Departmental Business Planning - Public Accounts Committee Contents

Examination of Witnesses (Questions 1-102)


30 NOVEMBER 2010

Q1   Chair: May I welcome you all? In particular, I welcome Martin Donnelly, as this is the first time that you've appeared; congratulations, we are pleased to see you. I hope this is not the last time that you are appearing, David?

Sir David Normington KCB: Well, I rather hope it is. [Laughter.] I've only got three more weeks.

Q2   Chair: There is also Kris Murrin, whom we have not seen before, and Ray Shostak, who has not seen the new Committee before. We welcome you all.

  This is not an interrogation. This is not at all us trying to catch you out. What we are trying to do at the beginning of the comprehensive spending review is really understand how the Government are going to move from their intentions, as described both in their manifesto and in the comprehensive spending review, to an implementation and a delivery plan. So this is really about you helping us to understand, so that as we then do the work over the coming years, we can do it on the basis of how you intend to work.

We have a lot of people here today—and you are going to do much more of the talking, I hope, than we are. But what we tried to draw together were the people from the centre—Ray from the Treasury and Kris from No. 10, who we think are the sort of corporate planning representatives. Then we have two of the key implementers—David Normington, who has had a very successful career, all over the place but most recently at the Home Office, and Martin Donnelly, who is starting. We thought that would be quite an interesting combination. Then there's Ian, who is working across government trying to eke out efficiencies. So you have different roles, and this is about how we can draw all that together. We have got the two business plans—the Home Office business plan and the BIS Business Plan—but we could have taken any, so they are really examples rather than specifics.

Perhaps we can just start by asking first of all what we call the corporate planners—Kris and Ray—in three to five minutes to say to us why we are doing this, what you see as the purpose and how you see the process developing. Just literally do it as quickly as you can and then we will move to the others, and then open the debate. Is that all right? I do not know if you were warned that that might be the process which we would be undertaking. That is how we are going to do it. Between you, from your point of view, why have we got them and how are they going to evolve over time? Do you want to start, Ray, and then Kris can come in?

Ray Shostak: Sure. Thank you very much. I thought I would do three things. First, I want very briefly to outline some of the principles behind the business plans in the new framework. Secondly, I want to outline the process of how we develop them with Departments. Thirdly, I want to say a bit about how we are looking to hold Departments to account with you.

First, on the underlying principles, there are two big issues in respect of the new approach by the coalition. The first is a move which is about taking power away from Whitehall and putting it in the hands of people in communities—so it is actually moving that responsibility and sharing it more broadly. The second issue is taking a longer-term approach rather than a short­term approach in the development and the reform of public services and decision making, in order to be able to ensure that we end up with sustainable growth and high­quality services for people. The business plans are a different way of doing business and at the heart of that different way is the issue of transparency—hence it is the transparency framework. The process replaces, as you know, the previous public service agreements and basically it looks to replace the cascaded targets in terms of the direction of the previous Administration with transparency as regards making information available to you, to Departments and to the public at large, so that that information, that transparency, can drive development. Instead of the annual reporting under the old PSA regime, Departments will publish simple reports—they will feature on their own websites and the Downing street website—of progress against meeting their commitments. As I say, the data outlined in the transparency section of the plans will be available.

Now, what was the process by which we got to them? It was a joint process, a collaborative process, between the centre of government and Departments. The plans were developed over the course of the summer. The structural reform elements were published in draft in July and the final versions that were published in November reflected the comments of the public at large and others during that time. Essentially there were three parties: the Treasury officials, who ensured that the plans aligned with the spending review settlement and worked on indicators, were very helpfully assisted by your officials in ensuring that the indicators were robust and consistent as a piece. The Minister responsible for Government policy in No. 10 ensured that the structural reform elements reflected the coalition's programme for Government and ERG worked with Departments to ensure that the transparency sections of the plans actually reflected the coalition's ambitions.

The plans were signed off by the permanent secretary and the Secretary of State, and ultimately signed off by the quadrilateral group—the Prime Minister, the Deputy Prime Minister, the Chancellor and the Chief Secretary. There was very close joint working, particularly between the Minster responsible for Government policy, who I gather is coming to see the Committee, and Danny Alexander on behalf of Treasury, in taking the agenda forward. It is important to just signal that the transparency sections are published in draft and we hope that we will get a wide variety of comments from the public and from yourselves. The Select Committees are engaging with them pretty much as we speak.

Finally, on the accountability arrangements, every month Departments will publish a progress report and it will be put up on the No. 10 website. From next year when the process begins to kick in, the Departments will also publish data about their business plans more broadly, as part of the transparency element. Those data sets are already beginning to come on stream and will continue to do so. We are assuming the Select Committees will take particular interest within their remits in the departmental plans, and then, from that new source of information that will be available more broadly—an unprecedented set of information—we are expecting that there will be quite a lot of engagement more broadly. I hope that that helps.

Q3   Chair: Okay. Thanks very much. Kris, do you want to add from your perspective?

Kris Murrin: Sure. I think Ray's covered a lot of the territory there. I think at their most simplistic level the business plans were a way both of taking the coalition Government's programme for government, which set out its clear intent, and turning it into specific plans as to how these actions would be delivered and of giving an accountability framework. The plans set out very clearly month by month what each Department is due to do. That data is made public, so that stakeholders, public sector workers and the general public can look and simply say, "This was the coalition Government's intent. How are they doing? Are they on track? Are they not?" I think that was the main objective.

Q4   Chair: Okay. We will hold that for the moment; I am sure we have all got lots of questions to ask you, but let's go to David Normington and Martin Donnelly and just say that you are the guys who are charged with implementing this. How do you see it going? How are you going to turn this into action and delivery?

Sir David Normington KCB: Well, the business plans have a lot of action in them, but they are not the whole story about what the Department does—and they are not intended to be, in fact. They are really concentrating on the reform programme and the changes the Government want to make, but as colleagues have said, there is a lot of information in there which will be put into the public domain. Of course, particularly in big operational areas like the UK Border Agency, underlying this will be a detailed operational plan that will include a work force plan about where you are going to use your resources and how you are going to reduce both the budgets and the number of staff and maintain the service. So there will be quite a lot of detailed operational planning underneath this.

Q5  Chair: Just to interrupt, is that going to be in the public domain?

Sir David Normington KCB: Well, the UK Border Agency plan will be, yes, because agencies—

Q6  Chair: And except for your security stuff, will the rest be?

Sir David Normington KCB: Well, I think so, yes. We are already committed by this plan to put more of our plan in the public domain in terms of the money that we are spending on particular programmes. I think the detailed plans that will be published will be for the executive agencies, which is where the big operations are. So yes for the operation, for the big executive agencies.

Martin Donnelly: Perhaps I can echo that point. Joining the Department the day after the spending review was helpful in one way. It was also very helpful to be in on the final part of the Department's plan because it sets out very clearly what our priorities are. They are our priorities but are also agreed across government. Like David, we are now moving into the stage, following the spending review, of detailed operational planning to work out where resource goes to deliver these and all the other things which we do by statute. That is the process which is under way in the weeks ahead. There is a particularly important area for us: relationship with our partner bodies, which, as you will know, vary from extremely large, like HEFCE, through to really very small. I have written to all the partner organisations about how we will take forward aspects of this plan with them—our commercial strategy and our finance programme together—because all our administrative spending will now be looked at centrally, and this plan and the related work that we are doing gives us a very good basis for clarifying how we go forward with the range of partner organisations that will be delivering a lot of what is in our plan.

Q7  Chair: Administrative expenditure will be looked at centrally by you, by Ray, by Kris, by Ian—by whom?

Martin Donnelly: Well, certainly we will need to look at it together because it is now—

Q8  Chair: What, within BIS?

Martin Donnelly: Our administrative spending within BIS and the administrative spending of the partner organisations is being looked at as one unit and therefore it is incumbent upon me as accounting officer, with the key executives, to ensure that we are spending that money effectively and that no partner organisations are being squeezed excessively, or, conversely, have more funding.

Sir David Normington KCB: If I may say so, I think the admin expenditure now is a control total and therefore we have to report against admin expenditure, so we have to hit that budget.

Q9  Chair: To the three others: who could intervene?

Ian Watmore: We could. Well, first of all, from a Cabinet Office point of view, we are a Department as well, so we have our own version of the plans that David and Martin have talked about. From the intervention point of view, we are looking very carefully not to duplicate what the accounting officers are doing in their respective Departments, but instead to look across Departments and identify areas of common spend where we could highlight differences and then go and work with the key Departments where they look to be outliers one way or the other.

Q10  Chair: I am really intrigued by your role, Ian, because you say you are working with Departments to eke out efficiencies; that is what you are tasked to do.

Ian Watmore: Yes.

Q11  Chair: So will you do that by saying to David, "Have you looked at how you deliver this?" Or will you do it by David coming to you and saying, "Actually can you help us with this?" Will you monitor them? How are you going to get that together?

Ian Watmore: The day I tell David Normington what to do, could, I think, be an interesting day.

The reality of the position is that when looking across the data, if we picked a particular indicator of spend and felt that in this case the Home Office was an outlier, for either good or bad reasons, I would pick up the phone to David and talk to him about it. There might be perfectly understandable reasons. If it is a bad indicator, it might nevertheless by explainable, in which case there would be no further action. If, however, there was a problem, I think that David—this is my experience of with working with him and others in the past—would say, "Can you help us so we can at least understand why this is like it is and what we can do to fix it?"

