CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 660-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

PUBLIC ADMINISTRATION SELECT COMMITTEE

 

 

POLITICS AND ADMINISTRATION: MINISTERS AND CIVIL SERVANTS

 

 

Thursday 10 nOVEMBER 2005

BARONESS FRITCHIE DBE

MR ED STRAW

Evidence heard in Public Questions 1 - 97

 

 

 

USE OF THE TRANSCRIPT

1.	This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Public Select Administration Committee

on Thursday 10 November 2005

Members present

Dr Tony Wright, in the Chair

Mr David Burrowes

Paul Flynn

Julia Goldsworthy

David Heyes

Kelvin Hopkins

Mr Ian Liddell-Grainger

Julie Morgan

Grant Shapps

Jenny Willott

________________

 

Witness: Baroness Fritchie, DBE, a Member of the House of Lords, Commissioner for Public Appointments, gave oral evidence.

Q1 Chairman: Could I call the meeting to order and welcome our witness and guest this morning, Baroness Fritchie. When we used to know you, you were a mere Dame; you have now become even more illustrious and we congratulate you on that. You are coming to the end of your long tenure as Commissioner for Public Appointments and we have had close and fruitful dealings with you over the years. We have always appreciated your attendance at these committees and our relationship. As you do wind up we would like to not do what we would normally do which is to have a session devoted entirely to your annual report in all its glory, but to focus on some of the themes that the Committee is now particularly interested in. One of these is the whole business of the relationship between ministers and public officials and whether we need to visit that in a variety of ways. You are very central to that. The second big area is a review that we want to do about what we call "Ethical Regulation in Government" - whether we have got that territory right - and you are an ethical regulator. Would you like to say something just to start us off?

Baroness Fritchie: Yes, thank you very much. I am grateful to be asked to be here; it is very good when you come to the end of something to be able to reflect and this is a good place to reflect. I am not planning to talk in a long way because I know you would rather ask questions. I sent a copy in advance of my response to the Graham Committee's recommendations[1] and I just want to say that the copy that I sent to you was a copy which I sent to the then Minister for the Cabinet Office, John Hutton, in June this year. I wanted him to know before he and the Government came to a view what my views would be and then I subsequently met with him. As you know, the Graham Committee sat almost two years ago - they began in January 2004 - they took a year to take a really good in depth look at these things, they brought their recommendations out in January of this year and normally government response is within a couple of months but we are now into November and we still have no government response. I thought it was important before I came before you at least to know where I stood on some of those issues. That is all I really want to say and I am happy to take questions.

Q2 Chairman: Thank you for that. Your job is to keep an eye on the whole process of public appointments and to make sure that nasty things do not happen and that merit is preserved. Ministers on the whole would like more role in the public appointments process as they originally did have. Can you, just in a nutshell, explain why they should not have it? If ministers are responsible for everything they do and people like us hold them to account for it, why should we not just let them appoint who they want to public posts and then be held to account for it?

Baroness Fritchie: First of all, I absolutely understand and agree that ministers are held accountable and therefore they must have confidence in the people who are being appointed. The second thing is that the system that has been set up - that was suggested by Nolan all those years ago in order to have public confidence and give ministers confidence in the system and be confident in who was appointed - within departments is not used well. I have come before this Committee many times and I have said the same things over and over; I am weary but not bowed to repeat some of them. In the process, as things stand now, before any changes are made, in the process of public appointments ministers should be asked right at the very beginning: "What kind of person do you want to be appointed to this role? It is coming up for appointment or it is a first appointment in a new body, what is the role of the body, what kind of skills, abilities and qualities and expertise do you want the person chairing this to have?". The minister's thoughts, ideas and desires should be put very carefully into a role specification and the minister should sign it off and say "That's absolutely right". The minister should also be asked at the same time, "Are there any people that you know or know of that you think are people who have these qualities who should be considered?". Again they can say, "Yes, what about somebody like this or this or this?" and those names can be put into the hat.

Q3 Chairman: You are describing "what is" but what I am really trying to get you to talk about after all these years of experience of doing it, is whether we are not making a great big meal out of this. I have just been reading an article by Peter Preston in The Guardian talking about Jamie Oliver and school food. I mean, there is Jamie Oliver, his show is on television, he focuses national attention on the issue of food and schools. Preston says, quite rightly, in a well-ordered world a minister would then get onto Jamie Oliver and say, "Come on, can you just come and head up this School Food Trust for us, given that you're a great catalyst for all this?". What the minister would be met with is what you are describing: "Oh well, you can put an application in and we'll have the independent assessors and we'll do all this business". Is it not a bit much?

Baroness Fritchie: No, because I do not think there is anything to stop anyone saying to Jamie Oliver, "We want you to play an important part in whatever it is we want to take forward, but we are not asking you to take on the governance responsibility of the board. We are not asking you to be head of an organisation where you are responsible and accountable for all the governance issues as well as all the adding value to the performance issues." On the boards of the bodies that I oversee are people who have particular responsibilities and, as people have said to me in the past, why can we not ask a famous pop star to come and do this for us, of course you can but is it not more likely that they were more interested in and able to give time to something that would enable him to spearhead the think tank - the thinking of what needs to be done - rather then for them to take on the governance role of a body.

Q4 Chairman: These are questions for ministers to decide. If the minister screws up with an appointment he takes the rap.

Baroness Fritchie: There are two issues here, one is why should ministers not do something? What I was trying to say in rather a long way was that ministers are already able to do a great many things that they do not do because they do not get involved and they could say, "I want a simple process, I want a short process, I want simple application forms, I want to see this happen and I want people of this calibre." Because there are some ten thousand of these - not just one that comes out of interest from a television programme - there has to be a system in which ministers can have confidence and the public can have confidence.

Q5 Chairman: But they cannot appoint Jamie Oliver?

Baroness Fritchie: To what?

Q6 Chairman: To the School Food Trust.

Baroness Fritchie: Is there such a thing?

Q7 Chairman: Yes.

Baroness Fritchie: Is it a new body?

Q8 Chairman: Yes, set up to sort out school food. Jamie Oliver believes in sorting out school food.

Baroness Fritchie: I would be keen to see what the skills, abilities and qualities are for the person who is going to lead that body and if they say, "We want someone who's inspiring, who's on television, who has the confidence of the public, who can only give us 20 minutes a week" that might be the very person, but they first have to do the thinking and they have to make sure the person has the time to do it. The chair of a body is legally liable for a whole range of things, whereas saying he is special adviser to this new body is a different thing. If Mr Oliver wants to apply for and give time to public office in that particular way I think that is perfectly reasonable. However, to kick start something new and make it work they require skilled expertise. They could use his evident enthusiasm but it does not have to be by appointing him chair of the board.

Q9 Paul Flynn: In the 1980s Margaret Thatcher appointed Richard Branson to clear up litter and graffiti. Do you think of that as a successful approach or a lesson which suggests it is possibly not the best idea to appoint the first person who comes into the head of the minister?

Baroness Fritchie: I do not think she set up a body of which he would be the chair. What she did was to ask him, I think, to spearhead the thinking and develop some ideas that would really make a difference. His public profile was one that, at that time, the public would pay attention to, so I can understand why you would want to properly involve all sorts of bright, interesting and charismatic people who should be listened to because they really understand their subject. My concern is that if you put them on top of a board where there are a lot of other things they are responsible for, they are not necessarily interested.

Q10 Paul Flynn: The results suggest that it was not successful.

Baroness Fritchie: No.

Q11 Paul Flynn: You said when you last came to this Committee that the public perception was that public bodies are full of stale, pale males from the southern counties. What progress has been made to make sure that the public perception now is that the bodies are full of bronzed, fresh females from the northern counties?

Baroness Fritchie: That is an interesting juxtaposition. I have made some progress but a very small part of my role is to promote diversity. It is for government departments and for ministers to be clear about the kinds of people they want on their boards, the people who broadly reflect the communities they serve. Quite rightly they will do the bulk of the work. I undertook a MORI poll this year to look to see if there had been shift in public perception of public concern since the one I did when I first came and there had been a bit of a shift. There had been more understanding; there had been more recognition of things being fairer, easier to access and a broader range of people appointed, but it is a long haul. I keep saying that it is a decade of development, it is not one or two initiatives and there is a long, long way to go.

