Public Administration Committee - Minutes of EvidenceHC 1625

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Oral Evidence

Taken before the Public Administration Committee

on Wednesday 22 February 2012

Members present:

Mr Bernard Jenkin (Chair)

Paul Flynn

Robert Halfon

David Heyes

Kelvin Hopkins

Greg Mulholland

________________

Examination of Witness

Witness: Rt Hon Oliver Letwin MP, Minister of State, Cabinet Office, gave evidence.

Q259 Chair: May I welcome our witness to this second inquiry that we are conducting into strategic thinking in Government? Could you kindly identify yourself for the record?

Mr Letwin: Oliver Letwin, Minister for Government Policy.

Q260 Chair: Could I start with just a tiny bit of narrative that explains why we are doing this second inquiry? It is very much a response to the Government’s reaction to our first inquiry, where we sensed there was some push back against the very idea of having a national strategy or grand strategy. Could you expand on the memorandum you submitted to the Committee, explaining that quite strong feeling of yours?

Mr Letwin: Thank you, yes. I am sure more of this will come out as we discuss specific things, but of course I am more than willing to begin by saying something general. What I have tried to set out in the memorandum is our view that it makes abundant sense for Government to adopt certain strategic aims, and indeed we have adopted some, which I have laid out. I have to say I do not think they are particularly controversial-that is to say, I suspect that the six, I think it is, strategic aims that I laid out would be broadly shared across the political parties represented on this Committee.

Chair: We will be coming to them later.

Mr Letwin: Fine. So, I think it makes sense for the Government to be clear-minded about their strategic aims, but as I say I think that those would be broadly uncontroversial, in Britain, anyway.

It clearly also makes abundant sense for Government to try to fashion a set of coherent policies that they believe will achieve those aims or further the achievement of those aims. Again that is something we believe we have done. It was the purpose of the coalition agreement to do it in the first place, and certain foundational documents that I also referred to in the memorandum further that. Indeed, that led to the development of business plans, which encode the things that we believe the Government have to do in order to pursue those policies and create an apparatus that this Committee has investigated for monitoring whether that has been achieved and so on.

It is a characteristic of the policies we have adopted in furtherance of our aims, however, that on the domestic front-again, I referred to this in my memorandum-rather than trying to pull levers and hope that there is something at the other end, we believe the proper and best way to proceed in general is to create frameworks that create incentives within which people will do the things that it is our policy that they should end up doing. In the field of national security and foreign affairs, in order to further our strategic aims-for example, the maintenance of a free, democratic society well protected from its enemies-we believe it is necessary to adopt policies that maintain a great deal of flexibility, because the scene outside this country and indeed, so far as the security of this country is concerned, inside it, is constantly shifting.

We then come to the question, what does the Committee mean by grand strategy? I do not know. If what the Committee means by grand strategy is what I have just described, then we are all for it. If what the Committee means by grand strategy is something that is a completely fixed view of the future and the adoption of policies that assume that view of the future will be realised under all circumstances, then I do not agree with it, but I doubt whether the Committee really could mean that. If it does not mean either what I have set out broadly or a completely fixed view of the future, what does it mean? Our scepticism about the phrase "grand strategies" springs from this fact-that we are unclear what it could mean other than something too fixed to be realistic.

Q261 Chair: It seems to me that we are talking at cross-purposes. You think we are talking about some kind of national plan, as though we were trying to recreate something of the former Soviet Union. That is not what national strategy is about. National strategy is as much about maintaining flexibility. It is about thinking strategically and maintaining a process. I think what you have talked about in your first answer sounds much more about implementation and plans for implementation rather than strategic thinking.

Mr Letwin: I am not clear what it would be to do strategic thinking in the context of flexibility-which it sounds as if we are agreed upon-if it were not to adopt, clear-mindedly, certain aims, to try to formulate policies that over a considerable number of years we believe will further those aims, and then to concern ourselves with the implementation of those policies and to adapt them as necessary in the face of realities. I cannot see what else one would do to engage sensibly in strategic thinking than those things.

Q260 Chair: I suspect that, when we come on to your six strategic aims, we will not find much to disagree about, because they are so general in nature as to be almost meaningless. There are many other goals that have been selected by the Government that seem to have stumbled into the programme of the Government without any coherence. This is why this inquiry is now asking about and looking at emerging strategy: how does the Government’s strategy emerge? Perhaps I could give some examples, by asking one or two further questions. Do you seriously believe there is any serious possibility of our achieving our carbon reduction targets by the 2020 deadline?

Mr Letwin: Yes.

Q261 Chair: Why do you think abolition of the existing House of Lords is an urgent and strategic priority against the present economic crisis and other challenges the Government are facing, given the ability this legislation might have to paralyse the whole Government?

Mr Letwin: If we thought it was urgent, we would have introduced it at an earlier stage in the Parliament.

Q262 Chair: So it is not urgent?

Mr Letwin: What we thought was most urgent we began by doing: for example, deficit reduction we thought was urgent. However, we think it is important. There are many things that are important that are not as urgent as some things that are urgent. We think it is important to reform the House of Lords, because we think it is important for the sake of achieving the very first of my goals here-a free and democratic society-that governments and the Executive should be continuously held in check by the legislature, and we think that the House of Lords is more likely to be able to hold Government properly to account and to check the power of the Executive effectively if it contains a healthy, democratic element. So that is precisely part of achieving our strategic goals, and that is why it was set out from the beginning in the coalition agreement.

Q263 Chair: The Prime Minister used to say it might be third-term priority.

Mr Letwin: The Prime Minister, indeed, took a view in the Conservative Party manifesto that we would work towards a "consensus". That was the word in the Conservative Party manifesto. When we came into coalition, we made an agreement with our counterparts in the coalition to advance this activity as an important part of creating a more effective check on the Executive, wrote it in the coalition agreement and are now implementing it. That is part of our strategic activity. I do not think you could choose a better case of the Government being clear-minded about their strategy. It does not fit the pattern you were alleging, that there are things that suddenly came into the strategy from outside. That was there from the beginning.

Q264 Chair: Would you agree that the 9 December veto at the European summit was a strategic moment in our relationship with the European Union?

Mr Letwin: I do not know what "a strategic moment" means. I am very clear that it was something the Prime Minister said he would do if he had not obtained certain conditions.

Q265 Chair: So it has no strategic consequences?

Mr Letwin: I think almost everything that is done by a Government-

Q266 Chair: On a scale of one to 10, where 10 is a major strategic moment and zero is a tactical issue of no strategic consequence, where would you put it?

