THURSDAY 18 JULY 2002

__________

Members present:

Tony Wright, in the Chair
Kevin Brennan
Sir Sydney Chapman
Mr Ian Liddell-Grainger
Mr John Lyons
Mr Gordon Prentice
Hon Michael Trend
Brian White

__________

EXAMINATION OF WITNESSES

LORD MACDONALD OF TRADESTON CBE, Minister for the Cabinet Office, and MR DOUGLAS ALEXANDER MP, Minister of State, Cabinet Office, examined.

Chairman

Can I call the Committee to order and welcome our witnesses today, Lord Macdonald of Tradeston, the Minister for the Cabinet Office, and Douglas Alexander, who is the Minister of State in the Cabinet Office. We are very pleased that you were able to come along. The broad heading of our session is The New Centre. We are looking at the different ways in which the centre is being organised and you are the last instalment of this inquiry. It means that we can ask you anything we like about anything really, and also it is the end of term so you can just relax. I wonder if you would like to say anything to us before we start?

(Lord Macdonald of Tradeston) No, Chairman. We are happy to cut to the chase.

Could I ask you this then? We have now had a second reorganisation of the centre in the space of a year. I suppose what I want to know is what was unsatisfactory about the first reorganisation, why did that not put the centre into a form that could do the business, and why do we think now that we have got a centre that can do the business, or do we think that, or do we think, as Richard Wilson told us last week - or somebody else; I cannot remember - that this was like Microsoft and Windows and that you could have a different version each year? Are we now in a settled state or is there more to come?

(Lord Macdonald of Tradeston) The first year, Chairman, was one of evolution. You must recall that of course, following the election, we had set up a number of central units and during the past year we have seen the development of those units in a way which has generally been judged, certainly from our perspective, to be satisfactory and at the same time there were other developments in the areas where the Deputy Prime Minister was active, and again there were many positive developments there, for instance in areas like regional government, so by the end of that relatively successful year we felt that we were in a position where the central units had proved their potential worth and therefore we should give them more clarity and focus inside the new structure, of course, which was enabled by the appointment of Sir Andrew Turnbull.

I think it would be useful if you could take us through essentially how this works. As I understand it, we now have the Cabinet Office as essentially the progress chasers for the delivery programme and the units being very different bits of this enterprise, and you as the Minister overseeing this and reporting to the Prime Minister. Could you tell us in practice how the chasing of delivery works inside Government?

(Lord Macdonald of Tradeston) In practice, of course, the Cabinet Office has four areas of responsibility, one of which is to support the Prime Minister, another of which is to give leadership in the quest for better delivery and reform of the public sector, and of course we must continue to support the rest of Government as well as being active in areas of intelligence and security. What we have been particularly concentrating on has been the agenda for reform and delivery. As I said earlier, we believe that the experience of this past year has shown that a Delivery Unit is able to work well with individual departments and indeed with the Treasury and is beginning to produce positive results and that the OPSR, the Office of Public Service Reform, too has clearly established its value. We believe that in our role as Ministers we can work very easily with this new simplified structure under the control of Sir Andrew Turnbull and working closely to David Omand and it is not a difficult structure. Douglas and I are able to work as two Ministers in place of the four that historically have been in place there, probably with a bit more expedition. We have got less to do by way of other distractions, and I recall Michael Heseltine's definition of the Cabinet Office as a bran tub. I think that is no longer the case. It is much more clearly focused now so Douglas and I are able to work with the units and with the Cabinet Secretary and the Permanent Secretary and indeed with other departments and with Downing Street.

(Mr Alexander) I think that is a very fair characterisation of where we are. I am in a slightly different position from Gus, having just arrived in the Cabinet Office. I certainly have found that degree of clarity that Gus suggests with both Ministers reporting directly to the Prime Minister and having ministerial oversight over parts of the operation as it is taken forward, but also the clarity, frankly, owing to the fact that I answer to the Cabinet Office on the floor in Westminster in the Commons and Gus answering in the Lords. It means by definition that you have to work closely together and in that sense I am very optimistic, five or six weeks into the job, in terms of the ability to make sure there is that clarity of purpose in the job.

Just in terms of how this works in practice as opposed to what it is like conceptually, could you argue that now we have all departments locked into public service agreements; we have now got a new system of regular reporting of performance against targets that the Treasury is going to do through its web site and so on? Why cannot that system just be allowed to get on with it? Why cannot departments just do that? What extra are you people adding to it?

(Lord Macdonald of Tradeston) I believe if you take the Delivery Unit, a smaller unit in relative terms with 20-odd people in it covering four key departments, what we are able to bring there is a constant focus on what the priorities for the departments have got to be from the centre, from the Cabinet Office and from the Prime Minister, and also the ability, where departments are preoccupied, to offer them some help in defining what the problems are and where they might be able to get assistance either from other parts of the Government, perhaps from the Delivery Unit itself, and introducing them perhaps to techniques that are available from the Office of Government Commerce or from the OPSR in ways that they can apply in health and education and in the Home Office. The experience of the past year, after the warnings that we have had about the potential defensiveness of departments, has been a very positive one. People have been receptive to what we have to offer.

(Mr Alexander) I do not see that there is any contradiction between having an effective centre and in helping departments in exactly the way you describe to take forward the delivery of the reform agenda. If I reflect on the words of the Prime Minister at the Liaison Committee, he was very clear in terms of saying he wanted to be able to have a degree of capacity at the centre but I think that was probably articulated just as clearly with Sir Andrew Turnbull when he gave evidence to this Committee when he talked about some of the central functions of Government by definition as a complex and large organisation, and frankly many other equivalent large organisations would as a matter of course retain at the centre a capacity for the kind of monitoring and support work that Gus has been leading in terms of the Delivery Unit, the capacity, for example, to ensure that the centre stands ready to support and assist departments in the huge endeavour towards e-transforming their practices. I think there are a number of natural functions which can be retained at the centre at exactly the same time as building capacity within departments to take forward that agenda.

So monitoring and support are the key words here? On the one hand you are the head prefects. You keep an eye on what all these lads and lasses are getting up to, and you are reporting back to the headmaster about them, are you not?

(Lord Macdonald of Tradeston) No, I would be much more diffident in my description of our role. We simply try to support the departments. We are able to do that because there is no attempt to overshadow or to impose, so any talk about being enforcers is quite wrong. We work in a very supportive capacity. We need the goodwill, of course, of the Secretary of State and the Ministers and we work very hard in a whole number of different areas to try and ensure that that support is readily given.

I am not being facetious about it. Monitoring seems to me to be a very proper activity, having established the need for it, and for a department to know that they are being monitored through units, people whose job it is to do that and they know about the reporting system that is going to take place, quite clearly. If you look at Andrew Turnbull's paper, and what he is saying about his relationship now with the Permanent Secretary and so on, it is very clear that there is a different kind of monitoring going on here than was the case before, is there not?

(Lord Macdonald of Tradeston) It is a much more collaborative process perhaps than before and I think that is the important aspect of it. As I said, with a unit as small as the Delivery Unit, with only a couple of dozen people, you could not sit on top of departments trying to monitor them. That is not our role. What we try to show is ways in which problems might be monitored where milestones can be used to measure and in that way the department itself begins to pick up the expertise and take up the capacity as well and begins to invest in it, so that they can do most of these things for themselves. We do not see ourselves being in a permanent situation of monitoring departments. We are there to help enable them do it for themselves.

(Mr Alexander) As I say, I have only been in the appointment for a number of weeks but, speaking to ministerial colleagues outside the Cabinet Office, it was very clear that the Delivery Unit had established exactly, as Gus says, a collaborative and supportive role working with the lead Ministers in all these areas within those departments. In that sense I think it is a model of how I would intend to work, which is, as Gus said, far less grandiose than perhaps the characterisation you suggested. I think we can render assistance but recognise that ultimately it is Ministers who make the decisions.

Do departments now come to you and say, "Look: we are having problems in this area or that area. We are not going to hit our target if we do not put corrective action in. We need extra help"? Do they come to you and say, "We have got a problem. Can you help us sort it?"?

(Lord Macdonald of Tradeston) They do not come to me directly in that way, but I think there was an understanding that began to grow that, while there were four key departments with a set of 17 objectives which we were trying to monitor in some detail across those four departments, it would be strange if you tried to keep the expertise that you were developing just inside that area, and that other departments should benefit as well and that therefore what has happened is that because of our close working relationship with the Treasury through the PSX process, the Treasury has begun to talk to departments about what we call in our jargon PSA plus, which is to look at some of the more difficult areas of policy and think, "Is there anything that we have learned from the first year with the central units that could be migrated across to other departments as well?" That is one of the reasons why we look to expand the Delivery Unit in the months ahead and broaden the use of its techniques across the departments.

Listening to you, is there a feeling that this is a temporary arrangement and that once departments have got their delivery act together the central units are going to fade into the background or even fade away?

(Lord Macdonald of Tradeston) These units are so small relative to the whole of the Civil Service - you are literally talking about a couple of dozen people in the Delivery Unit and a couple of dozen people in the OPSR - that it would seem to me sensible, looking forward, always to have that capacity somewhere at the centre. The Office of Government Commerce, which reports to the Treasury, is a much bigger unit with a much larger brief and it plays a role now in Andrew Turnbull's new structures. The Office of the E-Envoy of course is a bigger unit too, but it has a larger remit outside our reform delivery agenda.

There is just one area I want to open up and colleagues will come in. We are interested in looking at what we call government by measurement now, the whole target stuff and league table rules and all this. As a result of what has been said this week we are now to know far more about how departments are doing in terms of meeting targets than ever before and are we now going to apply the same principles to central departments as we have applied to schools, hospitals, social service departments? Are we going to have league tables at the centre, are we going to have beacon departments, are we going to have failing departments, are we going to have some departments taking over other departments? How is it going to work?

(Lord Macdonald of Tradeston) I do not think they are comparable, with respect, Chairman. You are comparing one school with another school or one hospital with another hospital. You cannot compare the Foreign and Commonwealth Office with the Cabinet Office. It would be difficult to find a ranking of that kind.

