House of Commons - Public Administration

Select Committee on Public Administration Seventh Report

2 Transfers of functions

4. There is already an extensive literature on the nature and purpose of machinery of government changes. We need to be clear what is meant by the term "machinery of government changes". Professor Christopher Pollitt's definition—"the allocation and reallocation of functions between departments"[5]—is in wide circulation, and appears to correspond with usage in Whitehall. This definition excludes transfers within departments, including to executive agencies—such as the recent movement of border control from the Home Office's Immigration and Nationality Directorate to the new Border and Immigration Agency. It also excludes the transfer of functions to or from any statutory public body.

5. Even within this seemingly narrow definition of machinery of government changes, however, changes can be of distinctly different magnitude. The recent transfer of the National Offender Management Service from the Home Office to the new Ministry of Justice is clearly a significant change to the way our public services are configured; it involves the transfer of many thousands of staff and two important public bodies in the prison and probation services. In contrast, the recent transfer of the private offices of the Leaders and Chief Whips of the two Houses of Parliament from the Privy Council Office to the Cabinet Office from April 2007 was far less radical. Different processes might be appropriate for different orders of machinery of government change; and we must bear in mind the magnitude of different proposed changes when we consider why changes are made and what their effects might be.

Why changes are made

6. The structure of British government is still shaped by the recommendations of the Haldane Report of 1918.[6] That seminal report set out a basic principle of "defining the field of activity in the case of each Department according to the particular service which it renders to the community as a whole."[7] It advocated separate ministries for Health, Education, Finance, Foreign Affairs and Defence—all of which essentially remain. No fundamental reshaping has since taken place, although we have seen short-lived experiments, such as Churchill's "overlord ministers" of the 1950s or the "super-ministries" of the Heath era in the 1970s.

7. Despite the continuity of the basic structure, there has been no shortage of individual changes. These may be simply to increase administrative efficiency; but earlier studies such as that of Professor Christopher Pollitt have found the reasons for such change were more varied than this:[8]

Some—about half, according to Pollitt—had indeed been undertaken for reasons of administrative efficiency, normally to give greater weight to a particular policy. The recent small scale reorganisation to create an Office of the Third Sector in the Cabinet Office is an example: it brought together the Active Communities Directorate of the Home Office with the Social Enterprise Unit, which was housed in the Department for Trade and Industry. This reflects the importance the Government currently accords to working with the Third Sector, and was matched with the designation of a Minister for the Third Sector.
Just under a third of the cases studied by Pollitt were assessed as being driven by issues of personal chemistry; balancing the Cabinet, matching responsibilities to personalities and their capabilities, or similar reasons. Professor Hood cited the example of the first Harold Wilson government, when, on Mr Wilson's arrival in Downing Street in 1964, the Treasury was split in two, and the ministerial roles were given to the two unsuccessful leadership candidates from the previous year, James Callaghan and George Brown. While there were both administrative and political reasons for this split, it is difficult to balance the weight accorded to the Prime Minister's different motivations.[9]
Very few of the changes in Pollitt's study came about as a result of government taking on completely new functions. He believed that changes were more often made to give an impression of dynamism and modernisation.

8. Obviously this analysis is a matter of interpretation; Government would never publicly explain that it was changing the machinery of government to placate an individual or to give an impression of dynamism. Clearly, though, some of the reasons for amending the machinery of government may be less valid than others. Lord Butler had clear views that it was not usually advisable to reshape government for political reasons:

9. Lord Butler also made the observation that a large proportion of machinery of government changes take place in the first days of a new government. When a new Prime Minister has to make appointments, the structure of the departments has to be decided first so that it is clear what ministerial positions there are to be filled. Civil servants do have discussions with the political parties in advance of the formation of a government, but in the lead-up to a General Election, for example, Lord Butler considered that the Leader of the Opposition would be unlikely to be focused on the machinery of government. On arrival in Downing Street, decisions would then have to be made very quickly.[11]

10. Professor Hood told us that there were two main schools of thought in the academic field.[12] One school held the view that government continually needs to adapt to political circumstances, internal and external, and that changes to the machinery were merely administrative reorganisations—so essentially (by implication) an internal government function.[13] The other school of thought, to which he himself was inclined to subscribe, held that the process of consultation and decision on proposed changes should be widened, as a useful discipline on government.[14] This is where the magnitude of change is relevant. We do not presume to define what constitutes a "significant" change to the machinery of government. One measure might be the number of staff transferred; another might be whether the change requires a Department to change its name. In practice, it is usually obvious whether a change is significant. Whatever the definition, though, different orders of change may warrant different processes—and in particular, different levels of scrutiny.

11. We do not have a view on whether some reasons for changing the machinery of government are by their very nature more legitimate than others. We do believe, however, that when significant changes are made, Parliament and the electorate have a right to know the Prime Minister's reasoning, and judge for themselves the validity of those reasons. This is particularly important when there is a risk, as after a general election, that major changes will be rushed through without full consideration.