Mr Letwin: Do you mean a scale of one to 10 from things that matter a lot to things that matter a little?

Q267 Chair: I am talking about things that have geopolitical consequences for our relationships with other countries in this context. Does this have a long-term impact on our relationship with the European Union or is it an incidental matter?

Mr Letwin: It is certainly not an incidental matter. It has been a very persistent goal of this Government not to find ourselves becoming part of, or bearing the burdens of, being part of the eurozone.

Q268 Chair: So it was a consequential decision rather than a decision that leads to other major consequences?

Mr Letwin: Almost every decision that Governments take lead to-

Q269 Chair: You are being very evasive, Minister.

Mr Letwin: No, no. Let me finish, if I may. Almost every decision that a government take leads to all sorts of long-term consequences. That is one of the complexities of government. I would have thought we would all agree about that. This was a decision that arose from a settled plan, announced at the beginning of this Government, and as part of their strategy, not to be in the eurozone and not to bear the burdens of being in the eurozone. That was why the Prime Minister took the stance he took, because he believed that it was not appropriate, in the light of his strategy and his policy, to take any other decision.

Q270 Chair: I think I will put that down as "will not answer".

Mr Letwin: No, no, forgive me, Chairman, I have answered that very clearly, which was that it was an important decision.

Q271 Chair: When Parliament returned after the Christmas Recess, the Secretary of State for Scotland launched a consultation paper on a referendum about Scotland possibly leaving the United Kingdom. When was the decision actually taken to issue that consultation paper, and what led to that consultation paper being issued?

Mr Letwin: I could write to you and give you the exact date when the decision was made. I cannot recall it with certainty.

Q272 Chair: I would be grateful for that, because I submit that actually it was made over a very short space of time-a matter of days.

Mr Letwin: I was just about to go on to say that, though I cannot recall the exact date and will write to you about that, the discussions leading up to that decision, in which I was myself involved, went on for many months. These were decisions that were very much discussed.

Q273 Chair: But when you went on holiday before Christmas, were you expecting to do that on your first day back?

Mr Letwin: I do not recall the exact sequence of events but I can tell you absolutely that this was a decision that emerged from gradual discussion over quite a considerable period-again, I will write to you about the exact period but I suspect it was more than six months-during which we weighed up all sorts of possibilities about ways in which we might proceed, and came eventually to that conclusion.

Q274 Chair: Does the same go for the abrupt change in the policy on child benefit, which emerged as a great surprise to many of us at the Conservative conference? That decision was not foreshadowed in the coalition agreement, and seems to be at variance with things we said in our manifesto. When was that decision made?

Mr Letwin: Specific fiscal decisions are not laid out in the programme for Government.

Q275 Chair: It is not a fiscal decision; it is a spending decision.

Mr Letwin: It was a decision that had a very significant fiscal impact and was announced by the Chancellor. Those decisions that are the totality of the specific spending and tax decisions that constitute our deficit reduction programme were not laid out in the programme for Government. They are decisions that are typically made under pretty close conditions of confidentiality within the Treasury and with a very small number of other colleagues. That decision also took some time to make.

Q276 Chair: This inquiry is going to be about analysing how decisions emerge and what they imply about our strategy. I think I have just gone through a number of very major decisions the Government have taken in recent months, some of which seem just to have come out of the blue. They do not seem to be part of a coherent strategy.

Mr Letwin: Obviously your view, Chairman, is your view. It is not one that I can do anything other than respect. I do not agree with it, and I have stated-I hope, clearly-that each of the decisions you have referred to actually emanated from a pretty coherent view over a very long period. For example, the one you last mentioned, child benefit, stems from a deficit reduction programme that is very persistently pursued throughout this Government. The European one that you mentioned stems from a long-held view we took about our relationship with the eurozone, and so on. Each of those decisions seems to me, very far from the way you have represented, a good example of decision making within the context of clear-minded pursuit of certain strategic outcomes on the basis of policy.

Q277 Chair: We should be able to discern a coherence from these events?

Mr Letwin: Yes.

Q278 Chair: So, you rather like our new approach of trying to analyse how strategy emerges within Government so that we can help you try to improve that process?

Mr Letwin: I certainly welcome the efforts of this Committee to improve the administration of the United Kingdom-evidently, as that is its purpose.

Q279 Chair: But you like this concept of emergent strategy?

Mr Letwin: I am not entirely sure what you mean by emerging strategy. Let me go back to my language, because I think part of the problem with this whole discussion is that the language is extremely difficult to penetrate. My view is that, as well as adopting clear-minded aims, Government need to adopt a set of policies that are coherent with one another and coherently related to the achievement of the aims. If your inquiry is an inquiry into whether we have coherent aims, whether we have coherent policies and whether our policies are coherently related to our aims, then I entirely welcome it. That is indeed, in my view, the duty of government.

As I say I would not use the words "emerging strategy" to describe this, but I am not trying to quibble about the words. If what you are aiming at is coherence, both internally and with our aims in our policy-making, I am all for it.

Q280 Chair: So you would agree with one of our witnesses, who said that he was very much opposed to the idea of an emergent strategy, which seems to be tantamount to admitting the absence of leadership in the system?

Mr Letwin: Again, I have obviously read the transcripts of the discussions. I think a lot of the discussion has been muddied by unclarity about the use of terms. I am very clear what I mean by "strategic aims". I have laid them out so I assume the Committee will also be clear what I mean by them. I am clear what I mean by "a policy". You have mentioned five or six of them. I think, therefore, the question, "Are our policies good ways of coherently achieving the aims?" and the question, "Are the policies coherently related to one another?" are good and clear questions. If we could stick at that level, I think we would all be clear what we are trying to discuss.

Q281 Robert Halfon: With regard to the response you have given about strategy and the six strategic aims, how do you respond to the criticism from some that these six strategic aims are motherhood and apple pie? Any Government would say they want a "free and democratic society", for example.

Mr Letwin: I think they are, very luckily, broadly shared in Britain today. Next to you sits a distinguished member of a different political party whom I suspect would also share these aims. I cannot speak for him, he can speak for himself.

Paul Flynn: We are great comrades.

Mr Letwin: I would guess there is a lot in common there. This is a very lucky feature about Britain. Do not let us take this for granted. There have been many countries at many times-actually, most of the world for most of its history-where those would not have been taken for granted or indeed agreed with by the people running the country; or at least, had they said they agreed with them, they would have been lying, because that was not what they were seeking to achieve. It is a great thing about our democracy that broadly we agree about what we are trying to achieve and that most of the debate, therefore, inside Britain, goes on about the policies that are best suited to achieve these aims. Therefore, most of our attention is focused on the question, "What policies will achieve these ends best?" Of course, that leads you into immense difficulties and complexities.