I am sure colleagues will want to come back to that. The final thing is on targets themselves. When I look at the White Paper that came with the Spending Review documents this week describing how this system is now to work, and the PSA system is described somewhere in here as the contract between the Government and the public, the problem is that if I read this paragraph called "Enhancing Accountability" - this is in relation of course to PSAs and the whole thing - would any member of the public understand what is being talked about? Let me read this to you: "Most targets have been rolled forward in line with the new spending plans with adjustments where necessary to reflect experience. In some cases separate targets have been combined under a new headline target where they cover closely related areas. Some of the existing targets have not been included because they are an input into one or more PSA targets rather than outcomes in themselves. These will normally be included in the department service delivery agreement. A small number of headline targets will not be carried forward as either new PSA or SDA targets where they have already been or soon will be met or superseded by new targets or events." If this is our contract with the public what does the public make of that? Do you understand it?

(Lord Macdonald of Tradeston) Chairman, speaking as a former journalist, I would have been able to re-write it, I think. It may be that the way it is written is simply for a professional audience where there are assumptions made about -----

It is a contract with the public, it says.

(Lord Macdonald of Tradeston) Yes, but I think that it is a contract with the public that clearly has to be taken by the departments and put into plainer language and rolled forward if you like into the public domain in a way that is much more comprehensible. I do not dispute at all that it is very dense and in places would appear to be difficult to understand unless you are coming at it with a very technical understanding of the acronyms and so on.

It is not just the language. It is the fact that, unless people have confidence, unless the targets have credibility and are properly evaluated, the system just will not be seen to work for people. Getting that right and getting it into a form that is understandable and checkable becomes very important, does it not?

(Lord Macdonald of Tradeston) You touch on something that is extremely important in all of this, Chairman, and that is the fact that we have five million people employed across the public sector and if these targets are to be meaningful to them they have to be understood at every level of organisation, and that is a huge challenge. I believe that Government is looking at ways in which we can get information down through communication plans, and Douglas in particular will be involved in this area, to try and make sure that people do know what their targets in their organisation are in language which they can understand and can pass on to their customers, to the citizens.

(Mr Alexander) I was conscious when Gus described himself as a former journalist that I am a former lawyer and no doubt we could incur a great deal of legal expense in interpreting the particular paragraph you read out. I think the more general point that has to be drawn out in the particular example that you cite is that there is a risk, frankly, given, as I prefaced my remarks by recognising, that government is a complex organisation, that you may talk about something, which I regard as being quintessentially understandable, that is, a desire to drive forward our expectations and improvements in schools and hospitals and other services which people encounter every day of their lives, in a language which can appear overly technocratic. As a politician working at the centre in the Cabinet Office I regard one of the challenges that we have in communications terms is while we are ensuring that we take forward that process of reform of organisation, as Gus has described it, we should always have a weather eye to exactly the point that you observe, which is that we need to be able to make sense of it for, I have to say, political reasons as well as reasons of good governance, that there is an interest in making transparent not just individual policies but actually meeting the goals that lie behind those policies and indeed the values which are the foundations from which those goals emerge. Actually I think that is one of the challenges for politicians which is distinctive from some of the work that is carried out by officials in this regard.

Mr Liddell-Grainger

What after a year do you see the role of Ministers being?

(Lord Macdonald of Tradeston) The role of the Minister, as ever, is of course to be accountable to Parliament for what is going on inside the Cabinet Office, to ensure that we can call upon the resources of the Cabinet Office and make sure that they are deployed in the areas that we believe fit the priorities of the Government. We believe too that, as Ministers, we should work closely with our officials and that we should liaise with other officials and politicians right across Whitehall to try and establish the right kind of positive working relationships and I think we have had some success in that in the first year.

But do you not think that at the new centre the role of Ministers is going to be superseded by Cabinet Office advisers, through Mulgan and Thompson and Barber and so on, because the role that is going to be taken up as pushing the centre agenda ground forward will be done by a sort of intellectual group of people in the centre with Ministers being told where, what and how to think and that a very important part of the brief will be the background put in from these groups?

(Lord Macdonald of Tradeston) I do not fear in that direction. As Douglas has said, we were both appointed to the Prime Minister, we report to the Prime Minister. We are in a position to know his mind on these matters, but we are also aware that we are supporting the rest of Government. There are over 30 Cabinet committees and I am a member of 19 of them and Douglas is on 16 of them, so we have a fairly broad involvement in trying to take Government policy forward and therefore I do not think that the breadth of that information and the political insight that we would hope to bring to it could easily be replicated by officials.

That is an enormous amount of bodies you sit on between the two of you. How do you achieve it? Here you are in the centre ground. There do not seem to be a lot of people out there. You have got 20 roughly in each of these groups. You have got you guys sitting on just about everything else. Is not the other way of looking at this that you might lose control of the situation if you have got too much to do?

(Lord Macdonald of Tradeston) Fortunately we are supported by very good officials.

(Mr Alexander) To echo Gus's words, we draw on the expertise of a great deal of outstanding officials, but of course, as we are scrutinised before a committee like this, the allegation can be laid that we are either too powerful or not powerful enough. It depends on the questioner. I think it is fair to say that, given the evidence that was presented to you by some of the people that you have mentioned in your question, they themselves were keen to emphasise that ultimately advisers advise and Ministers decide.

That is why we are looking at this, to see what the balance is. Of course, if you get the balance wrong and your targets wrong, --- we were talking about targets. Let us just look at those for a second. You were talking about the way targets are achieved. You have had a year. How do you think your targets are coming on? Are you hitting the targets that you were expecting to hit?

(Lord Macdonald of Tradeston) If you go back to 1998 and the first Comprehensive Spending Review, there was a set of targets that were put forward then and the great majority of those have been achieved. The process started off with about 300 targets in 1998. It came down in 2000 to I think 160 and this week it has been reduced to around 130 PSA objectives if you like. There are other targets that follow from that. I come from a management background and therefore, apart from very short periods, I have always worked in big companies, so it does not surprise me that you have a capacity if you like at head office, nor does it surprise me that to manage properly you have to measure. We are trying to measure fairly comprehensively but I hope not in a way that distorts. You have this dilemma which in business would be largely invisible. If you set 100 targets for a work force, in an ideal world would I not be right in saying that 50 would be achieved and 50 would be missed if they were properly stretching targets? Probably as a practical business man you would say, "Let us try and set these so that they can get maybe 80 per cent of them, if we can get the judgements right, because we do not want half the workforce going around demoralised, saying, 'I have failed'", so you are very likely looking for an 80/20 ratio. In Government, of course, people anticipate that 100 per cent of targets must be met, but if they were they would not be well set targets, by definition. The difficulty with politics of course is, hit 80 per cent and you will not get 80 per cent of the credit. You will get attacked by the Opposition on the 20 per cent you have missed.

Let us look at the ones you have missed, nobody in particular because that is not what we are here for. If you have missed and then you have to take it up with the department, you have to make sure that that department either finally discover why they have missed or resolve the miss. How do you do that because then it is the Minister's responsibility, or is it the Delivery Unit's responsibility to hit that target?

(Lord Macdonald of Tradeston) We have a public expenditure process, a PSX process, and that is the Cabinet Committee on which I sit, chaired by the Chancellor, and that monitors the development over the Spending Review period by each department. The Prime Minister also holds regular meetings every six weeks or so with the Secretaries of State to look at some of the key areas in terms of targeting and that is where the Delivery Unit and the OPSR and others come in and we help to put together with the department an agenda which says to the Prime Minister, "there are maybe half a dozen issues here, Prime Minister, that the Secretary of State wants to raise with you or you want to raise with the Secretary of State. Here is the background information. Here are the graphs and the trends and the milestones, all the information you need." We then sit back and the Prime Minister and the Secretary of State, supported by his officials, have a discussion about why targets are being missed or met.

So what do you do? Do you name and shame the department which has missed it? Somebody must be accountable for missing targets because you set the target from the centre. Is it not the responsibility then of you to also say, "Look; they have missed that target because ..." or "This is ..." or "They are not capable"?

(Lord Macdonald of Tradeston) The targets are set in this process of consultation with the departments through the PSX process. As I say, many of the meetings are chaired by the Chancellor, some are chaired by the Chief Secretary of the Treasury and I as it happens attend nearly all of them. The departments will work with the Treasury, and indeed with the Delivery Unit, increasingly to say, "How do you want to set these targets in a way which is truly challenging?", and therefore the setting of the targets is a collaborative process and the setting of the targets for 2004 Spending Review will probably begin in the next few weeks.

So who is responsible for the targets? The Prime Minister?

(Lord Macdonald of Tradeston) No. The targets are the responsibility of the department, of course, and we try to support them in achieving those.

Are they set by the Prime Minister and the centre?

(Lord Macdonald of Tradeston) They are set in agreement with the Treasury, and of course the Prime Minister as the First Minister.

Are they set by the Prime Minister? Why are they being set by the Treasury? Have you got other targets you are trying to hit? Surely the Prime Minister is where the buck stops?

(Lord Macdonald of Tradeston) No, I am sorry. I should have perhaps explained that these 130 public service agreements are set by the Treasury in discussion with the departments and with the involvement of central units as appropriate. Once those are set the Prime Minister is able to say, "There are a dozen (or a couple of dozen) of these targets that look to me particularly important and perhaps particularly difficult. Can we try and keep sight of those in my regular meetings with you?", so we would have perhaps four or five particular targets for the Home Office that the Prime Minister would want to see consistently monitored for his regular six-weekly or two-monthly meetings. The PSA would be what the Prime Minister was monitoring but that PSA would be set by the Treasury.

It seems to me that the centre is the Prime Minister. Underneath the Prime Minister is the Cabinet Secretary and the Ministers and if this is all delivering up to the central point, which is ultimately 10 Downing Street and the Prime Minister, is it the Prime Minister's department? Is that what you are saying?

(Lord Macdonald of Tradeston) The Cabinet Office is the department that supports the Prime Minister but it also supports collective government. It supports in general terms the drive for reform and delivery and it also supports our efforts in security and intelligence, so we have four functions, one of which is to support the Prime Minister.

