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30 Oct 2008 : Column 316WH—continued

Something that concerns me is the rise of the public service industry, which becomes a practical problem in the mythology of government, and what happens to be the narrative of the moment. Of course, there has been privatisation and outsourcing for years. The Patent Office was urged to outsource, because that was what everyone else was doing, but there was a great need to in-source, because it was providing services for patent examiners, trademark examiners and various other middle men who acted as agents. The public would go to see them and they would get in touch with the Patent Office and the trade mark department, which would do all the work while they creamed off the profits. A powerful case was made to alter the Treasury rules so that the public could go directly to the Patent Office, thus cutting out the middle man and providing a quicker, more reliable and more efficient service. The problem was
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that the Treasury rules were against it, and the idea of in-sourcing was so strange and eccentric that it was difficult to get Ministers to take it seriously.

The trade union, Unison, has pointed out that a public service industry has been created, and significant sums of money have been spent on it, creating a sympathetic habitat for increased privatisation. That is the current state. That has helped to produce a climate in which there is little opposition in the main political parties to its growing role. It is the fashion of the day and is accepted. Lobbying organisations such as the CBI Public Services Strategy Board, the PPP Forum, the Business Services Association and the NHS Partners Network have been set up and have developed close relationships with the Government and the media. The industry also devotes considerable sums to sponsoring research that supports its role, through bodies such as the Serco Institute and the Aldridge Foundation, or through the direct funding of think tank activities. The whole mythology feeds on itself.

Contractors have recruited many former Ministers and civil servants as directors and advisers. In relation to this report and others, the Committee is concerned about that revolving door, which can be corrupting to the role and independence of civil servants. Many civil servants retire at a relatively early age—perhaps at 60, just as they approach the prime of life—and go on to have a long career elsewhere. Does it enter their heads, when they are doing their work and making independent decisions, that there might be something in it for them, such as a cushy retirement job?

Lord Wilson of Dinton has been mentioned. Sir Richard Wilson was the head of the home civil service and secretary to the Cabinet. As such, he had overall responsibility for seeing that the Prime Minister’s policies on public sector reform were carried out. Afterwards, he was appointed a director of Xansa, now part of the Steria group, which is one of the main providers of business process outsourcing services to the public sector.

I have a whole list of such examples. Sir Gerry Loughran was head of the Northern Ireland civil service from 2000 to 2002. After retiring he took on a number of private sector directorships, including Phoenix Natural Gas, which is owned by the Terra Firma private equity firm, and he soon became chairman upon joining the board. When he was a senior civil servant, Loughran chaired the Strategy 2010 project to sell and lease back the civil service property portfolio. After leaving the civil service, Loughran became a director and chairman of Partenaire, where he led the company’s unsuccessful bid to win the £2 billion workplace contract.

Lord Wilson’s successor as head of the home civil service was Lord Turnbull. His current directorships include British Land, which is active in the private finance initiative and public-private partnership market, and Prudential, which is also active in the market. The famous Sir Peter Gershon, who gave us a report of great value, has had an interesting portfolio since he left the service. He became a civil servant in 2000, as a founding chief executive of the Office of Government Commerce, and conducted a series of well-known reviews in the period up to 2004. Sir Peter is now the executive chairman at Vertex, one of the largest suppliers of business outsourcing services, and is the non-executive chairman of the General Healthcare Group, which is the largest private health care group in the UK and is
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owned by the private equity group, Apax Partners, and the South African health care company, Netcare. Sir Peter has also completed a review of ICT procurement for the Australian Government.

There are a great many such examples of people who have been at the top, such as our friend Chris Woodhead, whom we all know and love. Following his period as the chief inspector of schools, he set up the Cognita group of independent schools, using funds supplied by a private equity firm, Englefield Capital.

Mr. Gordon Prentice: Is my friend telling us that the Advisory Committee on Business Appointments is falling down on the job? What conclusions is he asking us to draw from this long list of former senior civil servants who are now active in the commercial world?