Q12  Chair: But if David says, "Leave me alone."?

Ian Watmore: Ultimately the expenditure that David has in the Home Office is for him as accounting officer and for the Home Secretary as Secretary of State to deal with, so we are not trying to blow their accountability; it is meant to be more helpful.

Q13  Chair: I am not saying this is not a tricky question—

Sir David Normington KCB: No, I do not think I can say, "Leave me alone." I mean, sometimes you do that with the centre, but I do not think you can do that in this case, because the monitoring process is an escalating one which eventually gets to the Prime Minister. I will only say, "Leave me alone," if I know that I am on ground which justifies that. I think the process is one where if the problem continues it will be escalated and eventually—all of us will try to avoid this—we will be in front of the Prime Minister explaining why we have not done it.

Q14  Chair: Ian, what about the Philip Green recommendations? How do they sit?

Ian Watmore: Well, two things about the Philip Green recommendations: No. 1, he complained, I think rightly, that there is not enough management information at the heart of government to see across Government Departments and how they compare and contrast. These business plans have been designed to get some of those indicators into the public domain in a consistent fashion across Departments, so that will help. In the second—

Q15  Mr Bacon: Can I just stop you there? Are you saying they are going to be standardised indicators, then?

Ian Watmore: Yes.

Q16  Mr Bacon: That is the idea?

Ian Watmore: There are subsets that are in operational indicators and so on in each plan and the intention is they are measured on a like­for­like basis so that we can compare and contrast.

Mr Bacon: Okay. Sorry to interrupt.

Ian Watmore: You know the sort of issue: when you ask a simple question like, "How many staff do you have?" you immediately get 10 sub-questions, such as "Are you including the executive agencies or not? Whole-time equivalents or not? Part-time employees or not? Contracted in staff or not?" So we are going through a process of agreeing in detail what those definitions are, so that everybody will report on a like­for­like basis. So that would be the first point about the Green review.

The second point is there are some aspects of efficiency that the Green review pointed out should be done once on behalf of Government for all Departments to benefit from. I think when I was last before the Committee I used the example of the energy procurement that we have done, which since we have met has actually won the civil service award for the best project or activity done by the civil service over the last year, so it is an example of how by doing something once all the Departments get the benefit of that. So the other part of the Green review is that we will be building up, I think, 10 categories of spend that we are going to do centrally on behalf of Government.

Q17  Matthew Hancock: On exactly that point, to be able to do things across the whole of government, in some cases you do need to mandate, and you just said that actually Sir David could tell you "No," so how can you do cross­cutting savings like that unless you have the power to mandate?

Ian Watmore: The Government have been quite clear in the spending review to highlight a number of areas where they have the central mandate, and the example I gave is one of those. So that is the mandate of how we will be doing it.

Q18  Chair: And those mandates are what—all the Green review mandates, really?

Ian Watmore: They are not all Green review, no. They were put into the spending review. You may have heard the Government talk about what they call their tight­loose framework, which is where they are talking about certain things they want to control very tightly and certain things about which they are much more devolutionist. In the former category tend to be the areas of efficiency, and it is in those areas that the spending review explicitly laid out what the controls were—things like having projects approved before they start and having procurement done centrally and that sort of thing.

Sir David Normington KCB: And property.

Ian Watmore: And property, yes.

Q19  Chair: I think that is been a useful run through at the beginning. I am glad I have heard it, because I looked at this and thought, "This is a partial plan; this is only a plan around change, where proposals are going to change." One assumes, for example, that around your core business, all of you as Departments will have the new transparency things—I cannot remember what you call them—input indicators and impact indicators, which sound to me like outcomes and PSAs and things, but I know they are a bit different, and we might come to that. Will you have those impact indicators for the rest of your business?

Sir David Normington KCB: We will certainly have data for the rest of the business. For instance, effectively, we will have more impact indicators for the UK Border Agency than are in the plan, because we need that to run the operation, which is a very large operation, and we will also be trying, of course, to put resource, staff and money to those indicators. It will be a proper operating plan. So yes is the answer to you.

Q20  Chair: Okay. It is obviously an iterative process, but the interesting thing in reading these is that resources do not really appear against any of this so far, and I just wondered how that was going to evolve?

Sir David Normington KCB: At the moment the plan has the very high­level outcomes from the spending review, but we are committed in our plan—I do not know whether that is true of others—to publish more detail about our spending against the main programmes of the Department when we have allocated the budgets in detail, which is the process going on now. So, you will be able to see, for the next financial year, the detailed breakdown of the money.

Q21  Chair: And Martin, you are doing the same?

Martin Donnelly: If I could give one example from the BIS front, we published on 16 November our skills strategy, with nine outcomes and a set of associated indicators to allow people to drill down more clearly in that particular policy area.

Q22  Chair: And is there money in that? Are resources in that? Do you also publish the money and how the money goes down?

Martin Donnelly: In that case, quite a lot of the money goes through the further education agencies, and they of course do have their own planning process—and that will also come out as we distribute the funding in detail following the SR. For some of our objectives, such as the regulatory ones, around the competition framework or rebalancing the economy, resources are actually less important than some other measures.

Q23  Chair: But in the skills one, for example, for me, a business plan doesn't make sense unless you can relate what you are going to do to what you are going to spend and profile that over time.

Kris Murrin: I think the transparency section of the plans at the moment, as colleagues have commented, is draft, to allow consultation. It will be firmed up by the end of March ready for the financial year—in that there will be a summary of spend to a programme level.

Q24  Mr Bacon: Sorry, I think you may have partially answered this question, but going back to what you were saying a minute ago about the next version having more numbers in it, it does say, "This document will be refreshed annually". Are you saying the next version will have, against each of these structural reform branches at the top, numbers attached?

Sir David Normington KCB: I do not know precisely the answer to your question, but what it says under the table on spending is "Detailed breakdown of these budgets will be published by April 2011". So the answer to you is yes, although I do not quite know how we will be breaking it down. Broadly, you should be able to see against the main priorities of the Department how much we are spending. I suspect we will be doing it in more detail than is actually in those headline coalition agreements, because we need to do it in a way that covers the whole Department.

Q25  Mr Bacon: But if I take those bits of Lego and bolt them back together, will I be able to get to "Item 4: Secure our borders and reduce immigration" and see how much money was spent on that?

Sir David Normington KCB: I think so, yes.

Q26  Nick Smith: Also on plans, will they be integrated? I say that because there is a good reference on page 14 of the Home Office plan dealing with alcohol licensing. I notice on page 15, however, in terms of an integrated criminal justice system, there's an emphasis on reducing reoffending for drug users, but not alcohol users. I think that is a bit of a gap.

Sir David Normington KCB: I cannot promise you that everything will be integrated in year one, in truth, but alcohol and drugs, which are both major drivers of crime, will be in the detailed plan.

Q27  Stephen Barclay: Mr Donnelly, you said in your opening remarks that you will be looking at administrative spending in your partnership organisations. Will that include looking, for example, at what partnership organisations are spending on consultants and interims?

Martin Donnelly: Yes, the Cabinet Office guidance applies across the partner organisations that are within the Francis Maude exercise from earlier this year, and one of the issues that I am very keen to ensure everyone is clear on is what information is required at the centre—that is one area; another, for example, is senior salary levels—so we are sure as we go into the next financial year that all the partner organisations are working within the same disciplines as we are in BIS. One thing I have asked them to do is tell us if they think we can be doing anything more efficiently, because it is very important for an organisation like ours, which is smaller than the total of our partner organisations, that we do not have delusions of grandeur, if I can put it that way, in this matter. It is a joint process; we are working within the same disciplines.

Q28  Stephen Barclay: That is very helpful, because last year I think the Government spent £1.5 billion on consultants, £700 million of which was with arm's length bodies and no central data was collated on that. What you are saying is that, for the 70­odd partnership organisations within BIS, you will now be gathering that data?

Martin Donnelly: Essentially, yes. I hesitate only over one or two at the margins where there may be specific arrangements for expertise. For example, in respect of some of the research councils, a lot of what for us might be administrative spending would be defined as programme spending because it is very closely related to delivery of a particular programme, where slightly different rules apply. But the underlying logic, as I understand it, is precisely that.

Q29  Stephen Barclay: Okay. Well, that is very helpful. I do not want to misquote him and I need to check exactly what he said, but at our hearing two weeks ago, Sir Gus gave evidence which suggested that it wouldn't be practical to gather the data on consultants for arm's length bodies, so it is quite reassuring if we are actually going to gather that now.

Ian Watmore: As I was with Sir Gus on that occasion, I think what he actually said was that in the past it has not been but in the future it will be. And I think I explained that the—

Q30  Chair: I am not sure he said that, but I hear that that is what you wanted him to say.

Mr Bacon: "What he really meant was…"

  Ian Watmore: I am learning. I also said that the key was that we probably would only start to get really good data from April 2011 onwards, so that this year's data is going to be a hybrid, which is why when we presented to you last time, we had very good data on the centre of Government and approximate data on the arm's length bodies for this year. I think it will improve next year.

Q31  Stephen Barclay: Mr Watmore, it is a very helpful clarification; I am very pleased to hear it. Could you further clarify that interims will also be included in that central mandated data?

Ian Watmore: Yes.

Q32  Stephen Barclay: It will—that is great. And as part of the transparency, therefore, will we be getting in real time a sense of what is spent on consultants in terms of any restructuring costs around the changes being brought in?

