Select Committee on Public Administration Fourth Report

 

2  Core tasks

Government policy proposals

9. As our predecessor Committees have done, we have given early consideration to those government proposals—wherever they emanate—which appear to have significant implications for the nature of public administration in this country. We have also monitored the policy proposals put forward by the Cabinet Office.

THE GOVERNANCE OF BRITAIN

10. A large number of Government policy proposals emerged soon after the change of Prime Minister, contained in a Green Paper entitled "The Governance of Britain".[8] As already noted, many of these proposals drew on the work of this Committee and its predecessors. We stated when the paper was published that we intended to examine many of its proposals when more detail emerged from the Government.[9] We have since learned that some aspects of the constitutional reform agenda will be taken forward in a draft Constitutional Renewal Bill, to be published early in 2008. We intend to take part in scrutinising those parts of the draft Bill in which we have expertise, and we may also have suggestions as to what else might be included in such a Bill.

11. We have already taken evidence on the proposal to expand and formalise the role of Select Committees in scrutinising public appointments, which is contained in the Green Paper. We took evidence from the Commissioner for Public Appointments, Janet Gaymer CBE, in June, and again in December when the Government's proposals had been published. We also took evidence from the Chairman of the Treasury Select Committee, Rt Hon John McFall MP. The Treasury Committee has regularly held a hearing with prospective members of the Monetary Policy Committee of the Bank of England. Mr McFall was also able to talk to us about his Committee's experience in conducting the first pre-appointment hearing of the type set out in the Green Paper, on the appointment of the first Chair of the new Statistics Board. We reported on this subject in early 2008.[10]

OTHER PROPOSALS

12. The Government's policy of commissioning public services from the Third Sector was the subject of one of our major inquiries in 2007. The starting point for this inquiry was the Government's declaration of its policy objectives in an action plan at the end of 2006.[11] We have heard from an extensive range of witnesses, including two Ministers and a senior Civil Servant, a range of charitable organisations, the Charity Commission, the Commissioner for the Compact, trade unions, the Confederation of British Industry and the National Consumer Council. Our programme of oral evidence for this inquiry concludes in January 2008.

13. We were also asked by the Prime Minister to provide our views on a review by Sir Patrick Brown of the Business Appointment Rules, governing the roles into which Crown servants are allowed to move on leaving public office. Sir Patrick's central recommendation was that there should be a single test for approving such moves: "a Crown servant can have no incentive to provide favours to an external body in return for future employment".[12] In cases where this was breached, he suggested a single sanction of a two year delay in appointment. Although Sir Patrick made some valuable other suggestions, his central recommendation of a single test and a single sanction did not seem to us to offer the necessary flexibility to cover for all circumstances. The Government agreed with our conclusion and did not adopt Sir Patrick's approach. The Government also accepted our recommendation that Ministers should be required, and not just advised, to seek and follow the advice of the Advisory Committee on Business Appointments before taking up outside appointments. This has now been incorporated into the Ministerial Code.[13]

Areas seen as requiring examination because of deficiencies

PROPRIETY AND PEERAGES

14. In 2004, our predecessor committee conducted a major inquiry into the honours system.[14] Early in 2006 we decided to follow this up with a further evidence session on the propriety aspects of the honours system. Allegations that honours were being offered in return for donations to party funds and sponsorship of the Government's city academy schools prompted us to extend this into a substantive inquiry. On 14 March 2006 we announced that, as part of our ongoing inquiry into ethics and standards in public life, the Committee would investigate whether the machinery for scrutiny of honours and peerages for political service was working.

15. In a separate development, following complaints from a Member of the House of Commons, the police began investigating allegations under the Honours (Prevention of Abuses) Act 1925 and the Political Parties Elections and Referendums Act 2000. The police asked us, and we agreed, to defer our inquiry to avoid prejudice to their investigation. We considered proceeding in private, but decided against this since we felt that one of the great merits of the select committee system was the openness of its proceedings, and that it was undesirable to take evidence that might not be released for a considerable time. Given this, we were concerned that conducting the inquiry as we wished might be prejudicial. Accordingly, even though the matters complained of were not technically sub judice, we paused our inquiry until such time as we were able to proceed without risk of adverse effects on the administration of justice.

