

One way is through performance measurement. But it has always been more difficult to measure outputs than inputs. Effectiveness has been defined as the extent to which policy inputs meet policy aims, or outputs achieve outcomes. In its assessment of the Next Steps initiative, the Public Accounts Committee stated in its 38th report that the quality of services to the public should be given as much importance as improving the economy and efficiency of their delivery. We agree. Accountability for the nature of performance indicators and performance out-turns is the responsibility of the National Audit Office, which carries out both certification audits and value for money studies for agencies and other bodies.

MORE EFFECTIVE PARLIAMENTARY SCRUTINY

There needs to be more effective parliamentary control of value for money with greater concentration on outputs/levels of service and cost/benefit analysis of activities and less on detailed study of inputs. We propose these reforms include:

— More power to select committees to monitor overall impact and to call for the Comptroller and Auditor General (CAG) to carry out reviews of efficiency and effectiveness.

— The rules of the Public Accounts Committee, the Comptroller Auditor General and the National Audit Office need to be clarified to ensure they have the power to monitor new forms of public funding and service provision in both the private and public sectors, including empowering the CAG to follow public funds and audit all NDPBs and public companies.

— Financial and managerial information produced in relevant and intelligible format would greatly aid effective monitoring of value for money. The widespread use of "commercial in confidence" to restrict information must be curbed. The role of external auditing and of the PAC is crucial in maintaining standards of performance and probity in public bodies.

— It is therefore essential that audits of public bodies continue to be done by the NAO and the Audit Commission and they are not privatised or contracted out.

The Financial Management Initiative encouraged the development of performance indicators throughout the civil service but they were often used only superficially. The Next Steps initiative produced more serious analysis of performance because of the need to set targets for agencies to pursue. In theory a reliable system of performance indicators should enable there to be hands-off control of the agency. The development of effective performance indicators becomes even more crucial where work is contracted out.

EVIDENCE BASED POLICY, PERFORMANCE MONITORING AND REVIEW

It is important that policy and the assessment of reform is based on clear evidence. At the moment much of the quantitative and qualitative evidence is lacking. We point out elsewhere how the discontinuity of the project/contract mode of funding has depleted and the science engineering technology database but the same applies to the social sciences. Information is gathered in a spasmodic and fragmented way and analyses are rarely brought together. Just as science and technology capacity in government has been damaged, so other knowledge specialists in government are thin on the ground and have often been compartmentalised into particular departments. It is worthy of note, for example, that only in the latest DTI Review by Patricia Hewitt, has it been suggested that a Chief Economist be appointed in that department.

Another way of testing performance is by the direct reaction of the customer/client, an approach which gained political impetus from the Citizen's Charter initiative. Although consumerism on its own is not a sufficient test of performance in the public services, especially for those with a strong political dimension, it is nevertheless an important one. In many public services, however, citizens will not have the normal consumer options of taking their custom elsewhere. We might dispute the merits of the Private Finance Initiative, for example, but if we fall ill we may have to go to a PFI supplied hospital, whether it is performing well or badly.

THE CONCEPT OF A PUBLIC SERVICE ETHOS AND THE INVOLVEMENT OF THE PRIVATE SECTOR

6. Is the concept of a public service an anachronism?

Certainly not. Public services are not like other commodities. They exist to support the social, economic and environmental well being of communities and/or where a community decides that the market alone cannot provide a particular activity. The state then assumes some degree of responsibility for the service: by funding the service or by regulating its quality and delivery. In undertaking this, the state also assumes the ultimate responsibility for the risk of the service failing—a risk for which there can be no adequate financial compensation and a risk that cannot be transferred from government, no matter who actually provides the service. The cases of Railtrack, the London Tube and the National Air Traffic Service (NATS) make this absolutely clear. Railtrack has been taken into "administration" because of a total loss of confidence in its safety record as well as its ability to raise capital. The PPP for the London Tube is raising serious safety problems because of the number of "contractual interfaces", a problem also found in Railtrack and a potential problem in the privatised NATS if it starts dismantling its engineering staff and contracting out its maintenance services in "Railtrack" fashion. Moreover, the new NATS PPP which was established primarily to take the burden of raising capital off the Treasury books, finds itself, ironically, facing major problems of finding both capital and running costs in the post 11 September environment. Although in the case of both Railtrack and the NATS PPP it could be argued these problems are a result of catastrophic incidents it is precisely the risk of these sorts of incidents, as well as the issue of passenger safety, which means that the responsibility must lie with an accountable government and cannot be permanently shifted to the private sector with any degree of confidence.

7. IS THERE A PUBLIC SERVICE ETHOS, AND HOW CAN IT BE DEFINED?

Opinion polls show that the public believes that there is a public service ethos. Asked whether it matters if NHS services are provided publicly or privately, so long as they remain free at the point of use, a clear majority of people say it does not. The same applies to the private management of public hospitals. But ask people if, in general, public services should be run for profit and two-thirds say they should not—with virtually half saying they should always be run by the public sector:- (see Question 17 for more details)

Nicholas Timmins is probably nearest the truth in saying

Financial Times

Further illustration of this is provided by our members in ADAS. ADAS is the advisory service to farmers and others in the agricultural field, which used to be an agency under MAFF, and was privatised in April 1997. Our members report that:-

"ADAS management have spent the last four years trying to change the public service ethos and replace it with one more suitable to the private sector. The Foot and Mouth crisis gave a clear demonstration that the public service ethos with regard to the delivery of work is still alive in ADAS even after four years of trying to replace it. Many ADAS staff were called to the front line to assist with a wide variety of duties. A significant number of staff, whilst struggling to keep up their normal work spent evenings and weekends on Foot and Mouth duties. Even when it was known that no overtime would be given they still felt the need to go and do whatever they could for the industry which they `served'."

At this individual motivational level we believe there is on the part of most public servants, particularly where a conscious career choice has been made to enter the public service, a preference for working for the public good as opposed to private profit or to provide commercial products or services. Hence there is often great resistance to "privatisation" of areas such as DERA which goes well beyond the uncertainties over future careers or fear of change.

FUNDAMENTAL PUBLIC SERVICE VALUES AND CHARACTERISTICS

However, the notion of a "public service ethos" can be defined much more widely to cover the fundamental values and characteristics of the public service, and the management structures, with their associated logics, by which they are carried out. As far as the civil service is concerned the Treasury and Civil Service Select Committee's report on the Role of the Civil Service in 1994 stated clearly that:

"It is our conviction that the values of impartiality, integrity, objectivity, selection, and promotion on merit and accountability should act as unifying features of the British civil service."

These values have come to the fore again particularly in the concern over standards in public life and the subsequent Nolan Rules.

In doing our own analysis of the civil service and its future (IPMS "Civil Service 2000" June 1996) we came to the conclusion that there were certain key characteristics which recurred as underlying justification for civil service provision. They included not only values or standards but also degree of "public interest" and mechanisms for advice, management and delivery. These key characteristics include:

— The lack of alternative, competitive sources of external supply

— Consistency, quality and reliability of service delivery

— Efficiency and effectiveness

— Depth and range of expertise

— Retention of basic "intelligent customer" capability

— Accountability

— Integrity, impartiality and independence

— Confidentiality, security and political sensitivity

— Equality of treatment

— Over-riding public interest

— Good employment practice (including union recognition)

— Legal immunity

Some of these characteristics, especially those relating to accountability and impartiality are unique to the public service. Others are not and would be common to the assessment of many services in the public and private sector alike. Analysed into its separate elements there is probably no single defining characteristic but taken together the "public service ethos" can be seen at one end of a continuum of characteristics and "buccaneering" private capitalism at the other end.