Q282 Robert Halfon: But aren’t they just values rather than strategic aims?

Mr Letwin: No, they are not values; they are strategic aims. For example, if I take the aim of achieving "a strong, sustainable and growing economy", there are people around in Britain today, utterly decent people who I guess broadly share our values, who do not believe that Britain’s economy should grow. There are some people who think that growth is itself an overrated commodity.

Robert Halfon: Very few.

Mr Letwin: Few, but nevertheless it is a perfectly sustainable position. I am talking about the category of the thing, and the category of the thing is that this is an aim. It is a specific aim that you might disagree with. As a matter of fact, we all agree with it and so the questions for us all are, "How do you get the economy to grow in a way that is sustainable and strong?" Incidentally, I should draw your attention to the fact, sticking on this one example for a moment, that had we been writing that 30 or 40 years ago, people, with certain honourable exceptions, probably would not have put in the word "sustainable".

Q283 Robert Halfon: But who would not agree with, "A fair deal for those who are poor or vulnerable", for example?

Mr Letwin: I hope nobody. The question is how you achieve it. Choosing that as an aim, as opposed to simply being one of the people who agrees with it, means that you then have to think of policies that will try to achieve that. Of course, our whole programme of welfare reform and our programme of trying to encourage, empower and facilitate the Big Society-which this Committee has investigated-are part of our aim to achieve a fair deal. It is not the articulation of the aims so much as putting it on your list and thereby forcing yourselves as a Government to formulate policies that will achieve it that is the interesting thing.

Q284 Robert Halfon: How were these six strategic aims actually devised? What happened? What was the process by which you came up with this, and how long did it take?

Mr Letwin: As a matter of fact I think it took quite a long time, because of the nature of the formation of this Government. Both of the political parties in the coalition did a lot of thinking about what they wanted to put on their list, so to speak, before the election, and, as luck would have it, both had come up with broadly similar priorities. Indeed, that is one of the things that made it possible to form a coalition. In the course of forming the coalition, in that rather sort of hothouse atmosphere, we spent some considerable amount of energy, although not a very long time, agreeing what the things were that we were most trying to achieve. Then we tried to make sure the policies we set out in the coalition programme for Government were ones we thought would achieve those aims.

Q285 Robert Halfon: It still looks like a set of principles-very good ones, but still a set of principles rather than a strategic plan.

Mr Letwin: It is not a set of policies; it is a set of aims. The set of policies, which is several hundred long, is there in the programme for Government, aimed at achieving these things. This is where we come back to the very interesting discussion that the Chairman precipitated on what it is to have a strategy. In our view, it is to be clear-minded about the aims you are trying to achieve, then to formulate a set of policies that you think will achieve them, and then to try to make sure that those policies are actually implemented. Whether you are successful or not will depend on whether, as a matter of fact, when implemented, those policies achieve those aims.

Q286 Robert Halfon: Did you make any effort to engage the public when you devised these strategic aims?

Mr Letwin: I think I can fairly say we all did, because, as the two parties went into an election having chosen the things that they would emphasise, and as the election produced a certain set of results, I think one can fairly say that they have been subject to a very considerable-in fact, the toughest-democratic test.

Q287 Robert Halfon: All three parties would choose those. There would be no difference in any of the three parties from what you put down. As I said, no one would argue against having a fair deal or a vibrant culture or beautiful environment.

Mr Letwin: As a matter of fact, I think it is the case that British politics is in a happy position at the moment, where there is not too much disagreement between the political parties about the strategic aims; the disagreements are about which policies will best achieve them. I agree with you.

Q288 Chair: Can I just summarise, then? So, actually, strategic thinking for a Government is very easy: you write your manifestos, you stand in an election, you get a majority or you form a coalition, and then you look at what you have in your manifesto, write down the lowest common factor agreement stuff between the two parties, and, bingo, you have a strategy. That seems to be what you have done.

Mr Letwin: You keep on reverting, Chairman, to the word "strategy". I am using very careful language. The strategic aims are there. That is not too difficult because, as a matter of fact, we share them. It might be difficult at other times, but at this time in British politics it is not too difficult. What is difficult is formulating the policies that will then lead to the fulfilment of those strategies.

Q289 Chair: What are the strategic aims that serve as a guide to what policies you pursue and what you actually do? These are so general in nature that they do not serve any purpose, in terms of what policies you pursue. I can tell you that there are members of this Committee from all sides of British politics who would come up with completely different policies and would claim that they were trying to achieve the same strategic aims.

Mr Letwin: Yes. There are disputes about which policies will best achieve these aims.

Q290 Chair: So these strategic aims are not very useful, then, are they?

Mr Letwin: They are very useful, because if you do not know what your aims are, you certainly could not have a coherent set of policies coherently for achieving them. Let me take a case-one which I think you and I disagree about, Chairman. In here it says a "strong, sustainable and growing economy". If one omitted the word "sustainable", then we would be omitting a whole strand of policy, which is about trying to make sure that there is an encouragement of biodiversity, a reduction of carbon and other things of that sort.

Q291 Chair: We are going to burn more coal to generate our electricity over the coming decades.

Mr Letwin: Some people who do not place the emphasis we place on sustainability do not take the view that we should place as much emphasis in our policy as we do on making sure that we are reducing carbon. The question you asked me a little while ago was whether we thought we could achieve the 2020 carbon reduction targets. The answer I gave you was "yes". The reason for that is that we have adopted policies that we think will do that. The reason why we have adopted policies we think will do that is that it is one of our aims to do that, set out here. You were saying that you thought that these aims had no effect on policy. I am giving you a clear contradiction of that, which is that the fact of including "sustainable" here leads one into a domain of policy making that you personally, I think, disagree with. So here is a real disagreement.

Q292 Chair: I am not expressing any view on it. I am just wondering whether we are going to achieve it when we are going to burn more coal in our power stations over the next decade or so than we burn now, otherwise the lights will go out.

Mr Letwin: I am trying to point out that having the word "sustainable" in the aims does have an effect on the policies you choose, and has had an effect on the policies we have chosen.

Q293 Chair: But it does not seem to have much effect on the policy. These strategic aims do not seem to have any effect on the policy, because they do not provide any steer whatsoever as to what policies should actually be, because they are so general in nature.

Mr Letwin: They do. No setting of an aim determines how you will achieve it, but the setting of an aim does preclude doing some things that would not achieve that aim, and opens up the field to prioritise those things that will achieve that aim. That is the relationship between aim and policy.