Chairman

Before you leave that, Ian, because we are trying to log the system as we go along here now, these key PSAs that the Prime Minister does his regular stock takes on, are these ones that we all know about or are they ones that he just picks?

(Lord Macdonald of Tradeston) They are ones that in the past year he has felt to be particularly important.

But these are entirely internal to the system? These are not public?

(Lord Macdonald of Tradeston) Yes, they are now public. The Treasury makes them public and I think we will be updating every six months now.

The key Prime Ministerial ones, the ones that he says he wants to keep his eye on all the time, amongst all this, -----

(Lord Macdonald of Tradeston) No, they can be public, Chairman. The implication of what I said earlier was that they should be public.

No, no. That is fine.

(Lord Macdonald of Tradeston) Thousands of public servants should know what they are and be able to respond to them.

Just to be clear on the setting side, it is interesting to know too exactly where these targets come from. Is it the case that the Treasury simply comes up with suggested targets for departments, tries them on departments, departments say, "Oh well, we do not like the look of those", and negotiations happen, or do departments come up with a raft of targets to the Treasury? How does it work?

(Lord Macdonald of Tradeston) We have this public spending process, the PSX, which is the Cabinet Committee, and through the work of the Treasury spending teams they will work closely with their counterparts in the departments to see whether resources are adequate and whether there is value for money and, as I say, on any particular areas where the expertise of the central units might be useful our people could well be called in, but normally it is a process that is very much between the Treasury spending teams and the departments and that is going on constantly across a very wide area and it is monitored by that PSX process.

But in a nutshell are these Treasury targets or are they jointly owned targets?

(Lord Macdonald of Tradeston) They are jointly owned. Each department has clearly signed up to those targets and we have had obviously a Spending Review process and you have heard the Secretaries of State begin to develop in more detail how they will take those targets forward just in the past week.

Mr Liddell-Grainger: These targets are fascinating, are they not? Can I ask about Lord Birt? I am stuck on this. It follows on naturally. It is a target, you see.

Chairman: An easy target.

Mr Liddell-Grainger

I still do not understand the relationship to Lord Birt. Last week in here we had the Civil Service, the three Delivery Units. I did not get to the bottom of what actually Lord Birt did. He seemed to be an omnipresence around the fringes of this, passing information up, but again trying to hit targets. Is he a target-led person? Is he an adviser?

(Lord Macdonald of Tradeston) No. I would like to pass this over to Douglas but let me just say that I have actually worked with John Birt in the past. I have got a very high regard for him. He has got a very fine analytical mind. I have seen the work that he has done for the Prime Minister and he is an adviser to the Prime Minister. H e is working inside the Strategy Unit but working part-time and working unpaid. The ability of John Birt to be able to analyse and isolate trends or ideas is in my experience quite singular and he is a very useful addition to the excellent work that we get from our officials and from other sources. As I say, Douglas is now responsible for the Strategy Unit and John Birt works inside that framework.

Can you just answer the other question? To whom is he accountable? Is he accountable to you, the Prime Minister, the Head of the Civil Service?

(Mr Alexander) John Birt is an unpaid strategy adviser to the Prime Minister. I have in preparation for giving evidence before this Committee looked back to Hansard of 25 March where the Prime Minister named the unpaid strategy advisers of whom John Birt is now one. Previously he worked within the Forward Strategy Unit. Now, in terms of changes which have been introduced following the appointment of Sir Andrew Turnbull to his position as Cabinet Secretary, his work was previously in the Strategy Unit and what was previously the Performance Innovation Unit but has now merged into the Strategy Unit. That work was already commissioned but in fact there was a complementarity in the work that was being taken forward, and ultimately his position has been very distinctive from some of the discussions we have been having in terms of work with the PSA and so on.

What is he doing at the moment?

(Mr Alexander) He is providing strategy advice to the Prime Minister.

No: what is he doing? Is he on hospitals, cups of coffee? What is he strategising on? What does he do?

(Mr Alexander) It is a matter of record that he has been undertaking work, for example, on transport policy, and in another Select Committee there is clearly a great deal of interest in that particular piece of work. I would feel it to be perfectly reasonable for a Prime Minister to be able to draw on a wide range of sources for advice.

I do not have any problems with that. The Prime Minister can ask anybody he wants or she wants or whoever else wants for advice, but what intrigues me is the accountability of unpaid people within Government who are advising, suggesting, strategising. There are already four Delivery Units with all this back-up from the Civil Service and Ministers and all the rest of it; yet we have still got people on the fringes who are creating a strategy on transport policy. To me this is just another strand of somebody in the New Centre who does not seem to have a set policy or a set brief. It is transport this week. What is it next week? Is it cleaning the outside of Parliament?

(Mr Alexander) It is a matter of record that Lord Birt has already worked on the issue of crime and the issue of transport, but there is little I can usefully add to the points the Prime Minister himself has made in relation to the unpaid strategy advice being offered by Lord Birt, which, as I say, I think reflects a general principle which is that it is a matter of long-standing recognition that Prime Ministers are able to draw on the advice of a range of different people and there are arrangements in place in terms of the establishment of the Strategy Unit which, rather than leading to more complexity, actually surfaces the reality, which is that there are a range of issues which I think it is perfectly reasonable for the Prime Minister to commission work on but which sometimes do not sit comfortably within departmental briefs but none the less would be issues that he would be keen to seek advice on and is able to receive advice on. Frankly, one of the challenges of Government is to be able to sustain informed, intelligent policy-making advice across a range of areas and, while the Civil Service is providing an outstanding service in one regard, there is also scope for the kind of work that is being taken forward by the Strategy Unit. I do not see there being any inconsistency between that general role and the particular work that has been commissioned from Lord Birt by the Prime Minister.

Mr Prentice

I am unclear in my own mind about whether Lord Birt is a kind of lone figure, an outrider, or whether he works very closely with Ministers and civil servants. Lord Macdonald of Tradeston, you have a huge range of responsibilities but you also speak in the Lords on transport matters. You must have had many meeting with Lord Birt when he was thinking about transport policy.

(Lord Macdonald of Tradeston) No, I did not. At that time I did not speak on transport matters in the Lords. That is only since the re-shuffle that I have had to do that, so when I ceased being Minister for Transport after the election I was not involved. I have seen John Birt's work. I have talked to him on a couple of occasions. This stream of ideas or analysis that the Prime Minister wishes to commission from John Birt or from other sources all simply goes in to inform a broader view of the issues. We in the end work closely with the officials in the department. Now as a spokesperson for transport in the Lords I will of course work with officials in the Transport Department, but they would set the priorities with their Ministers that I would follow. I would not be going to John Birt looking for advice on how I would address any particular issue.

I understand that. What I am trying to get at is the relationship that John Birt had with the organs of Government, if I can put it that way. We had the three central unit heads here last week and they told us that people who offer advice to Government could only do so effectively if they interacted with the relevant Government departments, so what interaction, if I can put it that way, was there between Lord Birt and the Department for Transport when he was preparing his report on transport strategy?

(Lord Macdonald of Tradeston) As I say, I was not a Minister in that department at the time but I would imagine that he would, working with the Secretary of State, have had access to the officials who might be able to provide the information or expertise or argument that he needed to try and come to his conclusions.

I do not want to press this point unduly, but there was no discussion with the heads of the central units about these proposals that John Birt was working up.

(Lord Macdonald of Tradeston) There would have been discussions clearly with Geoff Mulgan as the head at that time of the PIU.

(Mr Alexander) Geoff also made it very clear, if I recollect the evidence accurately, that, as he himself said, in his own capacity he advises and Ministers decide, and it was quite clear that that was where responsibility lay. I think that we can over-complicate a general view which says that if you have a view of politics and governance, as I do, that it should be rooted in values but driven by ideas, then I am not hostile to the idea that senior politicians should be able to have access to ideas because in many ways they fuel the policy making process.

No, but here is this guy, Lord Birt, who has got no background in transport matters at all, who has not spoken on transport issues in the House of Lords since the general election, has nothing to do with the Department for Transport at all so far as I can gather, comes forward with proposals to introduce motorway tolls and it is quite legitimate for people to say, "How much credence is going to be given to this report and how did he come up with these ideas anyway?"

(Mr Alexander) Of course the Prime Minister is on record as answering observations similar to the ones you have just made by asserting his right as Prime Minister to have access to people because of the distinctiveness of the judgement they bring to bear on a range of different subjects. That is reflected in the fact that not only on transport but also on crime the Prime Minister is keen to have Lord Birt advising him.

Okay, but the great danger with Lord Birt is that it is seen as cronyism, is it not?

(Mr Alexander) As I say, I take a different view of politics which is not views in and views out, but that actually underneath the politics does rely ultimately on translation of ideas and policies into outcomes and therefore to sustain the intellectual capital of Government by drawing on a range of different sources, be that the Strategy Unit, be that an unpaid strategy adviser, be that the expertise of the Civil Service, is actually a very constructive and progressive way to take forward policy making.

Brian White

Just before we leave that, during some of our previous reports we have been looking at the fact that the Civil Service was considered to be a gifted amateur and that whole process has moved with the greater professionalism of the Civil Service, Civil Service training, all those issues. Is not the introduction of somebody like Lord Birt, an individual coming in as a gifted amateur, a throwback to those days?

(Lord Macdonald of Tradeston) John Birt is a very experienced business person. He was involved in commercial business over many years and then he was involved in running a huge public corporation. I think that some of the strengths of that corporation he is displaying today down to the kind of analysis and actions that John Birt took when he was in charge of the BBC. I do not think it is right to try and diminish what John Birt has done or what he can contribute. It is true that in business, as in every other walk of life, we have had to live with pretty dramatic change over the past few decades and the Civil Service too is wrestling with the kinds of problems that every organisation faces now: how to get on top of the challenges of IT, how to deal with the management of major projects, how to properly motivate its staff, how to recruit and train and how to get better leadership, which is coming through of course as a characteristic that is essential in the achievement of many of our aims. With respect, John Birt is part of the more general thrust that Douglas has described, but he does bring a lot of technical expertise to Government, albeit for a very short time each week, unpaid.

