Examination of Witnesses (Questions 20-39)
RT HON
JOHN HUTTON
MP
1 NOVEMBER 2005
Q20 Chairman: The point, if I may
put it like this, is that many people have a political interest
in having these issues hanging in the air. Not having them resolved
is what serves the interest of the opposition parties and of the
media. The way to cut through that would be to have someone to
look at them. Then you could say, "You put up or you shut
up. If you've got evidence, you bring it to me". Alan Budd's
point was: "There is something thoroughly unsatisfactory
about me being commissioned, by the Permanent Secretary of the
department where the Secretary of State has allegations made about
him, to investigate that department". It is, in a sense,
compromised from the outset. It is not a question of finding a
way to have a go at ministers. In a way, it is a protection for
ministers, is it not, if there is some way that someone could
independently investigate these kinds of allegations?
Mr Hutton: I agree with that,
Chairman. I am not arguing against a role for an independent investigation
in some cases where allegations are made against a minister or
former minister. In fact I think the practice has demonstrated
that on occasions that is precisely the procedure that has been
followed, and I think that is entirely appropriate. If the argument
is specifically about this particular case—
Chairman: No.
Mr Hutton: Well, if it is not,
I think the point I want to make is this: the Prime Minister,
having looked at the facts and come to a perfectly clear view
that there is no evidence of a conflict of interest between Mr
Blunkett's behaviour when he was outside the Government and his
behaviour when he was in the Government then and in the Government
now, and feels that in those circumstances an independent inquiry
is not going to be appropriate. That is the Prime Minister's judgment.
It is a judgment that I absolutely endorse. It is not true that
we do not have a constitution. We do. We have a sort of a constitution.
Q21 Mr Liddell-Grainger: We do have
royal prerogative. We do not have a constitution.
Mr Hutton: We have more than that:
we have legislation, we have customer practice and so on. The
substantive point is whether the Committee feel sufficiently that
the current arrangements are so unsatisfactory that they need
reform—and I suspect you probably take the view that they
do, and there are those of us on the other side of the argument
who say the system can work perfectly clearly and perfectly well.
Q22 Chairman: The Committee had decided,
before this current affair, that we were going to have a look
at the whole area of ethical regulation in government, so I suspect
we shall revisit that. Let us, if we may, move on to other territory.
On the memorandum that you have given us you have said, "The
Cabinet Office is now working on delivering the strategy for the
next phase of public service reform . . .". Is the next phase
going to be the last phase? Does public service reform ever come
to an end or is it a process of permanent revolution? I think
we would all quite like to know this.
Mr Hutton: I do not think it is
a case of permanent revolution. I do think there is a responsibility
on government, whoever is in government, to make sure that the
taxpayers are getting value for money, that they are getting a
high quality, efficient service. Just as in, for example, the
private sector it would not be a successful strategy to assume
that every problem has been solved, that there is nothing more
that can ever be done to improve the quality of the product that
you are providing; I think it is essentially that discipline on
government as well. The need to go on making sure that public
services meet the rising aspirations/ambitions of the British
people is going to require ongoing change and reform. Yes, I think
that is self-evident.
Q23 Chairman: I understand the point
about all organisations having continuous improvement strategies
and so on, but I am asking on the kind of big bang reformist strategies
that we are experiencing at the moment in key public services.
Are we expecting that process to have been completed during this
Parliament, so that we can say, "Those public services have
now been reformed?". Or is it a case of: "This is just
simply another instalment of a process—of which you will
have a further instalment after that"?
Mr Hutton: I think it is partly
driven, is it not, by the manifesto commitments that we have made
and we are likely to make in four years' time. I do not know what
they will be, but clearly there will be, I am sure, a series of
things that we will want to do in four years' time to continue
to accelerate and improve the performance of public services.
Q24 Chairman: Will the ambition be
to have accomplished the fundamentals of public service reform
in this Parliament?
Mr Hutton: Our ambition is to
do the things that we said we would do in the manifesto, which
is, yes, certainly to extend more choice over the services people
use, to improve the efficiency and effectiveness of those services.
The manifesto made very clear the areas where we wanted to see
improvements. The Cabinet Office is focused entirely on making
sure that the things we said we would do during the last election,
which we have committed ourselves as a Government to doing, we
actually oversee and implement.
Q25 Chairman: If you are working
in a public service, you quite like to know whether the end is
in sight. Whether this process of reform in which they are all
engaged has a completion point or whether it is going to be followed
by another stage and another stage and so on.