16. On 20 July 2007, it was announced that there would be no criminal proceedings arising out of the investigation.[15] We were then able to renew our inquiry and fulfil our pledge to review the law as it affects public life and corruption. We resumed our evidence sessions in October 2007, hearing from Rt Hon Lord Stevenson of Coddenham and Rt Hon Lord Hurd of Westwell of the House of Lords Appointments Commission; from Assistant Commissioner John Yates of the Metropolitan Police; from Carmen Dowd of the CPS; from David Perry QC, who led the team of independent counsel assisting the CPS; from the academic experts Dr Meg Russell, Professor Justin Fisher and Dr Michael Pinto-Duschinsky; and from the Cabinet Secretary, Sir Gus O'Donnell.

17. Our report was published on 18 December.[16] In it, we proposed a package of measures—to be taken alongside any changes made to the party funding system—to ensure that processes for appointments to the House of Lords could command public confidence. We called for corruption legislation to close loopholes in the legal framework around dishonest behaviour in public office; for the link to be broken between honours and seats in Parliament; and for immediate reforms to House of Lords appointments to restrict patronage and remove the room for abuses. We were heartened to learn that the Prime Minister apparently agrees that parties' powers of patronage should be reduced, and that changes are needed to the tests applied for prospective peers. We look forward to seeing the Government's considered response to our Propriety and Peerages report, which is due by mid-February 2008.

OTHER DEFICIENCIES

18. On 29 March 2007, the then Prime Minister, Rt Hon Tony Blair MP, announced that he intended to split the Home Office's responsibilities and create a Ministry of Justice. The announcement highlighted a serious hole in our constitutional framework - the absence of any check on the Prime Minister's power to allocate and reallocate functions to different government departments and agencies. As we saw from the subsequent controversy, such changes can have significant effects on the performance of government, not least in terms of costs incurred and effects on service delivery. We are seriously concerned that Prime Ministers can make such changes on a whim.

19. Our report on machinery of government changes, published in June, called for a proper parliamentary safeguard to ensure that government has fully considered any possible implications.[17] Where necessary, we would also expect consultation on proposals. We were not satisfied by the Government's response that no changes are needed to the current arrangements; it did not seem consistent with the tenor of the Government's statements on constitutional reform and limiting the power of the executive. We reported our concerns to the House for a second time in December, and we hope that the Government will reconsider.[18]

20. We also took evidence from Sir Michael Barber, the former Head of the Prime Minister's Delivery Unit, on his contention that there was a pressing need for a new Prime Minister's Department. We may return to this subject if events bear out Sir Michael's calls. We may also return in 2008 to the subject of political memoirs, where we have some concerns over the contents of the Government's response to our 2006 report, and to the machinery for investigating alleged breaches of the Ministerial Code.

Areas of emerging policy

21. The principal area of emerging policy at which we looked in 2007 was the Government's commitment to user-focused or personalised public services. This commitment was recognised in a number of initiatives across a range of services, but the overall thrust of Government policy was particularly evident in the outgoing Prime Minister's Policy Reviews, and in the focus on service transformation as set out in Sir David Varney's report.[19] Our inquiry, Public Services: Putting People First, asked a number of questions about the practical implementation of the supposed user focus. We looked in particular at the opportunities for users to comment on or complain about public services they received; at how minimum standards could be guaranteed for all, especially in the light of Bernard Herdan's review of the Charter Mark system;[20] at how effectively Government consults service users; at the potential for co-production of public services between providers and users; and at how choice and personalisation of services could be reconciled with the pursuit of efficiency in service provision. We will report on this inquiry in 2008.

22. We have recently turned our attention to the question of lobbying. Our inquiry is the first Parliamentary inquiry on lobbying since the 1991 report from the Select Committee on Members' interests. In the intervening years, lobbying has been at the centre of political scandals. The 'cash for questions' affair, amongst others, left lingering associations between lobbying and 'sleaze'. The industry responded by introducing an element of self-regulation and encouraging professionalisation of its work, but lobbying is still viewed with suspicion in some quarters. The inquiry will consider questions such as whether the lobbying industry requires external regulation, as has been the case in the United States for some time, and the interaction between Government and lobbyists.

