Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses (Questions 100-119)

24 FEBRUARY 2005

MR JONATHAN BAUME, MR CHARLES COCHRANE OBE, MR PAUL NOON AND MR MARK SERWOTKA

  Q100 Mr Prentice: What are the figures for turnover?

  Mr Cochrane: We can certainly provide you with those figures; you could also get them from the departments. The issues around the DWP are issues that have been developed by your colleagues on that select committee as well. In other places the Civil Service is a significant employer and there is not the dynamic labour market in parts of the northwest or northeast that we have in London. We are often talking here about people who have considerable periods of service in the Civil Service and whilst none of us here would claim that the Civil Service is the greatest job in the world, it is still a job worth having, it is a job worth doing and one that people do not give up lightly. However, there is growing evidence that this combination of uncertainty about the futures of departments, uncertainties about pay, uncertainties about pensions now are causing people to think, "Is my long term future in the Civil Service or should I start looking elsewhere?" It is a lot easier to look elsewhere in some parts of the country than others, as we are all aware.

  Q101 Mr Prentice: You were talking earlier about structural change, devolution and so on. Do you think it is far too easy for the government of the day to make huge changes in the configuration of the Civil Service without reference to Parliament? William Hague, when he was before us about a year ago, said that Parliamentary approval should be sought for such things as dissolving a department and creating a new department. What is your view on that?

  Mr Cochrane: One of the tasks that Jonathan and I have to do in the next two or three days is to draft our response to the government consultation on the Civil Service Bill (which I promise we will do before the closing date) and I think there is an important issue to be made in that. That attempts to define what a civil servant is and tries to list what are those bits which make up the Civil Service, which is quite helpful stuff. However, what it does not do is say anything about how a government can almost arbitrarily decide some huge function of the state could suddenly be done by Tesco supermarket. I totally agree with you. I think it is a point that you as a Committee have made before. A government's powers to suddenly make totally arbitrary decisions about what is done by the state, what is done by the Civil Service and what is not is really quite wrong and we do need some statutory structure to deal with that.

  Mr Baume: I think there are two different issues, one of which may be, right, we are just going to send all this outside the state sector, for example; the other one being, we have now decided this morning that we are going to merge, for example, education and employment departments (which was a Conservative decision). My view personally is that that is not a matter necessarily for Parliament because I think each government will want to configure the functions in a way that seems to make sense and I think realistically I cannot see any government in the end giving that authority away. However, if you are looking at efficient government the tendency has been to have these kinds of almost over-night political fixes that then have a big effect on the effectiveness for a period of a particular government department. As I say, in education and employment in 1995 or 1996 the permanent secretaries had about six hours' notice and other senior staff in the departments had an hour's notice before an announcement was made in Parliament at three o'clock in the afternoon. If you are going to do these things I think it makes a lot of sense for government to actually plan ahead. Again, the Labour Government pre- the 2001 election (about four or five months before the election) said, "We are going to transfer functions of environment over into what was MAFF and bring them together". A lot of very good work was done planning that but lo and behold, the morning after the general election a much more substantial re-organisation was announced which threw all of that planning into a degree of chaos because by that time we had the foot and mouth crisis. It is simply not good government and we saw that 18 months ago with the announcement of the creation of the DCA. That was all caught up in a lot of internal ministerial politicking which meant that the Government got a very bad press for what may well have been a fairly sensible decision because a lot of the implications were not being thought through. It can take a year to two years in the end to merge and integrate functions when you have shifted departments, partly because of the problems that Mark highlighted about completely different pay and terms and conditions, but also about trying to bring the things together. It actually makes sense for government to plan these things and give notice. I understand that no prime minister is going to say three months before a general election that so and so will be the secretary of state for whatever after the election. That would be arrogant and politically very unwise, but I do not see anything wrong with a government saying, "If we are re-elected we plan to merge these two particular departments or create a new department of X". That seems to me no different to any other policy initiative. My advice to ministers—if I could be so bold—would be: "If you are going to make these kinds of changes, give notice, allow people to plan them and that way you will get a much more effective outcome for the decision that is being taken".