Q294 Chair: Can you give an example for "a free and democratic society"? What does that preclude the Government from doing?

Mr Letwin: For example, it actually is the basis upon which we committed in the programme for Government to enlarge the scope of the Freedom of Information Act; to be the most transparent Government not only in our history but in the world; to publish a vast amount of additional data; to reform the constitution; to create a more effective decentralisation of power, so that people would have greater democratic control over their police, over their local authorities, over their neighbourhoods, over their planning-

Q295 Chair: So, people who are against those things are against a free and democratic society?

Mr Letwin: No. Chairman, I am trying to be very careful. I am distinguishing between agreement about aims and the fact that you could have different policies for achieving those aims, and yet pointing out to you how, from that aim, we have evolved a whole set of policies clearly designed to achieve that aim. I am not saying that somebody else who had a different set of policies might not also hope that those policies would achieve that aim. But there is a relationship between the aim and policy, a very clear one, and I was sketching it out, I think rather powerfully. I think it is difficult to deny that the things that I was describing would not be on our agenda were it not that we had this aim. So, putting down this aim matters.

Q296 Paul Flynn: Can I welcome you as one of the few coalition Ministers who has demonstrated in the past that you have a working brain? I hope that this does not become a major impediment to you in your job now. We have been told by one witness that one of the problems with strategy is the different timescales that Departments have. DFID works in Afghanistan on a 10-year horizon, the Ministry of Defence on a six-month one and the Foreign and Commonwealth Office on a shorter period. One could add that the Government’s timescale is tomorrow’s Daily Mail headline. Do you accept this or are you planning your strategies beyond the life of this Parliament and possibly the next Parliament?

Mr Letwin: Let me take the last part of your question first, because it is quite a deep question and I want to go through it in reverse. The first point is, yes, we are doing things that we think will have their main effects in five, 10, 15 or 20 years from now. For example, our energy policy is not one that is designed to transform the scene tomorrow or next year, but over the course of decades. Similarly, our deficit reduction plans are going to lead, we hope, to Britain being in a better condition fiscally-I know they are controversial, but that is our hope-some years from now, not tomorrow or next week. There are many other examples: for example, our school reforms are very consciously an attempt to change schooling over decades, not over weeks or months. Of course, one might agree or disagree with them, but that is the timescale. So, my answer to your last question is, yes, we have adopted lots of policies where we are very conscious that they will have their effects only over quite a long period.

Going back to the first part of your question, which as I say I think is a very deep question and one that we spend a lot of time thinking about, I would give you the following answer. There are inevitably many different timescales over which Governments have to operate and different Departments have to operate at the same time. That is one of the great complexities of government, it seems to me, in any country. You do of course, in a democracy, have to be responsive to what is going on day by day in the media. There is no point in any of us trying to deny that. On the other hand, you have these very long ambitions. Between the two, you have things that need to be done at different lengths of time away. Different Departments-but even within a Department, different parts of the Department-will inevitably have different timescales attached to different kinds of actions. So one of the great things that we try to do in our Cabinet Committees and in our National Security Council is not to obliterate these differences, as we do not know how to obliterate them-they are just a feature of life-but to be conscious of them, and to try to make what we are doing for the very short term coherent with what we are doing for a slightly longer term, and, in turn, coherent with things for longer than that. That is a very difficult juggling act all the time.

Q297 Paul Flynn: Let me just take one example from your reply. The nuclear policy changed in 2007 under the last Government. Next week we have the anniversary of Fukushima. A report has been done, which excluded any reconsideration of the cost of nuclear power. New nuclear is proving hugely costly, and no nuclear power station has ever been built on cost. There are huge sums to pay for clearing up the mess; it might need burying in Scotland. Is it sensible to proceed with that programme, without a reassessment of the cost post-Fukushima?

Mr Letwin: We think it is sensible to proceed in the way we are proceeding. If you will forgive me, let me go through the entire chain to make a point in relation to the Chairman’s earlier questions. Having adopted the principle of "a strong, sustainable and growing economy", we were faced with the necessity to achieve simultaneously three important goals in energy policy: the lowest cost that we could achieve for the consumer and business; the greatest security of supply that we could achieve; and the lowest carbon emissions that we could achieve. Our assessment remains that it is difficult to achieve sufficient quantities of each of those three goals, which are often in contention with one another, without having a significant component of nuclear power. Therefore, we think it is sensible to proceed with negotiations with the providers of nuclear power.

As you engage in those negotiations, one of the things that will happen is that the price will disclose itself. That is what the negotiations will eventuate in, among other things: a price and a set of liabilities. At that stage, we will have to judge whether the price that we are being asked to bear as a nation, and the liabilities, if any, that the nation is being asked to take on, are ones that are worthwhile in the light of what nuclear power can deliver for security, for reduction of carbon and for the long term of our energy sector. That is a judgment that can only be made once the price has been disclosed in the contractual negotiations, and that is when we will engage in that review.

Q298 Paul Flynn: Lord Rees made the point to us that without a robust strategy the immediate will always "trump the important"-that 2000 years of scientific discovery and knowledge will be trumped by a tabloid headline. Is this happening in your Government?

Mr Letwin: I think there is always a danger of what Lord Rees describes and what you describe in a democracy, but I have to say that I think this Government have been peculiarly good at not allowing the day’s headlines to deflect them from long-term activity, whether you happen to agree with the activity or not.

Just today there is a great deal of publicity about our health reforms, and I suppose that a Government who wanted to get a good headline for a day might suddenly abandon their health reforms. We have not abandoned our health reforms. We are pursuing them. There are many other cases in which this Government, having set out a quite ambitious reform programme-whether you agree with it or not-have stuck by it, despite a great deal of opposition of various kinds. There has been much opposition to our welfare reforms, but we are pursuing those. I could go on with a long list.

While it would be absurd for me to claim that this Government are never in any way affected by the day’s headlines, I think I can claim that we have a very persistent attitude to pursuing long-term policies with long-term goals, despite the fact that, sometimes, we go through quite considerable periods of controversy in the media.

Q299 Paul Flynn: Are you continuing the long tradition in the Civil Service of the unimportance of being right, and are you still promoting people on the basis of failure? I am thinking of the lady who just came from the Border Agency, where there was utter chaos, who had an extraordinary period involving an election scandal in Birmingham and has now been promoted as a result of her clearly troubled past. Is this a question, again, of what you do in the Civil Service, namely, move people sideways or promote them when there is an embarrassing situation?