8. How is the public service ethos different from the private (or voluntary) sector ethos?

As far as motivation is concerned there may be little difference between the public and private sectors. This is especially likely to be the case when the voluntary sector is brought into the equation, where one might argue that their high standards of "altruism" and concern for the particular communities which they serve have been a major factor in their use by central and local government to deliver services. But the key issue is that regardless of the "intent" of the workers, commercial requirements in the private sector may serve to distort or inhibit their ability to deliver public service. Private sector business has a different logic and economy of incentives to the public service.

George Monbiot in his book, "Captive State", puts it thus:

"It is also true that many corporations are efficient and well managed. But they are, by definition, managed in interests at variance with those of the public. Their directors have a fiduciary duty towards the shareholders: they must place their concerns above all others. The state, by contrast, has a duty towards all members of the public, and must strive to achieve a balance between their competing interests" (Pages 13-14).

A member in the privatised ADAS, having experienced it both within government and as a privatised organisation, puts the difference as follows:

"The public service ethos in terms of delivery is different from that of the private sector as it is not orientated about financial gain but is about doing a good job, providing a service. It is about using one's skills and experience for the good of others. It is about providing the customer with everything that the person who is giving the service thinks they might need to know even if they have not asked for it. In the private sector this is seen as over delivery, inefficiency, wasteful of resources. The Private sector ethos is about doing the absolute minimum to fulfil the contract. Only doing what is being paid for. Not going that one step further for the benefit of the customer. That is not to say that work is skimped or below standard but on the bottom line the driving force is always financial and not for the good of the customer."

Loss of Government Expertise and Synergy through Privatisation

One of the impacts of privatisation and contractorisation which has not been sufficiently acknowledged by government is the fact that many of the core public service functions have been dropped or made more difficult and previous synergies between policy and execution lost, as well as the loss of scientific capability.

An illustration of this issue is provided by the experience of our members in the privatised Building Research Establishment (BRE). The following are elements of its original public sector role within the Department of Environment and Transport (now part of DTRL), which BRE either no longer fulfils at all or has reduced:

— Some areas of expertise have disappeared

— No more "free" instant advice to Government unless within a contract

— Reduced free advice to the public

— There is a focus on short-term financial gain rather than long-term investment

— There is a reluctance to maintain capabilities without guaranteed funding

— Government is commissioning less research

— Additional layers of management to pay for—i.e. the research management contractors

— As Government sponsored research reduces, the organisation moves into private "consulting".

In addition there has been a loss of overall scientific capability to the Government and to the UK as a whole:

— Sale of Cardington means loss of key unique large fire and structure research facility

— Loss of key staff through privatisation

— Some remaining staff demotivated and less committed.

— High staff turn-over since privatisation causes loss of continuity

— New staff do not have long term scientific commitment to the organisation

— Reduction in standard of scrutiny/quality assurance of advice and publications

— Perceived loss of independent status has led to loss of co-operation from industry

— Reduction in scientific competence

— Construction has lost its special status in transfer to DTI

— Previous ethos was scientific excellence - now client gets only what is paid for

— New ethos undermines building a career based on technical excellence

— No longer regarded as a "scientific" organisation

— Move away from experimental research to desk based work

— Scientific work no longer necessarily reaches the public domain

Similarly on the Transport side of DETR, when the Transport Research Laboratory (TRL) was privatised the department lost both its main research arm and most of its "intelligent customers". A 1997 report by the Central Transport Group heavily criticised the lack of scientific and technical expertise within transport policy making, claiming that it was as a consequence losing political credibility within both UK and EU government circles. Quite simply, locating expertise away from the core has resulted in it becoming a less flexible resource. Problems need to be anticipated—research cannot just be turned on and off like a tap. There must be a strategy and an ability to co-ordinate and call up the required expertise. This is much more easily done if there is a critical mass of scientists in government and research councils.

SHORT TERMISM AND THE "CONTRACT CULTURE" CAUSE DAMAGING DISCONTINUITIES

There is also a general concern about the impact of privatisation, commercialisation and the "contract-culture" on the public service. In the science and technology context the Council for Science and Technology (CST) in its review of SET activity across Government makes the important point that many R&D programmes are long term in nature; they "cannot be turned on and off". A reading of the BSE Inquiry report makes it abundantly clear that reaction to new developments and crises depends heavily on the continuity of pre-existing research lines and an ability for government policy makers to know who or what research to call upon, as well as an ability to quickly initiate new lines of research. There is a tension between the two objectives of co-ordination and rapid reaction required for crises such as BSE, together with the need for free flow of information; and the "commercialisation" approach which relies on competition, commercial secrecy and often very short term contracts.

The recently published Stage 2 Report of the Quinquennnial Review of Research Councils also expresses concern that the customer contractor principle is not necessarily the best way of handling long term research needs. They point out that the relationships between the customer MAFF/DEFRA and its contractor BBSRC is much less satisfactory for ensuring full coverage and continuity than the relationship between the NHS and MRC which is not based on the customer contractor principle but a much more collaborative approach. They say in Recommendation 4.4:

"Relations between Government Departments and Research Councils should be more systematic and strategic, take place within the context of science strategy for the relevant areas, and be reinforced at working level. The effectiveness of the customer-contractor relationship between Government Departments and Research Councils should be examined, if possible as part of the cross-cutting review of science and research."

The survey of our own members in November 1999 ("What Future R&D" IPMS Bulletin) reflected many of these concerns about the impact of the move towards more short-term, customer-contractor based research which had already taken place. In relation to the R&D undertaken, there is no doubt that pressures to commercialise have made a difference in some areas though there is uncertainty at this stage how the creation of spin-off companies from public sector research establishments will affect public sector science. One fifth of respondents expected a positive effect compared with one third who expected negative consequences.

A large majority of respondents believed that the limited duration of project funding interferes with the quality of science and restricts opportunities for further development of results. Four out of ten respondents believed that privatisation had made a difference to tendering independent advice in the public interest. Other respondents commented that they had not been asked for advice since their organisations were privatised. A number characterised their situation as "he who pays the piper calls the tune" or "state the truth and lose your funding". Respondents were asked about the "intelligent customer" capability of their sponsor department or, in other words, about the sponsor's ability to make well informed and timely decisions about its research requirements and use of research results. 41% of respondents considered that the "intelligent customer" capability of their sponsor department had become worse over the last five years. At the same time, one in five respondents reported that more than half their work is done on a "commercial in confidence" basis.

EXAMPLES OF DAMAGE DONE BY SHORT-TERM "CONTRACT CULTURE"

Prospect followed this survey up with some in depth case studies which illustrate the problems of short-termism and the contract-culture as it affects public interest research. Examples A and B in the following pages (and C under Question 14) give detailed examples through the experiences of individual members whose identities are disguised.

Example A: The difficulties of operating on the basis of short-term contracts and lack of long term technical support

"Patrick is one of a declining number of scientists in his research institute whose post is supported by core funding. He finds that he spends an increasing amount of his time writing grant proposals to gain short-term staff and resources.

The technical support for his role is virtually non-existent, so he has to provide the long-term technical expertise to support his short-term staff. Because of the demands on his time, he is concerned that the maintenance of controlled environments and of equipment is less than satisfactory. He is also worried that staff are often inadequately supervised and is aware of instances where scientific methods have been inappropriately applied and analysis of data superficial.