  Q102 Mr Hopkins: We recently interviewed Sir Peter Gershon and if I may say I was surprised he was much more sympathetic than I had imagined and he did not play up the job cuts; he did play up economies of scale in procurement for example and other ways of making efficiencies. I must say that I have great sympathy for what you say about civil servants. As members of Parliament we deal with them all the time through our offices and my impression is that they are very dedicated but there are not enough of them. Just to confirm what Mark has said, my office recently telephoned the pension helpline and was told by a recorded voice that they were number 83 in the queue. Would you agree that in many areas—immigration, Inland Revenue and tax credits, DWP and specifically pensions—that actually there is a case for either more civil servants or re-organising what we have slightly better so that we can do the job better?

  Mr Serwotka: I would agree with that; I think it is a lovely question. I am glad that Sir Peter was a bit more positive, but the difficulty we have is that the TUC produced research that actually showed that what the Government is proposing on the back of the Gershon review is to reduce the Civil Service as a proportion of public sector employment to a historical low. Its research shows that the Civil Service has genuinely gone at a level of around 10 or 11% of public sector employment through peaks and through troughs. When public sector employment has gone down, it has gone down but the proportion has remained. Under the Gershon proposals as the Government envisages it would be reduced to around 8% which is not only a historical low but the research went on to show that the job cuts themselves amount to less than 10% of delivering the money that the Chancellor promised Parliament—the £21 billion that he wanted to find—and yet it has dominated the coverage, the political input in the debates in Parliament and all the media. In other words, for a very small amount of money it was dominating the headlines which we think was proving the point that the politics of it is to get the staff levels down and why I think that is such a difficulty is that it has done two things. It has introduced what I think is a dreadful term into our common language which is: "back office bad, front line good". I think that comes from the Gershon report and has a fundamental misunderstanding of delivering public services. You cannot deliver any front line services without a dedicated team of people who are considered back office. When we went to Parliament about that—I will not say who the cabinet minister was—and we asked the question did they believe that the people who draft the answers to the Parliamentary questions are front line or back office staff it was made clear that probably you would say they were back office but they could not do without them. That was a little way of making a very important point. Is it just the person who visits the pensioner in their home who is front line, or the people who answer the telephone, assess the benefit claim or make sure the computers work? Our view is that it is a seamless whole and concentrating on "back office bad" is a negative. That has meant that it is hard now to have a real dialogue about what staffing is required. The Inland Revenue and Customs and Excise in the new department want to shed 16,500 posts (12,500 net) and yet everyone believes there is up to a £25 billion tax evasion issue in the UK. Logic tells us that to cut 12,000 people from revenue gathering departments at a time of such a massive amount of tax evasion seems slightly odd. In the DWP where we are going for these telephone number job cuts I think if a proper analysis was done at the moment the DWP are struggling to deliver all aspects of their business and in many cases staff are being told to prioritise certain things rather than look at the whole. Questions must be asked whether this approach is the correct one. The difficulty I think we have is what I personally resent. We now spend our time touring the country and our starting point has to be to lift the morale of people whom the Government relies on to deliver front line services because everything they read about themselves is negative. Whether that is the politician who says, "Back office is bad", whether that becomes The Daily Mail editorial which talks about desk jockeys and what do they bring and what does the tax payer get, it is extremely demoralising. We are the ones—I know this will sound a bit over the top—who say that Britain's civil and public servants are the unsung heroes and heroines. Everybody likes teachers and nurses; they do not like tax collectors, benefit administrators and customs officers yet they provide essential services to the fabric of the UK but they are the easily denigrated part of the public sector. I think the great shame of Gershon is that it has taken something we could all have worked on about how more efficiently to run an organisation of over half a million of people delivering services from cradle to grave and it has become a political thing that is just focussing on one aspect and I think that does a disservice to many things that we could have worked jointly on. The headlines are about the first national Civil Service strike for eleven years because people are protesting about the way they are being treated and a run down of jobs that in some cases they can see will make the situation a whole lot worse.

  Mr Baume: The single most important public service in this country is actually the Inland Revenue and Customs. Every other aspect of government—local and national—is delivered from the money collected by the Inland Revenue and Customs but when do you ever hear a minister praise the Inland Revenue?