Paul Flynn: I shall come to that committee in a moment. We have interviewed the committee, and we know that it rarely meets and that its members may contact each other by letter. It is a bit of an old boy’s club, and one member was described as having an austere point of view for believing that limits should be placed on the jobs that civil servants and Ministers can take on.

Another person whom I would like to mention is Sir Steve Robson, who was one of the regular attendees at our Committee. One of his triumphs as a civil servant was overseeing the privatisation of British Rail. I was rather surprised, when I questioned him, that he did not seem to be aware of a splendid independent report by a Select Committee of this House, chaired by a Tory, that came to the unanimous conclusion that the privatisation and fragmentation of British Rail would be an unmitigated disaster. That turned out to be accurate in every respect. After privatising the railways, Sir Steve was the second permanent secretary at the Treasury until he retired in 2001. While he was a civil servant, he was seconded to 3i, so he was partly private then, with a foot in both camps. He also oversaw the Government’s policy on PPPs while serving the current Government at the Treasury. Since retiring, Sir Steve has been a director at Partnerships UK, JPMorgan Cazenove, Xstrata and the Royal Bank of Scotland. He is also a member of the chairman’s advisory panel at KPMG. That is a full life!

Kelvin Hopkins: I strongly agree with my hon. Friend’s comments about Sir Steve Robson. What are his feelings about Sir Steve Robson having said that there is no such thing as the public service ethos—in other words, that there is only the market and money?

Paul Flynn: Yes, Sir Steve Robson is one of the people who entered the civil service without any great respect for the ethos that we all like to praise. I am afraid that there are others with similar views. The civil service is a changed body with a different culture from the one that we long believed existed. Some people have been politicised in a certain way, very much along the agenda of the Thatcher Government—of moving towards privatisation, in the belief that that is right.

I remember when the executive agencies were first set up. That development had a great deal of support in many quarters. We do not really recognise that most civil servants now work for the next step agencies. At the Department for Environment, Food and Rural Affairs,
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more staff work for the Rural Payments Agency in Newcastle than directly for DEFRA in London. When those agencies were set up, they were so remote than when hon. Members asked questions about them, their questions appeared in Hansard, but their answers never appeared. Instead, they were sent to the individual Members. With the help of the Rowntree Trust, I set up a private enterprise project that printed all the answers every month in a booklet called “Open Lines”, because it was a denial of information programme. About a year later, the Government nationalised my private enterprise project, reversed the trend and started to publish the answers.

It has been suggested that there is something we could do about the appointments body, and I believe that there is. The appointments body is made up of the great and the good, and we have spoken to its members. There seems to be dissatisfaction among the members with the limits of their power. I suggest that the appointments body should have the power to impose limits and to say to people who are taking these high offices and jobs after their retirement that they should not be lobbying in certain ways or that they should not be active for a year or so; it put a certain limit—two years—on one former Minister to avoid problems.

What would perhaps be useful is if we could have a system whereby civil servants and perhaps Ministers too are banned from working in those areas that are related to the Departments in which they served. They should not be allowed to take retirement jobs in those areas. That would remove the temptation, and the possible accusation, that they are looking for cushy retirement jobs when they take their decisions as civil servants. I believe that we need a strengthening of the appointments body and that that would generally improve the quality of civil servants.

I would like to come back to the original point of the report. There is a powerful case for a civil service Bill, for the benefit of both civil servants themselves and the country, because we want to continue to have the wonderful service that has been supplied to us for a couple of hundred years at least by a civil service that is still in many ways the envy of the world.

3.31 pm

Mr. Gordon Prentice (Pendle) (Lab): It is a delight to follow my friend the Member for Newport, West (Paul Flynn). I would just like to pick up his closing point about the Advisory Committee on Business Appointments. We really need to shine a light into dark corners. When Ministers leave office and take up employment in commercial organisations, very often with huge salaries, they are often told that they cannot lobby their former Department or the Government. However, the system is not policed in any way, and it is crying out for reform, which I hope will happen sooner rather than later.

