Examination of Witnesses (Questions 100-119)
RT HON ED MILIBAND MP AND SIR GUS O'DONNELL KCB
29 APRIL 2008
Q100 Mr Prentice: At our sister parliament in Ottawa there is a Westminster system and changes to departmental organisation in Canada have got to be approved—this is my understanding—by the Canadian Parliament. If they can do it over there, why can we not do it over here? Secondly, we had Professor Hennessy before us last week and he told us that the Ministry of Defence was set up by statute after the Second World War, it may have been the War Office or something before then, so we already have a Whitehall department set up by statute and if the prime minister of the day wanted to change it then presumably the primary legislation would have to be changed.
Ed Miliband: As I say, these Transfer of Function Orders do have to go through this House where they are subject to negative resolution. The other point I would make is I think there is an appreciation of the need to set out very clearly the reasons for changes, and we have undertaken in our response to say all future changes will be set out as I think the changes were last summer, the reorganisation last summer when there was an explanatory memorandum setting out the reasons for the changes, and ministers should make themselves available to select committees to explain the rationale behind changes. I am not aware of the Canadian situation, I will undertake to look into it. What we must not do in giving Parliament necessarily powers to hold the Executive to account is put government into limbo. Having thought quite a lot about your response and our response to your response, I cannot see how we can necessarily enhance Parliament's powers in this area without having that effect and this would be constraining the powers of any prime minister from whatever party in a way that would not necessarily be helpful to our system.
Q101 Chairman: I think you are more sympathetic than the Government's reply, if I may say so, and we might have interesting further discussions about this. So much else in the Constitutional Renewal Bill used to meet objections of the kind that you have just advanced, which is that basically we could not work government if we do these kinds of things if we had Parliament involved in approving war and all that kind of stuff. We have gone beyond all that and we have found out there are ways of solving problems if we really want to. That leads me to a second point. Reading the reply to what we said on public appointments and the criteria seems to be that these posts of particular public importance will be ones that deserve the involvement of Parliament and parliamentary scrutiny, the thought did occur to me on that test, and in the spirit of wanting to wrest prerogative powers away from prime ministers, which is the spirit of this Bill, why could the same approach not apply to the appointment of Cabinet ministers? Why should those appointments not have to run before select committees first?
Ed Miliband: I will let Gus answer that one!
Sir Gus O'Donnell: Are you talking about pre-appointment?
Q102 Chairman: Yes, pre-appointment. If a prime minister says, "I want to make this man Minister of Defence", he has to go and meet the Defence Select Committee and go through the same process that we described in relation to major public appointments.
Sir Gus O'Donnell: Well, certainly I have never worked with a prime minister who has thought of that one.
Q103 Chairman: No, but we are in radical new territory here.
Sir Gus O'Donnell: It would certainly take us into radical new territory. I just think of the practicalities. If somebody is put forward as the Defence Minister in the period before pre-appointment scrutiny, who is the Defence Minister?
Q104 Chairman: That will do as the first answer.
Sir Gus O'Donnell: Quite important if we have a real defence crisis. You would like to know there was a Defence Minister.
Q105 Mr Walker: Do you subscribe to the view that the captain should choose his team basically?
Sir Gus O'Donnell: Yes.
Q106 Mr Walker: The prime minister should choose his team?
Sir Gus O'Donnell: I think prime ministers should choose their Cabinet, absolutely.
Mr Walker: I think I might agree with that, Chairman, just to go against your line of questioning.
Q107 Chairman: I think Ed is certainly more interested in this idea than Gus was.
Ed Miliband: I am afraid, Chairman, you may call me a conservative on these matters but I tend to agree with the Cabinet Secretary on this issue. What we are trying to do here is strike the right balance between Parliament holding the Executive to account and, indeed, as I indicated in my opening remarks, it needs to be strengthened in that respect and that is the whole intention of the reform programme that we are talking about, but it needs to do so in a way that does not gum up the works and stop the proper business of government happening.