Mr Letwin: One of the features of the British constitution, which I think is a good one and I suspect we might agree about, is that Ministers do not make decisions about the promotion or otherwise of particular civil servants. The reason for that, as you are very well aware, is to prevent civil servants from simply becoming creatures of politicians.

Q300 Paul Flynn: You were responsible for turning GOD into a trinity, recently, and the result of that is what is going on now. You must take responsibility somewhere.

Mr Letwin: Absolutely. Sorry. It has always been the case that at the very apex of the pyramid, when it comes to appointing the Cabinet Secretary and the head of the Civil Service, the Prime Minister of the day, there being no one else to do it, is indeed influential. Of course, I accept collective responsibility for the decision to run the Civil Service through a Cabinet Secretary, a head of the Civil Service and a head of the Cabinet Office in three separate roles. I may say that I think that they are working extraordinarily well together, and you may want to take evidence from them about that. That is at a different level from the one you are describing.

The management of the Civil Service is something that Ministers have not tried to intervene in or interfere with, I think rightly, because however imperfect it may be at any given time, politicians making decisions about the careers of specific civil servants will open up another set of problems.

Q301 Paul Flynn: A final brief question. Is it not true that Governments make cowards of all politicians, that the brave words of the Prime Minister when he was in opposition about how he was going take on lobbyists have now melted and become very weak policy, and that it was exactly the same with Labour? Labour, in fact, did not stand up when this Committee produced a report calling for major reforms on lobbyists. Is it not the case that when Governments change, it is not a change of philosophy or strategy, but a question of exchanging scripts?

Mr Letwin: Well, I think that is an excessively cynical view.

Paul Flynn: Oh, surely not.

Mr Letwin: Actually, the case you quote I do not think is a good one for arguing that, because there are two changes that we have made-sorry, one change we have made and one change we are about to make-that together will have a profound effect on lobbying. The change we have already made, which is little noticed but is there and you can go and look at it on a website, is that every meeting with a Government Minister is now transparent: you can see who has come to a meeting. The Lobbying Register will tell you, for any person you are looking up, who has come to see a particular Minister, who their clients are, so you can tell what is actually going on. Now, I think that that is a major step forward, and does live up to what the Prime Minister and others have said in opposition.

I do not accept, therefore, that, as you put it, being in Government just means collecting somebody else’s script and being a coward. I think on the contrary, if you were to level an accusation against this Government, it would have to be that, having adopted a very considerable reform programme, we are sticking to it, and so if you disapprove of the reform programme, you disapprove of that. But I do not think you can claim that we have been cowardly and have given up on long-term goals. We are, on the contrary, fulfilling them.

Q302 Paul Flynn: We notice a failing in enthusiasm for the Big Society, which has been referred to on this Committee as "a dead wheeze walking".

Robert Halfon: Only by you.

Q303 Paul Flynn: Are you really telling us that, when the Big Society guru has fled the scene, when the Committee running it has not met for 11 months, when the Prime Minister can hardly say the three words "the Big Society" anymore, this is showing your courage in maintaining a policy that clearly has failed?

Mr Letwin: I think I disagree with every part of that.

Paul Flynn: That is disappointing.

Mr Letwin: I am sorry to disappoint you. First of all, the Prime Minister repeatedly uses the words. Secondly, as a matter of fact we have taken three kinds of action, and are continuing to take three kinds of action, immensely to strengthen the Big Society: first, we have taken a whole series of moves to reduce the impediments and bureaucratisation and regulation of it by implementing Lord Hodgson’s reforms, by changing a whole series of things including health and safety legislation effectively-

Chair: Forgive me, Minister.

Mr Letwin: Let me just quickly say this, because I do not want to have the one on the record without the response. We have taken, secondly, a whole series of moves to make it more financed, hence for example, Big Society Capital, and, thirdly, a whole series of moves to ensure that it is empowered through community assets, neighbourhood councils and many other things besides. I think it is an extraordinary example of persistence of policy. Again, you may not approve of it, but it is very clear where we were trying to aim and where we are continuing to go.

Paul Flynn: I wish you a long career.

Q304 Robert Halfon: Just to clarify, for the record, it was Mr Flynn who described the Big Society as that, not the rest of the Committee. Just to go back to what you said when I asked you about how strategic policy was decided, you said that the electorate had decided this over the course of the election. Do you really think that is the case? Surely the electorate just thinks about who is going to improve the NHS, or tax policy, or whatever it may be. They are not going to be thinking about these principles that you have set out.

Mr Letwin: I do not really agree with that. There are parties in the United Kingdom that do not share all of these aims by any means. I will not demean the Committee by mentioning the name of one of them in particular, but there certainly is a party in the United Kingdom that would not honestly be able to say that it was in favour of a free and democratic society, in my view, and certainly would not be able to subscribe to a "socially cohesive, socially mobile" society in the terms in which I, and I think you, mean it; and that party did not get very many votes.

I think that it is a sign of the maturity and excellence of our democracy that, while parties have different views about some of the policies needed to achieve these goals, the main political parties share the goals, and the public votes for them because it shares the goals. There is a terrible danger of thinking that, because, as a nation, we are incredibly lucky that a huge, overwhelming mass of the population and the three main political parties all agree about something, somehow this is in the nature of the case. There are many, many countries in which these things are not agreed. I do think that it is because we have a vibrant democracy that it tends to bring the major parties to the point where they adopt goals that are broadly in line with the goals of the population, and get voted for accordingly, and if they from time to time fail to place significant emphasis on some of the goals, they stand in danger of losing that consent, as I think our own party did, for example, because we did not place sufficient emphasis on sustainability.

Q305 Robert Halfon: Do you envisage these strategic aims changing over time? If so, how would you engage the public when you were changing the aims?

Mr Letwin: They might change, I suppose. I think I have given an example where, 50 years ago, people would not have put the word "sustainable" in there. Actually, I am not sure that everyone would have written in a "beautiful and sustainable built and natural environment" at all times, either. So these aims do get articulated differently at different times, despite the degree of consensus which there is around most of them most of the time for us as a country.

Changing them is something that takes a long time and emerges as a result of a great deal of cultural and political discussion. I draw your attention to my own party’s evolution in coming to place more and more emphasis on sustainability, and indeed on beauty. These are things that, some years back, our own party did not particularly emphasise. How does that emerge? Well, it emerges in the course of the political discourse. The point I think I need to make to you, but also to the Chairman and the Committee as a whole, is that I therefore do not think that being clear-minded about your strategic aims is at all a minor thing. I think it is a very major thing, but I do see entirely that it is not the same as the hard graft of fashioning policies that will achieve those aims.