  Q103 Mr Hopkins: The Government would perhaps do better to look at the £37 billion tax gap of uncollected tax and say we need more tax collectors rather than fewer. However, that is not the question. Sir Peter Gershon also said—and he volunteered this—that he thought that public service and public administration—Civil Service—was different in the nature of its work than manufacturing widgets, working at Tesco, selling burgers or whatever. There is something different about public service involving human beings, the public service ethos and making judgments about people when they are ill, when they are being educated or whatever, and you could not simply privatise services like that because there was a different set of values at work in these two different sectors. Would you have some sympathy with Sir Peter's view?

  Mr Noon: I certainly have some sympathy for it but my union also represents, for instance, professional engineers in the electricity supply industry which is in the private sector and they have a strong commitment to public service as well. We have never taken the view that we have a monopoly of virtue in the Civil Service but we do take the view that many of our members—for example HSE—are people who have a strong vocational commitment to the work that they do and a strong sense of public service in delivering it which we think is undermined on many occasions by proposals for privatisation and the thought that there must always be a commercial solution to it. You can forgive the staff involved for thinking that if there is going to be a commercial solution they will take their own views about their market worth and maybe sometimes take their own decisions about where they see their careers. We represent engineers and scientists and there has been a disproportionate reduction in the number of engineers and scientists in government which we think has compromised the ability of government to act as an intelligent customer in some ways and carry out some of the points that Gershon wanted to see and also because so many of the organisations which have been transferred out of the Civil Service to the private sector are those which were predominantly engineer or science based organisations then in the heart of government in what is a knowledge driven society now there is a knowledge gap. There are fewer scientists and engineers at senior levels in the Civil Service than there have ever been proportionately and we think that is a huge problem too.

  Q104 Mrs Campbell: Can I just take you up on this point about intelligent customers because there has been some fairly devastating criticism from the Institute of Electrical Engineers which has made just the point that you have just made in fact. What impact does the lack of scientists and engineers have on, for instance, the IT projects? The most spectacular failure I suppose in recent years has been the CSA project. Is that entirely due to the commercial company or is there some failing within the Civil Service itself which is failing to manage these projects properly?

  Mr Noon: I would say there is insufficient appreciation at the top of the long-term importance of having that professional specialist input. I certainly would not accuse the private sector of trying to hoodwink the Civil Service on that contract, but there is a long record of difficulties of public procurement where government is not able to act as an intelligent customer in the way that it needs to be. That means not only being able to read the brochures that are sent, but to understand what the fundamental need is in the Civil Service and to be able to test in an effective way what potential suppliers are saying about what can be provided and not to believe the hype that comes with it. I think it may be on a number of occasions there has been insufficient advice or insufficient professional input to the decision making process which has not allowed the bits to be tested as effectively as possible. If you see the sorts of reductions that there have been in the number of engineers and scientists in central government that we have seen, then we think that is bound to compromise the position.

  Mrs Campbell: Sir Peter told us that the picture on IT projects is not as bleak as is sometimes presented, that about 30% of IT projects within government are problematic. That seems to me quite a high percentage actually.

  Mr Heyes: It is the same in the private sector.

  Q105 Mrs Campbell: It may be similar in the private sector, but these failures very often do have quite devastating effects on people's lives and as members of Parliament we certainly see the effects that the CSA failure has had on people and the disruption to family life that that has caused. What do you feel is the solution to this particular problem? Do you think government is just not concentrating on the skills it needs? There is now the idea of a skills council to ensure that Civil Service capacity is improved. Is that the way to do it or is that some people should be sacked and people with the right skills should be recruited?

  Mr Noon: I would never suggest sacking FDA members and recruiting engineers and scientists but I think in the development of the Civil Service having people at senior level with a scientific and technical background and expertise, not who are brought in because over recent times there has been some acknowledgement that this is an issue, but sometimes it is thought that we can buy in the expertise. We see a lot of difficulties in doing that because of the need to have people who work in the organisation long term who have that background not just simply to expect that it can be on tap in the way you want it at all times. I think it comes down to numbers. I think there is a problem because of the number of science based organisations which have been transferred out of the Civil Service so that the scientific/technical expertise is not bubbling up through departments like the DTI as once may have been the case. Also, it is a recognition that this is an important facet of a modern senior Civil Service to have that expertise which, in my experience, applies more generally in the private sector and in the many successful private companies where you see a much higher proportion of people with scientific and technical background at senior management level in those organisations.