My friend the Member for Cannock Chase (Dr. Wright), who is the Chairman of our Committee, covered the ground and I have only a few other points to make. First, I would like to say that we spend our time talking about mandarins, but there are thousands of civil servants across the country doing less elevated work that is none the less just as important. A civil service strike is coming
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up on 10 November, and I think that politicians and Ministers are often too ready, when things go wrong, to blame civil servants for policy failures. The former Home Secretary, the Member for Sheffield, Brightside (Mr. Blunkett), talked about taking decisions in his ministerial office and pulling rubber levers. He wanted something to happen; he would pull the rubber lever, and it would not happen. Well, that is what happens when a decade or two decades are spent hiving off, privatising, outsourcing and fragmenting, so that we have a civil service that is not a unified civil service in the way that we used to think of it. Instead, we have a fragmented civil service, with the next step agencies, the arm’s length organisations and so on.

This Government benefit from scrutiny. Too many decisions are taken in a hole in the corner. Our late friend, Robin Cook, who was the former Member for Livingston, told us:

I entirely agree with that statement. This Government need a lot more scrutiny.

I welcome the movement that the Government have made on pre-appointment hearings. We had long pressed for that movement, but Parliament will now have a role in the appointment of people who run key organisations. I do not have the list of those people in my head, but I hope that the chair of the BBC will come before relevant Select Committees. Certainly, the regulators, who shape so much of our lives these days, should be on the list, along with the police complaints officials. There is a core of public appointments that should be brought before Parliament, and Parliament should be invited to give its imprimatur before they are appointed. So that is a good thing that the Government have done.

The constitutional renewal proposals were published in the summer, and as part of those proposals the Government agreed, at long last, to introduce a civil service Bill. For years, the former Prime Minister, Mr. Blair, was dancing around this subject, prevaricating and giving hints. It was like a dance of the seven veils—it really was. There were hints that a civil service Bill would be introduced, and we on the Committee got so exasperated that, as my friend the Chairman of the Committee said, we published our own Bill way back in 2004. Now, however, we have a commitment on the record that the Government will act on this subject, which is good.

I am disappointed, however, that our recommendation for a code of good governance has been rejected; I am looking at the Minister at this point. The Government response to the report says:

The civil service code and the ministerial code should be approved by Parliament. We wanted a third code—a code of good governance—to underpin the other two. However, that third code has been thrown out of the window by the Government. Presumably, Ministers think that we are perfectly well governed as it is. However, that is not the case, is it?

We heard earlier in interventions that mandarins—senior and retired civil servants—came before our Committee; I think that we have heard from the lot of them, really, at one time or another. I remember Robin Butler coming before us and saying—it may well have been in answer
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to a question from me, although I cannot recall precisely—that there had been a decline in the quality of government. All the other retired mandarins there nodded sagely at that.

I reflected on that observation, and I thought that there have been some truly spectacular policy failures. In fact, the front page of the Financial Times on Tuesday—you would have seen this, Mr. Jones—said:

That is not any old computer records project, but a

We are told by the Financial Times that the project—the Connecting for Health project—has virtually ground to a halt. I do not know whether I should feel despair, because we have the super-expensive identity card project somewhere in the pipeline. If we cannot deliver a sophisticated computer project for the NHS, I wonder whether we can deliver on ID cards, and I hate to think what the cost to the public purse of that project will be.

Let us look at the other failures. We had the tax credit fiasco. Every MP had people whose hair was dropping out or going grey because of the problems that they had with tax credit. Equally, for as long as I have been an MP, I have been wrestling with child support in all its forms; that is another spectacular failure. There is also immigration and nationality, which is now called border control. A constituent came to see me at the weekend. He was applying for asylum. His first marriage had broken down, and he had left the marital home before he had indefinite leave to remain in the country. He got married again, and his new wife, if I can describe her that way, is pregnant, so it is really important that his immigration status be resolved quickly. I was shown a letter by the authorities saying that his case may be decided by, I think, 2011. Now that is simply not acceptable. I do not know the details of the failure, but it is an administrative failure of gigantic proportions that affects the lives of those constituents of mine.

