House of Commons - Public Administration

Select Committee on Public Administration Ninth Report

4 IMPLEMENTING SKILLS INITIATIVES

101. A central difficulty in judging the merits of the Government's various skills initiatives is the varied extent to which those initiatives are put into practice. The PCS and FDA appear to agree that departments have widely varying interpretations of, and commitment to, Professional Skills for Government. The PCS also saw difficulties in career management raised by the delegation of recruitment, pay and HR to individual departments and agencies.[76]

102. On pay, Hugh Lanning told us that the PCS had argued for a long time that the delegation of pay to individual departments was leading to unjustifiable differences between departments—some of them running at 30 and 40 per cent. The same problem was evident to the PCS in the delegation of grading arrangements:

103. This criticism is of course very similar to that of the Fulton Report. It was Fulton's report which led to the creation of the unified grading system in the early 1970s. However, concern about an unduly bureaucratic and homogeneous Civil Service in the 1980s was manifested in the Ibbs Report of 1988, also known as the Next Steps report.[78] That report began the process, continuing to this day, of moving functions from the "core" Civil Service to semi-detached executive agencies. Those agencies have usually had control of their own pay and grading arrangements to give greater flexibility in meeting specific customer needs, and the logic of this has since led to individual departments also obtaining responsibility for setting their own pay and conditions of employment.

104. The unions' proposition is that varying pay levels and recruitment practices are an impediment to talented staff moving freely between different parts of the Civil Service. Although it is difficult to test this empirically, it is certainly plausible; it was certainly the belief of the House of Lords Committee on the Public Service, which in 1998 found "firm evidence" that devolution of responsibility for pay and conditions had contributed to a sense of disunity in the Civil Service.[79] Anecdotal evidence suggests that the "old money" terms such as EO or Grade 7 continue to be used informally all over the Civil Service. It seems wrong that inconsistent grading practices should stand in the way of movement between departments—especially when it is clear to us from our discussions with front-line civil servants that this opportunity is an important part of the Civil Service job offer.

105. The current system of delegating pay and grading arrangements to individual departments may have its merits, but it can also be a barrier to staff development. Care should be taken that such arrangements do not militate against the free movement of talented staff across the Civil Service to develop their skills.

SKILLS AND EFFICIENCY

106. There is another major factor affecting all of the Government's skills initiatives. A lot of the Government's positive messages about skills are being undermined by the relentless search for efficiencies. Although the picture is not universal, we have rarely heard ministers recently publicly praising civil servants or defending the value of the Civil Service; and when they do, it is drowned out by the level of noise about efficiency and headcount reduction. Few Civil Servants will have forgotten the apparent auction between the Government and the Opposition in the run-up to the last general election over who could cut the most jobs in the service. Such actions make it tough to convince anyone that there is a genuine commitment to increasing skills.

107. Recent experiences at HM Revenue and Customs (HMRC) are a case in point. The PCS is concerned that staff at HMRC are being systematically "de-skilled" in the name of efficiency, a concern we have heard voiced elsewhere in the service. When we asked Hugh Lanning how this tied in with skills programmes, he told us that "it does not at all actually".[80] He cited a presentation to the Government Skills Board from Paul Gray, the Chairman of HMRC, about Professional Skills for Government. Mr Lanning told us that he asked about the effects of the LEAN management process inside HMRC:

108. The fears of civil servants go beyond de-skilling, however. Sir Peter Gershon's Review of Public Sector Efficiency in July 2004 (commonly known as the Gershon Review) has set the tone for much of the period since.[82] The Gershon Review called for efficiency gains of over £20 billion across the public sector by 2007-08, and a gross reduction of over 84,000 posts in the Civil Service and military personnel in administrative and support roles. Since the publication of the review, departments have been set annual targets to achieve in terms of both total spending and headcount reduction.

109. As we heard from Prospect, "in reality, the pressure to cut posts will overwhelm the opportunity for positive engagement on skills issues".[83] HMRC staff did not react positively to an announcement in November 2006 that a further 12,500 posts would be cut, in addition to the reduction of 12,500 posts already in progress.[84] The result has been a national strike in which PCS tell us that 131,000 civil servants took part, and industrial action is continuing. Nor, despite the Cabinet Secretary's suggestions to the contrary, is concern over events at HMRC limited to just one of the Civil Service unions—as witnessed by the FDA's statement that:

We also heard fears from civil servants in Jobcentre Plus that their roles and their jobs might be out-sourced to the private or third sector against their wishes.