Q12 Paul Flynn: There has been some unhappiness expressed about the Medicines and Healthcare Products Regulatory Authority on the grounds that it is over-influenced by the pharmaceutical industry. I believed the Chairman worked for some 20 years for a pharmaceutical body. Would you have a role in that, ensuring that the body with enormous power should not be over-influenced by the interests of the pharmaceutical industry? Where would you come into that?

Baroness Fritchie: I would come into that through conflict of interest as part of my role is to ensure that there is a fair and open process that is easy to find and smooth to travel through for people who want to be considered for public appointments. Part of that is to make sure that when people are sent application forms it is very simple and straightforward and when conflicts of interest are mentioned there is some indication of what a conflict of interest might be. I did a piece of work with PricewaterhouseCoopers where we audited government departments in relation to conflicts of interest and most put on the form: "Do you know of any conflicts of interest?" but they do nothing if people leave it blank or say no. I did some very interesting work in Northern Ireland to specify what might be a conflict of interest and indeed I used a pharmaceutical company as an example there and said, for example, on a specialist body, an advisory body to government, appointing someone from a pharmaceutical company might give them unfair competitive advantage if you are looking at what kinds of things are going to be researched in the future. Therefore I require government departments to look at conflicts of interest and perception of conflicts of interest. However, it is not for me to jump in and tell government departments and ministers precisely who they should have on those boards.

Q13 Paul Flynn: Do you think it is a matter of concern that the committee on the safety of medicines have set up a special committee to look into the dangers from one of the SSRIs (Selective Serotonin Re-uptake Inhibitors) Seroxat had to be disbanded because the majority of the members had a financial interest in the company that actually made the drug. Their investigation was delayed and in fact the restrictions on the use of that drug - which was killing people - came from America, not from Britain. Is this an area in which there is a failure in the appointment system and a failure of understanding of the vested interests of those people appointed to these powerful bodies?

Baroness Fritchie: Yes.

Q14 Julia Goldsworthy: Following up on the pale, stale and male, it reminds me of an example which I was looking at preparing for this which was the fact that the Department for Trade and Industry was taken to the High Court for appointing a woman to the South West Regional Development Agency Board and Malcolm Hanney - one of the interviewees who was clearly the best candidate - made a Freedom of Information request and the DTI was found guilty of breaching the Sexual Discrimination Act. I just wondered - because this has been referred to you - whether you have responded and whether you think the Ministerial Code was followed. Have you made a judgment?

Baroness Fritchie: I have made a judgment and I plan in the annual report for next year - having got Mr Hanney's permission and agreement - to use this example as a case study so that it is made very clear. There are a number of things. One is that the law is quite grey in some areas in relation to gender discrimination and positive action, and therefore I looked at this and found in favour of Mr Hanney in a complaint in relation to the Department. I would like to say here that the then Secretary of State for that Department was all over the papers; this was not her appointment, she was not the person responsible and therefore it made sense to take her out of the picture because she was not the minister. However, I found in his favour. He had planned to take it on to tribunal and judicial review and at the preliminary stages in the tribunal the Department agreed to settle and agreed that they had indeed breached the rules. The difficulty is this one - and we are back to the Chairman's question about a minister's right to appoint who they want - that ministers absolutely understandably want people who are fit for purpose, who would broadly reflect the communities they serve. However, the Sex Discrimination Act says that you cannot appoint someone because of their gender unless there is a particular reason for that to be so, and there is not in this case. Therefore all other things being equal you are not allowed to do that and in this case that was what happened. We had three candidates above the line and Mr Hanney was ranked number one by the panel and the minister chose to select ranking number three because they wanted to balance the board. That is discrimination. I have been in discussion with government departments - they with their lawyers, us with our lawyers - and I have sent out an amendment to the Code to make clear that it is a balance of skills and expertise and experience on the board. The important thing - and I suppose the point I was labouring on earlier - is that the real effort has to go in at the beginning. The real effort has to go in to make sure that the broadest range of candidates possible come forward and can be selected, not wait to the end and then say, "Oh dear, we don't have enough of this or that". That is my concern.

Q15 Julia Goldsworthy: Is that a problem with the Code or is it a problem with the way that the Department administered it?

Baroness Fritchie: I think it was a mixture. It was a problem with the understanding of the Code. When I feel there is unclarity in my Code - and I do sometimes - I seek to change it as indeed I did in relation to ministerial involvement and met with some resistance. However, in this case they believed that the "balance" needed was a gender balance and therefore that is why they made that decision. The law becomes clearer and clearer and because of some European legislation recently enacted, it is likely that many public appointments can now be considered as employment rather than appointments, so they are now in a loop - an inner circle - that they did not used to be in and that is one of the things that makes life a bit difficult. Just a mention on your stale, pale male. I feel I ought to say - in defence of men, really - that when someone challenged me that all of the appointments were full of pale, stale males from the southern counties, I countered with something like, "I will not demonise older white men who have given great service, however we also need diversity".

Q16 Chairman: You spent a lot of you time banging a drum to get more women into public life and here was an attempt to do it because balance on a board is thought to be important and you rule against it.

Baroness Fritchie: One of my over-riding principles is appointment on merit and therefore the best candidate must be the candidate who is appointed. That is the difficulty in relation to my Code, therefore the effort to get more women into public life is on merit rather than on anything else.

Q17 Jenny Willott: If the third candidate on the list was a man and they had been appointed by the minister rather than the person at the top of the list, would you have found a problem with that?

Baroness Fritchie: I probably would not have known about it. As the employment law now affects public appointments more, the information I have from solicitors currently is that, when the panel (who have done the work to find the right group of people for the minister to consider so the minister can make a selection) does their work, the minister has to have said in advance - this is their involvement in the beginning - "I want you to find people who fit this bill and I want you to present them to me with pen pictures of the best three above the line, each of them having merit". If you put three people and say, "Here are three different candidates and these are their abilities and qualities", then the minister is perfectly free to chose any of them. However, some ministers - or some departments without consulting the ministers - rank them in order one, two and three and when you do that you make it very difficult to choose someone who is not ranked number one, particularly if a member of the panel has told someone, "By the way, we've ranked you number one".

Q18 Jenny Willott: What is the role of ministerial appointment if you have a panel who is going to interview and then put people in whatever order they might come out at? Is there then a role for ministerial appointment? If someone clearly comes out best in the interview at the panel stage then clearly that is not going to be able to be over-ridden under discrimination legislation by the minister, so what is the point in having a ministerial role?

Baroness Fritchie: Currently - and this may change depending on the Government's response to the Graham Committee - one of the principles in public appointments is that ministers must have a choice, but that choice must be from: "Here are three candidates ranked in a line" rather than "Here is one, two and three". If it is "Here are three candidates, and this is why this one is outstanding" and so on then the minister is free to choose whomsoever they think is the best fit. There are times - because these processes do take time; I recognise some of them are lengthy - when things have moved on and so long as there is not a new criteria added the minister may say, "Aha, given what has been happening in the last three months, this person fits the bill better than that person" so the minister still has a choice if you offered three equally ranked people. The whole thing is set up to provide the minister with a choice. Should a minister want to be involved in the whole process all the way through they can, but the panel is there to serve the minister and to get the best fit, and deliver the best choice to the minister so the minister can have confidence in who they appoint.

Q19 Jenny Willott: That is if they are presented one, two, three.

Baroness Fritchie: That is the difficulty. Sometimes government departments rank them one, two, three.

Q20 Chairman: Had they all been above the line then it would not have mattered.

Baroness Fritchie: Absolutely.

Q21 Julie Morgan: You were saying that it was really important for the minister to be involved right at the beginning and to set the scene, so to speak.

Baroness Fritchie: Yes.

Q22 Julie Morgan: You also said that ministers can put names in the hat.

Baroness Fritchie: Yes.

Q23 Julie Morgan: What is the appropriate way of putting a name in the hat and what happens if a minister may have names who may, by the very nature of things, have political affiliations with the minister? Could you tell us what you see as a fair process in that scenario?

