Examination of Witnesses (Questions 120-139)
MR NICK
MACPHERSON, MR
JON THOMPSON
AND MS
GILL RIDER
28 APRIL 2008
Q120 Mr Davidson: Fine, if you have
that and could let us have that, it would be very helpful.
Mr Macpherson: There is one qualification.
For example, on my list in front of me it suggests that nobody
at the Ministry of Defence has completed it but, to be fair to
them, the Ministry of Defence have their own in-house course,
so I have to qualify it.
Q121 Mr Davidson: That is why I am
happy to accept the point made about equivalents, but presumably
after you have considered the question of equivalents, some will
be doing better than others. May I ask you about paragraph 2.18
and the question of the Cabinet Office sending out the self-assessment
questionnaires where 70% of senior civil servants felt that they
had already met the core skills criteria in financial management?
Then it goes on to say " ... the Cabinet Office does not
trust the reliability of the data" which presumably is an
indication that it does not trust the self-assessment completed
by senior civil servants. I am always happy to have my prejudices
confirmed, but what does that tell us about the self-awareness
of senior civil servants and their ideas about how much financial
knowledge they have? Surely, that is a pretty damning indictment.
Ms Rider: Absolutely. The issue
here is not about the self-assessment because the process was
done and completed and people filled it in. The issue is about
making sure that people are really assessing themselves against
the detail of what is required for them in that job.
Q122 Mr Davidson: So is it or not
a self-assessment process? It is, is it not?
Ms Rider: Yes, it is.
Q123 Mr Davidson: So senior civil
servants filled in a self-assessment form incorrectly and over-estimated
their own abilities, which is something we are quite used to.
Ms Rider: When you conduct a survey
and you say "Have you got this?" and you are not granular
enough to say "Do you have this amount and this amount, that
is what you require for your particular job?", you have to,
by the nature of surveys, ask simplistic questions and you get
simplistic answers. What we now want to do is to put in a process
that not only benchmarks in those general questions that you can
ask in a survey, but interviews a sample of people so that we
can really test out the specifics that the individual needs for
a particular job.
Q124 Mr Davidson: One of the issues
that I have a concern about is similar to that of some of my colleagues
and it was noticeable that Ms Smith mentioned the question of
just-in-time or it came up in an answer. We have experience of
just-in-time here because, just-in-time, a lot of departments
undertake actions that are suggested to them by the National Audit
Office so that when they come along here they can say they are
actually doing this. There seems to me to be an issue of culture
amongst the senior ranks of the Civil Service who disdain such
common things as money and trade and so on. To what extent do
you think this is just simply because they are disproportionately
drawn from the ranks of the public school and Oxbridge?
Ms Rider: I would not imagine
there is any correlation there at all.
Q125 Mr Davidson: May I ask whether
or not any of you are drawn from that background?
Ms Rider: No.
Mr Macpherson: I am afraid so.
Mr Thompson: I went to a comprehensive
school.
Q126 Mr Davidson: Good man. We have
had this from other departments. May I ask how many of the top
20 officials in the Treasury are drawn from the same background
as you of public school and Oxbridge? Since I do not expect you
to have that on the top of your heads, maybe you could just let
us have a note of that. Do you think it is reasonable that there
should be that proportion and, if it is above the proportion of
those people in the population, that that is a reasonable use
of the nation's talents?
Mr Macpherson: I am very happy
to give you the information. It is desirable to have a senior
management group which reflects the population. Equally, you want
to have people who are well educated and well qualified to do
the job. There are potential tensions there. Historically, some
academic study is being done at the University of Ulster about
the social backgrounds of permanent secretaries to the Treasury
and actually, since the war, on the whole permanent secretaries
of the Treasury have neither gone to Oxbridge nor gone to public
schools. I am afraid I am an exception to this.
Q127 Mr Davidson: When you let us
have the top 20 could you give us a note and tell us whether or
not you regard this as being appropriate and, if not, what you
are doing to change it?
Mr Macpherson: We are actually
doing quite a lot to change it in terms of trying to get out to
universities, which might give us a better social composition.
Q128 Mr Davidson: Excellent. Maybe
you could add a note to indicate whether or not those efforts
have been successful.[5]
Mr Macpherson: Yes.
Q129 Mr Davidson: When you responded
to a point that Ms Smith made as well, when she was asking about
people who had left under a cloud, you said there were several.
I must confess I cannot recall any. I wonder whether you could
give us a note indicating the numbers that you thought.[6]
Mr Macpherson: One recent one
is the Chairman of Her Majesty's Revenue and Customs, who resigned
over the loss of data.
Q130 Mr Davidson: He took the blame.
