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12 Mar 2009 : Column 481

Public Accounts

1.35 pm

Mr. Edward Leigh (Gainsborough) (Con): I beg to move,

As ever, I am delighted to open this debate on the work of the Public Accounts Committee. In January 2002, in my first contribution as Chairman, I said that our duty was to act as the parliamentary laymen and women who hold the mandarins to account. As a Committee, we retain a unique relationship with the civil service. We ask the questions our constituents would ask if they were in our place. We do so without fear or favour, and without political rancour, and always for a positive purpose. In short, we promote and protect the interests of taxpayers.

In the subsequent seven years of my tenure as Chairman, I do not think there has been a more important time than the present to prod, press and pursue those who run our public services, to make sure they get the most bang from our buck. I do not consider us remiss when the loudness of our own “bang” startles the occasional permanent secretary. It is, after all, a milder form of shock than Voltaire’s original observation that we kill an admiral from time to time “pour encourager les autres”, although judging from his occasional comments on the social background of those before us—especially those in uniform—the hon. Member for Glasgow, South-West (Mr. Davidson) might, perhaps, not be averse to such a punishment occasionally being dealt out to senior mandarins.

While I am following a French theme, hon. Members may be aware that my views on the malevolent economic climate recently led one of our national newspapers to compare me with a great historical figure. Unfortunately, that figure was Marie Antoinette. I am therefore relieved that the word “guillotine” has a slightly different meaning in this place from that which it had in revolutionary France. I am bound to note, however, that spiralling national debt was one of the sparks that ignited the French revolution. I do not think it a party political point to suggest that our own growing fiscal predicament should spark—indeed require—another kind of revolution: a genuine upheaval in the delivery of public services.

In a recession, the demands on public services grow, and in this recession the public purse continues to slake the seemingly unquenchable thirst of the financial sector. Even should the Government be proved right and economic spring begin to bloom next year, there will be no escaping tough fiscal choices. To meet the expectations of those who fund and use public services without adding to the burden of debt, we need more than incremental reform; I believe we need a Whitehall revolution. It is in this context that we consider the work of the Committee today. In my view, it makes our work all the more relevant and all the more important. Our recommendations contribute to reform; perhaps our deliberations can help to stimulate this revolution in Whitehall.

I want to focus on a few central themes. Some unkind critics say that much of what is said by Members in this place is spoken with one eye on tomorrow’s headlines.
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However, when I say I want to talk about efficiency and financial management, I am sure Members will recognise that I must be motivated by more than the allure of an increased public profile. I doubt that this report will figure much in the tabloids tomorrow, but that does not mean that it is not important.

I also want to touch on a third, more specific issue arising from the Committee’s work—how the public sector works with the private sector. Such worthy topics are meat and drink to members of the Committee and, indeed, to the Minister herself. True efficiency is about delivering more out for the same in, or the same bang for fewer bucks. It must be the engine of our Whitehall revolution—at the top of every public servant’s agenda. When people have to tighten their belt and watch the pennies, they expect the same from their own Government.

I acknowledge that there has been progress in parts of Whitehall in improving efficiency and the effective delivery of Government programmes. I believe that I am less at risk than some in seeing some green shoots here, although in this case they are of reform, not yet, I fear, of revolution. I am happy to celebrate—we have mentioned this before but it bears repeating—the example of the work to update Jobcentre Plus offices. Given that it is one of the biggest public sector construction projects the UK has seen in recent years, we might have been forgiven for fearing the worst, but this tough project was delivered on time and within budget. It is worth dwelling on why.

The project demonstrated the value of continuity in leadership, the importance of experience and the benefit of engaging local staff throughout a change programme. Members might think that I am attempting to lobby for them, or even myself, in celebrating the benefit of age and experience, but between them the senior management team that oversaw the Jobcentre Plus project boasted more than 100 years of front-line operational experience. They had all started from the very bottom, as clerical assistants. They knew how to run projects. There is no question but that the knowledge and savvy that this brought contributed to their success. We all know that the right team with the right skills on the right project can make all the difference. There is no need to throw endless sums of money at a project to make it work. What is needed is the right mix of experience and know-how, and, of course hard work. Whitehall needs to let those with the skills get on and do their jobs properly, and there is no reason why these projects—even IT projects—should not be run successfully.

Mr. Don Touhig (Islwyn) (Lab/Co-op): I apologise to the hon. Gentleman and to the House—I would like to take part in this debate but I have to attend a meeting of Members’ pension fund trustees shortly. I pay tribute to him and his chairmanship of our Committee. He makes a very important point about the successful operation of Jobcentre Plus. Does he share my frustration at the fact that the good practice that we do see in the PAC—we do not see it very often—is not shared across Whitehall? What can we do to make other Government Departments wake up and say, “Here’s a good way of doing something; let’s copy it”?