Baroness Fritchie: Again two things, one is the minister may or may not know those people but may say, "Someone of the calibre of so and so, they seem to be doing a good job" or "What about such and such a person?" and they may also name people that they know. Those names must go into the hat and be sent application forms and invited to consider applying like everyone else and they will be treated the same as everyone else. The second thing in relation to political activity, political affiliation is never asked. I think there are two bodies where a political balance on the board is important and is set out in statute, but other than that the monitoring form is detached; we just want to find out and be able to report to you and to the public in general how many people of different political backgrounds and activities actually are appointed to get a sense of whether something is becoming politicised. Therefore their political activity will not be presented to the panel and the panel will decide whether this person should be long-listed or short-listed or interviewed and if they drop out at any stage then they have dropped out. What is asked of people is: "Have you in the last five years been active on behalf of a political party? If so, let us know.". Then once a year I publish the political activity figures for those who were appointed or re-appointed, not for all those who applied. Therefore someone's political affiliation is not part of the equation. Someone's political activity on behalf of a party, which is already in the public domain, is gathered but detached from the application form and then used to give some information at the end.

Q24 Julie Morgan: Obviously in some appointments - because of the nature of the appointment and the people who apply - it is known.

Baroness Fritchie: Of course.

Q25 Julie Morgan: And an affinity perhaps with the minister would be known. That does, obviously cause concern amongst the public. How do you overcome that situation?

Baroness Fritchie: I get very worried if we go into a direction which says that no one who is politically active or knows any politicians should ever be considered; this is unfairness to the ninth degree and therefore all candidates must be treated fairly. If there is likely to be public interest in this then it is likely to be explored if that person gets as far as interview; how will you counter this or that would be explored at interview as a potential conflict of interest possibly. On the panel there would be an independent assessor, someone independent of that process who takes part in it, who is able - should there be a complaint about it - to stand up and affirm to me and give information to me that this was a proper process and this person has been properly appointed.

Q26 Julie Morgan: I believe there is evidence that the number of people with political affiliations who apply for public appointments is shrinking, which seems a great shame.

Baroness Fritchie: Not political affiliations; many of those appointed will have political affiliations. It is people who are politically active. Of all those who are appointed I have no idea how many are affiliated to different political parties; we do not ask that question because it is a private matter. It is only active on behalf of a party which they are asked.

Q27 Julie Morgan: Is that shrinking?

Baroness Fritchie: That has reduced. It goes up generally around the time of a general election, people tend to take more interest in matters political and more people come forward and therefore the figures go up. In general it has gone down. I think it is about 14.4 per cent or something like that last year of those who were appointed declared they had been active on behalf of a political party. They may be councillors or all sorts of things.

Q28 Julie Morgan: It is very important not to deter them.

Baroness Fritchie: Absolutely right, but it is also a very important point to recognise that of the 85.6 per cent - or whatever it is - of those people who did not declare political activity, many, many of them will be members of political parties and will be politically interested.

Q29 Julie Morgan: Just to go back to the beginning where the minister has a favourite person that he or she might like appointed, how are those people actually approached? Are they just sent the advert or if they are invited to apply it does go a bit outside the pure equal opportunities process?

Baroness Fritchie: Ministers are not asked to tell us who they would like us to appoint; they are asked who they would like to be considered. If there is a recruitment consultancy managing the process then they themselves are likely to have the advertisement and then seek to contact a range of individuals from organisations where people who have those skills or experiences or expertise may be. Therefore they would be saying: "There is an appointment coming up, is it something you would like to consider? Can we send you an application form?". That is how that is done. It may be - I do not know if it is so - that an individual rings up and says, "In this department we have a vacancy and your name was one of several that came up as a person who seemed to fit the bill". I think they are unlikely to say, "The minister has suggested that we give you a ring".

Q30 Julie Morgan: So you do not think there is any direct link with the minister and the people?

Baroness Fritchie: I do not know. It may be a minister says to someone, "You seem just the sort of person, why don't you apply?" We are back to my original question. Then we can stand up and say that the minister has not tapped someone on the shoulder; the minister has suggested that this is a person who should be considered and the process will define whether or not this person is the most meritorious. That stands up to public scrutiny.

Q31 Jenny Willott: You said 8.9, 1.5, 2.5 - or whatever they add up to - per cent; of how many? Do you know what the actual numbers are?

Baroness Fritchie: Yes, I do. It is one of those things I thought you might ask me and I very carefully brought a piece of paper that I now cannot lay my hands on.

Chairman: Can you turn to something else and come back to it.

Q32 Jenny Willott: Following on from that, you said that you published the numbers of people who have been appointed who are politically active. Do you actually keep the figures for people who apply that are politically active, because it would be interesting to see if the proportions are roughly the same or if people who are politically active are more or less likely to get appointed?

Baroness Fritchie: No, I do not because I am the regulator and I report what has happened. If we have something like 3,500 appointments turning over every year then you may well have anything from 20 to 500 applications for each one of those, and the different government departments manage those processes and they would have the figures. I have not required them; I have enough difficulty making sure they collect the figures that they have to collect and I occasionally ask them to give me more information on disability or something else, for example, and it would be an interesting thing to do to be able to say: if there was an interest let us just take a three month period in a year and let us ask departments in advance to save that information and then we could present it. Certainly that could be done but I only collect information on those who are appointed.

Q33 Jenny Willott: You talk about declaring political activity where the onus is on the individual concerned. Who determines what constitutes political activity? Some of it is extremely clear; if you have donated x amount of money then it is black or white, but there are so many shades of grey within political activity, I was wondering who actually decides what is declarable or what is not?

Baroness Fritchie: The Nolan Committee, when it was first set up, set out in their original report the kinds of areas they thought should be there. They say, for example: "Obtained office as a local councillor, MP or MEP, stood as a candidate for one of the above offices; has spoken on behalf of a party or a candidate; acted as a political agent; held office such as chair, treasurer or secretary of a local branch of the party; has canvassed on behalf of a party or helped at elections or undertaken any other political activity which you consider to be relevant". So that is the list and it is pretty clear. Although I did have one rather disgruntled person who felt that he should not have had to declare political activity; he had been actually driving people on behalf of one party to the polling station on voting day. He said he only did it for his wife; she was a member of the party and he was not and therefore why would that count? But of course he had undertaken an activity. The figures you asked for are: of the 14.4 per cent who were politically active (not affiliated) 8.9 per cent Labour, 2.5 per cent Conservative, 1.5 Liberal Democrat and 1.5 per cent other.

Q34 Jenny Willott: Do you actually have the numbers of how many people 1.5 actually is?

Baroness Fritchie: Yes, I can certainly send them to you[2].

Q35 Grant Shapps: Going back to your original opening questions, Baroness Fritchie, I do not really think the system works and I draw as my evidence that only one in five people think it does work. In your own report you say that, that the public perception is that it does not work. I want to put it to you that the reason it does not work is that actually everything you do is against the grain of the natural process. You have been set up for a very specific reason that we all know: the 1992 to 1997 Major Government looked sleazy and the 1997 to 2005 Labour government looks like cronyism and you are the answer, together with your predecessor Sir Leonard Peach. Really, what you are trying to do is apply sticking plasters to all these little problems that it actually goes so against the natural process that really it is making the whole thing bureaucratic.

Baroness Fritchie: I wholly disagree.

Q36 Grant Shapps: I thought you would.

Baroness Fritchie: I think you are completely wrong and I will tell you why. Something working is not just down to people who are not involved with it knowing about it; that is a failing and more people need to know and understand. There are a great many things for the citizens in this country to know and understand about. Of course it is sad that one in five people know nothing about it and more needs to be done, but we have to manage public money very carefully. Marketing and spin would not be helpful so careful work needs to be done. For me a natural order of things is not anybody appointing who they like in any way they like to be responsible for public policy and public money. Good governance is certainly something that is on everyone's lips. I believe in good governance. I do not believe in bureaucracy for the sake of the process; I do believe in a fair, open and proper system. I also believe that the people who go into it need to have confidence in it. If you have a system where people are merely picked because they know someone, then you are picking from a very small part of the population who often live in a very small part of this United Kingdom. I think you are wrong.