For example, there is a tendency to ignore "unwanted" data rather than checking and repeating experiments. Short-termism leads to inefficiency. Data generated by short-term studies is not adequately analysed or written up by staff who leave before the end of their contracts. Due to this short-term approach, Patrick says data may be incomplete but there is no opportunity to finish the work."

Example B: The discontinuity of vital databases and expertise generated by project contract method of funding

"Tony's area of research is the marine environment. He tells how a series of investigations into condition impacting upon the feasibility and safety of oil company operations and rigs in the North Sea have failed to deliver the desired outcome due to short-termism and discontinuity of expertise.

In the early 1980s the Department of Energy (DEn) invested £500,000 in two programmes to measure currents on the Scottish continental and West Shetland slopes. Unfortunately, these contracts did not extend to analysing the data obtained. Although the Department enquired from time to time what could be done in the last three months of a financial year when funds were found to be available, it was five years before the analysis was eventually undertaken.

After the Piper Alpha disaster responsibility transferred to the Health and Safety Executive but, in practice, environmental investigations were directly funded by the oil companies. The main participants around Scotland formed a consortium which employed commercial sector oceanographers to take measurements wherever they expected to place a rig.

This has resulted in far more data than under the previous regime, but it has not been obtained in any concerted way nor with much acquired skill in predicting future conditions. In the early 1990s, the oil consortium invited tenders for a two year contract to model currents. But the contract was over-specified and ill-conceived. The group engaged did not succeed in fulfilling the contract requirements. Five years later, the oil consortium changed to another modelling group.

In 2000, HSE, on behalf of the oil consortium, invited tenders for innovative proposals to improve understanding, predictability and estimates of extremes from the large amount of available data. The invitation to tender included a list of the data obtained and data reports, but the earlier DEn research and subsequent report were missing from the list.

Tony comments that this experience represents a catalogue of changing or poorly-defined responsibilities and attempts at short-term results quite out of keeping with the duration of interest and the timescale for real scientific advance."

Overall, therefore commercialisation and the "contract culture" have the following disadvantages:

— Collaboration and the ability to co-ordinate are often more important than competition. Indeed competition can hinder collaboration. It can often lead to unnecessary duplication of activities; blockages to the free flow of information and resources; and inability to co-ordinate action from the centre.

— Insistence on an institutional split between purchaser and provider can denude the purchaser of the resources to be an intelligent customer and deprive the centre of independent policy advice.

— Dispersal of work among different contractors can lead to fragmentation, discontinuity and damaging short-term perspectives which can severely damage the service provided, eg long term data gathering and research and development.

— Contractors will develop their own missions or follow lines of work which will attract commissions so that their approach may no longer match the public service customer's needs.

— Transactional costs involved in the contract culture can heavily outweigh any benefits.

— Contracts can be very inflexible. Once specified they are often difficult to change even if, for example, new avenues of research emerge during a contract which are more fruitful than those originally planned. Correspondingly it is often difficult to add new specification without incurring extra costs.

— Lack of a level playing field may result in inefficient external contractors being chosen and a consequent loss of civil service facilities which are more efficient and effective.

NEED FOR LONG TERM CORE FUNDING AND STRATEGIC PARTNERSHIPS

To mitigate some of these negative effects there must be the right mix of core longer term funding, with which the research providers can replenish their research base, and shorter term projects. The balance between core, usually longer term, and project or contract based short term funding will vary according to the specific department or PSRE's needs but in our view 60% is the minimum acceptable level of core funding to enable research institutes or agencies to plan beyond the short term and to develop long term strategies which can protect and enhance the science and engineering base. Moreover, where government contracts are let for the application of S&T a percentage should be earmarked for background long term research by the contractor. The Rothschild principle laid down in the framework for Government Research and Development (1972) set such a percentage at 10% and we see no good reason for it to be less than this.

Where work is carried out by contract there should be greater co-ordination between customer and contractor, for example through the mechanism of "concordats", whereby departments to agree longer term agreements with contractors to enable them to plan on a longer term basis without removing the element of competition and ability to change direction all together.

9. Is a public service ethos necessarily a good thing? Can it be an obstacle to the effective delivery of services to the public?

The public service ethos binds public services together and protects standards of impartiality and integrity, and need not be an obstacle to change provided there is a desire by Government to work in partnership with public service workers.

The major obstacle to effective delivery of services has been cuts in funding and lack of adequate training. The public service ethos, even if it was perfect, would not be sufficient on its own.

Clearly there are aspects of the public service "ethos" which can hamper a more "commercial" approach. Indeed, the worst situation of all is to have a poor combination of both which has happened in many areas such as PSREs where they are being urged to win private sector funding but are saddled with restrictive Treasury rules which prevent them competing on a "level playing field". Also the contrast can be seen in newly privatised organisations where public service ways of working can hinder their growth. Quoting again from a member in ADAS.

"In terms of management the public service ethos is slow and cumbersome when compared with the private sector. Too many people have their fingers in too many pies and the truly relevant people are not able to get on and make decisions quickly and efficiently. In the past there has been virtually no empowerment which allows problems to be solved and ideas to be generated by the relevant people.

Having had experience of the two it is possible to see the benefits and weaknesses of the two systems. There is a place still for the public service ethos in terms of delivery but it would be improved if some of the ethos from the private sector were taken on board, such as customer care and timeliness of delivery. In terms of management then the PSE could be much improved if guidance were taken from the private sector. The unwieldly management structures could well be an obstacle to "effective" delivery.

Lengthy times for decisions to be made as too many people had to be consulted and, even when decisions were made, because so many people were involved in them there would always be some who did not agree and would reopen the debate. Many opportunities for the company to advance were lost this way."

However as far as many public services and the process of government is concerned some of these elements of "bureaucracy" may be necessary rather than its abandonment in favour of a free wheeling entrepreneurial culture. Otherwise as Richard Reeves (Director of Futures at the Industrial Society) points out—

We risk losing "fairness, probity and reliability in the treatment of cases and other forms of conduct that were taken somewhat for granted under traditional arrangements".

Effective bureaucracy provides systems for ensuring that the right person is held accountable for the right action. Bad bureaucracy, the kind which has flourished in recent years, dilutes accountability through the creation of lengthy paper trails: e-mail, of course, simply fuelling this cover-my-back tendency. Bureaucracy has become a hiding place for poor management in the public sector—the wall behind which some public servants can hide."

10. Would the creation of a single public service help a public service ethos?

The creation of a single public service is not desirable for other reasons. Nor is it essential in order to achieve the key standards and characteristics set out in Question 7. However, it is desirable that those values and standards should be broadly similar even if their precise content differs according to the types of the service being provided.

It is also vital that a government is able to co-ordinate and direct both policy and its execution and to be sure that the levers of power when pulled will actually work. Many fear that the degree of fragmentation of the civil service which has already occurred has impeded its ability to co-ordinate effective action in an emergency as we have noted under questions 2 and 8.

11. Is it possible for profit-orientated organisations to maintain the public service ethos?

It is possible for profit-oriented organisations to maintain the "public service ethos" if the appropriate performance targets and regulatory systems are in place. However, this will depend on the types of service and the closer the task to policy, statutory and regulatory functions of the state the more difficult it becomes to secure the required co-ordination and joined-up government required under a fragmented and privatised system.