Mr Hutton: As far as the Government
is concerned, the principal pillars we have tried to put in place
here are clear and well known and feature very strongly in our
manifesto. They revolve around making sure there is more choice
over the services people can use. There is a very clear commitment
to improve performance in those services, and that has been done
by a variety of different tools, whether it is performance indicators,
targets, incentives or whatever, and there is a clear set of commitments
around value for money and efficiency. We are pursuing those three
pillars in Government and that is the reform agenda that we have
mapped out. It is impossible for me, quite obviously, to say what
the manifesto will look like in four years' time, but I think
the central pieces of the architecture are clearly visible now,
and, no, we are certainly not going to change things.
Q26 Chairman: My impression is that
the Prime Minister wants to relinquish office having accomplished
the fundamentals of public service reform. I think he thinks that
is going to be his legacy. Are you telling me that in fact that
will not be the case because it will simply continue after that?
Mr Hutton: I think the Prime Minister
quite clearly has set himself the job of implementing the manifesto,
and implementing the manifesto will see very significant improvements
to public services, and that will, I think, be a tribute to the
work of the entire Government, including the Prime Minister.
Q27 Chairman: Let me try one more
thing on you, then I will hand over. On the same kind of theme,
the Government's watchwords, now reflected in the memorandum that
you have given us, centre on choice, competition, contestability,
market. None of this figured in the Government's public service
reform agenda when it arrived in office in 1997. The direction
of travel was quite other. It was public service agreements, targets
and all that. When did the moment arrive when one direction gave
way to another?
Mr Hutton: I think it has been
a journey. I think on a journey it is very difficult to pinpoint
a precise moment in time. It is a combination of experience, implementation
of the reform agenda that we had set out, the opportunity to make
a major new investment in public services that came through in
2000-01 because of the way we have been managing public finances
and overseeing very strong economic growth and stability. The
agenda which you describe—choice, contestability, diversity
and so on—has been set out quite clearly in our manifesto,
I think since 2001, and it is that manifesto. It is maybe not
fashionable in this context to go on about implementing manifestos—a
lot of people like to change them as they go along—but I
am slightly old school when it comes to manifestos: I think you
should do what you said you would on the tin, and it is very clear
what we said we would do. I think the issue particularly about
choice, for example, is a very interesting one. It has been a
journey for us, as I have said. I think the point about choice
that has always struck me, is that people often like to say—and
you did a very important inquiry into this last year on which
I gave evidence—that it is not really what people want,
it is something that is a dogma thing, an ideology thing that
people are imposing, that it is a kind of McKinsey-speak for a
different sort of agenda altogether that undervalues public service
and the public service ethos. For us, choice has been something
that we looked at and considered very carefully. We asked the
patients, for example, in the NHS, whether they wanted choice
about it and providers and they said yes. We know it works. We
know it works to provide efficiency and value for money as well.
I think it is completely unacceptable in the 21st century for
governments to say to the public and taxpayers, "I'm sorry,
we are not going to give you choice. We are going to tell you
which hospital or which school your kids or your family can go
to". That is not a vision for public services that is likely
to command enduring public respect and support. The evolution
of the policy around this agenda has been, as I say, fashioned
by experience; fashioned, yes, by understanding what consumers
of public services say to us they would like to have, and trying
to find sensible ways of delivering that. But choice I think is
a tool that has to be used in the right context, in the right
service, in the right area to deliver an improvement in quality.
That is why, for example, it can apply in some areas more clearly
than in others. If my house is burgled in Barrow on Friday evening,
I am definitely not going to ring up the chief constable in Cornwall
and ask him to send a couple of bobbies up to track down the villains
because they have a better track-record on burglary than the Cumbrian
force. Everyone understands there are limits to how far this instrument
can be used, but where it can be used, of course, we would be
ourselves acting ideologically if we were to say we would not
be prepared to use it.
Q28 Chairman: If it is now decided
that this is the public service reform tool kit around the things
we have talked of, do you regret the fact that you did not have
that tool kit in place some years earlier, so that you could crack
on with all this?—and then we would no doubt be at an advanced
stage of reform now rather than in the foothills of it.
Mr Hutton: No, I think you have
to look at this as part of a sequence of events and part of a
journey. What has made these tool kits appropriate and useable
and likely to produce the results that we want has been the extra
investment, for example, that has gone into public services. To
have choice, you need to have the investment, because you need
capacity, you need new providers, and so on. We would not have
been able to have fashioned that response back in 1997. For perfectly
sensible and I think entirely appropriate reasons, we did not
feel we were able to make an investment in public services of
the magnitude that we made in 2000-01. The public service reforms
have to be compatible with the economic cycle and the revenues
and resources available to government. As the revenue and resources
became increasingly available, so we were able to do more and
more quickly in relation to public service reform.