Q37 Grant Shapps: Yes and obviously I am heartened that you think I am wrong and of course you are right to give a spirited defence; it is what you have been doing for the last six years and no-one wants to think they have wasted their time. However, in the example that the Chairman gave right at the beginning he was saying that if a minister wants somebody then surely they should be able to select them, to which you said, no; actually what the minister does - quite properly - is draw up a spec of the type of characteristics that that person might have, the kind of person that the minister would want to put in place. But we all know from our own real life experience - buying a house when you draw up a spec for the kind of property you like; or, in my case, interviewing and taking on people for my small business that I started 15 years ago, you draw up a job spec for that person; or even in finding a partner or spouse, the person you are going to end up with - you have in your mind a set of categories, a set of qualifications if you like, that you think that that person is going to have and lo and behold when you find the house you want, the person you are going to spend the rest of your life with or the individuals you employ, in fact they are completely contrary to the things you originally drew up. Your system prevents that natural process from taking place.

Baroness Fritchie: You are describing a system that is natural to you; that is not natural to me.

Chairman: It is certainly an insight into the Conservative approach to marriage and relationships, I must say.

Q38 Grant Shapps: We have probably all bought a house and ended up with a house we never thought we would look at.

Baroness Fritchie: You have made my point beautifully for me, thank you. A house you never thought you would look at. If a minister thinks they know everybody who is right and through force of circumstance because the description says "Here is a person that you would not normally look at, we would like you to look at", they say, "Oh my goodness, you are right, this is a better person; it is better than the person that I thought I knew". Therefore I quite understand that ministers need to have confidence in the people who are appointed but I do not believe that ministers know everybody who are good at everything to do with public bodies and from this small black book of names they would be able to select just the right people from throughout the United Kingdom.

Q39 Grant Shapps: I accept that entirely, but you are not putting yourself in the position of employment agency are you, which is almost the way you seem to describe yourself in that response? I am not suggesting that the ministers know everybody; they clearly need outside help to find the right person from agencies or whatever the equivalent is within government. What you really do is add layers of bureaucracy to the process; you make it much more complicated and critically you remove the responsibility from us, as Members of Parliament, to really effectively scrutinise the decisions of the ministers because it is made much more third party to the ministers so you cannot really hold the ministers to account anyway. In many regards you are part of making this place less effective with the best will in the world and for all the right reasons. That is the outcome of it, is it not?

Baroness Fritchie: No. Absolutely not. I would really appreciate some time for you to come to my office and see what we do. I am not a recruitment agency; I set a framework and I try to be a reasonable regulator with a light touch that says, "Let us look at a simple framework that says here are the proper things to do". It is a matter for the government departments and the ministers to decide how wieldy or unwieldy they decide to make that process. In some cases they make it very unwieldy because the minister is not consulted and involved at the earliest stage of the process and therefore when we get to the end she or he says, "I don't like the results you've got; what are you going to do about it?" and it is that. We need to speed up the process; the process needs to be simplified; departments need to have a central team for doing this on a regular basis so they get better and better at doing it. A whole range of new things need to happen, but people who are in any party or in no party in this country have to have confidence. Those who spend billions of pounds of public money and make decisions locally and regionally that affect communities, they must have confidence in the people who are appointed and the best way to do that is to have the widest range of good people who can come forward, be considered and be appointed on merit.

Q40 Grant Shapps: So it adds bureaucracy, makes ministers less accountable, the public does not think it works but you think you are doing a good job.

Baroness Fritchie: The public do not know about it. It is not that the public does not think it works. When it is explained to them and in the MORI poll they said, "This is fantastic; can we have more of it" and indeed - if you would like to have the whole of the MORI poll - they go on to say, "We don't want ministers involved at all because we do not want to have them politicising at the end; we would much rather have confidence in people who have just come through a proper process.".

Q41 Grant Shapps: We could have government entirely by proxy and administration; we do not need politicians at all if you follow that to its natural conclusions.

Baroness Fritchie: Of course those ministers are accountable to those bodies and therefore, as they make the final selection and they make the appointment - and they disappoint as well as appoint - then of course they are accountable to Parliament because they have set in train what kind of people they want, what they have to do and how they should get there and then they make the final choice. I do not think they could be much more accountable and have a fair and open system.

Grant Shapps: I look forward to my visit.

Q42 Chairman: The public like to think that it is all done by cronyism.

Baroness Fritchie: Yes they do.

Q43 Chairman: So in that sense if the purpose is to change public attitudes, they do not want to change. They are comfortable with the attitude which says it is done by cronyism, so in a sense that objective can never be achieved.

Baroness Fritchie: I agree to a point. I do not think they are comfortable; I think they are satisfied. They are uncomfortable about it, but they are satisfied in being uncomfortable.

Q44 Chairman: The consequence of Grant's question really is that we are in a sort of hybrid state. We neither have pure ministerial appointments nor pure independence. We are in this sort of no man's land of ethical regulation which people believe has not changed anything. Would it not be better to go for one model or the other?

Baroness Fritchie: I am not ready to give up on this model yet and indeed yesterday I wrote to a government department to say that I had seen in the press some concern about appointments through cronyism. The person has not complained to you and although the department has not complained to me yet, the individual has gone to the newspaper to vent their spleen. I then wrote to the department to say that given this situation I am very content to come in at their invitation and audit their system and give them - should they deserve one - a clean bill of health and I will come out with them to challenge these people who are just going out shouting cronyism, cronyism, cronyism. I think there is a job to be done for me with the departments to stand up and fight back.

Q45 Julia Goldsworthy: Are you not frustrated by the kind of plethora of ethical regulations that there are out there and how confusing that is to the public? I am just trying to work out who falls under what remit. The Monetary Policy Committee does not fall under your remit; it is entirely in the gift of the Chancellor.

Baroness Fritchie: Yes.

Q46 Julia Goldsworthy: The criteria and the selection are totally vague; it does not have to be based on merit so there is not one over-arching structure which everybody has to adhere to.

Baroness Fritchie: I am frustrated and this Committee recommended some time ago that there should be a review of other bodies and that I should be actively involved. Some 18 months ago you suggested this and the Cabinet Office have set about doing it. They have not involved me yet and they have not given me the final list. Therefore yes, it needs to be looked at and yes, more people should be under a system rather than having all these people outside saying that we are a bit different. I agree.

Q47 Kelvin Hopkins: There is clearly - according to our papers - considerable public disquiet about public appointments. They do not trust the system. I do not think that is something we can ignore. The Chairman has talked about two extremes and we are somewhere in an uncomfortable middle position. Would it not be simpler to move to a much more independent system where ministers do not have the control they do now?

Baroness Fritchie: Yes, it would be simpler. In one fell swoop you would get rid of cronyism.

Q48 Kelvin Hopkins: Would this not be healthy for our democracy?

Baroness Fritchie: That is a debate which I think is beyond me and I think we need to discuss and debate what the implications and the impact of such a thing should be on a whole range of things. I think this is the place that that debate can be had and I think you are about to have some of that. I would be very happy to be part of the thinking as well as the discussing. Yes, it would be an interesting debate. It depends what you are trying to do. If you are trying so say, "Minister, you are accountable but you have nothing to do with it, are you happy with that, because that is what the public want?". Or are you saying, "We're trying to find the best range of people to come forward and impartially to be appointed on merit and because there is public disquiet about cronyism or potential politicisation you now can have nothing to do with it"? The reasons for appointing people are complex and our concerns are many. Public perception is one that is very, very important. If you want a radical solution, which radical solution do you want and what would the impact be? If you are asking me where I would go right now I would go right now, to say that ministers should have an involvement in the process but should not be given the choice; they should get the person who comes out top, which is what the Graham Committee said and what the Government is now considering.

Q49 Kelvin Hopkins: If it was an entirely independent, transparent system where people appointed were obviously able people - it would not necessarily be media luvvies either but we could have a media luvvie on as well - public trust would be satisfied. We might get better government because we would get more independent minded people on there. We would have a range of views and we might move a little towards a more healthy pluralistic society again.