There is also always the danger, since public services are rarely natural areas for private sector provision, that the need to please shareholders and to find money for further investment means that the "bottom line" will override other considerations such as safety. This has clearly happened in the case of Railtrack and threatens to happen in NATS. (See also Questions 6 and 13)

12. What measures, if any, need to be put in place to ensure that the search for profit does not undermine the public service ethos?

For reasons set out elsewhere in this evidence we believe that in most cases the logic of private profit conflicts with the requirements of the public service ethos. For areas of public services which are already privatised and for areas which may be considered for privatisation, contractorisation, or commercialisation in the future the following measures need to be in place.

— Agreement on key criteria such as accountability, impartiality, quality, security as specified under Questions 1 and 7 to evaluate the appropriateness of private sector involvement.

— The National Audit office to review civil and public service functions against those criteria whenever a change of status is proposed

— A Civil Service Act to define the duties of civil servants to ministers and citizens and to clarify the role of special advisers

— Effective regulation of "conflicts of interest" by strict codes of conduct for those carrying out public service roles whether special advisers, members of advisory committees, secondees, or civil servants engaging in commercial activities.

— Professional codes of ethics and best practice should apply across all organisations, whether public, private, or voluntary sector carrying out public services.

— Freedom of information and transparency in all sectors involved in public service delivery. The claims of "commercial in confidence" to be rigorously examined with a view to maximising information available whether during the process of handing over public services to the private sector or afterwards to monitor service delivery.

— Need to ensure that privatisation and commercialisation does not damage overall public service capacity to act as "intelligent customer" or decision makers and ability to co-ordinate and respond to crises as they arise.

— Monitoring of performance and accountability to Parliament of all organisations carrying out public services with public funds whether in the public, private or voluntary sector.

— Adequate training in public service values of integrity, impartiality, objectivity and political neutrality for all those engaged in public service tasks whether in the public, voluntary or private sector.

13. Can lessons be learned from the experience of private sector involvement in public services in other countries?

Lessons can be learned, although the UK has gone further in the process of privatisation than almost any other country. So lessons on the cost/ benefits of privatisation are not always available. However the case of the California market experiment in energy shows the dangers of allowing a free market to prevail in key public services and not having the in-house capacity in central or local government to handle a crisis situation.

The free energy market and California "brownouts"

In 1996 California passed landmark legislation to restructure its electric power industries and give consumers the right to choose the supplier of their electricity. This resulted in fragmentation of an integrated electricity system, previously dominated by state-regulated utilities into isolated components, and opened electricity generation to market competition.

By summer 2000, these policies had resulted in major problems in electricity supply and pricing. Crisis point was reached in June due to a combination of hot weather, voltage instability relating to gaming the previous day, import limitations and power plants out of service. Prices were driven up dramatically. During one week purchasers of California power spent $1.2 billion on electricity, 300% more than they had paid during the same period in 1999 and 1/8th of their cost of power for all of 1999. Even so, there were inadequate supplies of power and over 100,000 customers in the Bay Area of San Diego suffered electricity cuts. The State of California had no influence on this decision.

Key points to learn from the Californian experience include:

— There is no clear relationship between price signals and investment in capacity in a private market. Californian energy prices are expected to remain high due to market structure and the tight supply of electricity. There is no obligation on the generators to fund new investment in electricity supply or delivery reliability. As private operators, they can take advantage of higher retail prices to increase profit margins

— The State of California lost control and access over data needed to assess wholesale market pricing and supply scheduling behaviour. Thus it is heavily dependent on electricity suppliers that behave according to market signals no security of supply or social considerations.

— Competitive market structures have not reduced prices for electricity consumers. Californians pay substantially more on average for electricity than customers in other States that have not shifted to competitive market structures.

— The regulatory system is not working effectively. State authority has been ceded to the federal government and the bodies with a supervisory remit have no duty to protect the public or to consider the retail consumer. In addition, there are serious conflicts of interest because some members of the supervisory boards are in positions to benefit either individually or at corporate level from higher prices in electricity markets.

Also we can learn about alternatives. For example, in the case of NATS the UK has gone further than any other country in privatisation. But the "Trust Model" put forward by Prospect (then IPMS) as an alternative was based on the Canadian model of NavCanada.

The Trust Model:NavCanada

NavCanada is a Canadian trust. It was incorporated in May 1995 as a non 'share capital corporation' under the Canada Corporation Act. The Canadian government transferred to the corporation all air navigation service property and assets for a price of 1.5 billion dollars and gave the corporation powers to own, manage, operate, maintain and develop the system.

The Act gives NavCanada exclusive rights to provide services and the ability to set and collect charges. Charging principles are set by government, the key feature being cost recovery not profit. The company is financed by debt; a 3 billion dollar loan was raised from a syndicate of Canadian and other banks to fund the acquisition and provide working capital and reserves. This debt was subsequently turned into bonds. Safety is regulated by government, and the Department of National Defence provides separate air navigation services for military use. These services have not been commercialised or privatised.

The Trust model secures a balance of interests among key stakeholders, with no single stakeholder dominating.

The model provides strong downward pressure on costs through the representation of users on the board, and not having to finance equity costs. NavCanada is primarily bond financed, with long-term bonds predominant.

Prospect believes the "Trust model" was a viable alternative to using the PPP model in an organisation like NATS. In the PPP model there will always be a conflict between the prime objective of profit maximisation and the need to meet other key objectives such as safety. We are not suggesting that this conflict is incapable of being resolved only that the difficulties of replicating the public service ethos and objectives in contractual form cannot be ignored. This potential conflict is the main reason why the commercial option for ATC has been rejected in every other country where the provision of air navigation services has been reviewed.

The Independent Publicly Owned Company (IPOC) proposed by Prospect would involve establishing a company whose shares are owned by the government (rather than the private sector) but which would operate with similar incentives and objectives to the private sector. A Charter with government would set out any social objectives and other performance targets. The board and management of the company would then be free to run the organisation without government interference. In summary this model will allow:

— Access to sufficient capital through both public and private sources.

— A separation of service provision from safety regulation.

— Greater accountability and transparency, with a more formal role for users and a commercial structure of incentives and disciplines.

— Commercial freedom to develop the business through a hands-off relationship with government and access to capital.

— Government as owner to have on-going strategic control over the business, to enable the obligations to be met and safety to be paramount.

It is interesting that the Transport Minister, Stephen Byers, has put the trust model forward as a possible model for the failed privatised Railtrack.

14. Do private sector people working in and around government, including secondees, task force members and others, undermine the public service ethos? Are special measures needed to regulate their activities and prevent possible conflicts of interest?

The high standards of impartiality and integrity established under the Northcote-Trevelyan reforms are still admired throughout the world. Key elements of these, as already spelt out in Question 1 are the:

— objectivity, impartiality and political neutrality of the civil service and of civil servants.

— fair and open competition in the recruitment and promotion of civil servants.

Politicians, independent experts, and previous heads of Whitehall have expressed fears that the civil service is fragmenting and in danger of losing the public service ethos which has bound it together since the nineteenth century. As the 1994 Treasury Select Committee's report on the role of the civil service said

"The devolution of authority within the civil service and the disappearance of traditional structures of control reinforces the need for greater vigilance about standards throughout the civil service. The disappearance of many tangible common features of careers in different parts of the civil service reinforces the importance of less tangible shared values, and emphasises the need to make those shared characteristics better known and understood throughout the service."