Q306 Kelvin Hopkins: You have said-and this is a quotation from you-that "we don’t know what will happen, so let’s try to be able to respond to a whole series of different possibilities". You then go on to say that as a result you "constantly try to maintain an adaptable position that allows us to respond to events as they unfold". Can you seriously claim that this approach has been reflected in the Government’s response to events in the last two years?

Mr Letwin: Yes, I think I can. But, as I thought the Committee might ask about that sort of point, I have done a little looking at cases in which, in recent history, and in England, not some far-off place, people tried to project the reasonably near-term future with confidence. I want to draw the Committee’s attention to two documents. One is the 1959 policy for fuel. In 1959, the strategists in Government produced the following argument: there seem to be no good arguments-I would draw to the Committee’s attention that they did not say, "on balance"; they said there were no good arguments-for restricting the growth of oil usage in this country. That was about 14 years before the biggest oil shock created the biggest economic problem for 40 years. The paper goes on three paragraphs later to say that, by contrast, the gas industry is struggling for its life. That was about five years before Britain converted to natural gas, which became the major fuel. So here were the assembled talents of British industry and expertise in British Government trying to predict the relatively near-term future for Britain’s energy and getting the two major propositions that they could have made predictions about completely wrong.

In case anybody thinks that is something that is in the past and has got better, let me draw the Committee’s attention to the 2008 Budget, which was about six months before the Lehman’s disaster and the biggest banking crisis in our history. The Chancellor of the day said, "Over the past decade the UK economy has become increasingly resilient to shocks … key to developing greater resilience has been the macro-economic framework." I am not saying this as a partisan attack on either of these documents. I am saying this because here are people trying to look not terribly far into the future, not about minor things but about things that are among the most major choices facing the country, and getting them completely, hopelessly, diametrically wrong. That is not because they were stupid or ill-informed. It is because they were human beings. We just do not know very much about the future.

I want to give you one further case, which I think is the most significant one for the purposes of this investigation, of which I have some personal experience. In the National Security Council we have gathered with us the heads of the intelligence agencies, as the Committee knows. We get a lot of information from them, from the Foreign Office, which is also represented, and from the military, which is one of the points of the committee-that it is not just politicians discussing it. There is also a vibrant intelligence community that is connected with ours around the world, and all the newspapers and other media of the world, and the commentators, and the many consultants, and so on. Using the whole of that collective wisdom, not a single suggestion was made to us, or indeed I believe to any of the other equivalent bodies around the world, that there was going to be an Arab Spring. Nobody guessed it. It happened quite contrary to anyone’s predictions.

So, here we have three fields-energy policy, the running of Britain’s macro-economy and the biggest events on the world stage-and in all three cases it turns out that human beings are not very good at predicting what is going to happen in the very near future. What else can you do but adopt a set of policies that try to maintain the maximum flexibility so that you are able to respond flexibly to the unknown? Coming back to the energy scene, that is one of the very reasons why our persistent view has been that we have to make sure, for example, that we do not put all our eggs in one basket-that we do not just build gas stations or just build renewables or just build nuclear-because we do not know whether gas is going to be cheap or expensive, whether nuclear will become more or less feasible, whether renewables will become cheaper or more expensive. These are all unknowns. I believe that our approach of trying to be clear-minded about our aims and trying to adopt policies that we think will go there but trying to maintain flexibility in the face of changing circumstances is the only rational approach.

Q307 Kelvin Hopkins: You are playing to some of my prejudices about Governments getting these things wrong time and time again, but your sentence, which is so masterful it sounds almost like Sir Humphrey-

Mr Letwin: Oh dear.

Kelvin Hopkins: He could have said that. It sounds like you are suggesting pragmatic firefighting, which is at odds with what the Government are doing. The Government clearly have a very strong and determined direction on health, on welfare reform, on pursuing nuclear power and so on. In a sense this is your pragmatism and what sounds like your traditional conservatism: let us not do very much; let us just manage things and hope that they carry on. True conservatism, traditional conservatism, is not radical; it is managing things and conserving things.

Mr Letwin: I certainly would not want to debate with you what true conservatism is, as I have never known. What I am clear about is that there is no conflict between a persistent and determined attempt to achieve certain policy outcomes that we think will contribute to the strategic aims, including very considerable reforms-you are right, this Government have a very determined set of reforms which they are seeking to bring about-and on the other side maintaining flexibility. In fact, the way these come together is that the nature of the reforms we are bringing about is such, we believe, that it will increase rather than reduce flexibility. What we are trying to do is to decentralise, to hand over more power to individuals and communities to determine their own circumstances and to create less centralised decision making, precisely because we think people are more likely to get things right in the long run if they can adapt to changing circumstances locally rather than be dragooned into achieving certain results centrally. So, the structural shifts that we are trying to bring about, whether in energy, localism or in many other fields, are aimed at increasing flexibility and resilience through flexibility rather than being aimed at achieving results against the false supposition that we know what is going to happen in the future.

Q308 Kelvin Hopkins: My view is that there is, and has been for a long time, a very determined sense of direction in Government, driven by ideology, not by pragmatism, and that for a long time those who disagree have been marginalised. I quote Professor John Kay, who came before us recently and said, "People at the top do not welcome challenge, and there is a single view, as it were, imposed on the organisation and people feel they will damage their careers by disagreeing with it." We heard examples before the last election, in this Committee, of civil servants who tried to challenge, and that perhaps a few of them were, shall we say, sent to manage a power station in Yorkshire, to change a metaphor slightly. There is this ideological direction, and yet you say you are just flexible and pragmatic.

Mr Letwin: Pragmatic was your word. Flexible is my word. As I say, the two come together. Let us take the case for reforming schools. We are aiming to create a structurally different system of schooling in England, within which individual schools run their own affairs, money follows the choices of parents and pupils, and schools compete for parents and pupils, because we believe that will raise the average standard of schooling and education provided, because that contributes to many of the aims, in particular, the aim of a "well-educated population". That is what you call ideology and what I call a policy carefully conceived to try to achieve a strategic aim. We might disagree about whether it is the right policy or the wrong policy, but in any event it is a policy adopted for that purpose.

Is it a policy that allows for flexibility? Yes, precisely because each individual school will have a great deal more flexibility about how it goes about doing its job of educating its pupils. We are not trying, in contrast to the perfectly possible alternative policy, to tell each school how to do it. We are trying to let the choices of parents and pupils determine the success or failure of schools so that schools can adapt to the kinds of pupils that are in their areas, the circumstances of those pupils, the character of the schools’ own teachers and so on, giving schools much more freedom of manoeuvre. It is a much more flexible policy.

