Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses (Questions 1-19)

SIR GUS O'DONNELL KCB

11 OCTOBER 2005

  Q1 Chairman: If I could call the Committee to order. It is my great pleasure to welcome to the Committee Sir Gus O'Donnell, recently installed as the Cabinet Secretary and the Head of the Home Civil Service. We congratulate you warmly on your appointment and we look forward to our dealings with you. Some of us on this Committee I think could say that we have had good and instructive dealings with your three previous post-holders. We find, by the way, they become more interesting when they have left the job rather than when they are in it, but we hope to do better still with you! I understand that you may want to make just a short opening statement?

  Sir Gus O'Donnell: Thank you, Chairman. Could I echo those words and say that I very much look forward to a very constructive and long relationship with you. I thought it would be useful if I just said a few words about how I see my role both in terms of Head of the Civil Service and Cabinet Secretary and the big challenges as I see them. First of all in terms of the Head of the Civil Service, I am a strong believer in the public service ethos. I want to get across pride in being a civil servant and I want to reflect the fact that four out of five civil servants do not work in Whitehall and that mostly they are out in the country. I have been going round visiting, to Edinburgh to talk about policy, to Newmarket to visit a JobCentre Plus, to Cambridge to see a new court in operation, to visit a Thames Gateway project down in Rochester, the Passport Agency, those sorts of things, to really get a flavour about civil servants in the front-line. I have been impressed by the Prime Minister on his desire for the Civil Service to deliver better public services and the need for Civil Service reform to do that. I am trying to get across to him that it is very important that we have pride in our Civil Service, and that in terms of reform, yes, we probably need more pace, a bit more passion, and a bit more professionalism in the way the Civil Service operates, and I am up for doing that. I think the Professional Skills in Government that my predecessor and I worked on together with Richard Mottram is a very good vehicle and I am thoroughly committed to implementing that. On the reform agenda, my first task was really to get the people right. As you will have seen, the Prime Minister has announced the appointment of a large number of permanent secretaries, those permanent secretaries covering around 50% of all civil servants, so that is well underway. In terms of policies, I talked to the Prime Minister about ensuring that we have proper Cabinet committee procedures for the various reform initiatives on health, education, welfare reform and the like, and that we ensure that the Civil Service provides good advice not just on policy but on how deliverable policy is. That is one particular area where I think we need to strengthen things. I wanted to mention this to the Committee today that I feel that we need to enhance central government departments' capability to deliver policies. As you know, the Prime Minister's Delivery Unit looks at delivery in the sense of achievement of PSA targets. What I want the Prime Minister's Delivery Unit to do is to enhance its role by looking at the capability of departments to deliver. The idea of this would be capability reviews run out of the Prime Minister's Delivery Unit but using external people as well—people like, for example, the private sector, the Audit Commission, people who have been good at these from the Audit Commission with experience of comprehensive performance assessments (CPAs), and use them to assess departments' capabilities on a range of functions like HR, finance, ability to run IT projects, with the idea that we would publish the results of the performance of departments in specific categories. That seems to me the right way to do it because for CPAs you can have an "excellent" rating for local authority A versus "weak" for local authority B, but we have only got one Ministry of Defence so I cannot do that. If I had ten I could do that. What you can do, though, is compare the capabilities of, say, the Ministry of Defence and the Department of Health to, for example, conduct financial management. How good are they at that? How good are they at the HR function? In some departments it will be more important that they are good at that particular function than others. The idea is that we would do these reviews and with external input publish the results and then there will be an action plan to ensure that the permanent secretary and I were happy about and agreed on what the steps forward were, and I would then hold the permanent secretary to account for improvements in that department. I have put this idea to my permanent secretary colleagues and to the Prime Minister and received enthusiastic support so I am pleased to say that everybody is behind this and we will now start to consult on how to do it, with a view to getting the first pilot departments around December or January. I would really like to roll this out across the whole of central government departments over the next couple of years—2006/2007. I just wanted to explain that that is where my thinking has gone on all of that and I think these capability reviews will help us to assess how best to improve the way in which central government departments operate.

  Q2  Chairman: I am grateful for that. We have an announcement and we are grateful for the fact that you have made it here. Could I just stay with it for a moment. I think it is interesting what you have said because obviously one of the things that this Committee and others have been saying over recent times is that central government is very good at assessing everybody else but not very good at having itself assessed, and this is clearly your response to this. What I am not clear, though, from what you have said is is it really going to be a performance assessment? What is a capability review? Does it look at how well departments are performing in terms of, for example, policy making and particularly in terms of policy implementation? Is it going to be as hard-edged as that?

  Sir Gus O'Donnell: I see it in two parts because you have to remember what it is that departments are trying to achieve. We have tried to get the essence of what departments are being asked to achieve into their PSA targets. They are the outcomes that we are asking departments to achieve. This is why I think it makes sense to put it within the Prime Minister's Delivery Unit because they are the ones making the assessment of how departments are doing against those targets, what are the trajectories, what are the risks they face in delivering those outcomes. This says, "Okay, department X is not doing very well in delivering its outcomes," but that does not tell you why. What this will look at is the capability of that department and possibly (probably I hope) give you indications as to why they are not able to deliver the outcomes required. In some cases it may be, yes, that the policies are not very well-aligned to the outcomes and that will be something that we will need to look at.