The law of unintended consequences

12. As Sir Robin Mountfield told us, machinery of government changes can matter. Ill-considered changes are potentially damaging:

I should also like to draw attention to the damaging effect of frequent changes of Departmental boundaries … cutting up and merging different parts of different Departments is enormously more disruptive than Prime Ministers (without direct personal experience of such matters) generally envisage.[

There is, of course, a difference here between small administrative changes and significant reorganisations. We doubt, for example, that the transfer of the Privy Council Secretariat from the Privy Council Office to the DCA has been enormously disruptive. Nonetheless, it is clear that structural changes can have negative impacts, and in ways which are not always obvious.

13. One danger in reorganisation is loss of expertise. Rt Hon Nick Raynsford MP, a former housing and local government minister, considered that it takes a considerable amount of time for a knowledge base to be built up:

Mr Raynsford spoke from considerable experience of changes in government machinery; while his personal brief changed little over his eight years in government, its location changed several times between Departments. Between 1997 and 2001 he worked in Environment, Transport and the Regions; for the next year, he was in Transport, Local Government and the Regions; and from 2002 he worked for the Office of the Deputy Prime Minister. His brief now sits within Communities and Local Government. These frequent reorganisations brought with them turnover of staff and changes of strategic priorities, which in his view damaged both institutional memory and understanding of policy.[17]

14. Another former minister, Rt Hon Baroness Shephard of Northwold, made the point that departments have very different skill sets based on their existing functions. Only some departments were used to running services directly, as she found out when she presided over the merger of the Departments of Education and Employment in 1995. Officials in the Department of Employment had experience of running job centres, for example, whereas:

15. Lord Butler witnessed a large number of machinery of government changes over his 37 years in the Civil Service. With hindsight, his considered view was that it was often a cyclical process; functions were brought together until a department's responsibilities were too wide, and at that point separated again. He was not opposed to Prime Ministers being able to make changes, but he concluded:

When we asked how long it took for a new department to settle down and be working at full effectiveness, the former Cabinet Secretary told us "it depends on the size of the change, but my general answer would be longer than you think"[20]; and when asked about the costs of such changes, he told us "again, the answer is more than you think. They are very expensive."[21]

16. The costs of machinery of government changes are not clearly identified. We do know, however, that these costs usually have to be met from within a department's existing settlements. Certainly the intention in the creation of the Ministry of Justice was that costs would be met from within pre-allotted budgets;[22] Sir Gus O'Donnell was clear that the Treasury would rarely look kindly on a reserve bid for a structural change.[23] Nor are the costs purely financial. The delegation of pay and grading to different departments brings particular difficulties, as any transfer of functions leads to complex rearrangements of departmental pay policies; it can be years before staff previously from different departments are fully integrated onto the same pay and grading structures. In the meantime, there are bound to be winners and losers, and resentment has boiled over in the past into industrial action.

17. None of this is to say that the machinery of government should never be changed. As the nature of society changes, so too do the challenges faced by Government; whether the pressing need of the day is to combat mass unemployment or international terrorism, it is absolutely appropriate for the Prime Minister to reallocate his resources to focus on the job in hand. Geoff Mulgan, the former Director of the Prime Minister's Strategy Unit, is of the view that the Departmental model itself might need to be reconsidered; he told us that departmental turf fighting could mean "more energy going into stopping other departments doing things than … into pursuing the national interest".[24] We note the efforts in Finland to restructure government in such a way as to dispel narrow departmentalism; perhaps it is time for a similar radical restructuring of the British government. Dr Mulgan has suggested that we may be due a new Haldane inquiry; we put this suggestion to Lord Butler and Professor Hood, who both assented.[25] We are approaching the centenary of the Haldane Report. It is time for a fresh look at the structure of government. It may be that the current departmental structure remains appropriate, but the frequent changes over the last decade suggest that the time is ripe for a new review.

18. Our primary short-term concern, however, is to encourage Government to appreciate the real costs of such changes, and to think long and hard about them. We asked the Minister for the Cabinet Office, Rt Hon Hilary Armstrong MP, if she believed machinery of government changes could have a negative impact on ministerial and civil service performance. Her reply was:

Once again, no allowance is being made here for the different magnitude of changes Governments can make.

19. Not all machinery of government changes are just "minor things". Significant changes take time to bed in, and services may suffer in the meantime. The costs are not just financial (although these can be significant); governments stand to lose expertise, institutional memory and strategic focus. The benefits may well justify these costs; but we recommend that any proposals include full and honest consideration of likely costs before such changes are made.

5 Pollitt, C., Manipulating the Machine: Changing the Pattern of Ministerial Departments 1960-83 (London, 1984). Back

6 Ministry of Reconstruction, Report of the Machinery of Government Committee, Cmd 9230, 1918 Back

7 As above, p 8 Back

8 Pollitt, C., Manipulating the Machine: Changing the Pattern of Ministerial Departments 1960-83 (London, 1984). Back

9 Q 23 Back

10 Q 21 Back

11 Q 2 Back

12 Q 4 Back

13 see for example Chester, D. N. & Willson, F. M. G., The Organization of British Central Government (London, 1968). Back

14 Pollitt, C., Manipulating the Machine: Changing the Pattern of Ministerial Departments 1960-83 (London, 1984). Back

15 Skills for Government, Ev 34 [not printed] Back

16 Oral evidence taken before the Public Administration Select Committee on 14 December 2006, Q 211 Back