(Mr Alexander) I also think that there are the individual qualities of collective politicians. There has never been a metric which says that experience prior to entering public life is necessarily a guide to excellence within public life. It was said about Ian Spedding in the Foreign Office that he was equipped to do two jobs, either to be a rather grumpy lift attendant in the Foreign Office or perhaps the most brilliant Foreign Secretary we have had in the last century. In that sense I think the idea that because someone does not have a background in health they are not equipped to be somebody who can give strategic advice on that or on other roles.

Mr Prentice: I am going to be a brain surgeon.

Chairman

We do not want to get stuck on Lord Birt. I do not know the man. I presume the Prime Minister would not call on his services unless he felt he had something to offer and I very much take the point about wanting advice from all kinds of sources, and if people have broad ideas and skills they should be able to be brought in. I accept all that, but the point we are getting is that the capacity for confusion here is considerable. Here we are with a PSA system - I am looking at the transport page of the Spending Review - which gives as its objectives its targets for the period ahead, so it is locked in to all those. It has got its 10-Year Plan which gives the long term projection. Government has now its Strategy Unit to do broad strategic thinking, and on top of all that we get these free range strategists who appear. Accepting all that has been said, there is a possibility of some confusion coming in here.

(Lord Macdonald of Tradeston) Chairman, I would say that in any organisation which is in the process of spending £500 billion a year and spreading that across five million people, you would need a degree of complexity at the centre. What might strike you, coming in from outside, is that so few units are involved and are in some senses so thinly staffed, as we have here for the British Government, as I think the Prime Minister intimated when he saw you, that, for instance, if his support gets any bigger at the centre of British Government it might soon rival that of the Irish Taoiseach.

Chairman: That is a good point with which we all agree, but complexity is not the same as confusion. Let us move on.

Brian White

When the Modernising Government White Paper came out, everybody said, "Yes, very good". Have you been back to look at how we progressed against the objectives set out in the Modernising Government White Paper? Also, one of the key things it identified was the departmentalisation of silos and the need for cross-departmental working. In the PSA process it is still very much a departmental focus, so how are you dealing with the cross-departmental issues?

(Mr Alexander) Part of the mandate or the letter that I understand was sent by Andrew Turnbull spoke about the fact that there was an enthusiasm to secure the Civil Service, which is respected just as much for its delivery skills as its policy advice and I think, again for the reasons that Gus suggested, not just in terms of the amount of money being spent, of course there are challenges, but whether the machinery of government is able to take that work forward. I think at times you can take the analogy too far. I know it is a subject of some concern to the Committee between the private sector and management structures and the structures appropriate for governments in the United Kingdom. I would like to reflect for a moment on the kind of structures that would be in place in any large organisation: there will probably be a capacity for trying to think ahead in terms of some of the major strategic challenges the organisation would face; there would certainly be a means by which in terms of some of the targets within the business we would actually be able to say they are a basic means and an effective means by which they could keep track of whether those targets were met was in place. In all likelihood there would be access to external sources of advice beyond the individual organisation itself and at the same time there would be a means by which clarity was given in terms of the strategic direction and accountability, in this case for ministers. In that sense of course there is a process which Sir Andrew Turnbull is taking forward allied to work being taken forward in the Civil Service reform. I think one should not assume because it is a large organisation that complexity is inevitable, in fact it may be a function of the scale of the objectives that we have returned to one of the observations which I have held most deeply in recent weeks since moving into the Cabinet Office, which is if you are serious, as I am, in terms of recognising the immense political challenge that the government has set for itself in terms of rehabilitating and rebuilding public services in this country then actually we have an obligation not just to make speeches but to translate those speeches by the poetry of campaigns into the prose of government. We have to be in the boiler room, in the engine room making that change happen. That is why the work of the secretaries of states and the departments are so key, because actually as a government we made clear it is the mandate we received, but it is also a genuinely historic clause, and one which I relish.

Brian White

Professor Stewart used to refer to the "wicked issues", do you see the Cabinet Office having a role in dealing with "wicked issues"?

(Mr Alexander) Give me some examples?

Issues that do not fit into anyone's box. Looking at issues, like how people relate to the public services, they do not relate to the Department of Social Security, they do not relate to the Home Office, do they, they relate to whatever the particular issue is at the time.

(Mr Alexander) Of course there has been the historic role for the Cabinet Office of holding functions which naturally sit at the centre and frankly do not naturally sit else where within Whitehall. That is why, despite the fact that it draws some scepticism from certain members of this committee, we do recognise that one of its responsibilities is to support the Prime Minister. Of course there are other functions which we discharge in the Cabinet Office, not least, for example, the intelligence and security matters Gus mentioned at the outset. In that sense there are central functions of government which continue to be held at the centre. On the specific point you make, I have been seeing what is in the jargon described as customer satisfaction. One of the things I look forward to engaging in in the months to come is exactly the kind of question you have identified, how do we try and cut through some of the policy language and some of ideals that we have set for ourselves and actually make sure that the development of policy within those public services are genuinely customer focused. It is essential that we understand the customers experience of those public services if we are to deliver our promises.

You are unique, you had the e-envoy report to you in the DTI and now you have him in the Cabinet Office, can you explain the differing roles he has in what he reports in the Cabinet Office and what he reports to the DTI?

(Mr Alexander) There has been some kind of change post the reshuffle in the sense that previously the position was that Gus had ministerial oversight within the Cabinet Office for certain e-government responsibilities while at the same time I had parallel responsibilities in terms of commerce within the Department of Trade and Industry. One of the main areas of concerns we were developing in cooperation and working closely with the e-envoy was the agenda of broadband Britain, of which I know you are an expert and you know a great deal about. In terms of change post reshuffle I think there has been a recognition, an acceptance that the appropriate location for that work is the DTI. In terms of the best guide to the work that the e-envoy will now be taking forward I return to the mandate set by Sir Andrew Turnbull and the Prime Minister when he spoke about transformation, and that is one of the major challenges that we see. I know that questions were asked of the Prime Minister before the Liaison Committee in terms of the work of the e-envoy, while there is a clear target for getting government services on-line that does not capture either the scale of the Prime Minister's ambition or, indeed, the work of the e-envoy's office. As e-commerce minister I made a lot of speeches last year asserting the importance of information and communications technology, not just in terms of utility within a business but actually the capacity of that investment to transform the way those organisations do business. I think there is a lot we can draw within the public sector or the public domain based on exactly that insight. That is why I certainly welcome the change to this, the explicit transformation, which is actually the business community being taken forward by the e-envoy over this. That is, as we see, a text book example of where resources at the centre can actually stand in and service and support the work of ministers and the departments. Actually it asking a lot of ministers as well as taking forward policies within individual departments to be able to take forward what is certainly a very challenging agenda in terms of the transformation of public services using new technology. In that sense I think it is a very good example of the e-envoy's office and in particular e-transformation, Andrew Turnbull's vision of the Cabinet Office.

One of the interesting structural changes is that the OGC now reports to Sir Andrew and sits in the Treasury. When there was licence adjustments last September the OGC automatically went to the Treasury to try and renegotiate the licences for central government, it did so until Mr Smith intervened for the wider public services and local government. Is it purely central government you are concerned about or are you concerned about the wider public services?

(Lord Macdonald of Tradeston) We are concerned with the wider public services and Wendy Thompson and her OPSR - I know you talked to her last week - is principally concerned there. I should just say that the Office of Government Commerce is still working very much with the Treasury and the overall improvement of procurement and project management., in that it is judged to have been very successful under the leadership of Peter Gershun. We are looking to borrow the expertise of the OGC so that it feeds into the Cabinet Office as well as to the Treasury. In that sense we will use the OGC to help the broader transformation.

(Mr Alexander) I can give you a very specific example of that, when I was the e-commerce minister one of the areas I felt we could do more to support broadband Britain was in the area of aggregation of the public sector in the market, not just at a national level but at a local level as well. Much of the most interesting work was actually taking place at the level of local and regional authorities. One of the pieces of work we managed to secure was that the OGC would look at the public agreement of broadband. It is exactly the learning that emerged from the OGC last year that informed the announcement - it was after my departure - from my successor Stephen Timms in the DTI about the establishment of a regional broadband unit, which would actually service and support not just the regional development agencies but also local government in taking that work forward.

One of the things that this Committee does is to look at the government's information and communication services, we have looked at Mike Granatt's work in the past, as a former journalist how do you rate the government's information communication services press releases?

(Lord Macdonald of Tradeston) The sad news for most organisations, including government, is that if you are sitting in a news room receiving a stream of press releases most of them go straight into the bin and therefore it is important to be discriminating and to try and decide what might be genuinely newsworthy and then to try and write that up in a way which is very different from that quoted by the Chairman earlier, if you want to try and get it into a newspaper get people to follow up on it. I have been impressed by the work that is done in departments that I have been in, in the Scottish Office, the DETR, now the Cabinet Office, a lot of it is defensive because of the constant pressure for comment that is required from ministers, and you simply do not have the time to give obscure technical journals and others, and yet it is a very important function that we perform. When I was in transport a lot of the work was going out to technical journals who were clearly very understaffed and our office simply provided half of their coffee every month. You might wonder if that is the proper deployment of your resources. Now we have the question of the new media to deal with. It is a very demanding task. Mike Granatt has performed very well as head of his profession. Like every other area of government it is under pressure to modernise and adopt new technologies, but that would be very helpful for the future.

Do you not have the problem of boring press releases?

(Lord Macdonald of Tradeston) I do not think that is the case. Douglas is, in fact, responsible for this area but I think that it is difficult for ministers to keep contact with all of the areas of it. When I first came into government it was my firm intention to rewrite every press release into what I felt was plain English. I was worn down very quickly on that.

Chairman

Perhaps I can ask Douglas on the last point before we lose this area, today we are producing a report on the Byers affair - which you will be delighted to know - the whole issue was the difficulties of having more than one person doing information work, you had a special adviser doing it and you had a press officer doing it and of course it caused utter mayhem, and eventually it caused the collapse of the whole section of the department and eventually the resignation of the minister. How on earth do we sort that out?

(Mr Alexander) I look forward to your report. I do not think you can expect me to discuss individual personnel, I was not a serving minister in the department involved in the work I now am at time of events that form the basis of your investigation. As I say, I look forward to your report.