  Mr Cochrane: I do very much agree with the point which was made by one of your colleagues about private sectors and IT failures as well. I am conscious in this debate that there was a massive IT failure in the Stock Exchange a few years ago. Referring back to your first question about effectiveness and so forth of the Civil Service, I think what we are very effective at in the Civil Service is exposing our failures whereas the private sector are very effective indeed at hiding their failures. I think also the sheer scale of some of these Civil Service IT projects is not always appreciated. Commentators who perhaps ought to know better but do not seem to equate IT in the public sector—whether it is the Civil Service, the NHS or whatever—as something akin to going into PC World and buying a bit of software and a lap top. It is not; these are absolutely massive projects. I think the computerisation of PAYE a few years ago was the biggest ever IT project in Europe, with huge timescales built into it, timescales which often do not fit at all with government's own timescales for policy changes. You can have a project that is being designed for policies now but by the time it comes on line, even if everything goes right, you could have had a change of government, a change of policy and a change of department. I think that is often forgotten. Just a final point, you mentioned sector skills councils which is something we are all hugely interested in. I think it is a bit unfortunate at this time when everyone recognises the importance of modernising skills, improving skill levels everywhere—including the Civil Service—there is a whole host of sector skills councils up and running in the private sector and the public sector and doing some really good work, but the one that we have not got up and running (and is still some way off) is the one for central government. I think that is sad and is quite relevant to this debate. If there is a skills issue in the Civil Service it would be nice to see the central government sector skills council being the first up rather than the last one up.

  Mr Baume: Just to add, in the CSA which you were referring to, ministers had insisted that the in-house IT and business analysis capacity be outsourced and the ministers had also insisted on an extremely complex process which meant that in the end the CSA was no longer an intelligent customer because ministers—not the Civil Service—insisted that certain functions be removed from within the organisation. There is that problem of an overlay of political intervention in the way that the Civil Service procures this type of work that makes it very difficult for the Civil Service to actually deliver. A lot of very good work has been done by the Office of Government Commerce over the past few years in improving this. I know other select committees have been looking at these issues in detail, but I think the political overlay to the decisions that are taken sometimes in some of these complex IT issues and procurement exercises in central government add a whole additional dimension to the kinds of problems that similarly emerge in the private sector.

  Q106 Mrs Campbell: It seems to me that a distinction is not being made between the people who can manage the projects and actually have the expertise and the skills in order to understand the complexity of the problem, and the people who do the technical stuff. Would you agree with that? Surely some of the technical stuff could be outsourced but it is terribly important that the Civil Service retains that expertise to manage with sufficient skill in-house to know when it is actually going wrong.

  Mr Baume: Absolutely. I have no disagreement at all with that and we are very supportive of the steps that have been taken in the last few years to vastly improve project management skills as well as picking up some of the technical skills. As Paul has said, we need to pull back into the Civil Service some of those other specialist skills over and above IT to make sure that government in the round is an intelligent customer of other private sector services and at the same time has sufficient in-house capacity on a range of skills to make intelligent policy which in turn translates into other sectors.

  Q107 Mrs Campbell: There may be a problem in some cases where technical work is outsourced to an outside organisation, the contractor fails and then there is not enough expertise within the Civil Service in order to pick it up. What is the solution to that? Is the solution to keep everything in-house or is there a prospect of being able to outsource some of the technical work without any catastrophic consequences?

  Mr Serwotka: Can I just offer one solution to that which we called for at one point, which was that there probably should be some inquiry or some commission to actually look at IT across the whole of government. If ever there was a case for coherence in the Civil Service this is probably a pretty good one because a lot of these systems are not compatible between the different departments. Even though the interchange now between the Inland Revenue and the DWP as the revenue becomes more sort of tax credits, the systems are not compatible. I think there is evidence that the contracts negotiated are probably not great. There seems to be quite a lot of loopholes in them. It would seem to me that rather than do it every single time in each department there should be a central IT strategy. Much as I personally would like to see all of this done within the state the reality is that the Government seems to have taken a decision which says that all things IT must be outsourced. If we started from where we are now and looked across the whole I think probably there would be an argument for a mixed approach. You are probably now in a situation where you do rely on some of these big multi-nationals in terms of providing the equipment and all the rest of it, but there is a case for state employees who have the expertise to be able to help out and at the moment that does appear to be lacking. I think the effect of that is not just the publicity. I hold my hands up; we played our part in ensuring that a lot of this does get into the public domain because a lot of the job cuts strategy is based on computers replacing people. Part of our concern is that that is an enormous gamble, particularly when you are cutting the jobs before the systems are proved to work and the CSA is a very good example of that and they are now freezing the job cuts which is obviously very welcome. The DWP's 30,000 are based on the fact that IT can do the job. I think there should be a look right across central government services and we would be very willing partners in that to try to move us onto something more effective. At the end of the day when a computer crashes, although the company is embarrassed and the Government does not like it, the thing that is often neglected is the effect on staff who are then in an office with the public in front of them or on the phone who cannot help them.