Ian Watmore: I think it is going to be difficult in the first instance to say, "The consultancy was then spent on these five different sub­activities," otherwise we end up publishing so many different cuts of the same information. So I think in the first level we would be saying if the Department, which is BIS, spends £1 million on consulting we will record that and who the company was and what—

Q33  Stephen Barclay: But I thought one of the changes was that the Cabinet Office was now gathering monthly data on consultants?

Ian Watmore: Yes, we will be from the new year onwards, and in respect of the current period, we took a six­monthly stock take at the end of October, which is what I reported to the Committee last time, and new contracts have to be centrally approved, first by the Department and, if they are larger, then by the Cabinet Office.

Q34  Stephen Barclay: I guess what I am trying to get an understanding of is this. The Home Office, for example, last year spent £73 million on consultants and further money on interims. And I know Sir David had a memorable exchange with Charles Walker about some of the spending on consultants in your own experience. Moving forward, how are we going to get, as part of the transparency agenda, visibility on exactly what that £73 million in the Home Office is going to be spent on?

Sir David Normington KCB: I think that there will be quite a lot of detail. There's a limit to how far that will be broken down, but I think it will enable you, if you have not got what you need, to ask some further questions, frankly, and usually we will try to answer them. First of all, we are trying to cut the amount of consultancy anyway. I do not think we will be breaking it down into penny packets, but I think there will be enough transparency there for you to first of all see what the main spend is and also to ask some further questions. I would expect you to be able to see, actually, how much we are spending, if anything, on consultants for restructuring.

Q35  Chair: We are going to move on. I just want to ask a general question and see what the centre's going to do with Departments, because when Gus O'Donnell came here he said that the reason there's been a cut in consultancy—I hope I am not abusing what he said—is that you have stopped doing things. You have stopped doing ID cards, let us say, in the Home Office, so you have cut that out. When you start doing things again, you are going to be starting to use consultants. And particularly where you are cutting your core staff, your administrative staff, by a third, as you all are—and maybe both David and Martin can say yes on this—it seems absolutely obvious to me that you will have to use consultants if you are to do a lot of these change programmes as you move forward. If I am wrong in that, tell me, but if I am right and if that happens, what will the Ian Watmore, Kris Murrin and Ray Shostak do in those circumstances, so that we get an understanding out of it? I mean, will you make it work in the framework?

Sir David Normington KCB: Well, the first thing to say is consultancy costs are in the administration part of the budget, which has to be cut by a third. The reason I said it was a control total was that it means that we have to account for that, and if we overspend on that, the NAO will qualify the accounts. Therefore, that is the control on us not transferring costs from our own staff to consultants, and that is really important because I think that has happened in the past. Secondly, of course there will be a need for some consultancy in the future, but I anticipate it being mainly—as actually it has mainly been in the past—on more technical help for designing big programmes, of which there will be fewer. But we are actually trying, and have been trying for a year, to replace some of that technical expertise that you get from consultants by recruiting our own staff, who are a lot cheaper. There will be pressures here, but since there are a lot of controls and we are committed to a target of reducing by 50% this year and 50% again next, and we will be reporting to the Cabinet Office on that, I think you will see very clearly if we have not achieved that. and I think they will be down on us like a ton of bricks.

Q36  Chair: Well, you can probably say this as you are going to be departing. Are those constraints too much then? If you are cutting your central staff; if you've got this control which prevents you from employing consultants for project­based benefit; if you've got Gus O'Donnell saying, "We do not have project management skills within the civil service anyway, because we do not pay enough," are Government setting you more than you will achieve? Will it be less, and how will we be able to see that? Will you go slower, will you be doing less? Somewhere it is got to burst out, it seems to me.

Sir David Normington KCB: If you are cutting your capital expenditure as the Home Office is, by 49% in real terms over this period, there will actually be fewer programmes, and therefore I just do not think that in future we will have the pressures on consultancy spend that we have needed in the past,. So that is one answer. I think there will be some quite tough calls here, in truth. I think there will be some pressures. But actually I'd rather have these constraints on consultancy spend, because it is become such a hot potato really, hasn't it? And I think there are questions about whether we have spent too much on consultants in the past, and this will cause us to test very hard whether we need to spend money on consultants.

Ray Shostak: I think part of the answer relates to Ian's comments earlier on about the tight­loose framework, inasmuch as currently there are new approaches to working with Departments on their consultancy spend, relating departmental work to the work that the efficiency and reform group is doing under the leadership of Francis Maude. Now, that in itself will surface such issues in a very tangible way, and is currently doing so, and that tightness is without question part of the reduction in consultancy spend over recent months, and almost certainly will be into the future.

Q37  Matthew Hancock: I want to broaden it out a bit. When we see permanent secretaries twice a week in this Committee, we see that the problems that have led to whatever catastrophe we are looking at tend to be linked to poor data and a lack of accountability. Now, those two things are, of course, intertwined—if you have no data, it is hard to have any accountability—but we normally find out that (a) nobody knew how much was being spent on x or what the outputs were, and (b) nobody is ever fired. I want to ask you both your big picture reaction to that and whether you think that these proposals will improve those things. But also, specifically on the impact and input indicators in the Home Office, for instance, you can't possibly run the Home Office just on these two pages of indicators. So I suppose my specific question is what more data are you putting out there and how are you deciding what data you need, and how quickly are you going to get this data into the required form. I understand that it is for transparency reasons as well, as Ms Murrin outlined at the start, but also for internal management purposes more data is required. How quickly is that happening? So if I could ask first in terms of the Home Office specifically, and then maybe Ms Murrin could spell the position out more broadly.

Sir David Normington KCB: I agree with your underlying assumption that we need more data than is going to be published here.

Q38  Matthew Hancock: Do you agree with the accountability bit as well?

Sir David Normington KCB: I do. May I come back to that though? I believe we have a great deal of data, actually. I think the issue is whether it is the right data to tell us where the risks are, and whether we have the expertise and focus needed to spot those risks before the thing blows up into a crisis. I think that in the history of the Home Office, that has been a problem on a number of occasions. However, I think by the spring we will be able to show you that there is a detailed plan and what data we can put into that plan. If you just take the immigration area, we have a huge amount of data which is both about outputs and about process in terms of timing and the speed with which we deal with things.

Q39  Matthew Hancock: Hold on, are outputs the same as impacts? You said outputs.

Sir David Normington KCB: Well, yes, I used the term "outputs"; impacts, outputs, frankly—

Q40  Matthew Hancock: We are all getting used to the new language.

Sir David Normington KCB: We are getting used to this language, although I guess I may not have to. But they are broadly the same thing, in fact.

On accountability I have quite a few examples—and I have never sought to make a public spectacle of this—of people we have moved on because they have not performed well enough. There are one or two examples of permanent secretaries moving on in those circumstances, so I entirely accept that there's a need to—

Q41  Mr Bacon: Can I stop you at that point, because I remember when you were permanent secretary at the Department for Education and we were looking at individual learning accounts. You were asked—this was about seven or eight years ago; in fact it was 2002—whether the people responsible for it were still there or whether they had been fired, and you said, with a certain degree of satisfaction, "They are no longer on my payroll," the clear implication being they were still on the taxpayer's payroll, but somewhere else. The example you have given of permanent secretaries is true, but a couple of examples of what quite often happens feature in some of the books that have been written recently, including something that happened under the last Prime Minister but one. Or was he the last Prime Minister but two? Anyway, it was under Mr Blair; it is so difficult to keep up, isn't it? Jonathan Powell's book gives an example of a permanent secretary who was moved on, and because they insisted on not promoting him to get rid of him—it was seriously put to Mr Blair that he should promote him to get rid of him—there was a huge row and it took several years and £2 million to get rid of him. Now, that is not satisfactory, is it really?

Sir David Normington KCB: Well, I do not defend those things. That is not satisfactory. I believe in accountability and I believe that if there is serious failing that can be pinned on people, there have to be consequences.

Q42  Matthew Hancock: Do you think that this process will improve that?

Sir David Normington KCB: I think it will because there's a great deal more information out there and some of it is comparative information between Departments. But you still have to take that decision to do it. It doesn't make it any easier to take that decision.

Q43  Matthew Hancock: So, Ms Murrin, maybe you can answer on that point, because the question is whether this will be done more than in the past, and that ties into whether these business plans are an improvement on the old approach, so in terms of more data and more accountability, do you think these will improve the situation, and how?

Kris Murrin: I think we can unquestionably say that there will be more data in the public realm, and that is probably a good thing. In terms of how the process will work, my job in the centre is to make sure that as much data as possible is made available to stakeholders and to the general public to make assessments for themselves of the job that we are doing. I think specifically in the business plan there are a number of sections in the transparency half. It lists all the data that Departments are making available with a clear timetable as to when that will be published, how regularly, and to what level. What we have then tried to do is to say at a very macro level on the input and impact indicators, what is the handful of indicators that will give us the greatest sense of what is going on out there at a service level. They are in consultation for a very good reason. We want advice from people: are these the right ones? Are they the most useful? I have been given a very clear steer by the Government not to make it a very big bureaucratic task, and to keep them down to a very manageable level, but to find out what are the most appropriate ones, and that will be done over the next few months.

Q44  Chair: But let me ask Ray, how is that different from the PSAs?