Chairman: Okay. I thought I would have a go anyway.

Mr Lyons

On a previous visit John Prescott told us targets are very tight to achieve. He said if you do not achieve it in year one it is unlikely you will achieve them in the follow up. What do you say to that?

(Lord Macdonald of Tradeston) We have a Spending Review process now which I think is an improvement on past practice and it does give departments time to vary their pace if they have been slowed down by events and they have a three year perspective in which they can catch up. It is an evolutionary process clearly but it seems to me it is both worthwhile and it is increasingly making progress.

Do you feel it will stop making progress if we do not get what we want?

(Lord Macdonald of Tradeston) It will never stop, it is not in the nature of things that it should stop or we should reach perfection. I do believe we are refining this system and no doubt we will have to modify the system in the course of whatever events inevitably overtake us in the future. We have systems in place now which are better than those that existed before in any government in my political memory.

You will hopefully agree that no matter what strategy you have there will always be problems of delivery in any organisation. One problem of delivery is there is often a failure to accrue or obtain the number of people to make delivery of the product at the end of the day. Do you listen to that feedback? There are problems in the Health Service of recruitment and retention, how do you listen to the pressures coming the other way, rather than delivery yourself in the centre?

(Lord Macdonald of Tradeston) Ministers are constantly out and about. The Prime Minister is increasingly going to meetings, many of them never publicised, with workers in the public sector. I myself try to get out. For instance in the Health Service I went along, almost uninvited, to a meeting of what was called the Coronary Heart Disease Collaborative, which was people from all over the country who worked in heart disease coming together to talk about how they got people from the time of their attack to the treatment in hospital in much more quickly. It was extraordinary listening to them, because had you ambulance drivers there, consultants there, GPs there and they were comparing their experience in the north of the country with the south of the country, in some areas they can do it in 40 minutes, in other areas it took four hours. You realise that this was the collaborative approach that thankfully is being encouraged by the Department of Health all over. What we have to do in communication with the millions of workers in the public sector is to try and find a way where they can contribute better to these processes. We believe in what we are doing, as you can hear from the way Douglas has presented it, and we would like other people to understand what we are trying to do, but we realise that they will not always agree, so we have to find ways in which the departments increasingly are doing it to listen to what people on the ground are saying. We want to devolve authority to the frontline, but all of the frontlines are different, they are all differently positioned. In our four principles of public service reform, yes, we want high national standards; yes, we want more accountability, but the second principle is to devolve to the frontline and the third principle is to get more flexibility in there. You cannot achieve that without talking to the people who are doing the business.

Do you accept there is no flexibility in the payroll for, for example, nurses, consultants and all sorts?

(Lord Macdonald of Tradeston) I think there is a great deal more flexibility than there has been in the past. There is flexibility clearly in the pay for police, they are paid more in London than else where and other areas of the southeast, there is flexibility in the Prison Service in pay and head teachers have more flexibility in the way that they reward their staff. That flexibility is coming through the system more quickly than in the past.

What about risk management? We discussed that last week with some of your colleagues, how do you build that into some of your strategy, and delivery strategy? I will give you one example, you may have a strategy in health in terms of better delivery and along come the American health groups looking to recruit from this country - they are starting to do it now - how do you deal with that?

(Lord Macdonald of Tradeston) We have yet to see the reality of that as a threat to our recruitment. What we can see is that a lot of effort has gone in in the past few years and the target which was set in the 10 Year Health Plan for the recruitment of extra nurses was achieved two years early, it should have been 2004 and as you will know it was achieved this year. We obviously have strategies in place in the Department of Health to drive recruitment and they have been relatively successful. I hope in recruitment we can do it from the pool of nurses who can be brought back into the service as well as enhanced training and, indeed, our recruitment overseas - because the conditions for nurses are attractive in this country in comparison with that pertaining in some European countries. As you probably know British nurses are paid more than French nurses or Spanish nurses and there is unemployment in the medical profession. Our doctors are paid twice as much as French doctors, there are unemployed doctors in Spain, Germany and Italy. That kind of recruitment is in process but it is a slow business at times because of professional qualifications and clearance, that is the kind of bureaucracy we are trying to remove.

(Mr Alexander) If I can just add a local perspective to that, as a constituency Member of Parliament not far from your own constituency you witness exactly that conversation every time you are back in your constituency and the politician in me was itching to say, our commitment is to recruit 10,000 doctors and 20,000 nurses. What I found in my own constituency's experience is the fact that people are seeing advertisements in the newspapers to recruit nurses has actually been far more powerful than politicians speeches about the fact that there is an ambition there to recruit nurses. Of course there are capacity challenges, in my own constituency we had 27 graduating nurses from a local university and my local hospital offered every single one of them jobs, but they were in competition with others. In that sense I think one of the strengths of our position as a government is not just to set targets but actually to be willing to put in the means to secure that. In that sense the government has been very clear that there are capacity challenges. The National Health Service simply was not big enough when we inherited it in 1997. I would also just add to the point that Gus made in terms of the recruitment of foreign doctors and foreign nurses, I also experienced the NHS services not as a patient but as a father, my son was born in an NHS hospital just before Christmas and the majority of the people looking after my son in intensive care in a central London hospital came not from the United Kingdom, so in that sense the announcement the Chancellor made last week as part of the Spending Review in terms of the increase in the number of work permits potentially available is a reflection of the fact there is a recognition that we face a real challenge which we are taking real action to address, which is how do we manage to secure the service and get new recruits into the service and at the same time retaining the services, particularly of nurses, who for a range of different reasons have in the past chosen to leave the profession.

Can I move on to the question of the position between the centre and the departments, if you feel there is a lack of delivery in some aspect of their work how do you communicate that to them? Do you have formal meetings to discuss that failure?

(Lord Macdonald of Tradeston) The delivery unit and the officials in the department would have those discussions and those would be relayed back on the official side to the secretary of state and were it relevant to the under achievement or non achievement of targets then no doubt it would be reported in the Cabinet Office through our processes which contribute to the bilateral meetings that the Prime Minister has with his secretaries of state.

Mr Trend

Can I change the subject slightly to other areas of interest, in the work of the Cabinet Office in particular we heard about broadband and the distressing experience last week with John Gieve sitting here and Richard Wilson sitting there almost like two naughty boys who had a fight and could not bring themselves to say sorry over the question of the ombudsman. They were clearly agreeing to disagree, but this is the first time it has ever happened since the institution of ombudsman system in such a serious case. Richard Wilson effectively told us this disagreement was a political matter. Can you help us understand what went wrong after a system which had been right for decades suddenly fails?

(Mr Alexander) I am aware of the discussion you had with Sir Richard Wilson and I hesitate to suggest there is not much I can usefully add. He made clear both the fact that the government took the matter extremely seriously and gave it serious consideration, but on the other hand recognised and observed the fact that the government has to make a judgement on these issues exercise that judgement.

The judgment was made within the terms of the code and the reason Richard gave us was that it was politically inconvenient, and political inconvenience is not an exemption under the code.

(Mr Alexander) I do not recognise that description.

He did say it was a political decision, there is no doubt about that.

(Mr Alexander) I would suggest that is different from political expedience.

Political decisions are not a reason for exemption from the code. Something is wrong, the code is wrong, the ombudsman is wrong, the Cabinet Office is wrong, because the system has not worked. Basically it has worked for decades and now it does not work.

(Mr Alexander) On the basis of trust and respect honest men can disagree.

Are they going to disagree in the future? How have they managed not to disagree in the past?

(Mr Alexander) I cannot anticipate what matters will come before the ombudsman in the future, that would be a matter for the individual complainant to raise with the ombudsman. As I say, there is little I can usefully add to Sir Richard's comments, other than to say that very serious consideration had been given to the matter and it was not an indication of the general Cabinet's attitude but of a specific ---

I do not doubt it was treated with enormous seriousness and took a huge amount of time. One of the things that the previous minister told us was that a review of the ombudsman system is going ahead, now we have heard this for some years, can you tell us the position on the review?

(Mr Alexander) The government remains committed consistent with precedent, but I am not able to anticipate when parliamentary time will become available to -

That is the answer we normally hear. Is there any chance of them speeding it up a little?

(Mr Alexander) Tempting though your invitation is there is little I can add to the established position, but as I say the commitment continues.

The review of the ombudsman was to do with the administration of the system, but we have now had the first serious case of the system not working, will that become part of the review of the ombudsman, how one can avoid this or somehow find room for it in some theory of government? Honest men can disagree, which does happen from time to time.

(Mr Alexander) I am aware there are a range of fundamental changes. There were actually very serious issues in terms of how to align the work of previous structures and institutions in a way that made sense to people.

I am asking you specifically, you can well understand a system which has worked well in some mysterious British way does not work, you have established a mysterious British precedent and because it is inconvenient for the government to explain something that could be easily misunderstood, I accept that point, although there may be ways of doing an exercise across government so the same sort of information would be giving an unbalanced opinion to the outside world, that is what is Mr Wilson told us. Is that precedent going to carry on or can we address that as part of it? The way Mr Wilson explained it to us was - and he said this in a different answer as well - is you can misrepresent by handing out the figures as they are or you can give a misleading impression. The tabloid press only ever read the headline and hare off in one direction. Of course the government does not want that, but nevertheless a precedent has been established on that basis, and that is something that does not appear in the code. Either the code has been widened or we need to have a clearer definition of what the ombudsman can or cannot say about the system as a whole.

(Mr Alexander) My training as a lawyer suggests that hard cases often make bad law. In that case at this stage I would not be clear as to whether the particular circumstances of the case --- As I say, I have had the opportunity to read the evidence Sir Richard gave to this Committee, but I am not familiar with the detail of the exchange between Sir Michael Buckley and Sir Richard Wilson. I would hesitate before giving any governmental commitment on a specific case.

It was clearly frosted, I can assure you that. Can you give the Committee the assurance this will not be the precedent for future policy?

(Mr Alexander) As I say, there came a point where there was a genuine disagreement.

I am sorry but the secretary of the Cabinet said it raised a principle which the government could not accept and it should not give out information which is potentially misleading. I have some sympathy with that, but that is not covered by the code and you examine this system. If you give us an assurance that you will look into this closely as part of your on-going review into the system that might suffice for the moment.