Mr. Leigh: That is a very important point with which I agree entirely. It is very frustrating. This morning, the National Audit Office report on the new computer
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system for offender management was published. That is another disastrous project. In answer to the right hon. Gentleman’s question, we can help. I went out of my way on Monday in our Committee to congratulate Mrs. Lesley Strathie, who worked her way up from the bottom of the civil service and ran the Jobcentre Plus projects that we have helped to launch into the stratosphere. She is now chief executive of Her Majesty’s Revenue and Customs—an absolutely top job in Government. I think it is still the case that, with the exception of Mrs. Strathie—I may be wrong—there are no other permanent secretaries who have actually run projects. There is no great mystery about this. We should reward public servants for delivering projects on time and on budget.

Regarding this disastrous thing that we looked at with the NAO this morning—there have been other such projects—nobody has ever been sacked; nobody’s career, so far as we know, has ever been harmed. We have to reward civil servants who perform properly—yes, even with bonuses—and we have to be prepared to move sideways or even dismiss from their posts civil servants who do not deliver because, ultimately, the public suffer. In that regard, the intervention made by the right hon. Member for Islwyn (Mr. Touhig) was a very important one.

Angela Browning (Tiverton and Honiton) (Con): I totally agree. It is typical for civil servants to be moved sideways if there is some terrible problem that they have been involved with. However, I wonder whether, in addition to the rewards that my hon. Friend is suggesting, there is a much more structured way of improving in-service training and skilling for existing civil servants, and of improving the training of new civil servants, so that those already in-post can benefit while in-post from the skills training they clearly need, and the necessary skills can be introduced in the core training.

Mr. Leigh: Yes, we need a much better developed training system for civil servants.

I have discussed the issue with Gus O’Donnell, the Secretary to the Cabinet, whom I have great confidence in and who is trying to change the whole culture of Whitehall in terms of training and a more professional approach. We must create almost a convention within Whitehall that someone who gets to the very top as a permanent secretary who advises Ministers must have run a project successfully. That is what happens in the private sector. People do not get to the very top of the private sector in an industrial company simply by advising the chairman or the chief executive on policy; they get there by delivering a successful project on time and on budget.

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): Is not one of the lessons to be drawn from the roll-out of the Jobcentre Plus office network shown in the response of the head civil servant to the point that I made about the social origins of her staff? As page 17 of the Committee’s report shows, she responded by saying that only one of the top 23 members of staff in her department had come from Oxbridge. This is undoubtedly the most successful department that we have ever come across in terms of rolling out successful projects. Does the hon. Gentleman believe that there could be anything more than a coincidence there?

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Mr. Leigh: I did not go to Oxbridge myself. I do not know, Mr. Deputy Speaker, whether you went to Oxbridge—you are not going to enlighten us. Anyway, we had better move on, but I take the hon. Gentleman’s point, which is a very good one.

Knowing that the public sector can sometimes get the job done makes it all the more frustrating when things go pear-shaped, as I am afraid they often do. Unfortunately, my Committee has found that excellence across the board still remains elusive. Let us take one example—the Committee’s report on the Department for Transport’s initiative to share with its seven agencies a central unit of corporate services. The project was dreamt up as an efficiency drive aimed at saving the taxpayer £57 million by 2015. Sadly, what followed was an example at risk of ridicule, rather than a shining example of revolution. This “inefficiency” initiative managed to cost the taxpayer an extra £81 million, and on occasion the swanky new system took to communicating in German—not so much “Yes, Minister” as “Jawohl, Minister”. Rather than obtaining the benefits of German efficiency—

Mr. Richard Bacon (South Norfolk) (Con): The computer says “Nein”!

Mr. Leigh: Probably, yes. Rather than obtaining the benefits of German efficiency, the Department for Transport lumbered itself with inefficiency in German. I recognise that this is an extreme and perhaps amusing example, but our report suggests that there needs to be a more consistent focus on delivering efficiency.

Mr. Greg Knight (East Yorkshire) (Con): I assume that my hon. Friend is referring to his Committee’s 57th report. I notice that on page 5, the Committee report states:

What disciplinary action has been taken against those top officials?

Mr. Leigh: To be honest, I do not recall—we have 60 sessions a year; other members of the Committee are here—but at a guess, none, despite the staggering failure in project management. A project that was supposed to save some £50 million actually wasted £80 million. I think we were told, as we always are, that we are not entitled to pursue civil servants by name, and I do not think it right that we should. My father was a civil servant and I have a great sense of the ethos of senior civil servants. It is not for us physically to pursue, persecute and crucify them, but I do think that it is for the civil service itself to take to task people who are responsible for such a catastrophic failure.

Mr. Knight: I totally accept what my hon. Friend is saying, but I note that in its response to his report, the Treasury states at paragraph 4:

What on earth does that mean? Does he not agree that, at the very least, we ought to know what those consequences are?