Ray Shostak: There's another thing that we need to add—and this is certainly very different from the previous regime. You'll have seen that in the Cabinet Office business plan—and there's a short multiple choice test on the Cabinet Office business plan in a minute—it will be publishing a departmental scorecard which captures the data emerging from the business plans, and it will do so on a quarterly basis. That will be used by the departmental boards. You will have seen that the Government has announced a new cadre of non­executive directors who will be working in the Departments as part of their departmental boards. All that will be much more part of the departmental machinery and part of the accountability structure relating to the sorts of issues and concerns that you are raising. There is no question but that unprecedented amounts of data will be available. Now, that begs a range of questions on which we have been working with the NAO, on ensuring that the data's robust, timely and actually measures something that people want to have measured—and all the sorts of concerns that we may or may not get on to this morning. There will be unprecedented amounts of data at local level and at national level, and that data will be available to be used, as Kris outlined earlier, by everyone: by the public and by yourselves, and, as David and Martin have outlined, it can be used in terms of the management of the Department, and so things will be very, very different in that respect.

Q45  Mr Bacon: What will be in that scorecard?

  Ian Watmore: Yes, as I was trying to say earlier, where there's common data across Departments, we will put it out there for comparative purposes so that you can see and compare and contrast. We have always had this difficulty in government that individual Departments do unique things and therefore it is difficult to compare them, so what we have tried to do here is to say there are certain factors about the way Departments run that is consistent across Departments—things like the ratio of back-office costs to front-office costs—which you can start to compare and contrast across Departments. You might then sub-categorise them into small Departments, very large Departments and those with big reach, and there might be only three sub­categories. That is to be worked through, but I think that is what we are trying to get to. Obviously the impact of the education policies in the Department for Education is not directly comparable to the impact of home affairs policies that the Home Office might implement, but administrative cost comparisons can be made, and that is the sort of thing that we will be comparing

Q46  Mr Bacon: So is it going to be numbers rather than the office of budgetary management traffic light system?

Ian Watmore: Yes. It is the numbers that are in here, but aggregated and compared and contrasted, if you like.

Q47  Stella Creasy: The story that is coming across at the moment is there's a lot of data that is going to be published, but what I am quite interested to tease out from you is how that is actually going to affect implementation, because it would be useful for me to understand as a start how the milestones connect up with the impact or input or output indicators that you've got. I mean, how do those mesh together? What's your understanding of how that is going to work? Is it on a departmental basis or perhaps on a Treasury basis, because obviously from what you said at the start it was not the Departments but the Treasury who were actually involved in setting those.

Kris Murrin: I think the front half of the plan sets out in detail the processes that will be gone through to deliver the reforms that the Government has set out in the coalition agreement. The input and impact indicators are in draft for a very good reason, which is that is the best available data that Departments have suggested maps most accurately to the reforms and will give the greatest amount of clarity on what is happening out there across the system, but we are looking for input on those to see if they are the most appropriate ones for the next few months.

Q48  Stella Creasy: So when this gets published in the future, the milestones will then be matched with a list of input indicators? You'll be able to see how those match up to the milestones you are trying to achieve?

Kris Murrin: As much as possible, but obviously one of the things we do not want is to start putting big and very costly new data requirements on the system, so what we are trying to do is get them to match as closely as possible but at a very good value-for-money and appropriate level.

Q49  Stella Creasy: But you must have some understanding within the Departments that if you are working in the Passport Office agency, for example, the input indicators that you've got there will fit the milestones that you are trying to achieve. So you should be able to cross-reference them, surely?

Sir David Normington KCB: You should be able to cross-reference them, and particularly in an operational area like that you will be able to. But if you take another example, some of our milestones relate to the creation of elected police and crime commissioners, which is a process issue, and the milestones on that are about delivery by a certain time. The impact indicators are hard to line up with that. Clearly, there will be some impact, but it is hard to say, "That is the impact of doing that." Clearly, that is about shifting accountability to elected people locally, and the data then will need to be out there to enable local people to judge what's happening locally.

Q50  Chair: This is a really interesting one, because we are going to see decentralisation and localism across government. What happens if your local elected police authorities do not deliver to your national priorities? Do you let them get on with it? Do you interfere? Does Kris interfere? Does Ray or Ian interfere? What happens if they spend too much on admin? What happens if they, even at that level, do not do what you want on drugs and alcohol?

Sir David Normington KCB: Well, the elected police commissioner as one person, not an elected authority, will be accountable for what happens locally and although there will be a small number of national priorities to which for instance local police forces have to contribute, such as the detection of serious organised crime, most of what they do they will do locally and they will be held accountable locally, and actually this signals a shift away from setting national priorities.

Q51  Nick Smith: On the subject of data, I am just trying to find a link in your business plan between the plans on pages 14 and 15 and data at the back of the document. I am glad that you are going to try and make sure that there's a relationship between the actions you propose to take forward and how you are going to measure it later, but I just can't see anything on alcohol licensing, and we mentioned earlier the gap in working with people who were alcohol abusers. I wonder how you are going to show that in your data later on.

Sir David Normington KCB: I do not know, actually. I think it is an interesting point, because what you'll be able to measure is whether we have done the actions there. In fact, we have always published data about alcohol­related crime, for instance. So I think there's an interesting question there. I think this may go to areas that we have not got in the high­level business plan, but where we may be publishing that data anyway. I'd quite like to think about that, because after all this is an iterative process and it may be that there are some more things we ought to put in there.

Ray Shostak: Part of the question you asked originally was what difference it would make in terms of implementation. I think that is inevitably a key question as regards the approach and whether or not the data will be helpful to implementation. At the end of the day, the quality public service—what really matters—is what is actually happening with regard to an individual citizen and their local service—their police officer, teacher, nurse or doctor. The plans are intended to try to build clarity about what we are trying to achieve, presented in terms of what the Government, what the coalition, is looking to achieve within its public services, and to ensure that there's a consensus around that. Inevitably there then needs to be clarity on roles and responsibilities and who is going to be responsible for what. Again, the plans are beginning to articulate far more clearly what the role of Government is and what the role of other agencies and other service providers is. Sets of data are needed that enable us all to know whether what we were intending to have happen is actually happening—hence the relationship regarding the transparency of the data—bearing in mind that local people will use that data for slightly different purposes from national Government. Of course, there follows all the other detail on feedback loops making sure there's good sound management, governance and so on.

Q52  Stella Creasy: Sure, but that leads me on to something else. There is obviously a difference with regard to the scrutiny that can happen in the public realm, because of the data that you have published and how you are using it to deliver as a Government agency on the priorities that you've set. That brings me to my second set of questions, which are about how this data will enable checking of where things are going wrong or are not being delivered. There is number of issues already that you've identified where you are overdue on things. How are you using data to track your ability to deliver the things you say you are wanting to do in this new system, and what then are the traffic lights that come up—or perhaps you used to use traffic lights—to say, "Well, this isn't happening, so how are we going to make it happen?"

Q53  Nick Smith: I understand that alcohol-related crime costs the country about £7 billion a year—and in Wales there were 76,000 such examples of violent crime in 2008. What data are you going to use in your action plan in the future which makes a difference back in Blaenau Gwent, where we are concerned about the cost of alcohol­related crime?

Q54  Stella Creasy: Also you've listed as overdue the end of child detention. So, you've got that data. How then does it feed into the system of actually achieving outcomes?

Chair: There's a lot in that.

Sir David Normington KCB: At least you know we are behind on the end of child detention. In fact what is happening is that there are a large number of questions asked of Ministers about why we are behind—and I think that is progress, actually.

Q55  Stella Creasy: As I say, this is not necessarily about public scrutiny; it is about how you are using the data. I am trying to understand where this comes into your Department—

Sir David Normington KCB: How I am using that is to say we need to come to an end point on that, and the intention is to try to do so before Christmas. So for me that is being used as a management tool in the Home Office. There's a whole process beyond this for me, where I manage the Department, and I manage the Department by looking at the key indicators and deciding why we are behind and so on, and then flagging that up to Ministers if necessary.

Q56  Stella Creasy: Yes, and so where does that then fit in with the escalation process you talked about?

Kris Murrin: I think you raise a very good point. At the moment, on a two­weekly basis, Ray, myself—the centre—meet Departments and go through their plan and see what progress has been made. At the end of each month—the Friday after the last day of the month—a monthly report is published on the No. 10 and departmental websites, which you can all look at, which sets out exactly which actions are overdue, and the Department is required to give an explanation as to why it is overdue, and then a judgment is made as to what is the most appropriate way of then dealing with that. Clearly, if there is an issue, as David points out, it is now flagged very early and allows you to actually use that data to do something about it in a more timely manner.

Q57  Mrs McGuire: Could I ask whom the plans are intended for? I am a bit confused as to whether or not one set of business plans can actually meet all the requirements that we have heard about this morning. Sir David said it was a management tool, somebody else said it was about public accountability, I can't remember who said it was about stakeholders. Can one business plan in this format meet all those demands? Discuss.

Kris Murrin: I think inevitably no document can meet the needs of everyone who wants to read it to a greater degree. I think what it is designed to be is giving the maximum amount of information to the greatest number of people. It will inevitably not meet everyone's needs to the greater degree.

Chair: So what else are we going to have?

Q58  Mrs McGuire: I am trying to get a handle on who is the intended audience of the business plan. Is it technically a business plan in the sense that most of us around this table would understand a business plan to be or is it, laudably, an issue about accountability of the Government for its coalition manifesto? I just think there's a bit of confusion at the heart of this, no matter how laudable I think the idea is.