If you are asking whether we are very inclined to listen to people who tell us that this whole approach to making our schools better is wrong, no, we are not, because we believe that is the right approach to making schools better. We think, with all the evidence we have available to us as human beings, that when people are freer and compete, standards tend to rise. In that sense, you are absolutely right that the Government continue to try to achieve a particular policy and are not put off by the fact that there are some people who disagree. If we were put off by people disagreeing, we would never have any policy about anything because, as a matter of fact, people disagree about everything, and you either adopt a policy or you do not. If you do, you will have some people who disagree with it and you will have not to pay them any attention while you pursue the policy.

Having said that, in the details of the policy, as I am acutely conscious of in the case of this particular policy that I am just discussing and also in many others, there are many people who come along to Cabinet Committees, but also to Ministers in Departments, and indeed in inter-ministerial discussions, and say, "We have spotted that, if you are generally speaking trying to achieve this, and you have underneath that done X, Y and Z, Y is not coherent with X and Z; it is not working well, and we should change it." Then we do very much listen, and a lot of our discussions are about the detailed implementation of the general policy to achieve the goal. I would say that is exactly in line with what this Committee has been advocating: that we should have a clear view about where we are trying to get to, and then be willing to look at the evidence about the particular detailed policy that will or will not get you there.

Q309 Kelvin Hopkins: We could debate this at length and I could go on. But the essence of it is that the rigid direction is always that markets work. We must create everything and put everything into a market context and then things will work. I am reminded-and I shall finish here-that, some 30 years ago, Milton Friedman, much beloved of some, but not by me, was interviewed by a hostile interviewer on American television, who asked if his economic views promoted human welfare. He of course said, yes. There was a challenge, and the interviewer said that they clearly do not, because they lead to inequality and higher unemployment. There was a really robust argument, at the end of which, Milton Friedman lost his cool and said, "Alright, it is about freedom." It was not about promoting human welfare. I suspect that is what infuses Government policy and has done for a long time. The idea that, in practical terms, we are doing the things that will benefit everyone in the longer run is not something that I believe to be strictly the case, and that what John Kay has said about people who do not agree with that philosophy being marginalised is what has been happening in my party and in your party. Your party signed up to that ideology in any case.

Chair: A yes or no will do.

Kelvin Hopkins: I have finished.

Mr Letwin: I did not hear the exchange you described between Milton Friedman and somebody else. I do want to correct one misapprehension. We do not believe that markets work in every context by any means. Our purpose and proposals for the reform of the police force do not involve competing police forces. You cannot give criminals vouchers to choose which police officer to be arrested by. We do believe that where you cannot get choice and competition, you need to have some other form of direct accountability if at all possible, and that is why we are moving towards elected police commissioners. It is a different model. So we are not wedded to the view that markets are always the solution by any means.

Q310 Chair: Moving on, I have to say that some of your answers to my colleague Mr Hopkins are absolute music to our ears, with regard to how Government get things wrong. One does then ask the question, why do we spend so much time and money horizon scanning, trying to predict the future, when we know we cannot predict it?

Mr Letwin: I think that is also a very deep question. Let me just spend a minute or two on it, because it is something that I have been thinking about quite a lot for the last couple of years. Given that I am very sceptical about the ability of human beings, let alone Governments, to prophesy the future with accuracy, it is a good question: why do we spend so much time worrying about it?

Q311 Chair: Would it not be better to spend money on the skills we need senior civil servants and permanent secretaries to demonstrate? This has been described by one of our witnesses. I am sure you are familiar with the Nicomachean Ethics and the four types of different knowledge: techne, episteme, phronesis, that is, practical wisdom, and metis, which is conjectural knowledge or what we might call imagination. Because we spend so much time pressuring civil servants to respond to individual events on a weekly basis, the depressing email coming out of Downing street once a week saying, "Please can we have your announceables for the next fortnight?" is what seems to drive the system of Government. Do we give enough space in our system of administration for our senior Civil Service to do those leaps of imagination that give them the opportunity to imagine the black swans or the golden swans-the great opportunities that I would say in this country we have been rather bad at dealing with for the last 30 or 40 years?

Mr Letwin: Let me come back to question on the Nicomachean Ethics and the types of knowledge that civil servants need. Just to continue for a second on the question of forecasting, the Government do spend a good deal of time, in one way or another, trying to look into the far and medium future. You might ask why we bother, given how bad we all are at it. I think I have come to the conclusion that actually it does make sense to spend time and effort looking at the future, as long as you remember that you will probably get it wrong. The reason why it makes sense to continue looking at the future is that at least you can try to identify as many of the very large risks as you can. Having a policy structure that is as resilient as you can make it in the light of an analysis of the very large risks and the uncertainties is a good thing to have. It is worth trying to chart what the very large risks are.

Q312 Chair: Would you agree that there is some concern right at the top of the Government that the long-term conjectural imaginative thinking, which in the end drives the identification of our national interests and how to pursue them, is being a bit squeezed out and is something that we need to concentrate more on?

Mr Letwin: No, I do not accept that it is being squeezed out at all. First of all, there has been more attention recently to the question of identifying risk-much more. The classic case in the context of the National Security Council is the National Risk Register, which is a very serious-minded attempt to identify and quantify risk and also to look at the degree of likelihood attached to given risks. This is an uncertain game and is imperfect, but it is much better to have such a register and such an effort than not. I am proud that has been introduced and is being used.

So far as thinking through the long-term effects of things that we are doing is concerned, that is something that goes on enormously in committees and between Ministers and civil servants. It simply is not true that the whole Whitehall machine is driven, which was the word you chose, I think, by the grid. The grid is a necessity of modern democratic politics and the 24-hour cycle. But the important point is to make sure-which I think we pretty much have-that the announceables, as you describe them, are things that emerge from things that are going on anyway, and are not created specially for that day’s news.

Q313 Chair: So you think the Civil Service is replete with phronesis and metis?

Mr Letwin: When I was teaching Aristotle in Cambridge I used to warn my students against trying to use these categories exactly, because I do not think that they work terribly well. I certainly do think that the Civil Service has a great deal of practical wisdom. One of the points of trying to rely more on the Civil Service and less on consultants to do things is that we think that the Civil Service was underestimated.

However, Jeremy Heywood has put forward some very interesting proposals, which we are working on with him and with Bob Kerslake, about the possibility of some degree of contestability so that outsiders also have a chance to use their expertise to challenge some of the policymaking that goes on inside the Civil Service, because although the Civil Service does contain a great deal of practical wisdom, there are many other people who have it as well.