Mr. Leigh: It may be that we should pursue that matter further. I suspect the consequences are that promotion for those individuals has been less accelerated
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than it might have been otherwise. As my hon. Friend the Member for Tiverton and Honiton (Angela Browning) said, that is usually the way of the civil service—people are never sacked, but sidelined. Traditionally, the deal in the civil service has been that people do not get bonuses, but they do not get sacked. It is a job for life, but people do not get paid terribly well. As a House, we have to think about the matter much more than we do.

The financial rewards at the top of central and local government are very high. Permanent secretaries earn a minimum of £140,000 a year and their salaries can go up to £220,000 a year, and many civil servants earn far more than that because they are on bonus-related schemes. The whole culture of Whitehall is changing, and perhaps the traditional way of doing things—that civil servants are never sacked—has to be thought about again by the Government, but it is for them to make up their minds on that.

We looked at a project run by the Department for Culture, Media and Sport, and the nine grant-making organisations it sponsors. We found that it spent a hefty £200 million to administer and pay out just £1.8 billion in grants without efforts to benchmark the grant makers’ way of doing things against each other, or against other ways of working elsewhere, which we might have expected. The Department could have no idea of how other grant-giving organisations operate or of what the costs were. Ordinary times would require greater focus on efficiency than is evident from those examples, but today we face extraordinary times. I am concerned that, far from driving true efficiency in the everyday business of Departments, circumstances may be leading us to institutionalised inefficiency. Spending taxpayers’ money is what Governments do, but we know that spending money is the easiest thing in the world; getting something practical for it is much harder.

We have seen before that it is easy to increase spending rapidly on a service. We saw that as we drew up numerous PAC reports into the NHS and the Rural Payments Agency. We make no comment on or complaint about the increase in spending—that is not our job. Too often, the rush to spend has been unaccompanied by any insistence on improved efficiency. When new money is put in, the taxpayer is entitled to expect identifiable improvements in productivity on the front line.

As the Government bring forward spending plans to try to counter the recession—the Department for Transport is one of the bodies most involved—we must be vigilant in guarding against waste, and we should try to ensure that the efficiency gains we have achieved so far are protected as spending increases rapidly. There should be a forensic efficiency assessment of every proposal to buy now what was expected later. Accounting officers should be certain of the costs and benefits of moving money around, and we expect to see evidence that they have adopted the most efficient solution, not leapt at the most convenient spending opportunity.

With so many pressures threatening efficiency, the public must be able to have faith in the savings claimed. The Committee has had to express scepticism over claimed efficiency gains in the past—I put that point to the Prime Minister myself, in the Liaison Committee. Our 2007 report cast doubt on the reliability of 74 per cent. of the savings claimed. I am not going to go into
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that again, and I have welcomed the fact that Departments’ claims will now be subject to the independent scrutiny of the National Audit Office, which is very good news. I am pleased to say that the Treasury has already promised to take into account associated increases in costs elsewhere before proclaiming efficiency gains. That is becoming more and more important.

As well as external scrutiny, the civil service needs far more internal challenge to how things are done—a point emphasised by the recent National Audit Office report “Helping Government Learn”. In Departments’ thinking, the question “Is this the best way to do it?” seems only to arise late. One of the challenges for my Committee is to help to shake Whitehall free from the mentality, wherever it remains, of, “This is the way we work because this is the way we've always worked”.

True efficiency will not be achieved without an ongoing revolution in financial management in the public sector. We have seen some improvements in that area, too. I welcome the increase in the number of qualified finance directors sitting on the boards of Departments. Today, I note at last that that includes the Department with the biggest asset base: the Ministry of Defence, which now has a qualified finance director—we have campaigned for that for years. However, that should be set in the context of a general lack of financial know-how among staff, who are not finance specialists. It simply cannot add up that the financial skills of the people who spend public money are not up to scratch.

The Committee’s report on managing financial resources highlighted the disturbing truth that only 20 per cent. of Departments base their policy decisions on a thorough assessment of the financial implications of their proposed actions. Departments will not get true efficiency unless they know the true cost of what they propose, and factor that into their decisions. It is all too easy to predict the results of that gap in financial skills. Things are better now, but in two successive years the Department for Environment, Food and Rural Affairs budgeted to spend more than it had been given by the Treasury. Anyone with experience of managing a household’s weekly account knows that that would lead to disaster. If, halfway through the year, a Department has to invest creative energies in juggling funds to try to stretch its budget, or to make cuts to its planned programme of work, that can only be counter-productive and harm the delivery of public services. I am sure that the Minister will agree that it is not for the Treasury to pull Departments out of the mire of their own making.

My final theme reflects an environment in which revolution is already upon us, whether we like it or not. The days when the public sector designed, developed and delivered public services in splendid isolation are gone. Engaging with the private sector requires different skills and brings different risks. Public sector officials must have their eyes wide open to profiteering, and their commercial acumen honed by experience, especially in today’s environment.

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