Q108 Chairman: Let us move back to more solid territory. On the Civil Service legislation we have had the Government's draft Bill and back in 2004 we had a Bill produced by this Committee and have now got the Bill proposed in the draft Constitutional Renewal Bill. These vary in different ways. In a nutshell, can you explain the process that explains any of the changes between the Government's position in 2004 and the one that we have now?
Sir Gus O'Donnell: In many ways looking at it again, taking account of what we have learned over the last couple of years, in all respects what it has suggested to me is the point I made right at the start is far more important. Things can change very rapidly and it strongly suggests to me keep this principles-based, keep this values-based and do not try and tie down things where actually you think you have got it right but for reasons that you had not anticipated it turns out not to be quite right. For example, if you specify definitions in legislation and it turns out actually you would have had to change that definition and that would have involved a change in primary legislation if you had stuck with the definition you started with in the first place. What it has led me to think on and try to implement through this is to keep it as principles-based as possible.
Ed Miliband: The Chairman's is a very good exam question. From looking at it, obviously I was not involved in the 2004 draft Bill but I do not think there are what we would describe as material changes from that version to this. There are issues about the way that you define the Civil Service, for example, which has changed. We take account of certain changes that have been made. For example, we have given additional powers to the Civil Service Commissioner so that she can undertake inquiries in response to complaints from civil servants, which was a change made in June 2006. I stand to be corrected, but as I would see it I do not think there are material changes, certainly not in intention and I do not think in letter either from the 2004 version.
Q109 Chairman: We will produce a list of these and show you that there are changes and you will probably have things to say about all of them. Can I just ask you this because this was raised by Sir Robin Mountfield when he came to see us last week. He said that one of his concerns about where we are at now is the reason for having legislation of this kind was partly to make sure that ministers did not do things that ministers should not do in relation to threatening the integrity of the Civil Service. It was okay having a Civil Service Code but there was the other side of the relationship which was ministers either not statutorily having to listen to Civil Service advice or asking civil servants to do things which were improper. He wanted the reciprocal obligation to be inserted into this Bill. Is that not reasonable?
Ed Miliband: I have looked back at your report on the draft Bill of 2004 and this Committee said that it was not minded to recommend that statutory form needs to be given to the obligations of ministers towards their civil servants. I agree with this Committee's report. Let me explain why. There would be two implications of doing what Sir Robin recommended in his testimony to you. One would be to put into statute ministers' obligations, and one might think that was a good thing, but the other implication of it would be to make justiciable the question of compliance with the Ministerial Code, in other words put into the courts potentially the question of whether ministers were or were not complying with the Code. I think ministers should be held to account by Parliament. Ultimately, as we know, it is for the Prime Minister to choose who is and who is not in government, but ministers are held to account by Parliament and in the court of public opinion. To open up the question of whether a minister complied with the Ministerial Code into judicial review does not seem to me to strike the right balance between the proper functions of the Executive, Parliament and the courts in this country. Personally, I do not think that would be the right way to go. I do not know but I assume that was why you did not think it was a good idea back in 2004-05, and I agree with you.
Q110 Chairman: We are in a sort of continuing discussion about this. We are interested in Robin Mountfield's position. If we are talking about core principles here, not about detailed implementation, one of the core principles is that ministers have to respect and comply too.
Sir Gus O'Donnell: I suppose I come at this as Head of the Civil Service thinking let us have a Civil Service Bill about what civil servants should do and the values that civil servants should operate. They are very clear, that is what this Bill is about. We have a Ministerial Code which handles what ministers should do and the Prime Minister is in charge of that. To my mind, the great value of this Bill is concentrating on the Civil Service.
Q111 Chairman: The Ministerial Code is non-statutory, a prime minister could abolish it tomorrow if he wanted to. It is a very fragile basis for a key constitutional relationship, is it not?