Departmental actions

23. As we are not a departmental Committee, our experience of the work of individual departments largely derives from those concerns brought before us by the Parliamentary Ombudsman. Often these alert us to wider administrative issues, particularly when the maladministration identified affects substantial numbers of citizens, as it has done in several recent cases. We remain greatly concerned by the Government's apparent willingness to contest the Ombudsman's special status in determining whether maladministration has occurred.

24. In 2007 we continued to press the Government on the unfinished business of previous problems brought to our attention by the Ombudsman. In our annual report for 2005-6 we hailed our inquiry A Debt of Honour as "a positive example of how the relationship can work".[21] This inquiry was into the Ministry of Defence's ex gratia scheme for civilian internees of Japanese internment camps during the Second World War.[22] The Department initially challenged the Ombudsman's finding of maladministration in the introduction (never publicised) of a blood link criterion in determining whether applicants for payments were "British civilians". Our inquiry found that this was indeed maladministration, and the Department has subsequently removed this criterion and commissioned a full internal inquiry—the results of which were released in July 2006. However, some former civilian internees during the Second World War remain excluded from compensation, even under the new criteria. We pursued the position of these people by taking evidence from the Minister for Veterans, Derek Twigg MP, in January, and we have maintained a correspondence since. We continue to call for some independent adjudication of the few individuals who continue to be excluded but whose complaints seem, on the face of it, to be just.

25. On the other hand, we have seen a remarkable and positive turnaround in the last year with regard to the Ombudsman's report on final salary occupational pension schemes.[23] A year ago we were angered by the Government's rejection of the Ombudsman's findings of maladministration. Many pension schemes wound up between 6 April 1997 and 31 March 2004 without sufficient funds to give their members the benefits which had been previously promised. This may have affected as many as 125,000 people. The Ombudsman had argued that the Government's failings had meant that those who suffered loss had not realised the risks they ran, and had been denied the opportunity to reduce their exposure to these risks. In her view, this amounted to maladministration, leading to injustice that had not been, and would not be, remedied.

26. We began our investigation following the Government's negative response. This led us to agree with the Ombudsman that maladministration had occurred. We reported in 2006, calling for generous and speedy recompense for the many victims of scheme wind-ups.[24] We were also critical of the Government for "concentrating its energy on denying findings of maladministration, rather than on considering what remedies might be practical".[25] After the Government also rejected the recommendations we made in 2006, we continued to search for ways to remedy this injustice.

27. The Pensions Bill offered us an opportunity. By that stage, the Government had already put into place a Financial Assistance Scheme (FAS) to help some of the people who had lost out. However, the extent of help available was considerably less than that available for future pension scheme wind-ups; the speed of payments made by the FAS was doubtful; and there remained significant numbers of people excluded from assistance on the technicality that their pension schemes had not become insolvent, but had been closed by solvent employers who might otherwise have become insolvent. We could see no justification for that inequality.

28. We took two actions. We put forward amendments to the Bill, and we also published a Report to aid the House of Lords when the Bill had passed through the Commons. We understand that both of these are unusual steps for a Committee of this House to take. Nonetheless, we are glad to have done so. We were not successful in getting the Bill amended, but we did secure assurances from the Government that the FAS would be reviewed by Sir Andrew Young, and that he would be asked to look at all of the problems we raised. This review has now reported, and, as well as finding more funding for the scheme, accepted our contention that there was no justification for the exclusion of certain people from the scheme.[26] The Government's response to our Report also saw it admit maladministration in this matter for the first time—although it did not accept every aspect of the Ombudsman's initial report, and court proceedings are still ongoing.

29. The Government's acceptance of Sir Andrew Young's review's findings means that, at long last, we feel able to say that justice has been done for the victims of pension scheme wind-ups. Although this result was a long time in coming, we recognise that this represents a very significant commitment of public funds, albeit to a very deserving cause. The continual pressure of this Committee, other parliamentarians and tireless campaigners has paid off, and represents a superb advertisement for what parliamentary democracy can achieve.