Baroness Fritchie: I think there is a kind of lead lag time between when you do something and when everything else catches up. I think the press and public are like Matilda who cried "Fire!" all the time; cronyism is cried whenever there is a known name. I was very heartened when the Chairman of the BBC was appointed when whatever comments were in the press no-one suggested that he got there easily or on anything other than merit. Indeed, one newspaper I read said he was very pleased to have gone through a rigorous process because no-one could gainsay the fact that he got there easily or on anything other than merit. That is the other side of it; people who are very publicly known, whilst it may be irritating to fill in forms and go to interviews, they can stand up and say, "I got there on merit, so say what you like but I will come back at you with your cronyism and prove you wrong".

Q50 David Heyes: You mentioned earlier the use of recruitment consultants. I think your words were "to go to people they know in a specialist field". Are these what are normally called headhunters?

Baroness Fritchie: Yes.

Q51 David Heyes: How extensive is that?

Baroness Fritchie: It varies from government department to government department. In Wales hardly at all; in Scotland hardly at all; in Northern Ireland when I was there hardly at all. Some government departments hardly at all and some government departments regularly. Those head hunters are on a call off contract so that there is a list of people who have been looked at and have been put on contract with that department and those are the people they go to. If you are looking for a specialist, someone with a scientific background, then there is a particular place that you would go to find someone who has to have scientific knowledge to be on a body. Or if you have a small department and you have cut away layers of your administration then you do not have people available to undertake a big appointments process where you might be asked for a thousand application forms, a thousand information packs and have to deal with between five and seven hundred people who fill them in and send them back. You do not have people sitting there to do that, so sometimes government departments use these agencies to manage the administration of it rather than necessarily to find them the names.

Q52 David Heyes: How do you, in your role, monitor, regulate and audit that work and ensure the probity of what they are doing?

Baroness Fritchie: In several ways. First of all on every appointment's process there should be an independent assessor and the independent assessor is someone independent of the process who can make sure that it is a fair and proper process. Secondly I became quite alarmed that when I had complaints and I began to investigate them sometimes the recruitment consultants were saying, "But we didn't know about that rule". I did some investigation and indeed I produced two reports. The first was to find out what government departments did in relation to recruitment consultants and I discovered that in some cases they just assumed they knew the rules. They gave them none of the Codes of Practice, none of the information; they assumed they knew the rules and left it to them. Therefore I produced a report for government departments about working with recruitment consultants. I would say a ladybird guide; not a big, long complicated guide. I also produced a report for recruitment consultants and twice a year generally I meet with a range of recruitment consultants to talk about the issues and what is of paramount importance as far as I am concerned. That is the way I do it.

Q53 David Heyes: The thinking behind the question really is that there is the risk of bias on the part of recruitment consultants recruiting in their own image, so it's their cronies and not ministerial cronies. Firms like Veritas, a branch of Capita for instance, Capita are seeking and winning vast government contracts and one imagines that another arm of that firm would have a bias towards people who share that view of the world in recommending people for the appointments. What kind of things do you do to make sure that that is not going on?

Baroness Fritchie: Conflict of interest is where some of that comes into play. I did have a complaint about 18 months ago which led me to look at candidates who had been sourced by the recruitment consultants and candidates who had come in through open competition. We went through a great many of the application forms to see if just because they knew a person they were getting unfair advantage because the person who had filled in the application form was known to them. We did quite a lot of work. Not enough to have found definite bias but enough to give me concern to go to recruitment consultants and government departments to say, "Here are the danger areas and here are the things you have to satisfy in order that everyone is treated equally". Then I had meetings with the independent assessors who sit on all the panels to say, "This is what he looked for and this is how you do it".

Q54 David Heyes: Is that any more than an exaltation to them to be careful? What controls are in place to ensure that there is not that bias?

Baroness Fritchie: I think there are three controls. The first is the independent assessor who sits on the panel and who should be up to date with how things are done, what the rules and regulations and proper processes are, and can challenge the recruitment consultant and indeed can say, "I want to sit in if you are interviewing these long lists of people; I want to sit in on everyone so it is not just you and them, it is you and me - the independent assessor - and that person so I know you have treated them fairly and I will record that". Secondly, I audit government departments every year so roughly every three years a government department will be audited or I will do a specialist audit - a themed audit - across all government departments where I go and look at just those kinds of things. Thirdly, through the complaints system where someone complains and I look very carefully at these things. I am a small office with a small number of people and I think we punch above our weight; we have some very good people. I know the system must be a fair and proper one but the process is not the most important thing; the most important thing is that we have a system that enables us to get good people who do a good job. That is the purpose of it. Therefore I take things up regularly with permanent secretaries; I write and tell them what I am worried about, these are the things that you cannot do, these are the things you have to look at. I send them audits of their departments so that they know and then I follow up to say what have you done about it. I do a fair bit, as much as I think I am able.

Q55 Chairman: Before we end, can we go back to Jamie Oliver. If I am a busy person, if I am doing loads of things to earn a living and I get a call from a minister who says, "Look, I really would like you to find some time and come and do a bit of public service by heading up this body" you might just think about it. If you get a call which says, "Look, I'd like you to send an application form in; could you get your CV together, could you do all this, could you get it into this committee, then there will be an independent assessor come and look at it. You may not come out top of the list so you may not actually get the job in the end" you are going to say "No, I'm going to get on with my life". Is that not right?

Baroness Fritchie: Yes.

Q56 Chairman: Do you not think that the issue of proportionality kicks in here? When you say that you agree with the recommendation that says that a minister can choose but only from a person that has already been chosen, what kind of choice is that?

Baroness Fritchie: That would not be a choice. Going back to my answer to Mr Hopkins I was saying, "If you were having a new system, if you are saying you can choose but only one of these three". I will try to be brief because there is a lot in there; maybe we can have a conversation later about these kinds of things. First of all, Mr Oliver is not representative of the thousands and thousands of people who apply for public bodies. He is important but so are all these other people who want to have the opportunity to serve on a public body and therefore we have to have a system that takes account of occasional exceptions as well as the large number of people - the three or four thousand - who are appointed each year. We have to consider that as well. Therefore we have to have a system that is fair to all. I do know that there are important people who have busy lives and would find room in them, if asked by someone like a Minister. I mean if someone asked me to do something and I was busy I might think, "Well, how flattering and how important; that is recognition and maybe I can do it". I might think that. However, I think that on balance I would rather sacrifice a few very good people for the many very good people that now have an opportunity to come forward. Indeed, I would be saying about something like the appointment to someone on a body, "Do you want that person to do the tasks of the chair of the board or do you want that person to be a president, an ambassador, and here are the five things that play to your strengths and will you come and do this?" and I would get them to do that.

Q57 Chairman: I understand that. Why do we not just lay an obligation upon permanent secretaries to ensure that all appointments are conducted on the basis of merit?

Baroness Fritchie: Part of the Graham Committee's report, and I think previous suggestions from this Committee, have suggested that that should be done, that they should be accountable. You will know through our conversations here and in other places that I have interesting tussles with permanent secretaries in the system as it stands now, trying to get the system to work. Laying it on permanent secretaries is good for holding them accountable but not abandoning everything else or else how will we know that we have good governance until things go wrong?

Q58 Chairman: That may be the note to end on because it opens up all sorts of issues. In the limited time that we have, we have had quite a good run at some of these things. I know you will feel frustrated because we have just scratched away at the top of them, but it is has opened up the territory again and we are very grateful for that. We may want to talk to you further. Well some of us are going to see you afterwards. Thank you very much for a very enjoyable session and thank you very much for your tenure of office. We wish you well in the other place, as we say.

Baroness Fritchie: Thank you very much. Can I say two things very briefly? One is I will write to you before I go with where things were, where things are and the list of things that I think are important. Of singular importance is the independence of independent regulators.

Q59 Chairman: We would have wanted to ask about that; I am sorry that we have not.

Baroness Fritchie: I have a lot I would like to offer there. Secondly, at my very first meeting I remember coming in and saying, "Thank you very much for asking me, I've been looking forward to coming" because I had never been before one before. I think everyone thought I was immediately mad. However, I have found these challenging and supportive as well as stimulating and many of the things that have come out of these meetings have been put into practice as a result of our discussions. So thank you very much for giving me the time, the challenge and the support.