I take the view that that is slightly different in a sense because
nobody suggested that he had actually posted the data wrongly
himself; he was taking responsibility for the organisation as
a whole. My question relates to the point you mentioned about
people of poor performance being managed out as well. It would
be helpful if we could have an indication of the numbers. I do
not want you to identify individuals but an indication of the
numbers to whom that applies and where they have been managed
out to. The point is that there is no penalty if they end up being
managed out into a better paid job or even an equivalent paid
job. If they are being managed out, presumably they are leaving
the Service. I would not object to somebody being found a job
for which their talents were more suited if they have genuine
talents. Maybe you could give us some help with that. May I turn
now to paragraph 3.19 which I thought was particularly helpful?
As I understand it, only 41% of departments said that proposals
invariably included a full financial appraisal, which presumably
means that 59% do not. Can you tell us which departments are in
the 41% and which are in the 59% and which are you?
Mr Macpherson: I cannot because
this was a survey carried out by the National Audit Office.
Q131 Mr Davidson: Can the NAO tell
us?
Mr Holden: In a note.
Q132 Mr Davidson: Which are the Treasury
in? Do you remember?
Mr Holden: I cannot off the top
of my head.
Q133 Mr Davidson: The final point
there is " ... only 20 per cent of departments considered
that policy decisions were invariably based on a thorough assessment
of the financial implications". There is some question over
what "invariably based" means. I presume that means
that a thorough assessment was actually available. Eighty per
cent indicated the converse, that a thorough assessment was not
available. Is that acceptable?
Mr Macpherson: I would want to
see us doing better than that. That is a disappointing result,
as I said earlier. All we can do in the Treasury is to continue
to push for better decision making.
Q134 Mr Davidson: What sort of percentage
then of your policy decisions are subject to thorough assessment
of the financial implications?
Mr Macpherson: As someone who
has been involved in some quite big decisions of late in relation
to the banking system and so on, a very high percentage indeed.
I would expect all serious decisions involving public spending
and revenue at the Treasury to be based on some very serious analysis.
Q135 Mr Davidson: Would the abolition
of the ten pence tax rate have been one where you as a department
undertook a thorough assessment of the financial implications?
Mr Macpherson: Absolutely.
Q136 Mr Davidson: So you knew all the
issues which are now coming up. You were aware of them or have
any of them caught you by surprise?
Mr Macpherson: The decision to
reform the income tax system and reduce the basic rate to 20 pence
and abolish the 10 pence rate as part of a wider package reflected
considerable analysis and was taken on that basis.
Q137 Mr Davidson: I do not doubt
for a moment that it reflected considerable analysis and I am
not talking about the wider package. I am talking particularly
about the abolition of the 10 pence rate and the phrasing here
about " ... a thorough assessment of the financial implications".
I want to be clear about whether or not all the impacts which
are now coming to public awareness were drawn attention to by
the Treasury at the appropriate time.
Mr Macpherson: Yes, a thorough
distributional analysis was done and ministers took decisions
on the basis of that analysis.
Q138 Chairman: Thank you for that
careful answer. In that list you are going to provide for Mr Davidson
to the Committee about people who have had to resign because of
financial mismanagement, there have been one or two cases of people
resigning or their careers being seriously compromised as a result
of a hearing in front of this Committee.[7]
It would be quite useful for all of us to be made aware of the
instances where that has happened. I do not ask this question
to gratify our ego, but there is a tension here, is there not,
because of the traditional reluctance of parliamentarians, which
I share, to name and shame civil servants and to hold ministers
responsible and the more modern approach to which you have alluded,
increasingly holding civil servants to account. I think we need
to have more of a debate about this, do you not? I should be interested
to know your personal view. You seem to veer towards the view
that we must indeed hold officials to account and, if necessary,
sack them and have much more of a private sector culture. That
is your view is it?
Mr Macpherson: It is genuinely
difficult. I do not want to get into some big constitutional discussion,
but it is right that civil servants should be held to account
for what they do. It is particularly relevant where you have agency
structures, where there are very clear operational remits, where
ministers in a sense are deliberately at arm's-length from those
bodies. There are risks around going for a fully paid-up private
sector culture which could cut across ministerial accountability.
It is an area where you have to tread carefully.
Q139 Mr Dunne: When a new department
is created or agency set up, what role does the Treasury play
in establishing the ground rules for financial supervision and
oversight within that department?
Mr Macpherson: Quite a big role.
Recent examples are where you get machinery of government changes
and you are splitting up departments or reconfiguring them. The
Treasury will play a key role in holding the ring and ensuring
that numbers add up and someone does not get short changed or
walk off with most of the money and less of the responsibilities.
We play a role there. The other thing, in terms of agencies, is
that agencies will have specific remits and there will be a constitutional
relationship between departments and the agency. If it is a very
small agency, the Treasury might not play much of a role. If it
is a very big agency, we will play a very active role.
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