Kris Murrin: Thank you. I think it is a bit of both. I spent many years working in the private sector and it has many of the elements that you would see in a normal private sector business plan. But I think it is primarily an accountability tool. It focuses, as we have discussed, primarily on the structural reforms that the coalition Government are trying to deliver. It will be used in a number of different ways. Departments' staff are using it to work out the priorities that they are being asked to focus on, but as David had pointed out there will be other documents that Departments will need to do the day­to­day running.

Sir David Normington KCB: It is not enough to manage the Department. It is a starting point, but it is not enough, so I wouldn't regard it as a tool managing the Department. The detailed planning has to hang off this for managing the Department.

Q59  Mrs McGuire: And to follow up on the Chair's question, will some of that other information which will underpin the business plan be made public as well?

Sir David Normington KCB: I think so, yes. Even if I said no, in these days of freedom of information, it would be a yes, anyway. So I think the answer is yes.

Q60  Matthew Hancock: Sir David, just on that specific point, you said earlier that the operational plans below the business plan will be published for your agencies under the Home Office but not for the centre. Why not?

Sir David Normington KCB: Well they might be. To be honest, I am not quite sure what kind of a plan we are going to have for the centre. But I am perfectly happy to take your view that we should try to make as much of this public as possible. There is a full business planning process—an operational planning process—below this which effectively takes it from the centre of the Home Office out into the agencies.

Q61  Mrs McGuire: Are the plans that we have in front of us by way of example four­year plans, to be refreshed annually? I wanted to try to find out what "refreshed annually" means, because in flicking through the plans as they are—I appreciate that they may well not be in their fully refined state—I see that everything seems to happen between now and, I think, November 2011, with the odd exception of March 2015, and nothing seems to be happening between 2011 and 2015. I would have imagined a four­year plan might lay out far more succinctly what would happen in years 3 and 4.

Ian Watmore: The Cabinet Office plan has a number of things in it for 2012 and so on which relate to matters such as voting reform and constitutional reform. In any one of these plans, if you are looking four years ahead, you are going to put out the big things that stretch out four or five years ahead and you are going to put the near term in a lot more detail. That is the way you do planning and management by work programme, which I've done for many years and I am sure lots of you have. What we will do each spring, and possibly every half year, is just bring the next group of activities into focus and put them out in more detail, and if in the meantime some new big things have come on to the horizon we will put those into the medium­term plan.

Mrs McGuire: So that is what the "refresh annually" will be about?

Ian Watmore: Yes.

Kris Murrin: Exactly.

Q62  Mrs McGuire: Now, I have one final question if I may. I think Mr Shostak said that there would be an unprecedented amount of data. How are you going to manage the unprecedented amount of data in any meaningful way, whether for internal use, for the use of Committees such as this or for all those other people who will be interested in this, given some of the difficulties that the civil service has had in the past about managing data? I think you used the phrase "unprecedented amount of data".

Ray Shostak: I did, and I mean it. It is absolutely the case that all agencies will now be providing more information and data as part of the approach to transparency that the coalition is taking. We are looking to manage the availability of some of those data sets through Directgov and through other means to try to make them easily accessible and available. We will need to monitor and develop that process as we go on. Individual organisations, local government and institutions will also begin to make more data and information available to their local users, so that different people in the system can use it in playing their part in the development of public services, as well as in exercising their choice in the use of public services. So we are not going to try and manage it all; we are going to try and manage the aspects that are part of the Government.


Q63  Joseph Johnson: Mr Shostak, thank you for that. I've tried to use some of the databases that the Government have put up online, and I actually found it very difficult. In particular, I was trying to find some data on a database that BIS manages on behalf of UKTI relating to how much UKTI spends on grants to the UK India Business Council. It was quite a specific request, and I really tried hard to interrogate this database but every time it came back with no result. Of course, that is just anecdotal, but I think it will be a massive challenge to make this data dump user friendly, so that it is really valuable to people.

  As you said, Mr Shostak, the coalition Government are putting a tremendous emphasis on the transparency framework as a tool to drive efficiency and value for money across Departments. Really, this is s a question for the two permanent secretaries. I know it is very early days, but can you give us any examples of behavioural change that you are seeing in your Departments with regard to how the transparency agenda is helping change the way your civil servants spend public money?

Martin Donnelly: I think it is a very serious question and it is a very big challenge. We have deliberately tried to push this forward, so we are publishing all our spending above £500, for example. I do believe that more transparency is a necessary condition for more effective behaviour, but it does need to go with a culture in which people are not put off risk taking to the extent that if they think there's a risk that something might go wrong they decide that they will play safe and do something which will be a less efficient use of public money overall. Now, it is our job, and ultimately my job, to make a judgment about the risks, but it is really important that we move towards greater transparency in a non­defensive way.

Chair: You have not really answered the question.

Q64  Joseph Johnson: Yes, is there any example? I am really looking just for examples of what civil servants may have done differently as a result of the prospect of greater public accountability through the transparency framework.

Martin Donnelly: If I may return to the spending above £500, I have no doubt that already in respect of issues such as away-days and the use of consultants, decisions which would have been taken with rather less rigour are now taken with more rigour—and we can see that feeding through in the figures for less spend on consultancy and tighter admin spend at the centre of my Department.

Sir David Normington KCB: I think at this moment it is the main effect. The knowledge that all that is under scrutiny, and indeed our own personal behaviours are under scrutiny in terms of what we spend, where we travel to and so on, is causing people to think very hard. It is a precise example; if you put things out in the public domain people say, "Oops, I do not think I am going to do that." Now, that is at a very high level. The question is whether that kind of change than then work right through the civil service. It also, if I may say so, causes the senior people to look. When you get the list of all the things that your Department has spent over a certain level and you start looking at it, of course, senior people start saying, "Well, why are you spending that?", so I think we will see the management culture changing as well, and that will change the culture of the Department.

Q65  Joseph Johnson: Thank you. Just to follow up on that, is there not a danger that you find that quite a large chunk of your Department's time is spent dealing with public inquiries relating to possibly relatively trivial sums of money and have you factored in how much civil servant time is going to be bogged down, effectively, by the transparency framework in that sense?

Sir David Normington KCB: Well, I think it is quite likely, but then that I think is the consequence of transparency. We have not factored it in as such and we certainly have not put a cost to it, but I think it is quite likely that those requests will come up.

Q66  Chair: Are you going to monitor the cost?

Sir David Normington KCB: Sorry?

Chair: Are we going to be able to see the cost of this?

Sir David Normington KCB: I do not know. As it is quite dispersed I think I think it will be quite difficult to see—

Mr Bacon: The chap behind you was shaking his head in answer to that question.

Sir David Normington KCB: In that case the answer is no.

Q67  Chair: There is another issue on this data as well, because it may make for a good—

Ian Watmore: Could I just answer Mr Johnson's question?

Chair: Go on.

Ian Watmore: I do not think it is absolutely necessary that we will get zillions more questions on it. For example, we have discussed in this Committee before the contrast between gateway reviews and capability reviews, the latter of which were published, the former of which were not. I am sure we spend more time defending the reasons why the former one wasn't published than we did answering questions on the others once they were published. There is absolutely no reason why putting the information into the public domain actually doesn't answer a lot of questions before they come up.

Q68  Mr Bacon: Was that an announcement that you are going to publish gateway reviews now?

Ian Watmore: We expect very strongly that we will be getting those reviews out into the public domain, because the whole point of the transparency framework is to put these sorts of things out there for people to consider. If they come back and ask questions, at the end of the day you have to make a judgement as to whether it is worth paying the extra money. I think the real challenge will be how we turn data into information. It is quite easy to splurge data on the general public; it is quite hard to give it the context, and that is what I think will evolve over time. COINS is a good example. We published COINS; you know now how hard it is to understand COINS data, as we have known for years, but what that is leading to is a reform of the COINS system and therefore you'll get better information out of it. I think that that is the kind of medium-term pressure we will get, rather than zillions of little itsy­bitsy requests that we have to deal with on a day­to­day basis.

Q69  Chair: Okay. I've got a list of six people, and I want to come in to. Amyas, James, Nick, Stephen, Matthew. Who have I left off?

Amyas Morse: There are two points I might ask you as a group to comment on. I am sure when you made these proposals you must have thought about the US experience of publication. I'd just be interested to know, not at great length, whether in the US that led to a torrent of inquiry or not. This is presumably looking at the US experience and seeking to get some of the benefits of that, so I would be interested to know. Perhaps Ian or Kris—

Ian Watmore: My understanding is the politicians who put this framework forward did look very seriously at the US experience, which is more open on these sorts of issues, although we have discovered this week that it is maybe not on all of them, and I think their view is backed up by the answer I gave to the previous question, which is that the sheer fact of putting this information into the public domain first reduces requests for data, but secondly puts more pressure on behavioural change inside the system, and that I think is their political philosophy behind that.

Amyas Morse: Okay. So in answer to what I was asking you, there wasn't a new torrent of inquiry because there's a lot more data out there is what that experience—

Ian Watmore: And I think there's always a subtle difference, if I may, between the point at which you first release something and the routine publication. We found with the capability reviews that with the first round there was massive interest, but by the third people were just taking it as part of the culture of government.

Amyas Morse: And on one other very specific point, if I may. At the moment not all the priorities are tied to impact indicators and I understand that. But can I ask whether by April 2011 the priorities will have monetary costs associated with them in most of these plans? I do not mind who answers.