Chairman: That is very kind; thank you very much indeed.

Witness: Mr Ed Straw, PricewaterhouseCoopers, here speaking in a personal capacity, gave oral evidence.

Q60 Chairman: Let us move straight on to our second half where we are delighted to welcome Ed Straw who has come to help us with our inquiries. Ed Straw is versed in looking at organisations of all kinds and helping them to get better. We are particularly interested in what you have been saying about the Civil Service and for our purposes, just for the moment, we are particularly interested in what you have been saying about the relationship between the political side and the administrative side of government. I do not know whether you want to say something briefly at the beginning or whether you want to go straight into questions.

Mr Straw: I just have a couple of things I would like to say. I would like to emphasise that I am speaking in a personal capacity and not for or on behalf of PricewaterhouseCoopers; it leaves me freer to speak. Secondly I see this about power. I would like to give Parliament more power, independent scrutiny more power, ministers more power, delivery management and staff more power, and citizens more power. I would like to reduce the power of the central Civil Service. With power comes accountability. I have a very different mindset. Where I come from is about you being elected to get the job done, the job on behalf of citizens is about delivering good decisions, happiness and health, and that is my focus.

Q61 Chairman: Thank you for that. The reason why you are particularly interesting to us is that most people who come and talk to us want to come and worry about the politicisation of the Civil Service. You want to come and celebrate it in a way and advocate it. Can you tell us why you want to do that?

Mr Straw: If you look at the way organisations work there needs to be first of all accountability, whoever that might be, and proper and strong accountability. Secondly, if you are appointed to do a job you need control over your resources that you need to do that job. All organisational theory says that. If I were the chief executive of Unilever and I arrived and was told that I might just about be allowed to employ one or two advisers, and I consequently get sniped at over those, but the rest of the organisation I have no control over the recruitment, appraisal, reward, promotion, performance management or anything else, I would not take the job. It would simply be impossible to do. In many respects those are the circumstances that we put politicians into, but politicians are held to account by the electorate to deliver. My second point is that if you look around the world as organisations change and start to under perform then there is a need to make some radical shifts. Marks & Spencer would be a very good example where for years and years and years its business model worked very well, they recruited graduates, they worked the business model and away they went. The market changed, the environment changed and there was a need for a very different approach. It is interesting to note in Finland that they used to have our sort of system. They found that it was not working - it was not delivering public service improvement and change - and at that point, termed politicisation, the top tiers were appointed by ministers because it meant that one could get hold of the organisation and produce the radical change that is needed. One other example, perhaps, is in the US (I was told this story by someone who termed himself a careerist civil servant) where they had 200 federal payroll systems. They reduced it to 12; they are now reducing it to four. I asked who drove that and he said the politicians, of course; the careerists are never going to drive that sort of change. I am the same. I sit in an organisation. I am happy with the status quo and the status quo in the Civil Service by and large is very good and I am not going to vote to change it.

Q62 Chairman: We have a theory which says that people come in to run the machine for a while and then we have a machine there waiting to be run. They say, "Tell us which direction you would like to steer it and we will steer it in that direction". That model has been our traditional one. I am not entirely sure what you are saying is wrong with it.

Mr Straw: For me, if I look at public services I look at the rate of change of public services, I look at the enormous amount of waste and inefficiency; demonstrably it is broken. This is not working. So you feel heat I think; I am one of those people, the assisters and the specialists, observing this. It is not working. If I compare other organisations that I work with to this one I conclude that it is not working.

Q63 Chairman: Of all the survey evidence we have of people's beliefs in and trust in figures of various kinds, civil servants do rather well; politicians do miserably.

Mr Straw: All sorts of people do miserably and quality of public service is regarded as very variable, but nowhere near the levels that it should be. There is, I think, trust in civil servants. I do not see the confidence that there should be in their service delivery. You just have to look at the performance of some of these organisations. I want to make a distinction here if I may: this is not about the civil servants who are, in my experience, as good, bad, indifferent as in any other organisation. I have worked with a lot of them; they are really good people. It is about the organisation of the Civil Service.

Q64 Chairman: Your remedy is that we should enable the politicians to import who they want into the upper echelons of government.

Mr Straw: I have two responses to that, one is that we seem to regard the organisation of the Civil Service as necessarily independent as the judiciary. Why? It does not happen in any other country that I am aware of. Secondly, who owns the Civil Service? Who is it actually accountable to? I have never really had the answer to that. Thirdly, how does the accountability and governance work? I hate the word politicisation because actually the Monetary Policy Committee - which I use as an example - is rampant de-politicisation in many respects in order to get the job done. Using people like Lord Carter to get the job done is not termed politicisation but could be termed politicisation for example in relation to the Legal Aid Review and National Offender Management Services. We have to get clear lines of accountability. I do not see anything wrong with the model in New York which says, "We are citizens, we elect a mayor, he appoints a police chief who does what the mayor wants. He delivers performance on the ground, those performances are reported directly to the citizens and then we have an election." That does not seem to me so difficult.

Q65 Mr Burrowes: When we had the seminar I particularly remember you alluding to local authority examples as supporting your approach to active involvement of essentially the leaders, chief executives and the senior management in councils who are very much signed up to the political leaders agenda, those ones that show success. I was wondering if you could just draw that out a bit further.

Mr Straw: Where there is an elected mayor model?

Q66 Mr Burrowes: Do you think that the local authority model is a better approach in relation to a much more active involvement of politicians in appointments and the signing up to their agenda?

Mr Straw: Yes, talking to many local authorities and many councils there is often very little power for the elected people and the unelected power dominates in those circumstances. Sorry, that is not democracy so far as I am concerned, it is not accountability. I have no difficulty whatsoever in there being an executive mayor, there being a close relationship then with the chief executive which there needs to be to get the job done, in order for services to be delivered that the citizens want and for those two to run that organisation and get it done. It is very simple for me and I do not know why we get so gummed up with power in the wrong places.

Q67 Mr Burrowes: I have been a councillor for eleven years in Enfield and have seen changes of administration when the chief executives and senior management changed at the same time as the political leadership. There seems to be much more focus on delivery and there have been results.

Mr Straw: It is obvious, is it not?

Q68 Mr Burrowes: You seem to be taking it a stage further in relation to challenging the whole concept of the Civil Service to the point almost of abolishing a lot of its original principles. Is it not more the case of accountability rather than simply seeking to take the rug out of the whole of the traditional aspects of the Civil Service?

Mr Straw: I think in many respects you are right in the sense that there is clear accountability, clear measures of performance, clear stimuli to improve, real consequences for individuals and organisations for success and failure, so good governance as well. Then actually after that it is just applying best organisational practice, and best organisational practice will vary. I am pleased to see that the Civil Service is taking up one of my other proposals which is the professionalisation and specialisation of staff and that is absolutely crucial to getting the job done. I think it is improving but at what point do a hundred per cent of people employed in the Civil Service have the qualifications, training and experience to do the job? If you ask that question that way round then you get a lot of blank looks because in so many areas and departments it will be less than 20 per cent.

Q69 Mr Liddell-Grainger: We went to the Civil Service College last summer and I was impressed. It has gone from being a Civil Service College to a management based profit centre. Do you approve of that and the way they operate?

Mr Straw: For me this is about learning and there are all sorts of specialised organisations around the world from which I and many others have learned. If you want to change a culture, go and get your learning from outside. My concern is not so much how it works; my concern is that this is a captured training organisation which, no matter how hard it tries, is going to reinforce the status quo of the existing culture. Personally I would abolish it.

Q70 Mr Liddell-Grainger: That is precisely what I wanted to find out. You talk about the way the Civil Service operates; would you privatise major parts of the Civil Service?

Mr Straw: The contestability point, the being able to make a change point, I think is very important. For example, Sport England was not performing well, DCMS sacked the board and the chief executive appointed a new chair, new board, new chief executive, saved twelve million; new strategy, new organisation working. There is a crucial point there in relation to agencies and any delivery organisations - of which there are many - that at that level you have to be able to change the board and the management. You might want to call that politicisation; I call that governance and accountability. The National Offender Management Service - if it ever comes into being - is a very good example of providing contestability for the punishment, rehabilitation and reduction of re-offending by offenders by taking away the monopoly provision of prisons and probation. I think there are all sorts of ways of achieving it and they are vital.