Of equal concern is the changing ministerial attitude to advice from civil servants. Increasingly, such advice is not sought at all, or is supplemented by external consultants appointed with a specific brief, or politically motivated think tanks and lobby groups.

THE NEED FOR A CIVIL SERVICE ACT

A code of ethics was drawn up in 1995 as a result of these concerns and pressure from the civil service unions. It was accepted by the unions with the proviso that it was not sufficiently comprehensive, particularly regarding the conduct of ministers towards civil servants because it was felt preferable to have the code in the public arena and to review its use after a period of time. Since then the situation has deteriorated considerably and there is major concern over the "creeping politicisation" of Whitehall, whether this is the government using senior civil servants as direct representatives on their behalf or the removal of civil servants who are believed to be insufficiently politically orientated in their approach, as happened to many civil service information chiefs when the Labour Government took office in 1997 and again more recently. There is also concern at the expansion in the number of special advisers to ministers.

The civil service unions moved a motion at the TUC congress in September 2001 encapsulating their concerns. It called for a new Civil Service Act to protect their independence, statutory protection from political interference and a limit in the number of special advisers to ministers funded by the taxpayer. Such an Act was recommended by Lord Neill's committee on standards of public life in its report in January 2000 and was accepted by the Government but, disappointingly, such an Act was not included in the Queen's Speech. It is vital that these safeguards against politicisation of the civil service are put in place.

PROTECTING INDEPENDENCE AN INTEGRITY OF ADVICE

There is also a developing problem with the provision of reliable and independent public service information and advice both in relation to special advisory committees and through government encouragement of PSREs and universities to take on more commercial work and increase their links with industry. (Commercialisation has been given further encouragement by the "Baker" Report on "Creating Knowledge and Creating Wealth" and the July 2000 Science White Paper "Excellence and Opportunity a Science and Innovation policy for the 21st Century").

In the case of scientific advisory committees they perform an essential function of bringing to bear external sources of expertise not available within government. But recent controversial issues such as GMOs have highlighted the fact that many of the experts on those advisory committees are from companies who have a commercial vested interest in the product or process under discussion. Prospect recognises that scientists and other specialists who are leading experts in their field are likely to be engaged in a range of activities for a range of customers. Government cannot afford to ignore this expertise and it is better to handle potential conflicts of interest than to forgo the necessary expertise.

REGULATING CONFLICTS OF INTEREST

There need to be clear guidelines on disclosure of interest backed by active policies of annual disclosure and clear criteria for decisions on whether interests are material. Disclosure should extend beyond financial considerations, bearing in mind that in the public sector experts giving advice fulfil a variety of functions not all of which have a clear commercial value. We therefore welcome recent moves to develop codes of practice and have participated in the various consultations on "Guidelines 2000 on Science Advice and Policy Making" OST, July 2000, which guides practice within departments and the more recent draft Code of Practice for Scientific Advisory Committees.

NEED FOR IN -HOUSE SPECIALIST SUPPORT

It is also vital for ensuring independence and integrity that there should be sufficient in-house specialist support to be able to assess and interpret specialist advice. This was a point highlighted by Lord Phillips in the BSE inquiry. In the case of BSE neither MAFF (now DEFRA) nor the Department of Health were adequately resourced to meet either existing or expanding workloads. This pattern is repeated elsewhere. For example, several agencies responsible ultimately for public safety such as the Medicines Control Agency are funded primarily by the pharmaceutical industry whose drugs they licence and regulate. They are dependent on data that companies provide.

The Department of the Environment Transport and the Regions (DETR), as the controversy over Genetically Manipulated Organisms (GMOs) has revealed does not have the in house resources either. Thus Professor Beringer when Chair of the Advisory Committee on Releases to the Environment (ACRE) complained that the specialist support available within DETR at that time was being spread too thin (see also Question 16). In 1999 he told the Science and Technology Committee on the Scientific Advisory System and GMOs that:

"nine people . . . have to deal with all the work to do with releases in this country, all the interactions within Europe and all the international work and it just is not enough. It has not been enough for nearly three years now . . . People are working extraordinarily long hours; they are terribly over-taxed".

As a result the committee recommended that the Government looks closely at the staffing arrangements for scientific advisory committees and commits itself to providing large enough secretariats to ensure the efficient working of the Committees.

"HE WHO PAYS THE PIPER CALLS THE TUNE"

As far as the pressure to commercialise in PSREs is concerned as well as distorting or detracting from core science missions in government departments and agencies it also raises similar issues of "conflict of interest" and integrity.

In November 1999 survey of our R&D members employed in the public and private sectors revealed:

— concern that the contract culture in public sector research laboratories has led to R&D practitioners being asked to tailor findings to suit the customer, and

— concern that objective and independent R&D is being placed under threat by increasing commercial pressure and that market forces are taking precedence over professional standards.

These problems are illustrated in another of our case studies:

Example C: Commercial pressures to tailor research findings

Joe is an experienced scientist. When Joe wrote a paper attempting to balance positive and negative aspects of GM to plant breeding, his research group was disbanded and his management responsibilities withdrawn.

Joe believes that this is typical of an approach that pushes scientists into a technical role, with little scope for wider analysis. He notes that throughout the institutes, the integrative science which could address the relevance and impact of GM technology has largely disappeared. A general emphasis in favour of GM has:

— Pressured individual scientists to accept the basic premises of the use of GM crops;

— Weakened objective assessment of the potential value of the technology;

— Removed independent and critical thought;

— Prevented adequate assessment of economic benefits and costs;

— Prevented proper risk assessment;

— Undermined public confidence in publicly-funded science; and

— Resulted in complete dominance of molecular biology at the expense of other research disciplines.

In response to these concerns Prospect pressed for effective regulation of conflicts of interest and agreed codes have been developed. However we have also been concerned about the impact at institutional level and the need to ensure that mechanisms are in place to ensure that in both government departments and NDPBs roles and lines of accountability for "quality of life issues" and "independent scientific advice" are clearly distinguished from those for "commercialisation" and "industrial sponsorship" and that there is transparency in the decision-making process within and between departments and in government as a whole.

15. Many companies are becoming increasingly aware of social and ethical issues. Does this make them more suitable for work in partnership with the public sector, or does it make no difference?

It may make a difference at the margins but the fundamental issue is the conflict between profit and public services, and the resulting structural impact the profit motive has on an organisation's ability to maintain a public service ethos.

16. Do the views, motivations and attitudes of public sector workers differ from those in the private sector? Does any difference in motivation have an effect on the delivery of public services?

Our members would say that there is a difference. They would say that they joined public service not only to earn a living wage, but also to serve/adhere to certain basic values. Motivation and staff morale is a key factor in the delivery of services, not so much in terms of the public/private debate, but more in terms of how the public expenditure cuts and the fragmentation of public services have affected staff morale. Most other European countries recognise the importance of a highly motivated workforce in delivering high quality public services. For example the French Charter states clearly that improvements in quality and the effectiveness of public services depends upon motivating public officials and broadening their skills.

THE NEED TO REBUILD THE MORALE OF PUBLIC SERVICE WORKERS

Our survey of members employed in R&D is also relevant here. The majority of respondents considered that they were unlikely to progress in their career before retirement, though very few respondents indicated that this was imminent. A number of respondents commented that there were no suitable opportunities for promotion with their current employer. The major reason given was cuts in the overall budget, mentioned by 31% of respondents. 61% of respondents reported a decrease in promotion opportunities over the last five years compared with just 4% who reported an increase.