110. We do not doubt that there is substantial scope for achieving efficiencies in the Civil Service, as in any organisation; and it is clearly in the national interest that such efficiencies are achieved. However, we note the compelling evidence we have received that headcount cuts are not the way to go about realising efficiencies. Professor Colin Talbot told us that most OECD countries (including Britain) turned their back on headcount cuts in the 1980s because "it is an incredibly blunt and counter-productive instrument to use".[86] In short, cutting headcount does not necessarily help to achieve efficiency at all. It is at best a mechanism for cutting budget; but often administrative costs of departments will go up, because the jobs still have to be done, and end up outsourced at a higher cost than was originally paid.

111. Professor Talbot had completed a study of the administrative costs of departments in the 1990s. He and his colleagues found that the administrative budgets remained stable while headcount was going down. His explanation for that was that departments were achieving headcount cuts by outsourcing jobs. According to Professor Talbot, that was why people abandoned it as an instrument and moved on to other ideas:

112. There may well be substantial scope for efficiency savings in the Civil Service, but headcount cuts are a poor tool for achieving those savings. Setting numerical targets for departments is crude and counterproductive.

Monitoring and Enforcing Progress

113. If Professional Skills for Government is to achieve tangible results, it will need champions who are both able and willing to drive change across Whitehall. If the Capability Reviews are to make a real difference to the quality of Civil Service performance across the board, then somebody must take a lead on monitoring and, where necessary, enforcing progress.

THE ROLE OF THE CABINET OFFICE

114. As discussed at paragraph 16, it is the Civil Service Capability Group (CSCG) of the Cabinet Office which is primarily responsible for championing skills initiatives. The CSCG leads (along with Government Skills) on the Professional Skills for Government programme, and also on Civil Service training, recruitment and diversity policies. Unfortunately, there is little evidence that a recast Corporate Development Group has the capability to take on a stronger, more directive role. We have already noted the poverty of the Cabinet Office's targets on external recruitment and length of time in post (at paragraphs 84 and 97 respectively). But these are symptomatic of a wider lack of direction. None of the Cabinet Office's targets on improving leadership and skills appear to have been adequately thought through. It is not clear that, even if all of them were achieved, the Civil Service's capability would be significantly increased.

115. The targets on leadership, for example, are:

An expectation of a four-year norm for Senior Civil Service postings;

About half of SCS competitions to be open;

An increase in the proportion of Senior Civil Servants who have experience working outside the Service from the baseline of 40% in April 2004;

An increase in the proportion of the SCS working a flexible pattern (part time/job share).[88]

116. There do not seem to be any quantifiable targets at all on skills; as we have noted before, there was a target that 75% of the SCS should be demonstrating all six PSG "core skills" by September 2007, but this target is now being reviewed. We can only conclude that it was either proving impossible to measure or that the target was going to be substantially missed.

117. In particular, the starting point of a more professionalised Civil Service has to be a professional Human Resources function at the centre. We were struck by the evidence to that effect from the Chartered Institute of Personnel and Development, who have worked with the Cabinet Office in the past in looking at the challenges faced by HR functions in government. They told us that there is a shortage of HR professionals with the skills to fulfil key roles in departments. However, even where there were professionals in place, the credibility of the HR function depends on its business knowledge and developing the skills and behaviours to manage relationships. The HR function in the public sector needs to be significantly more engaged in the wider business of the organisation; if departments are to make best use of their people, HR needs to be at the heart of strategy and delivery.[89]

118. David Walker suggested that it was not compulsory, nor even commonplace, for departmental HR heads to be professionally qualified:

119. To its credit, the Cabinet Office has acknowledged this deficiency, along with many others identified in the department's unimpressive Capability Review. A number of changes are underway to address them, but perhaps the most interesting development is that the Corporate Development Group has been "totally relaunched" as the Civil Service Capability Group.[91] As of 19 January there were 23 Grade 7 jobs in the Group being advertised—a quite extraordinary number at a single grade, considering the total number of people working in the Group is being cut. We hope that this is designed to give the Civil Service the professional central HR function it needs.