Q71 Mr Liddell-Grainger: Do you think there should be an agenda for change on streamlining the Civil Service and local government learning engines? What you are advocating is that they should be pushed into learning. If that is not achievable do you bring outside influences in to bear in the hardest possible manner saying "You are not up to it. We know you are not up to it; we're going to take over your functions actually". Are you saying that it should be wholesale?

Mr Straw: There are intervention regimes at present.

Q72 Mr Liddell-Grainger: I am talking about harder interventions.

Mr Straw: I would like to get onto it actually. I have not studied local government in the way in which I studied central government and whether it happens or not I do not know. I would like to think that maybe I will get round to writing another paper which is about the stuff of local government and how that can be reformed and developed. As a generality in relation to what you are saying and those principles of governance and accountability, they have to be right but I have not got there yet on local government.

Q73 Mr Liddell-Grainger: If local government mirrors national government - which it does to an extent, although it is a much more simplistic form - where there are major failures, we do not always know the major failings in departments because they cover them up, keep them quiet or people are moved. That is not the same as local authorities where you are much more accountable, therefore my question is, can we take that basis through to a government department?

Mr Straw: You are absolutely right. The antidote to corruption, cronyism and all the rest of it is transparency. I believe firmly in regulation and ethics and all the rest of it. I and my organisation are very much subject to those, but the real way in which all of those issues are controlled is transparency, the transparency of decision making. Voting on the Monetary Policy Committee is a classic example of the way in which you can achieve real accountability and prevent corruption without these superstructures.

Q74 Mr Liddell-Grainger: Gus O'Donnell came to see us and he is certainly different from any cabinet secretary we have had before. He is not an automatic Oxford man and he comes over slightly differently. Is he a breath of fresh air or is he becoming native so quickly that you will actually just call him O'Donnell?

Mr Straw: I have met him recently. He says that he appreciates and has picked up some thoughts from my paper. I think he is certainly different in style. As to achievements, we shall see. Could I emphasise the point there which I made earlier on: all history says that if this system is going to change it will be Parliament that changes it. It will be the politicians picking all this up and running with it. It will be Parliament asserting, quite rightly on behalf of the citizens, its power and authority and not just doing it occasionally once a late afternoon, but doing it on a consistent basis because there is a real sense of responsibility. I hope that Gus makes great changes and improvements. History says it will be for you to do that.

Q75 Julia Goldsworthy: Clearly the decisions that the Monetary Policy Committee makes are transparent but if the Chancellor is responsible for appointing who he likes with no clear system of short listing, no guaranteed mayor, no criteria for reappointment and basically there have been some people who have been given positions on the basis of informal telephone conversations with officials in the Treasury, where is the accountability back to the Chancellor for making those appointments?

Mr Straw: I am a citizen; I want a decent economy. As I understand it that means stable inflation and that means stability in interest rates setting. I do not care whether he selects a gorilla, an elephant or his mate next door if that organisation delivers that and he is accountable to me for that delivery. Interestingly, the accountability comes because it has a very clear role to optimise interest rates and then a very clear performance measure: inflation. If only every other part of public service had that clear role and objective and that clear performance measure. Then we all measure the Chancellor on the delivery of that and there is transparency - as I said earlier on - with decision making and it is a learning organisation because those specialists who come to those jobs go back to their peers, their dinner parties, their academic groups and people in corporates, and they are discussing like mad as to why he did that, why he did the other and so on. For me whether the Chancellor appoints his mate or not is not the issue. If I make one other point, anyone who has been in significant office wants and has to have people around him to do that office, people they know and can work with and trust and they know they are going to deliver. Often that does not mean going through some administrative recruitment process; it means knowing people and trusting them. I come back to the Lord Carter example. He has done some brilliant work on the National Offender Management Service; it was his report - not anyone else's - that will hopefully set that up. He is doing work now on Legal Aid because the Legal Aid budget has gone up to 1.2 billion. None of the internal processes, the apolitical processes, the processes of appointment regulated by Nolan and God knows who else have delivered on that. He, a political appointment, was brought in to do that and he is personally known to those people.

Q76 Julia Goldsworthy: If interest rates start rising and inflation starts going up as well Gordon Brown will say, "That is an independent organisation so that is not my fault; we can't be blamed for that.". Richard Lambert was appointed and is not the heavyweight economist that others are. Who is accountable if it is an elephant who cannot do the job?

Mr Straw: I would say that Gordon Brown is accountable. Interestingly he gave away power to get more power.

Q77 Julia Goldsworthy: He has not said to the Bank of England, "You can appoint who you think".

Mr Straw: Absolutely and in his job I certainly would not, given the history of performance on interest rates. We need a bit of institutional memory here about how we screwed it up in the past. Gordon Brown is the Chancellor. So far as I am concerned as an elector he is accountable; he is also accountable to you. I would like to see him more accountable to you; I would like to see independently established figures for borrowing and spending and all those things which are protected in the Office of National Statistics or whether they may be. I would like to see much greater scrutiny by Parliament of ministers et cetera. But this is as good as it gets at present and I think there is a lot to learn from that fine work.

Q78 Chairman: When you were sitting there listening to Dame Rennie just now you must have thought, "This is madness". You must think ministers should appoint who they want to do what they want.

Mr Straw: My agenda is, as I said, getting things done. You can get off on the hook of "we have to prevent the tiniest piece of cronyism, we have to open up everything to everyone, we have to limit all corruption". Meantime there is massive waste and inefficiency going on which actually I regard as criminal as corruption. It is the way you set up that regulation.

Q79 Chairman: Would you accept a certain amount of cronyism in exchange for efficiency gains.

Mr Straw: I do not call it cronyism; I call it - as Unilever would call it, as indeed think tanks would call it, and I suggest you in your offices call it - appointing people to get the job done.

Q80 Grant Shapps: Still on the same line, you present a real quandary - certainly to me and I imagine to others here - which is, I hate the idea of the politicisation of the Civil Service as an abstract notion. When we said we were going to discuss it, Alastair Campbell said it was a real problem, civil servants or paid political appointees telling the Civil Service what to do and the rest of it. On the other hand I very passionately believe that the power of politicians and Parliamentarians should be at the heart of everything we do because we are the only ones who are truly accountable. I have started, I suppose, to move in a way towards your direction which is to think that bodies like the Commissioner for Public Appointments are complete nonsense (but having said that I now have go and visit her so she can prove otherwise). Essentially that is your line, is it not?

Mr Straw: The whole regulation of politicians and ministers needs sorting. That includes that bit of regulation and of ministers that resides with the Civil Service. There is huge role confusion. You cannot both regulate someone and report to them and be accountable to them for delivery; it does not work. You have to take that out and clean up regulation. Regulation includes as much about disclosure and transparency as it does about having bodies and people doing it. That is absolutely vital. If you could sort that I would be very pleased.

Q81 Grant Shapps: So scrap bodies like ...

Mr Straw: Stand back, take a look at their role, balance that role against other things. At the minute we have the role of regulation and anti-cronyism up here and waste and delivery and efficiency down here. Balance them and then design really effective regulatory mechanisms which work. I am thinking about recent cases as well as those in the long distant past that really work. I, in my organisation, am on the end of some pretty ferocious regulation, codes of ethics, standards of behaviour, disclosure and goodness knows what. We do them because we know it is necessary, but it is a reasonably coherent system and we know why we are doing it.

Q82 Grant Shapps: I remember when you were last here somebody pointed out that your organisation was being sued for millions of pounds and a number of us left afterwards to say, "My goodness, if only government was actually exposed to the same level of scrutiny then government would be sued presumably for billions every day". Just to take the exact example of the MPC which has been raised several times, it is politically appointed - one hundred per cent - you say it works because it is transparent, because they publish their minutes, because it is open to a lot press and public scrutiny. I want to put to you that the reason the MPC actually works is actually a minority example because it is quite sexy, it is quite interesting, people are prepared to publish newspaper articles about what the MPC is doing, thinking and saying. Most of these other bodies, if they were done in the same way, would not get an inch of copy anywhere in the daily newspapers; they are just not that interesting so those are the ones that end up needing to be administered, and what have you, by bodies.