  Q108 Mrs Campbell: Did there used to be a central unit based at Norwich which was dismantled by the last government.

  Mr Cochrane: Yes, that is right, the CCTA (Central Computer and Telecommunications Agency) of which a mere shadow now remains.

  Q109 Mr Prentice: If the Civil Service loses its capacity to do something because the function has been outsourced, what evidence is there that private sector companies just bump up the cost because they have the state over a barrel?

  Mr Noon: There were some examples of this which I remember the House of Commons Defence Committee looked at in terms of defence services of areas that had been privatised, but I do not have the precise details in front of me.

  Q110 Mr Prentice: So there are examples out there.

  Mr Noon: Yes.

  Mr Cochrane: An interesting potential problem relates to the Lyons proposals on relocation. From our point of view that has a huge people dimension but equally has a property dimension. When you look at the three or four major government departments in terms of property they have all handed over the responsibility and ownership of their property to private sector companies. I think that link has not yet been made. If the Government has a policy, whether I agree with it or not, about re-locating government work they have already handed over the ownership and running of its estate to private contractors under very long-term contracts, how do you actually marry those two things up?

  Mr Serwotka: I do not have the evidence of the costs being bumped up but where I think there is evidence is that there is a feeling that they are over a barrel and there is nothing the Government can do. During the tax credits fiasco which should have been an unadulterated good news story for the Government, it all went wrong because the computers did not work and we had some people getting three payments, some people getting no payments, systems disappearing on the computer screen. I went to the Belfast Inland Revenue call centre and spoke to a member of staff who had worked in the private sector (I think it was Tesco). He said to me (and I thought this was quite telling): "If this happened in Tesco, then Tesco would get the computer people in and tell them they had 10 days or they were off". With government it seems the problem is that half way through a contract it would be Armageddon to chuck them off the contract, what would you do then and there was a feeling that there was very little sanction. Somebody could turn round and say that at the end of the day EDS lost the Inland Revenue contract but that contract was coming to its natural end. If it happens at the beginning or in the middle the real feeling is what can we do when the promises made are not delivered. That is where there is the feeling that we are over a barrel.

  Mr Heyes: Continuing with this same theme, I just wonder whether the conspiracy theory might help to cast some light on the reasons for these things happenings. We all shy away from it; we do not want to display paranoia. You talk about the CBI's board of public sector contractors; I guess their interest is in protecting and promoting their business interests and the diminished ability of the Civil Service to behave as intelligent customers really might help that if you apply a conspiracy theory to it. Paul Noon said he would not accuse the private sector of trying to hoodwink government but the evidence very often points to it being precisely that that is going on. I just wondered to what extent the political actions are motivated by the private sector biased advisors that are so dominant in government nowadays. Is ideology winning out over logic?

  Q111 Chairman: Can you tell us fairly briefly if there is a conspiracy going on here?

  Mr Noon: I would not say that there is a conspiracy going on but I do think sometimes the Government has a fascination with the private sector as being an instant solution to the problems. Not only does my union not think that that is valid, there are plenty of occasions where it has not been. There is a perception amongst my members and I think Civil Service generally that at the heart of government there is a greater faith in the private sector to deliver than the public service to deliver. We have been pressing very strongly for a greater demonstration of commitment to the values of public service. It is not just as was said earlier in teaching and nursing, but in public administration that that is a worthy cause of itself and for the Government to say so more effectively and more consistently—or say so at all sometimes—rather than the language you get and the image that is given perhaps because of the political issues that are there about who can compete for the biggest cuts in the bureaucrats it would vastly improve things if the Government made it clear that it supported effective public administration in the Civil Service.