30. We continue to monitor developments in the delivery of tax credits. A year ago, we noted that HM Revenue and Customs (HMRC) had recognised the need to provide better customer service to the recipients of tax credits—by their very nature some of the poorest and most vulnerable members of British society. A number of the problems which were once encountered—such as unacceptable delays, ineffective phone lines and multiple award notices—appear now to be far less frequent. Nonetheless, the Ombudsman retains significant concerns about the administration of the programme, and is still receiving many more complaints about tax credits than she anticipated. The vast majority of these relate to the recovery of overpayments, and in particular the application of one particular Code of Practice. Although we understand that HMRC is doing more work on this, the Ombudsman was not positive about the likelihood of swift resolution, and suggested she might well end up reporting on this once again.[27] We will continue to monitor progress.

Associated public bodies

31. In April 2007 we completed a major inquiry into the work of a substantial number of the Cabinet Office's associated public bodies, when we published our report Ethics and Standards: the Regulation of Conduct in Public Life.[28] The report focused particularly on the role and constitutional status of five of the Non-Departmental Public Bodies sponsored by the Cabinet Office, namely:

• the Office for the Commissioner on Public Appointments;
• the Office of the Civil Service Commissioners;
• the Advisory Commission on Business Appointments;
• the House of Lords Appointments Commission; and
• the Committee on Standards in Public Life.

32. Our inquiry found that these bodies, broadly characterised as "ethical regulators", performed important public functions, and ought to be recognised as a permanent part of the landscape of public life. At present, we found that the organisational arrangements of the different bodies were inconsistent, often for no clear reason, and that the ensuing framework lacked clarity and coherence. We also argued that a permanent framework for the regulation of government should not empower the government to staff, fund and make appointments to the regulatory bodies. We therefore called for the five bodies listed above to be sponsored by an independent statutory Public Standards Commission, at arms' length from both Government and Parliament.

33. Since the publication of our report in April, we have continued to argue for these important constitutional changes. In May, we took evidence from the outgoing Chairman of the Committee on Standards in Public Life on his views on our proposals for change. In June, we held a well attended seminar with representatives of the affected bodies, as well as many important figures with relevant experience and expertise. We also secured a debate in December on these questions on the floor of the House, where our report was well received. The Government's response in October was broadly positive, and accepted our recommendation that appointments to these public bodies should as a general rule be for long, single, non-renewable terms. However, the Government has not responded to our calls for a permanent statutory framework—it is awaiting the results of consultations on the Governance of Britain. We hope that our suggestions will be taken forward in the draft Constitutional Renewal Bill.

34. A number of our other inquiries touched on the work of the Cabinet Office's associated public bodies. Our report on Propriety and Peerages discussed a revised future role for the House of Lords Appointments Commission, while our report on The Business Appointment Rules considered the operation of the Advisory Commission on Business Appointments. Both of those inquiries have already been discussed in this report. We also reported in 2007 on the relationship between ministers and civil servants, particularly in relation to public accountability.[29] One of our main findings was that there appeared to be a confusion around who was responsible for failures of administration, and who should be held accountable—a question which arose again with the resignation of Paul Gray as Chairman of HM Revenue and Customs. We believe it is time for a new public service bargain. Central to this new bargain would be reflecting ministers' democratic accountability with a greater say in some public appointments. This suggestion, along with other reforms of the system for public appointments, is currently being consulted on by the Commissioner for Public Appointments.

Major appointments

35. Over the years we have refined the list of posts whose occupants we aim to take evidence from on appointment. None of those posts were filled by new occupants in 2007. However, two appointees took up office at the beginning of 2008 from whom we intend to hear. The first of those is Sir Christopher Kelly, the new Chairman of the Committee on Standards in Public Life; and the second is Sir Philip Mawer, who takes over as the Independent Adviser on Ministerial Interests. We have also, as discussed above, been inquiring into the process of parliamentary involvement in major public appointments.

Implementation of legislation and major policy initiatives

IMPLEMENTATION OF LEGISLATION

36. In 2006 the law relating to charities was reshaped by the Charities Act. That Act removed the presumption that certain charitable purposes were, by definition, to the public benefit, although the requirement that charities should provide public benefit remains. It was decided not to define "public benefit" on the face of the Act. This has meant that, in practice, the Charity Commission has not only to enforce the public benefit requirement, but to create principles which can underpin its enforcement. In effect, the Commission has to define what constitutes a public benefit.