Of course, we then had the loss of data. We have had various Committee sessions on it, and the losses seem to happen with regularity: whether in the Ministry of Defence or some other Department, someone leaves important information on a train or in a car, and it disappears. And finally—at least I think this is finally—we had the failure involving the 10p tax debacle, with the payment of money to 22 million basic-rate taxpayers who did not lose anything, while those who were on the receiving end have not yet been fully compensated. We wait to hear what the Chancellor says in the autumn statement, but 1.1 million people still have not been fully compensated.

Where does the responsibility lie—with the politicians or with the civil servants? In the example that I have just mentioned, it was clearly a political failure, because we had in front of the Committee the relevant civil servant—well, I say relevant; he was the head of the home civil service—and I asked him how could it conceivably have happened. What were the checks and balances? Who tested this policy to destruction? Who said, “If you lower the basic rate of income tax and get rid of the 10p band, how many people are going to lose?”? Who asked the questions? I was told that the distributional analysis of the winners and gainers would have been put together by Treasury civil servants and placed in front of the Chancellor on his desk. So we know where the blame lies in that case; but, in many others, we do not.

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I think—I have felt this for years—that we need a kitemark for policy. For as long as I have been an MP, I have seen translated into legislation policy that should have never seen the light of day. We just do not have a robust system of testing policy to destruction, and I blame my colleagues—you would expect me to say that, Mr. Jones—and the senior civil service for letting it happen. I am not going to go into ancient history, but earlier I mentioned Robin Butler, who, along with Lord Hutton, exposed for everyone to see the internal wiring of the British Government: the way in which we went to war in Iraq, when the Cabinet was treated like a vegetable patch and not brought into the discussions. It is all there—I will not go through it all—in the Butler report.

There is then the absence of records. Over the past 10 years, records have been seen as almost incidental. The famous sofa Government seemed to say, “We don’t need to keep a record of this; we can just, kind of, agree among friends.” Well, record keeping—accurate, meticulous record keeping—is essential for good public administration, and the senior civil servants, the mandarins, fell down on the job. They—Robin Butler, Lord Turnbull, Lord Wilson of Dinton and the rest of them—should have insisted that records be kept and proper procedures followed. One senior civil servant, Sir Nick Monk, who came before the Committee during our inquiry, drew up a code of good governance based on what happens in companies. It is probably not the best time for me to refer to good practice in companies, but Sir Nick looked at what happened there and concluded that the template could equally apply to central Government, whereby people—I am thinking about the Cabinet, the very centre—would be brought into the decision, given ownership of issues and papers to read well in advance of the meeting, and contribute. We get good government and administration when it is not kept to a tiny group of people at the centre—it is almost Leninist—but involves more people and Departments.

I found it astonishing when—was it 2005, or perhaps 2006?—Lord Warner, who is now significantly involved in the commercial world but was then the Minister with responsibility for health reform, made an announcement on Parliament’s last sitting day, in July, saying that 250,000 NHS employees working for primary care trusts would be transferred out of the NHS and into the private and not-for-profit sectors. That was a huge policy decision, and it was reversed—countermanded—months later, in the December of that year, by the then Secretary of State for Health, the Member for Leicester, West (Ms Hewitt). But I ask myself, “How on earth did such a flawed policy ever get to the stage where it could be publicly announced by the Minister for health service reform, only to be repudiated afterwards?”

I have one or two closing remarks. The civil service commissioners ought to keep an eye on the system. Whistleblowers should flag up their concerns to the commissioners, but the commissioners should—I hate this word—proactively police the system. I talked earlier about the essentials of good public administration and good governance, and they should police them.

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