  Q112 Chairman: You have members working in both the public and private sectors as specialists and experts and you have talked about the specialist bits of government which have been moved off into the private sector, what judgment can you make about the effect of that on the services themselves because you are able to look across the two sectors?

  Mr Noon: It varies depending on the bits of the organisation that have been transferred out. As I mentioned, the electricity supply industry—and I think this is a culture that goes back to the CEGB—has a commitment to keep the lights on. The way that it has been operated has been quite effective. However, if you look at something like the demise of the Property Services Agency which, going back historically, was quite a large department of state and of the Department of the Environment then the fact that that was transferred out of central government on a regional basis and facilities management has been fragmented and evolved and there have been secondary contracts and so on, I do not think it has been historically cost effective or effective in operation.

  Q113 Chairman: Can you think of instances where having stuff moved out has been more effective?

  Mr Cochrane: This is probably a slightly facetious point but I cannot resist it about the merits and demerits of the de-nationalisation of the Carlisle State Brewery in the 1970s.

  Mr Noon: Certainly what has happened in many cases is the organisations that have been transferred out of central government have been those where the amount of funding for them has been reduced in the longer term. If you look at the government dockyards at Devonport and Rosyth that were transferred out and the naval base at Portsmouth the problem has been that not only were they transferred out of the Ministry of Defence in those cases but the amount of work that was given to them was funded so the private sector was handed the problem of making the reductions in the private sector.

  Q114 Chairman: Can you think of any instance where the efficiency and effectiveness of a service has been improved by it being moved out in the areas that you know about?

  Mr Noon: It is difficult to judge.

  Q115 Chairman: You are able to summon up readily examples where it goes the other way; I just wanted to know if you could think of any example on the other side of the account.

  Mr Noon: No.

  Mr Cochrane: No.

  Mr Baume: Probably not, but there is always going to be a debate about where the boundaries of the state should lie. In the early 1950s there was a very big political row about whether the sugar industry should be nationalised. Thomas Cooke, if I recall rightly, was at one point a part of government. If you look over a slightly longer time frame there is always going to be an argument about exactly where the boundaries of the state should lie. To an extent the rights or wrongs of that will depend on the particular political and economic circumstances you are in. What you do need to ensure is that within government in the round you retain a capacity to undertake your stated objectives. So it is not necessarily about: is something more or less efficient outside or inside the state sector in the round, but if a function is removed from the state sector does that leave the state sector an ability to make other decisions and deliver what it is attempting to do in an effective way? This goes back to Paul's comment about the lack of science and technology capacity currently within the Civil Service. That does not necessarily come down to one organisation or the other, but in taking those political decisions—most of which were under the Conservative administration—did we in doing so leave sufficient capacity back within central government to allow central government to undertake its broader functions effectively? I think it is that argument rather than specifically one organisation or one small body or the other that I think we should be looking at.

  Mr Serwotka: Going back to the conspiracy point, I would not describe it as a conspiracy. What I think is the difficulty now is that we are told the ideology that there is not an ideology, what matters is what works. That is what the Government says. It is not public/private; it is what matters is what works. However we have a deeply held suspicion that actually the ideology is a bias to the private sector. The reason we say that is because we have many examples of putting together and constructing at great expense and great resource alternatives, for example, to privatisation or outsourcing that have been dismissed. In one case there was a letter that was barely over a page long where the readiness to dismiss the alternative public sector proposals could only lead you to the conclusion that it was not really seriously considered. I could make a strong ideological point about the fact that I do not think it is right that there should be profits made in the justice sector, that I do not think that benefit administration should be attracting profits, but we do not base our opposition on that. That is my personal view but a lot of our opposition is based on the proof that it has done better in the public sector but that seems very easily dismissed. I think that if we were convinced that this was a level playing field and what really mattered is what worked best then a lot of decisions would be different.

  Q116 Brian White: That is what the Civil Service does with hundreds of people in various departments day in day out. They just dismiss things coming in from the outside and that is what departments do all the time and you are just suffering the same thing.