(Mr Alexander) I am certainly happy to give you an assurance that I will look into the matters which you raised.

It is a miracle it has worked so well for so long. There is now evidence that it has hit a particular buffer and it would be quite tidy to think about what went wrong. If I can turn to something else, we hear an enormous amount about the Civil Service Act and we detect a shift in the government's intention. When Richard Wilson spoke on this - because the Prime Minister could not explain it to us himself - Richard seemed to be quite keen on moving ahead with the Civil Service Act and Andrew Turnbull seemed to be less keen. Are we right to detect that?

(Mr Alexander) There is no shift in the government's position. The government's position is that there will be a Civil Service Act, the terms of which have already entered the public domain. I have to repeat, I cannot anticipate, you would not expect me to, when the time will become available.

I thought you would say that. That is the standard answer we have. About six months ago we had the distinct impression based upon the way it was phrased and the body language in the way in which it was delivered that a White Paper was coming very soon. This was months ago and now we are back into that dark mist where the mysteries of Parliamentary time occur.

Chairman: Let me just add to what Michael has said, it was not body language it was a firm statement by the Cabinet secretary last Autumn, he came here and he said, "I have now secured the approval of the Prime Minister and I am authorised to say that". He went on to say there would be a paper by Easter.

Mr Trend

Chairman, the trouble with that is that Parliamentary time could still crop up.

(Mr Alexander) In terms of the dark mysteries you suggest I would hope that the work of this committee would be able to shine a torch into that darkness, which I understand is your work in terms of the Civil Service Act, and the government looks forward to seeing the findings of that particular report. It is also obvious in the case of the Weekes Committee, they are looking at these issues and similarly we are keen to learn and develop thinking in light of both of those reports. The commitment that was given to you by Sir Richard is reflected in the commitment I have given today, that the government remains committed to the Civil Service Act.

I knew you were going to say that. Richard was telling us it was going to happen and you are telling us that it is not, I know you are, I can tell you are.

(Mr Alexander) Listen to the words I speak, there will be a Civil Service Act but we cannot anticipate when a slot will become available. You can sometimes seek to ver interpret what is a very plain commitment.

You are batting very well. Can I ask you about Parliamentary questions to the Cabinet Office, why have they been halved?

(Mr Alexander) Parliamentary questions are a matter for the House authorities and as I understand it the position is that previously there was time available on the floor of the Commons for Cabinet Office questions, which included the office of the deputy prime minister and also a slot for the Department of Transport Local Government and the Regions. It is my understanding of the position that there is time now available to the Department of Transport and there is time available to the office of the deputy Prime Minister and there is time available to the Cabinet Office, there is more time available for Parliamentary scrutiny of the ministerial portfolio.

Then there must be less time for scrutiny of the Cabinet?

(Mr Alexander) To the extent that the Cabinet Office functions reflect a more narrow canvas than the work that is being taken forward by the Department of Transport ---

Everything you have said in the first hour or so of this session was that power was increasingly being scrutinised, the centre is more important and it seems to me to be strange that the Cabinet Office should have less scrutiny

(Mr Alexander) As I said, a scrutiny executive by Parliament in terms of the areas that were previously held by that function is now discharged by the Department of Transport. The office of the prime minister and the Cabinet Office has actually increased, not diminished and that lies within the authority of the House.

Can I just ask one last question about the director of the CLI, is that post open?

(Mr Alexander) There is an acting deputy taking the place of Carol Fisher and on the conclusion of her contract, which is at the end of July, from memory, then we will proceed with the standard process in terms of finding a very senior figure of that standard for the vacant position.

You will understand why some of the political opponents might think this is another opportunity to have another appointee. Can you give us an assurance it will not be filled by any part of the Civil Service?

(Mr Alexander) I was given assurances in terms of the selection panel exercising the judgment on the filling of that position it reflects the team who recruited Carol Fisher. If it would be helpful to furnish you with the positions of the people serving on the appointment panel I would be happy to do so.

Previously they have not gone for the civil servants they have recruited from outside.

(Mr Alexander) Carol herself was recruited from outside. If one studies the terms of the Quinquennial Review, the reason Carol explained to me she was keen to stay on in the position under the contract she was serving then I have to say it is a tribute to the selection panel that sat there in the sense of what she has done, and that is widely recognised.

You would expect them to fill the post in roughly the same way as you filled the position when she got it?

(Mr Alexander) I have asked for advice on this. We will make sure we will furnish you with the information in terms of the competition.

(Lord Macdonald of Tradeston) It will be an open competition supervised by the Civil Service Commission, so it will meet all of the rules for senior civil service appointment selection because it is a very senior post.

(Mr Alexander) This is collaborative working.

Can I ask one last question, you mentioned the Civil Service Commission, we saw the Civil Service first commissioner recently and she seemed to have a number of ways in which she would like to develop her work and she had strong feelings on the Civil Service Act and other matters. How is the Civil Service Commission and its work reviewed? Are you planning to consider her feelings and requests?

(Mr Alexander) I similarly had the opportunity to meet the first Commissioner as you describe her and I certainly endorse the comments you made in terms of her personal qualities. I know there are a number of matters she herself envisages in terms of building and I obviously would be interested to see how we can take those discussions forward.

Mr Prentice

We have had people before us who have described giant cock ups which have occurred with the introduction of new IT in the immigration, nationality departments, the CSA and in the Legal Services Commission. We heard from the Home Secretary earlier this week as part of the Spending Review a lot of money is going into to wire up the CPS, the police and Magistrates Courts. How much confidence do you have that the systems are robust enough to actually carry that through without there being another cock up?

(Mr Alexander) I would make a couple of observations, one is we are alert to the challenges we face, and that partly explains the change in terms of the role for the e-envoys office. If you look at major project managements on this scale already just in a very short period we have benefited and learned a great deal from the work of the OGC. We review the process that the OGC takes forward on major projects and it is a model of the programme management skills we need to bring to bear. The auspices of the OGC lies in areas of contract organisation and procurement on behalf of the government and I think there is an additional piece that the centre can offer in support of individual departments, and that is really the role that I envisage being played by the transformation team working with Sir Andrew Turnbull in the Cabinet Office. You are right, this is not a challenge you need in the public sector because there are plenty of examples in the private sector of money being spent, but there is also a lot being achieved in terms of IT projects and assets in that sense it would be improved were we not to be taking steps at the centre of government to support the work of departments. That is certainly the ambition or one of the responsibilities which has been developed in terms of the new centre.

Do I take it from that reply that you are confident the thing is going to proceed as planned. I recently visited the magistrates court in my constituency and they are still using Amstrads or ICL, really antique stuff, you tell us there are going to be major systemic cock ups which will really hold back service delivery, has it all been sorted out?

(Mr Alexander) We are putting measures in place to support the level of investment consistent with not just IT but our general approach to public expenditure, which is to secure value for money. It is a reality, of course, but in both the public and private sector in the past there have been instances where projects have not been delivered and costs are being accrued as a result of that. I would certainly endorse the point you make in terms of the antique nature of some of the infrastructure that is still being used in the criminal justice system, I think that strengthens the case not for saying the government should take no action but rather the government should have an approach in seeking to make sure that the money is spent wisely on other investments and is not a substitute for reform. You need to put measures in place.

On this value-for-money matter we heard Gordon Brown tell us on Monday we are going to have five new watchdogs, a policing watchdog, criminal justice, health, social care and a housing watchdog. Why do we need this? What was wrong with the others?

(Mr Alexander) My view is if you look the scale of investment, as Gus mentioned earlier there is a responsibility consistent with what has been said both at a political and governmental level in the latter years of opposition and the earlier years of government and the last four years of this Parliament to ensure that value for money is achieved. That does not seem to be in contradiction to the need to secure outcomes, it actually means in service of that we have for too long been bedevilled with the view that a degree of monitoring the implementation of these projects is in some way a barrier to the achievement of those goals.

What is wrong with the Audit Commission? The Audit Commission has a remit extending over all of these areas and is very highly regarded.

(Lord Macdonald of Tradeston) We still hope there will be complementary roles there.

What is the costs of reorganising, creating these new watchdogs, do we know?

(Lord Macdonald of Tradeston) I do not know the cost, but I speculate that it would be relatively small in the context of the good savings that might be made.

(Mr Alexander) The best example of that would be the OGC, I do not have the figures but in terms of the expertise they brought to bear in terms of procurement it can be very considerable.

There are cynics out there who say all of this organisation of change gives the impression of activity but it does not actually guarantee delivery. There was a body there, the Audit Commission, highly respected and it is going to lose very many of its functions to new watchdogs. I read in the FT today, Tony Travis, a respected academic with no axe to grind, a former member of the Audit Commission, he said that the Audit Commission is going to be dismembered bit by bit because it would seen to be too independent. Why should somebody like Tony Travis say that?

To be honest I am not familiar either with the codes or the article itself which that is drawn from. I merely mention some of the general points I made previously, I regard it as being a genuinely historic mission in politics to seek to rehabilitate the public service in contradiction to an ideology and a set of values which I find deeply anti-political to the notion of public service delivery in the past. I think it is responsible policy making to secure not just inputs but actually outputs and it is therefore entirely appropriate for a government which is determined to drive forward a process of the delivery of public services to make sure that there is the machinery available to ensure not just value-for-money in a purely financial sense but actually to ensure there are outcomes which the voters desire. Consistent with the point we were making earlier, I would not expect constituents of mine to be interested in individual monitoring bodies, but they are genuinely interested in the resources committed to public service delivery. No doubt they will hold me to account for that whenever I next stand for them at election. It is fundamental to our political mission to be able to achieve the kind of reform and resources that are needed. I would argue that the fundamental challenge we faced coming into government was not one solely of government resources for public services but actually the fact that there had not been a campaign before necessary to provide the standards of service and people were seeking that. That is why we do have an agenda in terms of resource allocation.

I am none the wiser as to why the Audit Commission could not do that job. Tony Travis, he is an inspectorate to the five new watchdogs which I mentioned earlier, said, "they may be independent of the services they are inspecting but it will be much less independent of departments and ministers". Would that be fair?