Chairman: I am sure colleagues will want
to explore this further with you.
Q29 Julia Goldsworthy: Following
up on the choice issue, has the Cabinet Office done any research
into how that works in rural areas? The constituency I represent
is in Cornwall, where there is only one hospital, so, even if
you provided the choice of many hospitals, for a lot of people
it would be an hour away from their nearest hospital. Have you
looked at how it works in rural areas as opposed to in London,
where you have lots of different hospitals?
Mr Hutton: I think some work has
been done on that. Maybe I could bring it to the attention of
the Committee, but I think it is likely to be the case that the
principal work in this area has been done in the case of the NHS
by the Department of Health rather than the Cabinet Office. But
if there is any information that is at all helpful to the Committee
on choice and how it works in rural areas, I would be very happy
to make it available to you.
Q30 Julia Goldsworthy: I would like
to move on to targets. If it is ultimately up to the Prime Minister
to decide whether there has been adherence to the Ministerial
and Civil Service Codes, what is the point of your fourth objective,
which is: "To promote standards that ensure good governance,
including adherence to the Ministerial and Civil Service Codes"?
Have you measured what progress you have made in promoting that?
Mr Hutton: I do not think the
two things are inconsistent. I think it is entirely an appropriate
function of the Cabinet Office to set itself the job of supporting
the Prime Minister in raising standards in the public service.
That is what we do. The code is clear. We have had a conversation
and I am sure there will be others subsequently about the detail
of all of this. But I do not think it is inconsistent with our
strategic objective of raising standards, for the ultimate person
to have responsibility for deciding or adjudicating whether there
have been breaches of those standards to be the Prime Minister.
I do not think there is a conflict between that at all.
Q31 Julia Goldsworthy: How do you
measure progress against those objectives and against your targets
and other departmental targets that you oversee?
Mr Hutton: I think the target
to which you have referred is one of the old targets. It is not
one of the new PSA targets.
Q32 Julia Goldsworthy: It is Cabinet
Office 2004 Public Service Agreement, objective 4.
Mr Hutton: I suspect I might have
to drop the Committee a note about that as well.[7]
Chairman: It does sound rather like it.
Mr Hutton: Yes, I think it is.
Q33 Julia Goldsworthy: Do you think
the Government is doing well in meeting its targets Do you know
what percentage of targets they have met and what percentage they
have not met?
Mr Hutton: We have met the overwhelming
majority of the targets. Again, I would be very happy, if the
Committee would like a fuller note about the extent to which they
have been met, to send the Committee that.
Q34 Julia Goldsworthy: What happens
if targets are not met?
Mr Hutton: It depends. We are
going to announce later today a series of further measures that
we need to take to meet, for example, some of the diversity targets
that we have set for the Civil Service. You have probably read
in the newspapers that we have met some of the targets but not
all of them, but in all those areas we have made progress in the
right direction. The frustrating thing about politics—and
it may be that, whatever side of the fence one sits, in this regard
we all to some extent share this experience—is that you
can set yourself a tough target and you might be able to get 90%
towards it, but if you do not make that extra 10% the whole thing
is regarded as a screw-up: it is a failure. Outside of politics,
if you got 90% towards where you wanted to get, most people would
say that is not bad going. In all those areas where we have not
quite got to the target, you will find significant progress in
the right direction. If there is not significant progress in the
right direction, there will be a series of measures that will
be taken that we will initiate in the department; the Cabinet
Secretary has responsibilities in terms of the performance review
that he has with permanent secretaries every year; and then there
will clearly be ministerial involvement as well to understand
the root cause of that problem and to take the appropriate measures
to put it right. But I think overwhelmingly the Government is
hitting its targets.
Q35 Julia Goldsworthy: Could it be
that the public does not have any confidence in targets because
they are not independently set or assessed, and quite often if
they are not met then another target is set instead? Because there
is no independence, there is no public confidence in whether or
not they are actually achieved.
Mr Hutton: I would find it extraordinary
if, having been elected, someone else set the targets for the
Government other than the Government itself. I do not think that
is a terribly sensible suggestion with respect. In the system
that we have, it is governments who should set out clearly what
they want to do and hold themselves accountable. I think we have
made ourselves more accountable to the electorate and to the public
as a whole because we have been clear about the things that we
wanted to achieve. I do not think a government in office in the
20th century—in the 21st century it has only been us, I
know—has ever held itself out to greater accountability
than we have done by the approach that we set towards target setting.