Ed Miliband: The requirement for civil servants to act on the four values that Gus talked about, including impartiality, is very clear and set down in statute. As I have said, there are complaints procedures if civil servants feel they are being put under undue pressure by ministers or others not to act in that way. I think any prime minister who came along and said, "I am going to change the Ministerial Code and ministers no longer have to uphold the political impartiality of the Civil Service and ask the Civil Service to act in a way which conflicts with the Civil Service Code", that prime minister would be held to account in the court of public opinion, as I say.
Q112 Kelvin Hopkins: Our system has a tendency to concentrate power in the hands of the Prime Minister and Downing Street and it works because there has been an effective system of pluralisation, there have been different centres of power which have a degree of independence, the key one of which I think is the Civil Service.
Sir Gus O'Donnell: Absolutely.
Q113 Kelvin Hopkins: There is a view that the Civil Service has been progressively undermined in its independence. You may disagree, but this is a view of the world and one I hold to myself. Does this not provide an opportunity to break with that Blair regime, or what has happened under the Blair regime, and re-establish the Civil Service as an independent body which can, as the saying goes, lead truth unto power, advise ministers and have a different coherence of its own and is not just a plaything of prime ministers. I speak as a person who is naturally conservative about these matters and I do have a view of the golden 1980s of these things and I rather admire the Sir Humphrey view of the world which I think was better than what we have had in recent years. Do you think this is an opportunity to re-establish what we have lost?
Sir Gus O'Donnell: I am afraid we start from rather different places.
Q114 Kelvin Hopkins: I thought we might.
Sir Gus O'Donnell: I do not accept the premise. I do think we are in an age now where the Civil Service is very strong, we attract the best. When you think of where the university graduates want to go, recent events have made it even more attractive for them to join the public sector, particularly the Civil Service, than possibly places elsewhere not so far from here, the financial sector. I do not have a problem with that. We are attracting very good people and are retaining them. I think we are very effective as a Civil Service, much more professional than we have been. I am afraid your golden age of the 1980s, if we look on it we did not have professional finance directors and the HR service was slightly embarrassing. I lived through that. I was recruited in 1979 and the fast-stream there was not tapped into if you happened to be anything other than white male Oxbridge, that was the vast proportion of people we were getting into the fast-stream, but now we have majority female entry into our fast-stream and are taking a much more diverse pool and, therefore, getting much better talent. I would be very happy to stand up and say I think the Civil Service now is better than it has ever been, not just it has not declined. We are very happy to speak truth unto power and that is why the Civil Service values—honesty, objectivity, integrity and impartiality—are absolutely right and that is why I value this Bill. I am strongly in favour of those things. I do not think it is a plaything, it is there to advise and it does give very strong, very clear advice on the basis of analysis of evidence and its ability and professionalisation to analyse evidence is hugely better than it was in the 1980s. I remember trying to give some advice to a Chancellor in the 1980s and on the basis of the crudest possible economic models it would take me a long time to estimate the impact of particular policies. With modern day computing I can do a hundred times as good a piece of work in about a tenth of the time. The technology has allowed us to be much more evidence-based and we also have a lot more data on which to collect that evidence and we do pilots. This golden age was not as evidence-based because there was not as much evidence and it was much harder to analyse because we simply did not have the tools. If I wanted to analyse what is the worldwide knowledge on a particular subject now I could get a vast proportion of it from the Internet.
Mr Prentice: So you did an analysis on the abolition of the 10p tax rate?
Q115 Kelvin Hopkins: I am pleased about all this professionalism and evidence-based and so on but, nevertheless, the Civil Service is different from other parts of our polity in that it is driven, and has to be driven, by a sense of commitment to the public interest. It has an ethos which is very powerful and absolutely vital to government.
Sir Gus O'Donnell: Absolutely.