Sir David Normington KCB: I've already answered that I think by saying there will be a detailed breakdown.

Amyas Morse: Okay.

Sir David Normington KCB: I am just hesitating about whether it will be possible to put alongside each priority a sum of money. We have to get as close to that as we can.

Amyas Morse: That is the intent, on all core Departments, is that right?

Kris Murrin: No, I do not think that is the intent. As David says, there will be detailed spending information in the plans for the next financial year and it will be possible to aggregate that to look at the big priority areas for a Department, but as David said, I do not think it will be articulated as a particular sum of money for each priority.

Amyas Morse: So if we are looking for financial accountability we should really be looking at the Department's comprehensive plan to follow through the money?

Sir David Normington KCB: Yes, every department's different here. We give, without conditions, to the police about 60% of our budget. There's a different answer for each of us. That is why I am just hesitating.

  Amyas Morse: No, I understand. Thank you.

Ian Watmore: I think it is important that we are not trying to drive this from the centre. You can debate whether this is the right philosophy, but the point of philosophy that hasn't really come out is that these plans are about the activities of the core Government Department. Most of the reforms are going to be in the wider public sector, community sector, very local. In the past there was an attempt to directly cause-and-effect link those things and I do think that is what they are trying to do here. They are trying to hold the Department to account for what it does, and for local deliverers of services, for the services that they provide to the public and there's a separation there.

Q70  Chair: I've got a list of people waiting to ask questions, but I am going to just abuse my position as Chair for a minute, because there is a conflict here: we are going to decentralise it all—your police chiefs and things are going to do it—and we have a set of national coalition priorities. What I can't get at all is this. Where that comes into conflict, both in terms of reductions in spending and in terms of—I can't remember the word you used—output data, what's going to happen? Who's going to come in? How are we going to resolve that, or are you just going to let it hang out and say, "Well, there's the information about it all; that is it'?

Ian Watmore: I can start with the efficiency side. I hate to use the phrase "tight-loose" continually, but it is the one that the Government use. The "tight" bit is about the efficiency indicators, and those are the bits that we will hold central Departments to account on, to make sure they spend their money efficiently.

Q71  Chair: And if the police chief, hospital or school doesn't deliver the efficiency, then what?

Ian Watmore: In the case that I am talking about it is the Government Department's efficiency that we will be looking at.

Q72  Chair: Most of the money's out there.

Ian Watmore: When the money moves out there, then I think you are into a different regime. If you give the elected or local official freedom to—

Chair: Overspend?

Ian Watmore: No, overspending is an accounting—

Q73  Chair: So you sack the police chief, you shut the hospital?

Sir David Normington KCB: No, because in the police chief's case that will be a decision for the elected police commissioner. There will be a big shift there. It is of course different in the police area because there will be a directly elected person who will be elected specifically to oversee police and crime in their area. In fact, we are not just saying, "It is all out there." We are also saying—it is in the plan—that there needs to be a set of data by which local people can judge whether the local force is delivering: street level crime data, antisocial behaviour data, police arrests, stops and searches, the number of complaints by police force. That will be required data as well, but the accountability is then local.

Ian Watmore: That is the difference.

Q74  Chair: And for hospitals and schools?

Sir David Normington KCB: I do not think I can answer on hospitals and schools.

Q75  Chair: Well, maybe Ray can: what happens if a school or hospital overspends?

Ray Shostak: I think the point you are making there is absolutely right—that it will be different service by service and area by area. What happens in the police, because of the nature of the reforms in terms of the elected police commissioners, will be different from what happens in health because of the NHS commissioning body, which will be different again from schools—and slightly more complicated in terms of the relationship between academies and free schools. So there isn't one simple answer to that. What is clear is that there needs to be both local accountability, and indeed an interest represented within the business plan in terms of the overall spend of public money.

Q76   Chair: So as we try to hold Government to account for meeting its objectives and spending within its budget, and meeting the coalition priorities, will we know who is accountable? Will we know is it the head teacher, the elected police chief, the commissioning body? It is Richard's old thing: will there be somebody to whom we can say, when that goes wrong, "The buck stops with you?"

Ray Shostak: We are in new territory here. I know Lord Adonis came in and met with you some weeks ago and the IfG is doing a piece of work on accountability within the decentralised structure, and the coalition has committed itself to a new approach in terms of decentralisation. It is absolutely the right question to ask, and we are going to need to find answers to that, but it seems to me inevitable that there will be people who will be accountable in the system, in a slightly different way from what we have seen in the past.

Q77  Chair: And when will you be able to tell us that? Will that be clear by April?

Ray Shostak: We will be able to tell you that service by service, as David has just done.

Q78  James Wharton: I am quite pleased that we are getting the opportunity to look forward to something that is going to be implemented. On this Committee, we very often look back over—and deploy our amazing collective powers of hindsight to identify—things that have gone wrong in the past, and tease out some of the lessons that can be applied to the future. The one thing that concerns me a little bit—and I think Anne has touched upon this in looking through the business plan—is that quite a lot is happening now and there is lot of change that is being implemented at the moment. In April 2011 we are going to have some new data that we can work with—we are going to be moving forward with this programme, and if it works it is going to be really good. We are going to have all this information so that we can then dissect what's going on with new layers of accountability and so on. But what about the gap between May this year and when all this comes in? I am looking for some reassurance that we are not taking our eye off the ball, because there is an awful lot of change going on already and we are looking to implement new processes by which we can hold that to account, but there is this year or so in between where there is a lot happening. I would like some reassurance that the Committee is not going to come back in two years' time and look at this year and say, "What went wrong there?' and the answer is going to be, "We hadn't implemented our new measures at that stage so we weren't really looking at it." I want some reassurance that what's happening now is being effective.

Sir David Normington KCB: The previous regime wasn't data free. It is really important to say this. There was a lot of data out there. Of course, what this is doing is measuring some different things and making data more available to the general public and also breaking it down into more locally usable data, so there is quite a lot of change. However, certainly in my area, there is a great deal of data, but it is against the previous Government's priorities, if you like, on crime and on immigration, and that is still being published on quarterly basis and at the end of the year, as normal, we will produce an annual report with a great deal of data about what we have done, how much money we have spent, and showing it against the priorities of the Government. There is quite a lot of material out there. It is not as though there is nothing happening at the moment in terms of collecting data and publishing. It is just that it is not against this framework.

Q79  Mrs McGuire: I remember we had annual reports in 1997 and 1998; did we have annual reports after that?

Sir David Normington KCB: The Departments have produced their annual reports—

Mrs McGuire: I remember the first flurry with which the first Government annual report was received.

Sir David Normington KCB: I do not know about that, but the Department has produced annual reports.

Mrs McGuire: But there won't be a Government annual report?

Ian Watmore: I think it is a good challenge to get these business plans to reflect the medium term, as well as the short term. There has been a big focus on making sure that the next six months of activity is clearly identified, so that people can put that there. I think what we need to do to develop these plans is to lay out more clarity on how the four years will shake out. If I go back to the answer I gave earlier, you will get more detail at every six-monthly refresh. I think that is a good challenge.

Q80  James Wharton: I have to say I have some concerns based on personal experiences and information that comes to me in my role as a constituency MP and in the work that I do day to day. A good example is the replacement of the RDAs with the LEPs and that process and the winding down of the regional development agencies. Now, I've had information come into me about the way in which my regional development agency is going to do that and the way in which public money is being used. Whether it is accurate or not—and I am being very careful with my words here, because I do not want to make accusations that may be unfounded—information has come to me about people's job positions and titles being changed and shifted about to benefit those individuals, rather than to have the most efficient winding-down process. I am fearful of that we will find, looking back, that we took our eye off the ball during this transition period. Everyone is focused on where we are going and where we want to be in this new regime and there's this period of quite dramatic change. My private concern, which I would want to put on the record as much as anything—as well as to get a response from you—is that we do not lose sight of what's going on now this year with all the changes that we are making.

Ian Watmore: I think that that is a really important point. All three of us who have departmental responsibilities will say this is a subset of what we are doing, and that what we are doing on a daily basis is much more than this, which means that we cannot take our eye of that particular ball. That is an absolutely clear objective.

Martin Donnelly: Just briefly on that specific point, we do have a transition board made up of all the key Departments and the RDAs to ensure an effective transition. This is a very big challenge and it is one that is high up our risk register, and we are seeking to manage it actively with the RDAs themselves.

Q81  Nick Smith: Like James, I welcome the emphasis on local data and transparency and we will see how that shakes out in terms of the public response over the coming months. I think it is okay that you are producing data on passport application times and processing because all that is important and relates to the sort of work that this Committee does. But what is really important is collecting data and publishing information on what I think of as the tricky issues in public policy, like drugs rehabilitation and the cost of alcohol­related crime. I just want an emphasis on those things and a bit more information on them, to see that we are doing the right thing in those public policy areas. I know this is a work in progress, but I would be more interested—and I think the public would be more interested—in progress in those key areas, rather than what I think of as pretty vin ordinaire public administration.

Sir David Normington KCB: If you take the Home Office plan, there's a mix of those efficiency measures and data that people will really be interested in, like crime and antisocial behaviour, police response times, and so on. There are some real things that really interest people. I think your point about drugs and alcohol is a fair challenge, actually, and I promise to take that away, because the last time I appeared before this Committee, in its previous guise and under its previous Chair, the session was on drugs and on drug rehabilitation. There was a lot of data before the Committee at that point, but the NAO also pointed out some areas where there was not enough. So, again, it is not as though there isn't a lot of data about drugs, drugs treatment and drug rehabilitation; it is just that we have not committed ourselves to publish anything in this plan. There is a lot of data and it is a really interesting question as to whether we should commit ourselves here or we should just do it, but getting a match between what people are really interested in and this plan is what it is about. This is, in a sense, why we are having a consultation about the transparency bit. That is why we are having it, really.