  Q3  Chairman: But you know what people are going to say. They are going to say, "Are we going to have league tables? Are we going to have naming and shaming? Are we going to have failing departments? Are we going to have special measures? Are we going to get some departments taken over by other departments? How far is this going to go?"

  Sir Gus O'Donnell: Like I said, there is only one Ministry of Defence so we do not have another Ministry of Defence to put against the one that we have got. I have nothing against the Ministry of Defence, I think it is doing an excellent job, let me be absolutely clear about that! The point is that what we can do is assess the different functions and capabilities within them, so if we take the HR capability, we could look at the HR capabilities across a range of different departments and then we will publish an assessment which is comparable across departments where it says this department is particularly good at HR, this one is particularly weak at HR. It may be that that is not a problem. If you are running a very, very large department the HR requirements may be rather different from running one that is rather smaller. In the Treasury, for example, when you are talking about around 1,000 people, you want an HR function that is very good at trying to sort out people who are very good at policy and policy implementation (deliverable policies I mean). When you are talking about the Department of Work and Pensions with 130,000 staff, the HR function that you need for running a department like that is very different and it is a very different challenge. I am hoping that these external teams will be able to assess how good departments are at these different things but, yes, there will be comparable measures which we will publish.

  Q4  Chairman: But to get away from the softer stuff like the HR function for a minute, if we have got a DWP which tells us still that CSA is a shambles, if we have got reports telling us that Tax Credits out of the Treasury and the Revenue have been massively defective, are these the kinds of things that you are going to interrogate and learn lessons from and indeed adjudicate upon?

  Sir Gus O'Donnell: In a sense they are rather different. They are examples where you have got policies and implementation issues as to whether the policy is delivering exactly what was expected of the policy. It may be that there we are talking about issues which relate to how well formulated was the policy, and I think there will be an element where capability reviews will get into that in the sense of "did we take full account of the practical side of implementation when putting forward policy advice?" I think there is that element. That is really at the heart of what Professional Skills for Government is about. It is saying that you have got some people who can be very, very good policy analysts but that they would be even better if they spent some time learning about operational delivery. Then they would be able to give ministers advice not just on particular, let's say, tax or benefit policies to deliver a certain outcome but actually about the problems of implementing them in practice.

  Q5  Chairman: This relates to a couple of other things I was going to ask you, if I could just do that. One is that I noticed on the day that you were appointed you visited the Passport Agency and the Driving Standards Agency and you have now been telling us that you have been visiting other places where civil servants work outside Whitehall. Do you think senior civil servants ought to have operational management experience before they become senior civil servants?

  Sir Gus O'Donnell: I think in an ideal world they should have experience of as many of the specialisms that we have got in Professional Skills for Government as possible. So that is policy delivery, operational delivery and corporate services. Those are the three areas that we have looked at. Clearly not everybody is going to have everything and we also have a generational issue. There are people like me who came through the system when PSG did not exist. I certainly wish that earlier in my career I had had the opportunity to get more operational experience but there we are. I did manage a certain amount of operational issues in terms of looking at, for example, Revenue and Customs and the operational aspects of delivering their policies. So, yes, I think it is a good thing and we are trying to encourage civil servants to get those sorts of ranges of experience. The phrase I used in the Treasury that summed it up was "if you want to get on; get out" basically to give them the idea that, yes, you will learn about policy delivery in the Treasury but get some experience outside. Go out and do secondments, say, in the wider public sector, in the voluntary sector, in the charitable sector, in the private sector, get some ranges of experience. Certainly I found that when I got out of the Treasury and went abroad working in Washington I gained a lot of experience, and just the ability to see your own department from outside and see how others view it is an enormously helpful thing to do.

  Q6  Chairman: Is there not a big difference between a typical private sector organisation and a public sector one which is that usually the people who run private sector organisations have actually had to run things in order to get to where they are. Civil servants on the whole do not have to have run things. They are able to sit at the centre and to imagine people running things further down the line. Is not one of the problems we have with policy implementation that policies are put in place by people who have not run things at the front-line? We say endlessly in these conversations, "Oh well, it would be desirable if things were different". What I am asking you is are you going to make it different?

  Sir Gus O'Donnell: Yes and that is the whole point of the Professional Skills for Government agenda, that we will be saying to people, "Here is a route to the top and what you should be getting experience in is policy delivery and operational delivery." First of all, there needs to be a culture shift. You are absolutely right in saying that in the past the policy idea was up there and then operational was something that other people did and somehow at a lower tier. What we are trying to do now is to get across the idea of equality of esteem for people doing operational delivery with policy delivery and those corporate specialisms, the ideal being that you get some experience along the way, so that if you are a policy delivery expert you get some experience doing operational delivery. I was very impressed by someone we interviewed. We have a high potential scheme for people we are trying to bring through in precisely the way you are saying. A Home Office policy expert had come in and done the traditional sorts of jobs and they had moved him out and he had actually been a prison governor. I am very impressed by that. I am sure that kind of experience when he has gone back from doing that sort of job to working in the Home Office in the criminal justice system thinking about policy is absolutely vital for him and will make him a much better policy person.