Mr Straw: Horses for courses. I agree with you entirely and I am not saying organise everything round the MPC. I have argued in my paper for project teams; I argued in relation to the comment here about the accountability for agencies. Things are different. Indeed, when people were jumping up and down about what had happened over Iraq and the dodgy dossier, I made the point that the organisational arrangements for scrutiny of decisions going to war are very different from the organisational arrangements that you need for tax collection. That point is writ large across the organisation. The MPC I think works: clear role, clear performance measures; it is independent of both government and Civil Service in its decision making. Specialists are appointed for expertise and reputation; transparent deliberations and decisions.

Q83 Grant Shapps: Would you accept the reason it works is because of the immense press and therefore public scrutiny of the MPC which just would not exist elsewhere?

Mr Straw: You can create that level of transparency and accountability in all sorts of different ways. For example, in the States you can go onto the website and you can look at the crime figures in your borough and you can compare them against the crime figures on average for the city for burglary and so on and so forth. If I were in Enfield and I had that level of information and burglary was going up more than it is in neighbouring boroughs I am suddenly creating a lot of local press interest and I am suddenly creating a lot of discussions.

Q84 Grant Shapps: It is a whole other area but it has not really worked in health, has it? I mean the publishing of league tables of hospitals has not really helped.

Mr Straw: Then where is the accountability chain in that? How do I hold my local hospital to account? Well, I elect a government which produces ministers; I do that once every four years. There is a whole chain of appointing trusts and boards and goodness knows what who appoint chief executives who appoint doctors who deliver services. What if there were elections every four years for the chief executive of the hospital? I then have a direct link between the citizens and the users and that chief executive. The problem there is that there are no real personal organisational consequences for success or failure, than those being measured by the citizens and customers.

Q85 Chairman: They could lose their job.

Mr Straw: They could lose their job at a ferocious rate which I think is a rate that is far too frequent. What I am drawing attention to is the whole accountability in government's framework is just gummed down.

Q86 Chairman: You have just given us examples of Lord Carter and the whole point about those examples was that there was no accountability; you simply put your person in and tell them to get on with it. Now you are worried about accountability chains in the Health Service.

Mr Straw: I think if I am a minister I have a problem, it is called Legal Aid. I appoint this person to do a review and come up with answers. That is a very tight and close relationship and accountability. If I go right up through this chain and then right down to your local hospital the accountability chain is just too fragmented and too disperse.

Q87 Kelvin Hopkins: The whole flavour of what you have been saying suggests that we have come to the end of politics and that government is now just technocratic.

Mr Straw: I think in a sense that politics has changed. It was where you were mediating, if you like, between classes and redistribution of income and now it is much more about the quality of public services that are delivered. I think that is absolutely right and I think therefore the pressures on you are very different and the demands from the public are very different. That means that the pressure is on you to be able to understand how you get good public service delivery. There are some out and out political decisions where you can say that there is a genuine choice between this and this. I think there is quite a move from representative democracy to decision specific democracy where people want to be involved in decisions which affect their lives, be it a local flood defence scheme or what is to be done with the local forest. The public deliberative engagement processes which are now emerging have meant that there is, to a small extent that shift to decision specific democracy. I think things are changing.

Q88 Kelvin Hopkins: Over the last 30 years we have seen the top one per cent of the population double the proportion of the gross national income they receive, from six per cent to twelve per cent, and at the same time seen poverty increase. Someone like me would say, "I think that is disgraceful, I think it is unacceptable. We should raise taxes on the mega rich and give a lot more money to the poor.". That is politics, it is not technocracy.

Mr Straw: Absoltuely, and that is your decision and what you are elected for and I respect it totally.

Q89 Kelvin Hopkins: Let us take the MPC for example. If you raise interest rates this inevitably raises unemployment and forces house prices down; my constituents become unemployed and they start to lose their homes. Then the MPC becomes very political. It is not just a technocratic job, it is political.

Mr Straw: At that stage it is interesting because I would respond possibly politically that a stable economy over a long period does far more for the health and wealth of everyone and therefore having that stability is in the interests of everyone. I would also go further and say that having extremes of poverty is in the interests of no-one and it is actually a society issue. In a way I almost see that as an apolitical issue because I think there is a broad consensus in the country that says we should not have that poverty. What are the solutions that we can find both in economic terms but particularly also in social terms, in education terms, in parenting terms to that? That does not have to be a political decision.

Q90 Kelvin Hopkins: On your point which is about the Civil Service, you say there is no other Civil Service like it in the world but the state in France, for example, does that not have a very strong core Civil Service? L'Etat is something very big in France and much stronger even than our Civil Service.

Mr Straw: Yes and no. No-one that I am aware of holds the independence of the Civil Service on the same state as the independence of the judiciary, which is what we have here in fact. It is completely beyond me why the status of the Civil Service has been so elevated.

Q91 Kelvin Hopkins: Do we not have a situation in Britain now where power is so centralised in the hands of the Prime Minister that we have lost the more pluralistic forces in society, one of which was the Civil Service?

Mr Straw: People have said to me, "Look, we cannot go down the road that you are suggesting because the Civil Service is an essential counter-weight to the power of Number 10". I am sure you understand that better than I do. That is why I say that we need a re-distribution of power which is a re-distribution to Parliament, to independent scrutiny, to ministers, to delivery organisations (management and staff) and to the citizens. Then you get the power in the right place. The problem with the power distribution at present is that it produces this gummed up system which just cannot deliver in the way it should.

Q92 Kelvin Hopkins: When you were talking about the distribution of power I started to become slightly optimistic, but then you missed out the key re-distribution of power from the centre of government, from Downing Street and the Prime Minister's office.

Mr Straw: I should have emphasised that too, yes.

Q93 Kelvin Hopkins: I hope that politics is going to continue and we will not just see government as being like running Marks & Spencer - the example you used.

Mr Straw: It is not and I only draw from various places in order to inform how I think government should work.

Q94 Chairman: Do you think we should have a prime minister's department, a strong corporate centre in government?

Mr Straw: It is a dichotomy in the sense of: get strong scrutiny, get strong Parliament, get strong statistics, performance measures, accountability governance, and if you want - and this is what happens in Finland - joined up service delivery, then you need a strong centre that is strong in a different way, that does strategy, planning, budgeting, and you need a ministry of finance and a prime minister's department together, and I am not even sure you need departments thereafter. You have to think about the role of secretaries of state and then you need major delivery organisations.

Q95 Chairman: So all the guff that we go on about endlessly about independence, impartiality, committees like this, worrying about whether we should have a Civil Service Bill that enshrines these principles, you think this is nonsense, do you not?

Mr Straw: No. I would very much like you to reconstruct the way in which government works. I would like Parliament to assert itself and I think it would certainly take some votes and probably take an Act. I would very much like you to base it on my proposals.

Q96 Chairman: So an incoming government would involve a mass cull of the Civil Service. It would bring your own people in and the old lot would go out. That would give this sense of direction and purpose to government.

Mr Straw: There are many other things that need to be done in the way in which I have outlined and there is also a transition to be handled.

Q97 Chairman: At the moment we are going to tool up government to make it better, to do the thing it is not very good at and we know all about this and you talk about professional skills for government and all that. That is your argument which says that this is how we work our system, we have this machine which gets driven by different political masters periodically and we need to make this machine work better than we do now. You are saying that that model actually, although it may be desirable to do those things, is never really going to do the essentials. To get the essentials done you have to change the balance between the political bit and the administrative bit.

Mr Straw: Absolutely. And you have to change the machine that exists at present.

Chairman: We are going to have to stop there. Thank you again for a very stimulating session. We have been interested in what you have been writing so thank you for coming in to talk to us about it, not least because it does challenge many of the things other people come to tell us about.

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[1] Evxxx

[2] Note by witness: The figures requested are published in the Tenth Annual Report of the Office of the Commissioner of Public Appointments. The relevant figures are 'Declared Political Activity', p72, and 'Appointments and re-appointments in 2004-2005 by declared political activity', p80. Available at www.ocpa.gov.uk/