Q116 Kelvin Hopkins: It is my impression that this has declined over time and we now have imported people from the money-making parts of the institution, if you like, and Mammon has been confused with public service, and even though I am sure that people are very professional, this fierce sense of loyalty to the citizens, to the public sector, to public service, to the nation, in a sense, is very different from that of those who work (very brilliantly no doubt) in the City and elsewhere who are interested in making money and running businesses and so on. I know people who want to work in the public sector for the public service; they do not want to work in the profit-making or profit-driven sector and they are very different, and that is the difference between the old Civil Service and the new Civil Service that there is this overlap.
Sir Gus O'Donnell: I think there is one piece of evidence that contradicts that, the relative pay levels that you are talking about actually have gone the other way, so public sector pay relative to that in the financial sector means that you are much better off in the financial sector than you were, rather than in your period when it was actually much closer. I think now you have to have a much stronger public sector ethos to be in the public sector because you are actually taking a much bigger financial cost to not going wherever you can be paid the most, so we have a very strong public sector ethos.
Q117 Kelvin Hopkins: If we can move on to politicisation because we had some of your retired former colleagues with us a couple of weeks ago, and they were saying that back in the 1970s there used to be a range of views within the Treasury, for example between Keynesians and neo-Liberals and monetarists or whatever, and there was a debate. Certainly I know that my own tutors in economics at university would say if economic policy changed there was always somebody who made one yesterday—"I have another model for you, Minister," for example after a devaluation or after being rejected from the ERM and so on—but the politicisation of recent years has meant that opposition within the Civil Service and the range of views within the Civil Service has been narrowed and we have become more focused and there is a view which is the view that everyone takes of the world now, there is not a difference of view about how we run the economy, for example. Is it not healthy to have a range of views within the Civil Service, particularly in the Treasury?
Sir Gus O'Donnell: I think it is very healthy to have a range of views, I strongly agree with that. One thing I would say is that we now have access to views not just within the Civil Service but internationally, and if you want to look at the international evidence now, at the push of a button you can get what anybody has written on, say, running the economy. Things have evolved over running the economy. As you say, in the 1970s—and I used to teach it—there were Keynesians versus monetarists. The one thing I would say about macroeconomic performance post the move towards inflation targeting is that it has been enormously better than it was before so the degree of debate has diminished somewhat. If you look at average growth rates, the variance in growth, the variance in inflation and the level of inflation, if you take those as a guide to the quality of macroeconomic performance post the inflation-targeting period, it has been enormously better than it was in your golden period of the 1980s or the 1970s, vastly better.
Q118 Kelvin Hopkins: Just a final point, a question I asked last week, in our draft Civil Service Bill, a number of things notably were missing from the Government's version, a definition of the Civil Service and the State at the beginning, which I think was very good, and the other thing was a list of values for the Civil Service, which is omitted from the Government's document. Do you not think it would be better to take more of our original into the Government document?
Sir Gus O'Donnell: I am with Northcote-Trevelyan; keep it short with few clauses, and it is very, very important that we have the values there.
Q119 David Heyes: I want to ask you about the key provision in the draft Bill which relates to fair and open competition for appointments and it says that selection must be on merit and on the basis of fair and open competition. If that is true—and obviously we would all subscribe to that—why have you provided exceptions from the rule in relation to the obvious examples, Crown appointments and diplomatic appointments?
Sir Gus O'Donnell: First of all, I am very strongly in favour of fair and open competition. I think it is a hugely important guarantee that we get the best people in the best jobs, and that is very important and particularly important for all the top posts. I think that there may well be occasions when you need an exemption and you mentioned the diplomatic one, and again I would stress I think something like 99.5% of all top diplomatic posts are done by fair and open competition and the exemptions are very, very rare. The one that I guess I was most involved in was when I was working for Prime Minister John Major when he appointed Chris Patten to Hong Kong. I think there were very specific political reasons why he felt that was the appropriate appointment at that time. So I am with you, I would want these things to be incredibly rare, very exceptional, and for specific political reasons.
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