Q82  Nick Smith: Do you think you've got the right balance?

Sir David Normington KCB: We may not have done yet.

Q83  Chair: I am glad that Nick asked that question, because I think there is a general issue around the data. There is data that you require for management purposes or to ensure that we are cutting the spending, and then data that the public are interested in. I think that the two are not necessarily the same. I am thinking back, David, to the question, "Are we are going to get Ofsted inspection data?" which is hugely important to parents in deciding which school they choose. I think they are probably less interested in whether the school has kept within its budget. I do not know if that is a Kris Murrin question, or a Ray Shostak question, or a question for Ian. How are you going to meet the different demands of different populations?

Kris Murrin: That is absolutely right. As a number of people have said, the business plan impact indicators are not in any way meant to be a summary of all the data that is going to be provided. There are huge numbers of data sources that are already being collected in Departments on myriad areas. My role very specifically is to make as much as possible of that data available to the general public, so that parents can use whatever data they would like to make a choice. The highlighted areas, the impact indicator level in the business plans, is a subset of the 10 that, so far, were judged to be the most useful macro­datasets to give you overall an understanding. But the very reason that they've been put out there in draft form is to consult and say, "Are these the most useful ones?" That doesn't in any way curtail other data sets being collected on all sorts of issues and made public.

Q84  Stephen Barclay: This point builds on recent questions, and it is about the balance between the quantity and quality of data. Sir David, you commented that there is great deal of data out there at the moment. However, I was surprised, for example, that the Home Office wasn't keeping data on how much compensation it paid on asylum issues. As part of this transparency, I would welcome an answer to who is driving the assessing of where there isn't data and where the data should be raised? Is that coming from a challenge centrally, or is it very much for the Departments to identify that sort of thing?

Sir David Normington KCB: It will partly come from the political priorities we are set, both by the Home Secretary and by the centre of Government, but I think in this process—and in a sense this conversation is proving this—it will also come from the public, and from the representatives of the public, who will be saying, "There's all this transparency, but actually we can't find out what we really need." If we are serious about transparency—and the Government are very, very serious about it—then we have to try to respond to that. If we are not providing data in a way that people can understand, it is not going to work, is it? That is why this is such a big change, really; it is trying to get data in a form which is usable, answering the questions that the public and you would want to have answered.

Q85  Stephen Barclay: As part of that, are you going to be putting, perhaps, names attached to certain priorities, so that there is transparency as to who within the Department actually owns some of these issues?

Sir David Normington KCB: Well, it depends which priorities you mean. Ministerial names have to go first against the priorities, don't they, because ultimately, that is where the first line of accountability lies for the political priorities that have been set.

Q86  Stephen Barclay: But that is more at the policy level. I am talking about the execution level as well.

Sir David Normington KCB: Yes, but a lot of these things are about policy, to be clear. But we have not gone as far as doing that. Of course, what we have just done is put a great deal of information about the organisation of our Departments in the public domain with names attached to it. We have not gone as far as I suppose we could, but I perhaps ought not to commit myself to that.

Chair: The trouble is that people move so fast, both ministerially and administratively.

Q87  Stephen Barclay: The information that we have got is helpful. I was struck that, for example, in your Department there are 150 staff on press and communications and 64 in your private office. Obviously you yourself will be departing, but in terms of understanding the challenge you have on administration and the cuts there, will the permanent secretary be determining where those administrative savings come or is this going to be coming from the central challenge—for example, looking across government at the press operation and whether press and communications can be done more efficiently across a number of Departments?

Sir David Normington KCB: It will be a bit of both. The first responsibility is for me to organise the Department to meet the priorities within the budget. Since the money isn't there, I have to hit the bottom line that I am given in terms of the money. And there is a requirement to cut administration costs by a third and the communications functions are encompassed within that. Now some of those savings can be achieved in our corporate and support services by sharing those services with other Departments across government. So, for example, the pension services across government are provided from one place for all civil service pensioners, and I think that model will become more and more common, so we will have fewer of our own dedicated HR and finance services and we will have more of them shared. We are already down that road, but to meet the requirements here in terms of meeting expenditure we will have to go a lot further. By the way, it is not my private office that has 64, but the Home Office's private office, and I would never cut the private office without consultation with the Ministers.

Q88  Matthew Hancock: I have to say that this has been one of the most reassuring, helpful and positive Public Accounts Committee meetings I have attended in my short six-month stint—so I want to ask a more difficult question. So far we have been talking a lot about the data, about accountability and about structures, but in these big changes that are evidently being put through, in terms both of reforms and of the process of managing the reforms—high-level stuff such as the business plans that we are talking about—we have not talked about the human aspect, and a lot of change management is about the human aspect and about managing people. The civil service, if I may characterise it this way, hasn't always won awards for its management of people and in particular for its change management. Given the scale of the task that lies ahead of you, I wonder what, alongside this, you are doing to ensure that that management ability is there—because it needs to be there right now—and to make sure that you manage that human aspect to keep all this on track. I wonder if there might be someone from the centre who might be able to answer that first.

Ian Watmore: Can I start and maybe get the Departments to pitch in? I think you are right. The Cabinet Office's own staff survey has just highlighted that in the very last month that confidence among the staff in change management is low. You are right to raise this. There are three levels to this matter. One is, "What's the macro change that is going across the whole system?" You want something that is relatively light touch at that level—you do not want micro-management of the change from No. 10 or the Cabinet Office or whatever—but we do need something that looks across the whole change picture, and I think we talked a little bit about this in the previous forum I attended. There are three types of change going on. There's the change in head office land, which is here and now; there are changes in the big Government agencies, which are probably spread over the next couple of years; and then there are changes in the wider system, which are probably much longer term. There is a series of changes that are overlapping that add up to a financial picture that roughly declines a quarter on each year, but is actually in each area quite dramatically different, so that is one picture that we are trying to look at centrally.

The second level is then, "What's the best experience and the best practice?" We had a really good meeting of the permanent secretary group in September or October where we actually got three or four permanent secretary colleagues to tell their own stories of what they've been doing in their Departments, and people are hungry for more of that. We had another training meeting of the top 200—the director-generals and permanent secretaries—only a couple of weeks ago where we had more of that. So we are trying to get the lessons shared. Then it is in the specific Department, where actually it becomes the major part of the management team of that Department to manage the change agenda, and that will be different depending on what the Department is and what each of the changes going through are.

Q89  Matthew Hancock: What's your experience of that? Maybe you could give us a retrospective on this question.

Sir David Normington KCB: This is all in the end about the type of people you choose for your leadership at a various levels and whether you are choosing them because they are very good at thinking about policy and supporting the Minister, or because they are very good at managing the people in the organisation. Historically it was true that the people who got to the top were the people who were very good at doing the policy and supporting the Minister and less good at doing the management of resources and people. I hope that that has changed. I believe it has changed enormously in my 37 years, but that is a long perspective. Certainly in the Home Office, I have been trying to choose people who are good at managing people, because we have 30,000 of them and they are the key to whether any of this is going to happen. At the moment they feel very anxious about their jobs, their pay, their pensions. Trying to manage that change while there are those anxieties requires a very high level of management. One thing I am keen on and have done a lot on in the Home Office is bringing in a range of people in from other places, so we have people from the local government, from the private sector and from other Government Departments. I have tried to build that cadre of people, which I didn't think we had in the Home Office.

Q90  Matthew Hancock: Mr Donnelly, you are new to your post. How do you find it?

Martin Donnelly: I think this is the biggest single challenge. One thing that I am doing is talking to, and being mentored by, some more experienced permanent secretaries going through this change process. I have found that morale has fallen and the challenge is to get on with the change process rapidly, to give people certainty or at least a clear understanding of when the uncertainty will be over and to treat people decently, to be very straightforward. That means listening to them, and it is a personal leadership job for me and for my team of director-generals. The slimming has started at the top. So we have slimmed the DG team and we are now slimming the director team over the weeks ahead. As we go through this, we aim to be very transparent with people. I hope that at the end people will be able to look back and say that this was handled not only professionally, but in a way that respected the fact that, as you say, we are talking about real people who have given a huge amount of service to their country through being civil servants. It is very important that they get the respect they deserve as we go through the change process we know we all have to lead.

Q91  Chair: So are you all allowing everyone to go on voluntary redundancy? Is that the general thing as we cut down the headcount, or are we actually picking and choosing?

Ian Watmore: There is always a distinction between low performers, which we do through a performance management arrangement, which gets people out of the door when they under-perform.

Q92  Stephen Barclay: What percentage?

Ian Watmore: Like most organisations, it is typically less than 5% at that level on a given year. The challenge we have got, as you know, is several tens of percentage points bigger than that in each area. Therefore, the first port of call will be the voluntary redundancy programme.

Q93  Chair: So it will be voluntary redundancy?

Ian Watmore: Yes, the terms of the compensation scheme are going through Parliament as we speak. When that scheme has been laid out, that will be one, but a lot of Departments have been getting on with that this year already, so to pretend that it hasn't been happening is wrong. I am loosely responsible for the COI and they've just made 300 people out of 800 redundant—

Q94  Chair: Can I just ask David Normington and Martin Donnelly whether they think going down the route of voluntary redundancy first is a good route?