  Q7  Chairman: Just to round this off, someone who has been very critical of the Civil Service on these kind of grounds recently has been Sir Michael Bichard, who is of course a former civil servant but he is also someone who has run things around the system, and he says that unless the Civil Service now has some proper transformation, not, he says, just another instalment of internal reform, then these kinds of big changes are not going to happen. You said you are going to approach this job with more pace and passion. What I want to know is are you on the continuity side of this argument for internal reform, or are you on the Bichard side and some kind of "big bang"?

  Sir Gus O'Donnell: I am pretty passionate about improving the performance of the Civil Service so I want to do this quickly but, to be honest, it is the next generation that we need to get at. If we are going to develop the people who will take over from me in the years to come, who will be better qualified than I am, then we have got to get them when they are at the Grade 7 level, and get people coming in with the idea that their career structure will involve all of these elements. I am very strongly committed to making that happen throughout the Civil Service, yes, so we will be transforming, but it will start at that generation where we can get to them and develop their careers so they are ready when they get to the top.

  Chairman: I am not entirely sure which side of the divide that puts you on but I am going to bring colleagues in. Ian?

  Q8  Mr Liddell-Grainger: How many people are in the Delivery Unit, which is going to be your watchdog, your Rottweiler?

  Sir Gus O'Donnell: The Delivery Unit is very small.

  Q9  Mr Liddell-Grainger: Will it be able to deliver with that amount of people?

  Sir Gus O'Donnell: That is a very good question. When I say "very small" I think it is under 50 and we are advertising currently for a new Head because Michael Barber has left, as you know, and we will need to resource it up to do this second strand that it has not done before. Some of the members of the Delivery Unit have been talking to the Audit Commission (which does CPAs for local authorities) to ask them to think about what kind of resources it will need, so, yes, we will need more resources. My number one challenge was to persuade everybody that this was the right way forward. It is a bit of a problem of success in that, having done that, a lot of departments are now really keen to get on and do this, so I need to think about how we resource up to make sure that we do these things well. The first time we do them we will make mistakes and they will not be perfect. So we need to do some pilots and improve them and find the best ways to do it.

  Q10  Mr Liddell-Grainger: Would you allow the Head of the Delivery Unit to appear before the Public Administration Select Committee?

  Sir Gus O'Donnell: You request whoever you want to come before you.

  Q11  Mr Liddell-Grainger: Would you be supportive of that?

  Sir Gus O'Donnell: I am supportive of people coming before you, most certainly, yes.

  Q12  Mr Liddell-Grainger: The reason I am asking is that when we did have Michael Barber here, he was very interesting on the way that the workings of government were operating, especially when departments failed—the Department of Work and Pensions, Defra, others. That is obviously of interest to us. The deliberations of the Delivery Unit are obviously private. Will you be publishing a report from the Delivery Unit yearly? Would you submit it to this Committee? How would you do that?

  Sir Gus O'Donnell: We will be publishing the results of these different capability reviews, most certainly, as they are finished, I would hope, so as we go through them. I am not going to save them all up and do them in one report at the end. I would like to get them out. One point there, however, I would urge you to treat them in a symmetric fashion. Yes, there will be some challenges for departments that emerge out of these but please also notice the things they are doing well because, boy, does that motivate people when you celebrate success.

  Q13  Mr Liddell-Grainger: My constituents tend to go the other way, they tend to want things done. When Tax Credits go wrong or farmers do not get payments they get pretty stroppy and we have to pass them on to you as line manager.

  Sir Gus O'Donnell: Indeed, but I am sure you also want to encourage the Civil Service to do a really good job.

  Q14  Mr Liddell-Grainger: Do you still have a "blue skies thinking" unit? Is that still operational?

  Sir Gus O'Donnell: There is a Strategy Unit.

  Q15  Mr Liddell-Grainger: What is that doing now?

  Sir Gus O'Donnell: Actually I want to use the Strategy Unit in part to help me with the capability reviews because when I come to look at departments, one of the things I am interested in is how good are they at formulating strategy so I am going to use resources from the Strategy Unit to do that. They are doing a range of different reviews for the Prime Minister looking at some issues related to specific areas—education, health, some of the big reform areas.

  Q16  Mr Liddell-Grainger: At departmental level or as a Cabinet Office function?

  Sir Gus O'Donnell: As general issues, yes.

  Q17  Mr Liddell-Grainger: So they are working outside the department?

  Sir Gus O'Donnell: They will tend to work increasingly with a department on a specific issue.

  Q18  Mr Liddell-Grainger: And who is heading that at the moment?

  Sir Gus O'Donnell: Stephen Aldridge.

  Q19  Mr Liddell-Grainger: Would you let him come here?

  Sir Gus O'Donnell: He is a civil servant; I am very happy for it.


 
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