These findings are confirmed by a recent study of senior civil servants carried out by Dr Eileen Rubery she said:

"There is considerable evidence that many feel trapped in dead-end jobs that are not fully using their skills, yet are unable to see a way to move either within or outside the Service. These people are bright, intelligent and potentially creative, ie just the sort of people that the Service is looking for, but at present many of them are not giving of their best, nor being used to best effect".

Through the process of market testing, contracting out, and privatisation, the civil service unions suspect that there has been a further worrying decline in morale not only for those staff working in the areas immediately under threat but also for others who have seen services decline and their colleagues facing uncertain futures.

The problem of low morale is also recognised by other commentators for example David Marquard in the Guardian (20.03.01) says that years of constant undermining, attack and encouragement to mimic the private sector has caused enormous damage—

"Incessant marketisation has generated a culture of distrust, which is nibbling away a the values of professionalism, citizenship equity and service like an acrid fog. For the marketisers, the professional, public service ethos is a con. Professionals are self-interested rent-seekers, trying to force the price of their labour above its market value. The service ethic is a device to legitimise a web of monopolistic cartels whose real purpose is to rip off the consumer. There is no point in appealing to the values of common citizenship. There are no citizens; there are only customers. Public servants are inherently untrustworthy. If they are allowed autonomy, they will abuse it. Like everyone else, they can be motivated only by sticks and carrots. If possible, privatisation must expose them to the sticks and carrots of market competition. If not, they must be kept on their toes by repeated audits, assessments and appraisals.

Twenty years of this mean-spirited rhetoric have demoralised the public services and encouraged users who can afford it to buy their way out."

TOWARDS A MORE PROFESSIONAL AND BETTER REWARDED STAFF:

Speaking after the election, as quoted in the invitation to give evidence to the Select Committeee Tony Blair said that the new structural framework for the public services which the Government envisage will give power to "the frontline professionals and set them free to innovate and develop the services needed". The terms and conditions of frontline staff should be "geared to proper recognition for the work they do, real incentives for better performance, higher morale and greater fulfilment". He continued: "So our strategy for public service reforms is: national standards, local innovation and more and better rewarded staff."

Indeed the Modernising Government agenda which the Government and civil service unions are pursuing in partnership also lays considerable stress on "Bringing in and Bringing on the Talent" and "A better deal for staff". It is crucial that these programmes are effective.

Moving from a hierarchical civil service based on centralised rules which specified details of administration to one which is devolved and innovative requires a highly motivated workforce with a substantial investment in training and professional expertise.

In the rest of this section we will show how we think the professionals and specialists whom we organise in the civil service can be remotivated and better utilised to ensure that the public service ethos and public service performance is revived and improved in the way outlined by Tony Blair.

OPENING CAREER PATHS FOR PROFESSIONALS

The CST Report highlighted the vital importance of scientific capability in government to ensure that they are equipped to meet the challenges of a highly technologically complex global environment. There is a need for scientific and technical (S&T) understanding for generalist posts in the senior civil service and not simply for those in core science jobs. There is also a need for generalists with a specialist background who can interpret and interface between the specialist "expert" and the "generalist" whether the latter be senior civil servant or politician. It is therefore vital to open channels for those with specialist backgrounds, both in terms of original discipline and in terms of experience of a specialist or professional nature, to reach the senior civil service where at present they are rare.

An important source of recruits for the unified grades was the PSREs but as the CST Report itself highlights that source has largely dried up because of privatisation and fragmentation.

"a key source of recruitment to departments, particularly at middle management levels, has largely dried up as a result of the privatisation of, or arm's length relationship with, research establishments which were previously staffed by civil servants. In the past these have provided a significant source of supply both suitably qualified and experienced staff to manage departmental R&D programmes and of scientifically literate senior managers . . . It seems to us that departments should now take action to ensure that careers in the Civil Service for people who want to work with science and technology are good enough to attract the brightest so departments can meet their needs for and appropriate level of scientific expertise. We also believe that there could be scope for more co-ordination across departments."

In addition, even where privatisation has not taken place the cuts in the civil service, including at senior levels (where several senior professional posts were sacrificed); the separation of agencies from core departments; and the delegation of pay, grading and other personnel management systems has reduced mobility and career opportunities, and removed any mechanism for central management to monitor or facilitate career moves. Thus, in DETR (now part of DEFRA & DTLR) for example, most scientific and other professional recruits into the Headquarters policy-making divisions were employed on fixed term contracts because they could not offer them long term careers either in those departments or elsewhere.

SHORT TERM INWARD SECONDMENTS ARE NOT ENOUGH

There is scope for some fixed term appointments or secondments at senior levels, particularly where they have direct experience of industry or other economic sectors, and where there are reciprocal arrangements for civil servants to move outside to gain experience. But they have major weaknesses. For example such external recruits may be at a disadvantage in holding their own with administrators who will be much more experienced in the ways of "Whitehall". Nor would they provide a suitable source of candidates for promotion into the higher reaches of the civil service as defined above.

Recent evidence of the difficulties comes from a study of Career Development Centres by Dr Eileen Rubery (ex DoH, medical professional). These Centres were run for staff at IP3 to Branch Head (UG.5) level in Technical and Professional Policy across Whitehall between November 1999 and October 2000. She said:

"6.2.12 We have had several participants who have recently joined the Department as part of the "Modernising Government" intakes of outside experts, some of these have found difficulty in understanding the DoH and in feeling that they are making an effective contribution to the work of the Department. They often have seemed at risk of becoming disempowered in the Department and ending up by being neither effective within the DoH nor able to transfer back into the NHS easily and happily."

In 1996 an internal DoE (prior to DETR) report set out the need for a cadre of permanent scientists and other professionals, although recognising that these might be supplemented with the use of external advice or short term appointments. It said it would always need internal expertise:

— Where there is an ongoing requirement for professional advice which is likely to be supplied more cost-effectively and immediately by in-house staff than on a call-off basis;

— Where in-house professionals can act as "intelligent customers", specifying requirements for outside professional advice and monitoring its quality, as well as judging objectively the quality of outside representations;

— Where continuity and familiarity with the policy context are an advantage and the in-house professional effectively acts as part of the policy team; and

— Where issues of independence and integrity are best served by those with no external conflicts of interest or concern for future contracts.

"BRINGING ON THE TALENT"

Under the "Modernising Government" agenda it is essential that all S&T and other specialist staff must be fully represented in the drive to secure "a service more open to people and ideas which brings in and brings on talent". Included within the "bringing on the talent" programme aimed at all staff is the requirement for departments to introduce talent spotting and management development programmes; and the scrutiny and analysis of career progression and profile of underrepresented groups available to feed senior grades and then to target development action as appropriate. For this to happen however will require the opening of channels which have not been readily available to specialist staff for the reasons outlined earlier. We hope that the new diversity and "bringing on the talent" initiatives will help in this task and that senior management will adopt the policies and take the actions required to ensure that specialist and professional staff as a whole grasp the opportunities which should be opening up.

Another project to widen entry to the senior civil service which may be useful for improving the number of staff in senior decision-making positions with a specialist background or qualification is the "Redefining and Renaming the Fast Stream Project" which aims to broaden the entry, particularly for underrepresented groups, without losing its market appeal. It is important to ensure that specialist qualifications and experience are included as part of that approach. In 1996 the then Deputy Prime Minister, Michael Heseltine in a speech at the Civil Service College, stressed in particular the importance of scientific and technical expertise and greater professional competence in ensuring a high quality civil service. He said:

"I begin with those providing advice to ministers. I believe these civil servants need to be:

— More inclined to quantify rather than simply qualify the arguments. This requires greater numeracy

— More scientifically and technologically aware

— More knowledgeable about the private sector, so that their advice can help create the wealth on which we all depend.