I think we have made it very clear what our ambitions are and
people can judge us accordingly. Yes, there will be some targets
that we do not hit, and people will draw their own conclusions
from that. I do not think it is sensible for someone else to set
the objectives for national government other than government itself.
I think that would be a chaotic system. Secondly—and this
is a point where I suspect I probably am more in agreement with
you than in relation to the first point—I think there is
a real issue about the use of statistics and the confidence the
public can place in them. We work very, very hard—and I
did whilst I was at the Health Department—to try to make
sure that when we say, for example, "We are meeting our waiting
list targets," there is no-one waiting over a certain period
of time for surgery. We have someone else come in and look at
those figures. We have the National Audit Office and we have the
Audit Commission and others who do that work for us, and of course
there is the Statistics Commission and the Office of National
Statistics and the code that applies to the collection of government
statistics. We have tried very, very hard to make the collection
of statistics that bear on the issue about whether we are meeting
targets or not, more open to public scrutiny and parliamentary
scrutiny, I think, than any previous government has done. Is there
more we can do? Yes, I am sure there is, and we will continue
to explore ways in which there is the greatest possible confidence
in the accuracy of the statistical information that we present,
but it is an uphill struggle. There is no doubt at all that there
are 80,000 more nurses in the NHS and that waiting times are halved,
but if you were to ask the public, "Do you think there are
80,000 more nurses in the NHS?" they would probably all say
no, and: "Do you think waiting times have gone up or down?"
they would probably say they have gone up. But the evidence is
quite clearly the opposite. That is, in a sense, a political difficulty.
The wider problems that ministers and, I suspect, all governments
will have in the new age in which we live, when people are more
sceptical and cynical about information—and rightly so,
I think—it is not a bad thing—is that we have to work
twice as hard to make sure we get that information accurately
assembled and as foolproof as possible. We spend a very great
deal of time in government, I can assure you, trying to get that
right.
Q36 Julia Goldsworthy: Could I ask
you about capability reviews as well, as it is on a monitoring
theme. I understand the Cabinet Office will be heading up the
capability reviews across departments; in which case, will the
Cabinet Office be volunteering to undergo that process first?
If they do, who monitors the capability review of the Cabinet
Office?
Mr Hutton: I think we are going
to start the review with a number of willing volunteers early
on. I do not know who yet they will be. I think they are going
to start politically, early in the New Year. Yes, maybe the Cabinet
Office will be one of them, but the Cabinet Office will certainly
be covered by the capability review programme that Gus has announced.
Q37 Julia Goldsworthy: Do you think
if the Cabinet Office undertook a capability review now it would
pass?
Mr Hutton: It is hard to say.
Q38 Julia Goldsworthy: There is evidence
from things like the failure of the True North project and changes
in financial management projections that there are some serious
financial management problems within the Department.
Mr Hutton: No. I do not accept
that at all. I think Colin Balmer's further explanatory note to
the Committee[8]
tried to explain what appear to be some of the serious discrepancies
that were emerging in terms of financial pressures within the
Department. Rather than a 50% overspend, it turned out to be an
increase of 4%. The figures were all before the Committee. I would
not want it to be accepted, Chairman, that I acknowledge this
Department is badly run or financially inappropriately managed.
It is not. I do not accept that. My answer to your initial question
as to whether it would pass a capability review is a very difficult
thing for me to say concretely. There are things that are not
right—and I am sure you know probably just as much about
that as I do, about the Cabinet Office's strengths and weaknesses—but,
like all departments, we do have that. We have strengths and we
have weaknesses. I think the important thing about the capabilities
review—and it is classic Cabinet Office work to support
this across government: it is part of our core mission—is
that it is to help departments to become more efficient and effective
at doing the things to which they are committed. I think our entire
process of government will benefit from that. This is not a party
political thing at all; this is a genuine attempt to improve the
efficiency and effectiveness of the Civil Service. That has to
be a gain for the body politic of our country.
Q39 Julia Goldsworthy: Just so I understand,
the departmental annual report outturn costs of £191 million
for "other administration costs" are reported as an
increase of 53%, but the correspondence we have received say it
was just a 4.1% increase. On the fact that there is such a difference
between an estimated outturn in your departmental annual report
and the correspondence that we have received, does that not show
there are much bigger issues there, even though the increase may
have been much smaller?
Mr Hutton: No, I do not think
so.
7 Ev 42, letter from the Cabinet Office to the Clerk
of the Committee, dated 16 December 2005, further point 2 Back
8
Ev 24, letter from the Cabinet Office to the Clerk of the Committe,
dated 19 October 2005. Back
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