37. This is a huge challenge, as was demonstrated by the enormous volume of responses to the Commission's original consultation. There are particularly passionate arguments around how public benefit can be provided by fee-paying charities, religious organisations and private educational institutions. We heard from the Charity Commission in July on how they were going about the task of meeting this challenge, and continue to monitor their progress; we are grateful to the Commission for keeping us informed of developments. It seems right to us that there is a role for elected representatives in these important questions of public policy. We have also discussed the issue with Cabinet Office ministers. We are concerned that the task of implementing the "public benefit" requirements in the Charities Act 2006 is an essentially political task, involving political judgements and accountability for those judgements. As such, it is understandable if the Charity Commission is finding it difficult. Although we are glad that they are involving us in the process, there remain real issues of democratic legitimacy.

38. Having played a role in its passage, we also continue to monitor some aspects of the implementation of the Freedom of Information Act 2000 (although continuing policy development in this area is the responsibility of the Justice Committee). In July 2007 we held an evidence session designed to examine the impact of the Act on the way in which Government business was conducted—focusing in particular on whether it was having a detrimental effect by discouraging officials from putting advice in writing. At that session, we heard from the Information Commissioner, Richard Thomas, and one of his Deputies, Graham Smith; and we also heard from Maurice Frankel, the Director of the Campaign for Freedom of Information.

OTHER MAJOR POLICY INITIATIVES

39. In 2007 we turned our attention to several connected recent initiatives in the area of civil service skills. Our inquiry into Skills for Government looked at the programme of Departmental Capability Reviews, at the new National School of Government, and at the Professional Skills for Government programme, as well as the creation of the new sector skills council for central government, Government Skills.[30] We asked how all of these fitted together, and how they fitted with efficiency programmes, with the continuing drive for external recruitment into the Civil Service, and with the pursuit of greater interchange between public, private and voluntary sectors.

40. Our inquiry found that "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". We set out ways in which that imbalance might be rectified. In particular, we called for the extension of accredited skills for civil servants, to aid workforce planning; for a greater emphasis on the development of talent within the service, possibly at the expense of the current problematic reliance on external recruitment; and for the continuation of capability reviews, but led by a body external of government. We were pleased that the Government's response indicated a retreat from crude headcount cuts as a tool for realising civil service efficiencies, which was subsequently borne out in the Comprehensive Spending Review.

Draft Legislation

41. No draft legislation has been published within our locus in 2007. However, we have long awaited the outcome of the consultation on the Government's draft Civil Service Bill on which our predecessors commented.[31] That consultation closed on 28 February 2005. It is at last expected to bear fruit in the form of clauses in the draft Constitutional Renewal Bill in early 2008. As we have already stated, we hope to examine those and all other relevant draft clauses in that draft Bill when it comes forward.

Examination of Expenditure and PSA targets

42. We undertake an annual examination of the Cabinet Office's performance and expenditure following the publication of its annual report, drawing on the valuable expertise of the Scrutiny Unit within the Committee Office. We look at both the accounts and performance against PSA targets. In 2007 we held evidence sessions on the work of the department with two successive Ministers for the Cabinet Office, Rt Hon Hilary Armstrong MP and Rt Hon Ed Miliband MP. We also took evidence from the Cabinet Secretary and Head of the Home Civil Service, Sir Gus O'Donnell, who is the accounting officer for the department.

43. In addition to these hearings, we undertake extensive scrutiny of Cabinet Office accounts, expenditure and performance in relation to its targets, through correspondence. We have engaged in exchanges on both the Estimates and the Annual Report. We have been concerned to ensure that we understand all financial documents, and have not always in the past found the financial information provided by the Cabinet Office to be timely, helpful or complete. In this respect we are pleased to report that we have seen great progress in 2007 and that the quality and clarity of the financial information provided to us by the department seems to be much improved.