120. We understand that the new Civil Service Capability Group will take on from the Delivery Unit the role of managing the Capability Reviews and ensuring that Permanent Secretaries are held to account for progress in their departments. It became increasingly obvious during our inquiry that the measures used by the Delivery Unit in analysing delivery did not mesh with the targets pursued by the Corporate Development Group in improving departments' skill sets. Capability and skills must be treated as closely related issues. If they are now to be the responsibility of a single unit, that at least represents some progress.

121. Meanwhile, a review has been announced in which Sir Suma Chakrabarti (the Permanent Secretary of the Department for International Development) "will examine where the Cabinet Office is best deployed in influencing, negotiating, co-ordinating and directing roles in respect of its management of the Civil Service and associated processes such as shared services".[92] This review is welcome, and indeed overdue; we hope that it will consider the proper balance between influencing and negotiating, which appears to have been the Cabinet Office approach in the past, and a more co-ordinating and directive approach.

122. Dramatic changes to the Cabinet Office are underway, not least the seemingly complete rebirth of its Corporate Development Group. We welcome this development. When compared to the efficiency programme, the Government's policies on skills and capability are lacking in cohesion and lacking in drive from the centre. Yet they are just as important. To rectify this imbalance, the Cabinet Office needs an effective replacement for the Corporate Development Group, with both the credibility to influence other departments and the power to direct.

123. Capability and skills are closely linked. The Government needs a co-ordinated approach to tackling both issues. If the responsibility within government for both now sits within the same Group, then that is a significant step in the right direction.

EXTERNAL MONITORING

124. Perhaps one reason why skills initiatives do not have enough central impetus is that there is a lack of external accountability for performance in these areas. We look at Cabinet Office performance against PSA targets, but these targets are poorly drawn. Progress against Gershon efficiency targets, on the other hand, is monitored closely by the National Audit Office (NAO), and has been the subject of oral evidence before, and reports by, the Public Accounts Committee.[93] It is not, however, the NAO's job to monitor Civil Service skills, or to investigate matters of poor performance in individual instances (unless there is a value for money dimension).

125. The prospect of external accountability should improve the quality of an organisation's performance. This has certainly been the experience in local government since the Audit Commission began to undertake Comprehensive Performance Assessments. We believe it would also be the case for the Civil Service. Our recent report into Politics and Administration concluded that civil servants could be considerably more accountable to Parliament without threatening the doctrine of ministerial responsibility.[94] However, Select Committees do not have the powers or resources to monitor the performance of departments in the same comprehensive way as the Audit Commission does with regard to local authorities, or the NAO with regard to departments' financial performance.

126. The former Cabinet Secretary, Lord Butler of Brockwell, told us that he believed there should be a body equivalent to the NAO looking at issues of non-financial performance in the Civil Service. He envisaged this body reporting to its own Select Committee, as the NAO does:

127. We see merit in Lord Butler's suggestion that there should be a National Performance Office, equivalent to the National Audit Office, that scrutinises Civil Service performance in detail on more than a financial basis. It is Parliament's job to hold the Executive to account; therefore the National Performance Office should have the same parliamentary status as the NAO.

128. We have already noted (at paragraph 23 above) that onlookers might have more faith in Departmental Capability Reviews if they were not managed by the Civil Service. If Comprehensive Performance Assessments can be managed outside of local government, we believe that Capability Reviews can be managed outside central government. A National Performance Office would be ideally placed to provide such a service. External management would give future reviews credibility and have less potential for conflict of interest, while the relationship with Parliament would ensure that findings were publicised and departments properly held to account.

129. It is intended that the Departmental Capability Reviews will be repeated after two years. We believe they should become a regular feature, and that future reviews should be carried out by the new National Performance Office. Standards of government will be increased both by external audit and greater parliamentary accountability. Such a body could also provide a regular performance report on government, in the spirit of the government's now discontinued annual reports.

76 Ev 72 Back

77 Q 102 Back

78 Prime Minister, Improving Management in Government: The Next Steps, February 1988 Back

79 House of Lords Select Committee on Public Service, First Report of Session 1997-98, The Public Service, HL 55, para 429 Back

80 Q 100 Back

81 Q 100 Back

82 Sir Peter Gershon, Releasing resources to the front line: Independent Review of Public Sector Efficiency, July 2004 Back

83 Ev 75 Back

84 see Helene Mulholland, "Civil servants may strike over job cuts", The Guardian, 22 November 2006 Back

85 https://www.fda.org.uk/ Back

86 Q 165 Back

87 Q 166 Back