  Mr Serwotka: My point is that it is the political pressure in order to dismiss a lot of this. That is what is concerning me rather than it being a genuine dialogue of what is the best way to do it. One thing I could cite as evidence of what happens when it goes wrong is the Criminal Records Bureau because when the Criminal Records Bureau had its problem with clearing teachers a year or two back- we have 30,000 members in the private sector in PCS—we had members, some in the Home Office as civil servants and some worked for Capita in the Criminal Records Bureau and what we got from the minister down to the management of the Civil Service and the private company almost down to the working level of junior administrators was that what went up was that it was the blame game. The private sector and the state, from minister right down, and you could not make any progress to try to sort out the problem. We felt that that was a classic example that the issues of sorting through the delivery—the issue of how do we get out of the mess—seemed to be the last thing on people's minds. It was: who is copping the blame? That threw up problems in our union because our members in the private sector felt that politically it was easier for us to say that the private company had got it all wrong and we had to deal with the real issues about valuing people whether they were PCS members in Capita or in the Home Office. I was told it was actually getting in the way of finding solutions and examining where the problem was. That was after the privatisation. Our concern is that that often starts before privatisation because an ideological decision is taken where something is going regardless of the circumstances. When I look at the effectiveness of the Civil Service it is clear we could be far more effective in many ways but a lot of our problems come from the politics behind where the decisions are made and it is filtering down and getting in the way of logical operational decisions. It could be more effective.

  Q117 Mr Heyes: Using that example, I guess you have recognition agreements or facilities agreements of some kind now with Capita and other private sector providers. That must seriously inhibit your ability to criticise some of these inefficiencies that come about from this ideological approach. You are criticising but exempting from criticism the bit where it affects your members in the private sector.

  Mr Serwotka: Essentially that is a point we have had to deal with. We have had some stormy waters and essentially the point that we will now always make is that we do not criticise the workers in a private company who themselves are doing a very difficult job often without proper resources. What we look at is the strategic decisions that have led to the difficulty and our criticism would usually be pointed at the person who decided to privatise or the promises made by the heads of the company. I think what it really brings me back to is that that was one example of how it is quite difficult in the eye of the storm often to have a logical dialogue about how to get through things when people often have to justify the decision taken in the first instance. The other thing I would say is that as a union I think we took a very brave step because we, as a public sector union predominantly, clearly generally oppose privatisation. When the Inland Revenue computer contract came up for renewal—this contract represented 5% of EDS's global turnover, it was the biggest IT contract in Europe at that point and we had many, many members working in EDS as well as in the Inland Revenue—the easiest thing for us to have done come the rebid was to say renationalise. Actually the decision we took was to talk to our members who worked in the company and said, well, it is easy for us to sit back and make an ideological decision but we wanted to know the effects. As a result of that, having talked to all of our members, their view at that point was that they did not feel renationalisation was an option. On the back of what people said working in the front line we took the view that the thing to do was to put into the tender specification specific demands on how the company would treat the workforce and respond to certain things. That led us ultimately to a view that we did not intervene and say, bring this all back. One of the reasons we did not do that—and I think this is important—is that our members recognised that the Inland Revenue as a body and the Government did not have the expertise to make renationalisation at that point. It was not possible, therefore we felt that making an ideological point would have been meaningless. I think that told us some interesting things. People who deliver the business knew that for the Inland Revenue to take over the running of everything may be something they should seek to do in the next 20 years but it was not possible at that point. We are having to make some rather pragmatic decisions which sometimes are not comfortable but are the best thing. I suppose what I am appealing for is a bit of pragmatism everywhere. We are always told to be pragmatic. If that was taken, the other side of the coin before some of these big decisions are taken, I think we would have very different outcomes.

  Q118 Chairman: But if it were believed that putting stuff out into the private sector was both more efficient and more effective, you should do it, should you not?

  Mr Serwotka: If it were seen to be more efficient and more effective.

  Q119 Chairman: Yes, if the analysis was done and it looked that it was going to be more efficient and more effective to put an activity in the private sector you should do it. Not to do it would similarly only be ideology, would it not?

  Mr Serwotka: That is why I made the point that I think you can make an ideological argument why you should not do it, but that is not the case of the unions; the case for the unions is that when you actually do the type of examination that you are talking about invariably it is better to keep it in the public sector.


 
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