Sir David Normington KCB: We are required by our agreements to go first to voluntary before we got to compulsory.

Q95  Chair: Do you accept all the voluntary?

Sir David Normington KCB: I was going to say, actually, the Home Office is losing 2,600 people this year before we get to the spending review, which is 7%. It is voluntary on both sides and therefore you do not have to let anybody go. Of course it takes a bit of management grit to say, "You are too good to go," but actually that is what we have to do in this process. It is only if you get to a situation where you can't get the numbers down—where you do not have enough volunteers—but if you have enough volunteers you can pick and choose, and providing you get your criteria right, you can try and make sure that you retain the people who are the future of the organisation. It is hard, and it will get harder. Further down the road there are places—and it is mainly places—where there will be compulsory redundancies if we can't get enough volunteers. That will be the difficulty as we go down this road. We are committed by our agreements to do it by voluntary means, but we may have to move to compulsion.

Q96  Mr Bacon: We have been talking about performance management inside organisations and I found Mr Hancock's last question about the human side one of the most interesting aspects of all this. Indeed, Mr Shostak, you said this whole thing is the greatest challenge of all. It became very clear when all the public sector top salaries were published just how many directors-general there were who had come in from the outside—in many cases on higher salaries than permanent secretaries. Sir David, you mentioned that you brought in quite a few people from outside. Charles Clarke in evidence to the Public Administration Committee said that there were several posts when he was Home Secretary that basically had to be filled by people from outside, because, he said, the Home Office couldn't find the right people internally. This speaks to the whole question of civil service formation and whether people are getting the right training or not. Indeed, you mentioned how Sir Gus O'Donnell said the other day to us how much people like doing policy, and you end up with people at the top who do not have management experience. You are well known for being a good manager among permanent secretaries. But the experience tends to be that people get to the very top who've got policy experience rather than experience of running things, and people who are good at running things sometimes get pushed sideways, out of the system, or ejected by the system. Sir Michael Bichard comes to mind in that respect.

  What I would like to know is this—and it may be best to start with Mr Watmore, who is nodding his head at this point, I am pleased to see—what about the management of the whole system? All the think-tank work on this, both from the left and the right, whether you are talking Reform or the IPPR, seems to come to the same conclusion about the management structure of the system. I start with you because it says here that you are the Government's chief operating officer, which is terrific. All the think-tanks seem to come to the same conclusion, which is that we need to reform the structure of the civil service. We need to have a Cabinet Secretary who's got line management responsibilities for the permanent secretaries under him. At the moment, the permanent secretaries—this group of self­protecting Greek philosophers, if I can put it that way—do not really have anything more than a senior common room chat about the failings of the Ministers whom they serve. When we have this sort of architecture it is not obvious in a management sense who holds permanent secretaries accountable on a regular basis. Now, some would answer that of course Ministers do, but we all know that you can have seven Transport Secretaries in seven years, so we do need this kind of reform that people have been talking about?

Ian Watmore: There was so much in that question that if I answer it I am almost agreeing with it, but there were some things in there that I wasn't sure I did agree with. So I am not going to, although one point is that I think Sir Michael Bichard distinguished himself as a very successful Permanent Secretary, but that is another issue.

Mr Bacon: I think he was too.

Ian Watmore: The fundamental is point that the top echelons of the civil service need a blend of people deeply skilled in policy and people who are really good managers, procurers and commercial animals and so on. I think we have got a much greater blend in today's top civil service than we have probably ever had. I've got a private sector background, Kris has a private sector background, Ray's got a local government background, to name three around this table. So there are people coming into the system from a variety of backgrounds and bringing their experience. That is the first point.

The second point is that permanent secretaries are accountable to the Cabinet Secretary. I do not think any of us would say anything different. The Cabinet Secretary is the most senior of the permanent secretaries. We all get appraised by him every year, and so on. Secondly, the Secretary of State for whom we work has a serious input to make. You can't make that absolute because there are times when the permanent secretary has to have a different view from the Secretary of State and that is an important part of our constitution and our structure, but the Cabinet Secretary would always take into account problems that Ministers had with a particular permanent secretary.

The new board structure that is coming into play will also be another port of call, but ultimately the Cabinet Secretary has that role to ensure that the permanent secretary capacity around his table is the right capacity for the right job—and he takes it, I know from personal experience, extremely seriously.

Q97  Chair: Right, I am going to ask two final questions, which are on issues we have not covered. One is the unintended consequence issue—and it is really more for Ian, Kris and Ray—where action taken by one Department that has an impact elsewhere. In this very decentralised world that we are moving into, how are you going to respond to that?

Ian Watmore: Again, I think there are administrative and policy considerations. You asked earlier about what the public is interested in. There is a section of the public that is really interested in the administration side, and there is a bigger section that is really interested in the policy outcome side, and I think the question has two parts. If, for example, we were taking decisions in one Department that had an administrative weakness that knocked on to the rest of the Department, that would be something for somebody like myself or the Cabinet Secretary to pick up and address.

Q98  Chair: What does that mean, "address"? I am just trying to see what the structure is.

Ian Watmore: Let's give you a practical example.

Q99  Chair: No, you can give endless examples, but let's just say that Ken Clarke decides he's putting fewer people in prison and that has an impact on the number of people committing crime.

Ian Watmore: Then we move to the policy issues of which I think there are many more examples, where ultimately it is for the politicians to decide whether there reforms are coherent or not. If they start to collide in a particular area, then that is one of the jobs of the Minister in the Cabinet Office responsible for policy.

Q100  Chair: I am hoping this doesn't happen because I support Ken Clarke in what he's trying to do, but if, actually, letting people out of prison does lead to greater crime, then the accountable people will be the two Ministers and nobody else in the system?

Ian Watmore: Sorry, I wasn't sure if that would be the consequence because it depends on the specific example, but when you are talking about a coherent set of policy reforms—and there is a public service reform White Paper due in January which is going to lay a lot of this out—and where you are looking at the combination of all the different things, including payment by results, transparency, devolution, elected local officials, commissioning and all the sets of policy reform that the Government is bringing into play, the most likely impact of those if they are in conflict is likely to be in a single place. It is going to be in a location where you might find that there is a difference between those two. That is what I think the politicians have got to address both at national level and at local level.

If you are going to get an interplay, as there always has been, between justice, health, housing and education—all the things that we know make a difference to whether somebody is going to reoffend or not—to use your example, then it is about how we commission locally to ensure all those agencies are brought in. I was having that discussion with the Minister, Oliver Letwin, the other day, and these are the sorts of questions that you might want to pose to him because he's much more articulate on the subject than I am. It is about how you commission a payment-by-results activity. If you are going to pay somebody by results of not reoffending then the way to commission that is to ensure that all the local agencies that provide a service that will actually influence the outcome. It is very hard to drive that from the centre of Government; it is much harder to drive than at the local level. I think that is what the Government believes its reforms are trying to do.

Sir David Normington KCB: On your specific point, of course the Home Office has a shared objective with the Ministry of Justice on integrating the criminal justice system, including supporting the Ministry of Justice "to develop options to provide people with greater protection, prevent crime, and apprehend criminals". In other words, these policy issues are shared with the Ministry of Justice and there is joint decision taking on them.

Q101  Chair: The final question is on the management of risk, because the best-laid plans go wrong. How organisationally between the centre and Departments will you respond to national circumstances that emerge—external factors? An enhanced threat of terror would be one for you, David, or perhaps lack of skills and therefore challenge to growth? How is risk that you can't see now going to be managed in the development of plans to keep to both the priorities and the spending constraints?

Ray Shostak: Each of the Departments, both those represented here and across Government, will, of course, have their own risk management plans in place. They have done and will continue to do so. From that point of view, you would be expecting the Department as part of its operational planning in terms of looking to the future to have a clear and unambiguous risk management plan and strategy to be able to handle all of that.

Q102  Chair: So the centre won't intervene?

Ray Shostak: The approach the centre has taken is to be looking to Departments to be well managed and to find ways in which they can have and exercise that responsibility. Picking up the earlier point, on whether the centre will go away, if there are financial risks at one Department knocking on to another Department, of course, our spending teams will be picking that up and be working with those Departments to actually resolve those sorts of tensions—hopefully proactively rather than reactively.

Ian Watmore: It is the cross­cutting risks that we try to pick up centrally. You have political mechanisms for that, but also the Cabinet Secretary has his own civil service management structures in which we look at these issues. At that level, we are trying to see what are the things that cut horizontally across four or five Departments that might make a difference. It might be international. It might be security. It might be skills. It could be all sorts of things. We try to identify what those are and either work with the Departments concerned to bring them together or occasionally, as has happened periodically, you then put something that is a different unit cutting across. The third sector was one that came up many years ago; every Department was dealing with the third sector in an ad hoc way on its own. It looked okay from the Departments' own point of view, but aggregated it didn't, so the Government brought in the Office of the Third Sector—now the Office for Civil Society—as an oversight body. There are occasions when we do that, but in the main we would look for cross-cutting things and deal with the Departments concerned.

Chair: Thank you very much indeed, that was a very informative session. We will see how it gets written up, but what we are trying to evolve is a framework in which we can then make judgments over the next four or five years. I think your contribution to that was really, really helpful, so many, many thanks.

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