(Lord Macdonald of Tradeston) That is very much a surmise on the part of Professor Travis. I think what we can say based on the experience of the office of government commerce, as Douglas mentioned earlier, is that it is well on its way to saving us over £1 billion in its improvement of procurement practices and it is involved in monitoring projects for some £25 million. When you think of the huge expenditure going on over government this is an area which I think will reap any investment we put into it many times.

We all want to see value-for-money. Can I finally ask you about your obligations, you have a huge spread of responsibilities sitting on all of those Cabinet committees, the responsibility for transport, better regulation, civil contingencies and the Duchy of Lancaster. Can I ask you, how much time do you spend on your Duchy of Lancaster work?

(Lord Macdonald of Tradeston) I was at a board meeting earlier this week and spent a few hours there. Of course I have papers to read, but it is a very competently run organisation with a very expert board there. I also have duties concerning about 4,000 magistrates in the north west of England, so there is a bit of time spent in the appointment of those magistrates and the retirement of the magistrates.

Are you still the only government minister who can fly a little flag from the government car?

(Lord Macdonald of Tradeston) I was not aware of that.

Jack Cunningham used to fly it!

(Lord Macdonald of Tradeston) I will be there at the end of the Commonwealth Games at Manchester as the chancellor of the Duchy of Lancaster - paying for my own tickets, I should say - and then in Preston Town Hall the following day when her majesty goes into the north west on her tour.

Chairman

At the moment millions of people are flying flags on their cars, you are entitled have a flag on your car!

(Lord Macdonald of Tradeston) Not for football I suspect!

Sir Sydney Chapman

I just wanted to return, if only finally, to two issues in relation in particular to do with the Civil Service Bill and the ombudsman. In the House of Lords exactly a week ago you replied to a question on the Civil Service Bill by saying, "the government's position on legislation for the Civil Service is as set out in their submission to the Commission of Standards in Public Life, copies of which are in the libraries of the House". In the cause of plain English why did you not just say, a Civil Service Bill will be introduced in the next session of Parliament?

(Lord Macdonald of Tradeston) Because I thought people might be interested in reading the report into which so much effort had gone and I was drawing your attention to that. I think the submission to the Committee of Standards in Public Life, which the Cabinet Office made was surely welcome given the uncertainty that your Committee is exhibiting in some areas in this matter today.

(Mr Alexander) It might assist the Committee, on point 15 in response the government agreed that a Civil Service Bill should be used to put the position of special advisers to the statutory...

You are putting in the strongest possible bid for a legislative slot in the next session of Parliament?

(Mr Alexander) As l say, we are not able to discuss the contents in advance of the Queen's speech.

May I quote you saying in the House exactly a fortnight ago in reply to the question on the reform of the ombudsman system, "the government have made clear that they intend to bring forward legislation to replace the existing arrangements with a more unified ombudsman body when Parliamentary time allows". Is that going to be allowed in the next session of Parliament? Again, assure us that you are putting in the strongest possible bid.

(Mr Alexander) As I said, the government is fully committed to that.

Moving on from that, last year when the Deputy Prime Minister came to this committee he said that as Deputy Prime Minister he provided the strong political force that is necessary in the Cabinet Office. Now that the office of the Deputy Prime Minister and personally the Deputy Prime Minister has moved is there still a strong political force in the Cabinet Office?

(Mr Alexander) As Gus has made clear to this Committee, as ministers within the Cabinet Offices we report directly to the Prime Minister. I am certainly confident that we are able to secure the support of colleagues in terms of taking forward the work of the department, the office of the Deputy Prime Minister is reflected in the many responsibilities, which John Prescott made his job and his other areas of policy responsibility. I am certainly confident that we can take forward the work of the department like colleagues have done previously.

(Lord Macdonald of Tradeston) If I may add, Chairman, I hope you have taken from my description earlier of our role that we were neither prefectorial neither were we enforceable, so we did not need this force of weight that seemed to be implied in your earlier judgment. We were acting collaboratively and the approach which we took in addressing the problems of other departments was one which was proving increasingly productive.

Just as a slight comment on the question of Parliamentary time in the Commons being halved - and I thought Mr Alexander gave a very good answer - but I cannot help reflecting that had he still got half an hour to answer questions in the House, albeit once a month rather than once a week, it would be good preparation to become the next Prime Minister.

(Mr Alexander) That is one question I am not going to answer. I would say on the basis of my very limited experience as a minister speaking on Cabinet Office responsibilities that Parliament is able to scrutinise in 15 minutes, so I hesitate to think what it would be like after a full half hour.

Mr Brennan: I believe we will have a Labour Prime Minister in ten years!

Sir Sydney Chapman: I did say about three!

Mr Brennan

Not for this purpose, but I was reading some Yeats earlier on, and I will quote you,"The falcon cannot hear the falconer; things fall apart; the centre cannot hold; mere anarchy is loosed upon the world". Is that what this is all about, the Prime Minister is the falconer, if you like, he is really looking to extend his remit right across government, that he believes unless there is a powerful, strong centre with a Prime Minister with a firm grip on things that things will fall apart.

(Lord Macdonald of Tradeston) I do not think that is the case and you are probably aware of the context in which Yeats wrote that poem. I will not speculate on who the rough beast might be. I believe that the Prime Minister's instinct, again from my managerial experience, is a very sure one, in that he wants to understand in each of the most important sectors of this government, of this business, how it works and how he can help. That is a question that Douglas and I constantly ask ourselves. If things are working well then all my experience is leave well enough alone, try not to interfere. If Michael Barber is doing a good job in the Delivery Unit I will not be coming in and having everything explained to me and slowing it all down, you try to work with a very light touch and you have to know when to intervene. I think that the Prime Minister displays a very sure instinct in that, which is obviously one that becomes educated over time and he has been working through the problems of government for the past five years and he made no secret in his discussion with the Liaison Committee that he wanted a strong centre. Now, a strong centre is not necessarily a big centre because in relative terms we are small compared to the Germans, the French or the Americans. Yes, we want a strong centre, we want to try and concentrate expertise and we want to access the brightest and the best if they are prepared to come and work for us, and no apologies for that.

Do you ever worry at all that all of these targets, the way that the tentacles reach out, might actually ultimately amount to, target-itis is a phrase that has been used, and that the whole purpose of government is skewed, if you like, towards meeting targets and that something of the flexibility, innovation and the ability to run with the ball in the right direction is lost in the overwhelming need to meet the targets?

(Lord Macdonald of Tradeston) We have to be very alert to the threat that you describe, people must not become just fixated on targets, that is why it is so important to look to the four principles of public service reform that we have been trying to get people to understand. One of those is to try and increase the third principle, it is to try and increase the flexibility and incentives there, to devolve authority and to open up the ability to innovate. Call it what you like, there are words around like "earned autonomy" but what we have tried to do is become increasingly more visible. Where organisations are working well the centre should be pulling back and letting them get on with it, but on the other hand you must be able to monitor and you must have high national standards because you cannot tolerate chronic failure, that has been tolerated for too long and the lives of millions of our children and our fellow citizens, particularly in deprived areas, have been blighted by the under performance of public services. This is a mission that we are on. We want to give more freedom to the frontline and they can earn that freedom very readily, we believe, by increased performance. It is one of the most difficult things in life to try and drive change through organisations.

Is this what they used to call "loose-tight".

(Lord Macdonald of Tradeston) Yes, there is an element in that that there had to be a fairly tight grip in areas where there was manifestly under performance and as people begin to change the way that they do things, and perhaps new leadership comes in, and new resources, most importantly of all, it begins to come. We made it clear that our investment is linked to reform and we expect people to understand that message, that we have created 150,000 new jobs, extra jobs in the public sector since 1997 and there will, no doubt, be hundreds and thousands more in the course of the years ahead to come. That is the important thing, that that investment that the Chancellor has described is also matched by reform and we hope that the work forces in the public sector understand that message and will work with us to try and achieve what will be good for all of us.

(Mr Alexander) I think Gus has spoken with eloquence about the Cabinet Office but I think the other work against the kind of development you suggest by your question is the reality of political life, which is events and changes happen and actually therefore it is vital and indeed incontestible, I would argue, that the role of ministers endures, which is to exercise judgment in any changing environments and circumstances. One of the things which intrigued me in terms of the evidence that you received from previous witnesses was the clarity in the way they asserted the fact, that of course they were able to give advice in terms of support but ultimately there is a position whereby a minister as a secretary of state is charged with the responsibility of taking forward the government's ambitions in what is necessarily, but not always, a changing environment. My recollection from Yeats is there is also a line about "good men lose all conviction", actually what you hold on to is all of your convictions and your values, which you take forward, but some of those values have been translated into policy outcomes and you come to require the kind of support and monitoring that a modern government demands.

That is very interesting. A part of that theory and approach generally would be that you are tight on vision, on what the Government is trying to achieve - and everybody should understand what the centre wants and what the Government is trying to achieve - but then you are loose about trusting people to get on with delivering that. We visited the Netherlands recently and one thing that struck some of us is that they are going down some of these roads we are going down in this country and they look towards the UK in many ways as an example. One of the questions we put to them was why because the only target you want to know is that the public are satisfied, by and large, with the public services that are being provided.

(Mr Alexander) I agree with you. The danger is that we become overly managerial in our description of what is taking place. I would not assert the centre as being in terms of where it wants to go. I would say, echoing the words of the Prime Minister, that the present Government were very clear where they wanted to go in 2001. It was an instruction to deliver and in that sense the opportunity that is given to us and the privilege of serving as ministers is to take forward a mandate received by the British public. In that sense, I see the work of not just the Cabinet Office but ministries across Whitehall as being imbued by that political reality on an on-going basis. The danger of management theory discrete from those realities is that it can sometimes make more complicated the reality than is in fact the case, which is that there is a group of people who feel very clearly that they received a mandate and were elected on that mandate and are determined to implement the changes and reform necessary to secure the outcomes, which is ultimately what people are interested in.

Being brutally honest about this, do you think that any of the targets that the Government has set in recent years may have been badly designed and that actually they may have invoked the law of unintended consequences in some ways? As a result of being badly designed, if you like, they have resulted in resources being skewed towards outcomes that you do not really want to achieve.