— And better managers themselves

These requirements were recognised by the Fulton committee thirty years ago. A good deal has been achieved since then. But as the White Paper made clear, the pace and extent of change do not yet measure up to the rigorous challenges we face."

CONTINUING PROFESSIONAL DEVELOPMENT IS ESSENTIAL

Equipping S&T and other specialist staff to fulfil their potential within the civil service and to take the opportunities which may open up is vital. To encourage staff to sustain and improve their skills and to retain their professional integrity, it will be increasingly important for departments to commit themselves to full continuing professional development programmes, including the obtaining of further qualifications. There are several aspects to this; the need to keep abreast of increasing fast moving technical and scientific developments; and the broader management skills, including project management skills; the ability to communicate knowledge to others within the organisation and outside and the equipping of specialist staff to fill more "generalist" roles through schemes such as "SPATS", "Technological generalists" or modern versions of the same.

VALUING PROFESSIONAL EXPERTISE

It is essential that there be full co-operation at all levels between professionals and administrators. A recent study of diversity in the civil service by ORC International shows that there are strong feelings among specialists in general that their expertise and qualifications are not valued. Specialist staff are also less likely than others to feel that their organisation respects individual differences (eg cultures, working styles, backgrounds, ideas). Moreover, on the administration side, the "generalist" culture was highlighted as a problem. For example those who wished to stay longer in a particular area to develop expertise instead of constantly being moved between jobs said their attitude was "frowned upon".

Evidence from the Rubery Report on Career Development Centres shows that on both the professional and administration side special skills and expertise are not highly valued and the increased inability to move around Whitehall because of fragmentation and departmentalism makes it difficult to maintain professional identity and to develop expertise across the civil service.

The Report also comments on the position of "generalists" and the fact, as noted above in the Diversity Survey, that they get little opportunity to develop specialisms and skills relevant to the job. The report says:

— "The skills employed across Whitehall are taught as a craft not a profession. They are not valued outside Whitehall, although they may well be of value to those outside Whitehall.

— There are no recognised qualifications for those who possess these skills.

— Staff are aware of this and it adversely affects their confidence, status and ability to seek posts."

The cult of the "amateur" which the Fulton committee deplored is still alive and well. Thirty years on from Fulton, with the technical complexity of many issues, the need for dialogue both within and outside the civil service and the need to deliver policies effectively, it is even more vital for it to be removed. It is to be hoped that the Modernising Government Agenda and particularly the "Bringing in and Bringing on the Talent" initiatives will remedy some of these deficiencies. The Rubery Report's view is that in spite of the White Paper on Modernising Government and the rhetoric about changing culture and training, there was little evidence that those attending the Centres felt they had experienced much concrete help in making the White Paper happen as yet. But it is early days and Prospect is actively campaigning for a genuine attempt to change the culture to one which appreciates, effectively utilises, and gives much better career opportunities to those with relevant expertise for the problems faced by the modern civil service. Without this radical change in culture a "joined-up" civil service open to ideas and expertise and open to dialogue—a genuinely "open government"—will not materialise.

17. There is conflicting evidence as to whether the public is in favour of private sector involvement in public services (MORI polling, June 2001). What in your view is the truth about public attitudes?

Most evidence so far has tended to suggest that the public does not like the idea of public services run for profit by private companies. For example, a recent NOP poll, carried out for UNISON showed that 83% of respondents said that public services should not be run by private companies for a profit. The major Guardian ICM Poll on Public Services in March 2001 showed that all voters, including Conservatives, wanted to see public services run by the Government or local authorities and overwhelmingly rejected the idea that public services should be run for profit. Only 11% approved of the plan to privatise NATS.

There is, nevertheless, some conflicting evidence arising from the polls both between and within surveys. Some of this variation will depend on who has commissioned the survey and set the questions. It probably also reflects a wide variation in the degree of understanding among the public as to what is meant by private sector involvement in public services and according to the service being discussed.

The June MORI poll may have had conflicts within it (see Question 7) but what appears to emerge is the public's clear unease about the pursuit of the profit motive in public services. However, what the polling also showed was that the public was more relaxed about "not-for-profit" private companies delivering public services.

18. If there are to be rules regulating private sector involvement in public services, should they apply also to, for example, the voluntary sector? Should there be less stringent regulation where profit is not involved?

We believe there should be a level playing field, regardless of who provides public services. As far as the voluntary sector is concerned "Altruism" is not enough. There should be standards which are enforceable. They should be proportionate and relevant to the degree of vulnerability and risk that failure poses to the individual citizen or the community as a whole.

Standards should not only relate to performance but the other aspects of delivery such as the terms and conditions under which people are employed. There must be full transparency of operation and costs.

ACCOUNTABILITY ISSUES

19. What kinds of accountability are most effective?

It is important that ministerial responsibility and accountability through Parliament is retained for services which are contracted out or privatised and that full openness and transparency in line with the legislation on freedom of information is observed. Financial and managerial information should be produced in relevant and intelligible format to aid effective monitoring of value for money. These methods are best applied where it is important to influence policy and monitor reform.

Where a more direct assessment of performance on a day to day basis is required these are covered in more detail under questions 27-31. But in general measures of performance should be fair in their bases of comparison, suited to their purpose, and subject to consultation with stakeholders. Care must also be taken that the input of resources and the level of the base line (eg in relation to league tables) are taken into account when measuring performance. Performance data on services provided through private partnerships and contracts should always be made publicly available.

20. Is there sufficient coherence in the accountability arrangements for public services?

No. Accountability at best appears to be ad hoc, and reflects the fragmentation of the public services. We need a common standard of surveillance appropriate to the particular type of service. The involvement of private and voluntary providers in public services should not lead to a dilution of public accountability. The roles of the various bodies involved in the development of government policy and its execution and the links between them must be transparent and clearly accountable to Parliament and the public.

The quality of services should be given as much emphasis as improving the economy and efficiency of their delivery. There should be more effective parliamentary control of value for money, looking at the overall cost/benefit of activities including those to the functions left behind when areas are contracted out or privatised. As indicated in Question 5 more power should be given to select committees to monitor overall impact and to call for the Comptroller and Auditor General (CAG) to carry out reviews of efficiency and effectiveness. Also the roles of parliamentary scrutiny and the auditing bodies should be extended to monitor new forms of public funding and service provision in both private and public sectors and to follow public funds. The application of judicial review to service providers who are not in the public sector needs to be clarified.

21. Is there too much accountability, or too little?

The picture is varied. Prospect believes that accountability should be proportionate to the type of public service. However, the sensitivity of a particular public service or area within it may vary over time so a certain minimum level of coverage will be required for all. The provision of information is particularly vital where ministerial control over routine matters has been relinquished.

22. Does the new pattern of public service provision require new forms of accountability?

Some "new" forms of accountability are required. What is also required however, is the re-establishment of Parliamentary accountability. The whole drift of the government's contracting out and privatisation strategy has reduced the amount of information available to the public and Parliament. The commercialisation of government activities often puts information about them into the "commercial in confidence" exemption category, and privatisation puts them outside the scope of the open access provision altogether.