Assisting the House

44. On 5 December 2007, the Committee held a debate on the floor of the House of Commons on the subject of the regulation of conduct in public life. We believe that the debate showed that there is considerable support for change to the constitutional framework. We welcomed the Minister's approach in that debate, as well as the assurance that the Government was still considering all of the recommendations put forward in our report on Ethics and Standards.[32]

1. As already discussed, we also played an important role in pursuing amendments to the Pensions Bill to ensure justice for former members of now closed occupational pension schemes. We put forward amendments to the Bill, and we also published a Report to aid the House of Lords when the Bill had passed through the Commons. Although our amendments were not adopted, our pressure and that of other Members and campaign groups secured the review which subsequently ensured a satisfactory outcome.

Table 2: Liaison Committee criteria relevant to 2007 inquiries

	Government and Commission policy proposals	Examination of deficiencies	Departmental actions	Associated public bodies	Major appointments	Implementation of legislation	Draft legislation	Expenditure	Evidence from Minister	Public Service Agreements
Propriety and Peerages		√		√
Ethics and Standards		√		√				√
The Business Appointment Rules	√	√		√
Politics and Administration: Ministers and Civil Servants		√		√
Governing the Future		√	√
Machinery of Government Changes		√
Ombudsman: Debt of Honour			√
Ombudsman: Pensions		√	√
The Work of the Ombudsman								√
The Work of the Cabinet Office			√					√	√	√
Skills for Government			√	√						√
Public Services: Putting People First			√						√	√
Third Sector Commissioning	√		√						√
Lobbying		√
Parliamentary Scrutiny of Public Appointments	√
Freedom of Information: Administrative Impact		√				√
Charities and Public Benefit	√			√		√
The Centre of Government		√

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8   Ministry of Justice, The Governance of Britain, Cm 7170, July 2007 Back

9   First Special Report of Session 2006-07, The Governance of Britain, HC 901 Back

10   Third Report of Session 2007-08, Parliament and public appointments: Pre-appointment hearings by select committees, HC 152 Back

11   Cabinet Office, Partnership in public services: an action plan for third sector involvement, December 2006 Back

12   Sir Patrick Brown, Review of the Business Appointment Rules, p 6 Back

13   Cabinet Office, Ministerial Code, July 2007 Back

14   Fifth Report of Session 2003-04, A Matter of Honour: Reforming the Honours System, HC 212-I Back

15   Crown Prosecution Service, CPS decision: "Cash For Honours" case, 20 July 2007 Back

16   Second Report of Session 2007-08, Propriety and Peerages, HC 153 Back

17   Seventh Report of Session 2006-07, Machinery of Government Changes, HC 672 Back

18   First Report of Session 2007-08, Machinery of Government Changes: a follow-up Report, HC 160 Back

19   Sir David Varney, Service transformation: A better service for citizens and businesses, a better deal for the taxpayer, December 2006 Back

20   Cabinet Office, The Customer Voice in Transforming Public Services, June 2006 Back

21   First Report of Session 2006-07, The Work of the Committee in 2005-06, HC 258, para 24 Back

22   First Report of Session 2005-06, A Debt of Honour, HC 735 Back

23   Parliamentary Commissioner for Administration, Trusting in the pensions promise: government bodies and the security of final salary occupational pensions, HC 984, March 2006 Back

24   Sixth Report of Session 2005-06, The Ombudsman in Question: the Ombudsman's report on pensions and its constitutional implications, HC 1081 Back

25   As above, p3 Back

26   Department for Work and Pensions, Financial Assistance Scheme Review of Assets- Final Report, December 2007, para 47 Back

27   Oral evidence taken before the Public Administration Select Committee on 18 October 2007, HC 1086-I, Q 8 Back

28   Fourth Report of Session 2006-07, Ethics and Standards: the Regulation of Conduct in Public Life, HC 121 Back

29   Third Report of Session 2006-07, Politics and Administration: Ministers and Civil Servants, HC 122 Back

30   Ninth Report of Session 2006-07, Skills for Government, HC 93 Back

31   Cabinet Office, A Draft Civil Service Bill, Cm 6373, November 2004 Back

32   HC Deb, 5 Dec 07, col891 Back


 

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Prepared 24 January 2008