(Lord Macdonald of Tradeston) To go back to where we started, I think there is an evolutionary process. You might take a manifesto commitment from 1997 and, let's say, you take waiting lists and the numbers of people on them, at that stage coming into government with that kind of mandate behind it, it might seem a good way of driving change through the system and using that as a target. As the years go by, the process begins to tell you that there is an even better way of doing this and therefore you move into waiting times. It does not necessarily mean that you wasted all the effort you put in in trying to reduce the lists.

(Mr Alexander) Let me give you another example of exactly that kind of evolutionary approach within the Office of the e-Envoy and now e-transformation, the 2005 target that was set some time back after an e-Cabinet by government which was to get government services on-line by to 2005. That has been a vitally important discipline and action obliging departments to take forward that work and to make sure physically they are on-line. We are not there yet but that work carries on. Of course, our thinking develops, as does the thinking of every other organisation in the country trying to e- enable itself, to recognising that if there is a service which is on line which nobody chooses to use because it is badly designed or not friendly to the customer or whatever other reason, then it is actually of very limited utility in term of the outcomes I was describing earlier. Of course, you have got to start saying what is the way that we can start to e-transform rather than simply saying you can fill in a tax return on-line but we are going to make it a complicated exercise to undertake. In that sense Gus's description of the general in terms of it being an evolutionary process is reflected also in the specific, that there are some very specific examples of where that process of learning continues in government.

Can I ask you on one other thing and I do not want to pursue this for too long because time is pressing. I know part of your work is e- transformation and so on in government. This may not come under your responsibility at all but I would welcome your opinion on it. Are you worried at all about the use of e-mail in government? We had some exchanges on this in this Committee about e-mail and the public record and what is on the public record and what forms part of the historical record and what does not and what should civil servants and special advisers use e-mail for and whether or not they should follow Joseph Kennedy's old maxim "never write anything down that you would not like to see on the front page of the New York Times". Has any serious thought been given to any of these areas?

(Mr Alexander) I think he also said never have a conversation if a note will do. My sense is that there is a genuine question there which is not unique at all to the public sector but more generally in terms of how we communicate. Consistent with some of the earlier questions about Sir Richard Wilson, there was a very interesting report before a Committee of this House previously on that where he says the manner in which we communicate and the fact that we write down an e-mail in a couple of lines in perhaps more haste than you would writing a longer letter is a change in terms of the psychology of work which a range of different organisations are coping with in different ways. I appreciate there are very specific examples (which I have absolutely no interest in raising before this Committee) of e-mails in government. I think that is why it is very important in terms of the processes that are put in place in terms of individual privacy and for freedom of information across the piece that government has an awareness of issues that are emerging. If you want a specific example where the work of the Strategy Unit has been useful, it has been useful in terms of anticipating some of the questions around not just e-enabling specifically but the kind of e-world into which we are moving. It seems to me that would not have fallen naturally to an obvious Whitehall department and I would suggest that is perhaps a good example of the kind of forward thinking that government could usefully access and benefit from and then push into the policy-making process.

(Lord Macdonald of Tradeston) I should say that as a Government clearly we regret some of the e-mails that were circulated. The Department for Education and Skills have made it clear that they have taken action to ensure that it does not happen again. I worked for 30 years in private business under an Act that demanded impartiality in terms of programming so it comes as no difficulty for me to hope that the same standards apply across the Civil Service. We genuinely believe as Ministers that the impartiality of the Civil Service is very important. You have half a million civil servants and in any trade people have their own dark humour at times and their own shorthand. I am sure if you are a soldier or a doctor or journalist you have got your own shorthand in terms of how colleagues talk to one another that you do not want too easily surfaced. We are now dealing with a form of communication where it can be surfaced, and quite properly so, so people have to be more disciplined.

(Mr Alexander) This is not challenge unique to the British executive or to the British parliament. I was reading in the paper this morning that the White House has traced back the fact that someone in the executive office in the White House was accessing the Britney Spears web site and that formal investigation is now suggesting it was a secret service officer within the White House. I am glad to say that is not something for which I understand the Cabinet Office is either responsible or guilty but it does suggest that it is a challenge for a range of different organisations.

Kevin Brennan: I would not research too carefully the history of some civil servants' web site access.

Mr Trend: Following that Sir Richard Wilson.

Chairman: Britney Spears?

Mr Trend

He had thought about the question of e-mails very carefully. He said when he writes an e-mail he prints it out - no doubt so he can put it in a box marked "open in 30 years' time". Is the Cabinet Office still in charge of official history? How is this going to affect archive material?

(Mr Alexander) As I recollect it, he told the Committee that there was on-going work within the Cabinet Office given the transformation that is taking place from paper-based offices to an electronic system. If it would be helpful I could furnish that information that he gave the Committee so that you have that.

I would be fascinated by that.

(Lord Macdonald of Tradeston) I imagine that Sir David Ormand will be able to illuminate you on that at some point in the future.

Chairman

Two very quick things to wrap it up because we have taken up a lot of your time. Listening to you, Gus, if you were running an organisation and somebody from somewhere else started to tell you what your targets had got to be, this would be offensive to you as a manager, would it not?

(Lord Macdonald of Tradeston) No. Companies pay very large sums of money to have outsiders come in and explain to them what they might be doing next; they are called consultants. I have some scepticism of that process but surely ---

Whatever the centre is, Gus, it is not a consultant.

(Lord Macdonald of Tradeston) No, but we are all working with the same company. There are half a million of us working for the same company in government and if one department, the Treasury, the finance department, tells you what to do over in the HR department or the manufacturing department, then that is a perfectly proper internal debate.

That is a good go but let me try it again. You said, rightly, that we should not tolerate failure. You could say that you should not tolerate difference, which is a quite another question. By what right does the centre have to say "we shall determine the outcome measures for every public body in the land and we will only allow you to determine the process measures to secure the outcomes." That would be offensive to you running any organisation, would it not?

(Lord Macdonald of Tradeston) Yes, but what we have is a process of devolution that we are encouraging across the public sector and what we are asking for is that the geographical lottery comes to an end because all citizens are paying their taxes. I did not say we cannot tolerate failure because failure is inevitable if you have innovation and risk. What I think I said was we cannot tolerate chronic failure, in other words you cannot let it go on and on without something being done because it is the right of citizens to have the same level of service, we believe, wherever they are in the country in health or in education or in law and order. The systems that we are bringing in we are trying to bring them in in collaboration with the people delivering those services and in a process which will increasingly give them the autonomy to make their own decisions, but we hope that the outcomes will increasingly be standardised across the country and be higher than they are now.

If some local body - it could be a police force or anybody you can think of - says, "Look we know our community, we have done work with them, we know what we want to achieve here, we know what people are telling us, we know what our internal culture tells us we have to do"; they will not be able to set their own objectives because they have these that come down through the system. I know it is the same question over and over again but how can you develop the real capacity-building of an organisation if they live inside that kind of tight framework all the time?

(Lord Macdonald of Tradeston) It must not be as tight as to create that problem. I have every sympathy with the point that you are raising. Clearly, if there is a problem, say, of street crime then what we have tried to do with the Prime Minister in the lead is to say to ten of the 43 forces, "You seem to have a problem with street crime." We have not said it to all 43 police forces because, as you say, in many areas it might not be their primary preoccupation, so we have to become more sophisticated in that. If we all begin to understand the same language of reform and of innovation and of devolution, then I think that it will be easier to have fewer of those conversations and allow people more freedom.

That is very helpful. Your mention of crime raises another area I want to raise with you and that is whether or not we are claiming too much for ourselves as government. Douglas gave us a very technocratic account of how we are going to run things - all for very good reasons, but I wonder if it does not mean in a sense we are claiming too much for ourselves. Let me put it to you directly. Can the government reduce crime?

(Lord Macdonald of Tradeston) We obviously work on the causes of crime, Chairman.

Can governments reduce crime?

(Lord Macdonald of Tradeston) There is a causality there. I would imagine that the government through its encouragement of better practices right across the criminal justice system can, of course, help reduce crime.

But on a scale of one to ten, where ten is a total capacity to influence the level of crime and one is not very much capacity, where does government sit, do you think?

(Lord Macdonald of Tradeston) That is not an exercise that I would engage in happily with you, no. That is not the kind of measurement scales I am used to.

An objective of the Home Office is to reduce crime. We have got to know where government sits on that scale to know what its ability is to achieve its objective.

(Lord Macdonald of Tradeston) No, I do not accept that assumption.

Chairman: Either I am getting it wrong or you are getting it wrong.

Mr Prentice

Very briefly, I just wonder if the national targets are going to survive regional devolution in England. There is a possibility that there may be a referendum in at least one region before the next General Election. Are we going to see big regional imbalances and differences showing up between different English regions or even post-devolution in English regions where there will be a very strong role for the centre. You must have discussed with this John Prescott or the Prime Minister?

(Lord Macdonald of Tradeston) No I have not discussed this with John Prescott or the Prime Minister. Clearly our focus is trying to raise standards across the public sector over the next three-year period. There is obviously a gathering body of evidence in the different circumstances of Scotland and Wales but I would hope other areas which we have prioritised, like higher national standards and increased accountability and greater flexibility and the fourth principle of more choice and more contestability, will all have proved their worth at the time the second principle of greater devolution kicks in at regional level.

Chairman: We must end. Sir Sidney asked this at the beginning and I will ask it again. It is getting boring to ask when are we going to have legislation to sort out the Ombudsman system and when are we going to have legislation on the Civil Service Act. It really is tiresome to keep asking and it must be tiresome to keep having to find the form of words to answer it. The only way to resolve it is to do it, so we would urge all speed on this. My understanding is that a new unit is being set up inside the Cabinet Office now, with a head yet to be appointed, and it has as one of its tasks work to come forward on the Civil Service Bill. I would urge as much speed on that as we possibly can. Douglas, you referred to the poetry of campaigning being transferred into the prose of government. We have had, courtesy of Kevin some poetry as well in our Select Committee. We are very glad for that and we are very grateful to you both as well. Thank you.