A growing area of concern is the degree to which charitable foundation finance is replacing or supplementing public finance in some areas. One area where this is happening is in support for scientific research. For example, in the last two rounds of comprehensive spending review finance for the "Science Budget" has been matched by large amounts of funding from the Wellcome Trust. The impact of this funding has been extremely beneficial to the science and engineering base and without it the Government would probably not have provided as big an increase as it did. Nevertheless, there are concerns that this has also involved an influence by the Wellcome Trust on the highest level ministerial decisions such as the siting of the new "Diamond" synchotrone at Oxford rather than Daresbury. It is not clear from the public record and Parliamentary discussions on what grounds the final decision was made and what influence the Wellcome Trust had. But the suspicion is that its wishes were heavily influential and may have swayed the final decision. Nor is the Wellcome Trust except to the Charity Commission whose concerns are different, for the scientific decisions in which it has such a heavy influence.

23. In the Government's overall programme of public service reform, is the need for accountability to Parliament and to other bodies properly taken into account?

No. The government's increasing reliance on the private sector and the associated the commercial confidentiality serves to prevent transparency of public service reform. Insufficient attention is also paid to the impact of contractorisation and privatisation on core government policy, statutory and regulatory functions.

24. If the answer to the above question is no, what measures should be put in place to ensure better accountability?

In addition to the points made under Question 20 which include wider remits for the CAG and NAO and a clarification of the role of judicial review to enable a more coherent approach to public service accountability whatever the specific mode of delivery we would suggest the following:

— The National Audit office should work to a wider range of select committees than just the PAC.

— Stronger oversight by Parliamentary Select committees.

— Statutory powers in the NAO to access information on private providers relating to public contracts beyond a certain size.

— Ensure that private and voluntary sector providers accept that higher standards of disclosure and transparency apply in the public service sector than in the rest of the economy.

— The responsibility held by different bodies in a partnership should always be made explicit. Public authorities should remain responsible for ensuring that citizens will not suffer as a result of contractual deficiencies.

— Clear processes for enforcing contracts should be specified and which public authority is responsible for ensuring they are carried out.

— Better annual reports by public bodies to aid scrutiny by parliament and public.

25. Does the growth in private involvement in public services threaten to reduce public accountability?

There is recent evidence that it does. Prospect has many members in National Air Traffic Services (NATS), which was privatised several months ago. Air traffic control requires ongoing investment to ensure safety in the skies. Such investment was promised as a condition of the privatisation. However, on the 15 October 2001 the transport minister David Jamieson announced that the new air traffic centre in Scotland has been delayed indefinitely. This broke assurances given to staff, the unions and Scottish MPs that the centre would be built and open within the agreed time-scale.

The new centre is needed to replace the ageing Scottish system, which will be nearing the end of its life by 2007. With no date fixed and long lead times for completion of the new centre, there will be a shortfall in air traffic control capacity. Prestwick, along with the control centre at Swanwick, is part of a two centre strategy designed to maintain the integrity of Britain's air traffic system, and ensure one operational centre able to guarantee UK air safety in the event of the other failing, or being subject to a terrorist strike.

Prospect poses the obvious question. How is Mr Jamieson's announcement about withholding investment accountable now that investment control rests with the PPP?

26. Do the demands of commercial confidentiality threaten the accountability of public services when the private sector become involved?

Prospect believes that the attitude to openness is one of the most crucial issues in restoring public trust and confidence, in maximising accountability and ensuring maximum efficiency in policy making and implementation. The government has taken several steps towards more openness including the Freedom of Information Act although it doesn't go far enough and we are concerned about the huge delay in its implementation. The open approach of new agencies such as the Agriculture Environment and Biotechnology Commission and the Food Standards Agency are other welcome examples. Set against that progress, however, the whole drift of contracting out and privatisation is moving in the opposite direction. The commercialisation of government activities puts information about them into the "Commercial in Confidence" exemption category and privatisation puts them outside the scope of the open access provisions altogether.

In the context of scientific advisory committees and rebuilding trust and confidence we are pleased to see that paragraph 30 of the Draft Code of Practice for Scientific Advisory Committees says that "Information should not be withheld from the committee on the grounds of commercial or government confidentiality. The secretariat should make the committee aware of the existence of any information that has been withheld from the committee on grounds justified under the Freedom of Information Act 2000".

In addition we would argue that there should be mechanisms to ensure that decisions about confidentiality are always objective and exercised on a consistent basis across all scientific advisory committees.

Also as it says in Guidelines 2000 on Scientific Advice and Policy Making "Any claims for material to be protected on grounds of commercial confidentiality should be rigorously tested". We believe this is an excellent principle which should apply to all areas of government which affect the public interest and to any consultations concerning commercialisation, contracting out or privatisation.

SERVICE USERS AND PUBLIC SERVICE REFORM

27. Does the Government's public services reform programme have sufficient focus on users and consumers of those services?

No. Prospect believes that priorities need to change. The use of the word "sufficient" suggests an acknowledgement that public services reform is not driven by the needs of users and consumers of public services. Indeed, Prospect believes it is the Treasury's concern over the level of the PSBR which is the primary engine behind changes to public service provision.

28. If not, how can the position of users and consumers be strengthened?

Open government and good channels of complaint are vital. Also it needs to be remembered that there are users and consumers of public services within government and other public bodies as well as private organisations and citizens and their needs should also be taken into account when reform, especially privatisation or contracting out, is being considered as we have indicated under Questions 2 and 8.

We would also support the suggestions made by the IPPR Commission on Public Private Partnerships that:-

— All PPP contracts should clearly set out the grievance procedures through which individual citizens have redress.

— The Cabinet Office and the Office of Government Commerce should provide joint guidance on how to conduct community consultation in PPP projects.

— In areas of service delivery which impinge directly on citizen's everyday lives (for example, housing or schools), particular effort should be made to involve users substantively in the selection of service providers.

— Pilots for neighbourhood level "community trusts" should be established which allow local people to take a strategic view of the fit between existing public sector assets and neighbourhood needs.

— There should always be clarity about what it is that the private sector is expected to contribute to partnerships.

29. SHOULD USER RIGHTS BE ESTABLISHED IN RELATION TO PUBLIC SERVICES?

Yes.

30. IF SO, HOW COULD THESE RIGHTS BE EXERCISED IN PRACTICE?

By the provision of enforceable remedies.

31. COULD THE CITIZEN'S CHARTER/SERVICE FIRST APPROACH BE FURTHER DEVELOPED?

The emphasis on improved service contained in the Citizens' Charter initiative is welcome. But for those agencies providing services for external customers—whether these be individuals, eg benefit claimants, or companies in receipt of regional aid—there is always a political dimension. So political accountability is important. The term "citizens' charter" should mean what it says.

Citizens are not simply customers. They have a right as citizens to be treated fairly and impartially as well as to receive a given level of service; and they may wish to register a view about the criteria lying behind these services. This distinguishes public services for citizens, whether individual or corporate, from private services. The Institute for Public Policy Research put it thus:

"The public service is fundamentally different (from the private sector) and cannot be reformed simply by reference to market forces...As it stands consumerism is an inadequate theoretical basis for the role of public services, failing, as it does, to take account of the public interest and the need in a democracy for public accountability".

32. ARE COMPLAINT/REDRESS SYSTEMS FOR PUBLIC SERVICE USERS ADEQUATE AND EFFECTIVE?

No.

Dr. Valerie Ellis

Assistant General Secretary, Prospect



© Parliamentary copyright 2002	Prepared 21 June 2002