Q314 David Heyes: We did not do Aristotle at Blackley Technical, and I have never recovered from that, so I have a fairly simply question. Is the structure of Cabinet Government conducive to good strategy-making?

Mr Letwin: I am very sorry to do this, but it comes back to a considerable extent to this vexed question of the word "strategy". I think that Cabinet Government is very well suited to the business of challenging and discussing policies in order to determine whether they are policies that will achieve one’s strategic aims. I do not think that Cabinet Committees are particularly good as a vehicle for looking at the detailed implementation of policy. We are conscious that we need to do much more work than Governments have typically done and we have yet done to identify the best ways to make sure that good policies are translated into good outcomes through good implementation. If you ask me where the system of Government in the UK is weakest, I would say it is at the level of making sure that the implementation works so that you get the results you were hoping to get from the policies that you have adopted, which is of course a necessary precondition for them achieving the strategic aims you are trying to achieve.

Q315 David Heyes: So there is the need to do more. The inference from that is that there is not time set aside in Cabinet to enable strategic discussion. Is that correct?

Mr Letwin: No. If by strategic discussion you mean discussion about whether our policies are adapted to achieving our goals, there is a lot of that that goes on and it goes on well and carefully and seriously. I suspect it has under many regimes, and it certainly does at the moment.

What I am saying is that that is what the discussion does, and it inevitably does, because if we gather Cabinet Ministers and others around a table for a couple of hours to discuss a serious subject, a couple of hours is quite a long time in ministerial diaries, as you will be conscious, but is not nearly enough time to start looking underneath the strategic level, if you like-whether the policy is well adapted to achieve the goal-into the question of how this is in practice being implemented. That is something that demands weeks and months of labour, often outside Whitehall out there on the ground, looking at what is actually happening.

So the real challenge for us is finding the mechanisms to make sure that we are discovering what is really happening on the ground and that we can respond by changing policy if necessary if it is not being implemented in the right way, or by changing the implementation, if that is what has gone wrong

Q316 David Heyes: But not strategic thinking in the sense of looking far ahead and considering the implications of that; that does not take place at Cabinet level.

Mr Letwin: On the contrary, looking far ahead is exactly what does take place; that is to say that we are sitting there and asking ourselves the question, "If we adopt this policy, will it achieve our long-term goals? What long-term effect will it have?" That is the discussion that does happen in Cabinet Committees and happens well in Cabinet Committees.

Q317 David Heyes: A lot of the evidence we have taken has given a very strong message that there is a need for a stronger centre of Government. Would you agree with that?

Mr Letwin: I think there is quite a strong centre of Government, in the sense that the Prime Minister and the Deputy Prime Minister are enormously powerful, and the apparatus that surrounds them is considerable. I think it is also important that we do not disempower the particular Departments. It is important that they retain their expertise and their considerable degree of autonomy. The way in which I think one can reconcile those two things, and make sure that the Government as a whole are marching in the direction they are aiming to march in, is by ensuring that we have sufficient co-ordination between Departments. That is the purpose of the National Security Council and of the revivification of the Cabinet Committee system.

We thought about this quite hard, and we came to the conclusion that neutering the Departments and running everything from the centre would be wrong, simply allowing each Department to tread its own path would be wrong, and that the way to avoid either of these evils was to have Departments with some considerable degree of autonomy but brought together and co-ordinated so that every decision was made in a committee that actually draws Departments together. The National Security Council is a very good example of that.

Q318 David Heyes: But much of the evidence we have had speaks well of the way strategy is worked out within individual Departments. It is the pulling it together at the centre that is the weakness and why many of the people who have given us evidence make a strong argument in favour of a stronger centre.

Mr Letwin: That has not been my experience.

Q319 David Heyes: Would, for example, an office for the Prime Minister help to improve that?

Mr Letwin: Although there is not something called "the Office of the Prime Minister", the Prime Minister has an enormously impressive private office and an enormously impressive policy unit. The Prime Minister operates heavily through the Cabinet Office and my own work there.

Q320 David Heyes: The Cabinet Office is not the Prime Minister’s office, is it? It definitely is not.

Mr Letwin: The Cabinet Office is a separate office from Downing Street, but there is a door that is constantly being opened, as we move back and forth between the two. The work that Will Cavendish’s team, for example, does on implementation and on the deregulation agenda and the work that the Economic and Domestic Affairs Secretariat does are absolutely interwoven with the work of the policy unit and the Prime Minister’s private office, and indeed with the Deputy Prime Minister’s private office, which happens to be in the Cabinet Office.

All of this works together, and in this Government, very unusually, works very closely with the Treasury, so that at the centre of Government, if you take together the Prime Minister, the Deputy Prime Minister, the Cabinet Office and the Treasury, you have a group of powerful entities and Ministers working together the whole time to try to bring together the activities of Government. Whether you call that a Prime Minister’s office or do not call it a Prime Minister’s office, I really do not mind. But it is certainly a strong centre.

The crucial point I am at pains to make, however, is that it does not operate simply by telling Departments what to do-and it should not, in my view. It works with Departments to try to make sure the activities of Departments are co-ordinated with one another so that the Government machine as a whole is moving in the direction it is seeking to move in. I think that is the right balance.

Q321 Greg Mulholland: Minister, is not the reality that, in the end, strategy comes down to money? Certainly a lot of the evidence and opinions that we have heard very much suggest that in the end that becomes the overwhelming driving force. You yourself told us when you came before us last January that you, understandably rightly, work very closely with the Chief Secretary to the Treasury and perform quarterly reviews of the departmental business plans with Secretaries of State and permanent secretaries. Is that not really clearly showing that it is actually the Treasury that drives strategy across Government?

Mr Letwin: No, I do not think it would be right to think that the Treasury drives what I would call policy across Government. It is, however, certainly true that there is very little point in adopting a policy that you cannot finance, and very little point in trying to carry out a policy that has not got sufficient finance to make it work. So, especially if you are very short of money, as the Exchequer is at present, you have to be extremely careful that the policies you adopt are policies that are financeable within the very tight public expenditure constraints under which we operate. I would describe it as a constant dialogue between what we seek to achieve and what it is possible to achieve in the light of the financial constraints. In other words, the Treasury is not there, outside a certain domain, driving policy, but it is in there discussing the financeability of policy the whole time.

Q322 Greg Mulholland: It is more than just how much policies cost, isn’t it? The Treasury has an influence in guiding whatever Departments do. The most powerful example in the experience of the last couple of years is the National Planning Policy Framework, the draft NPPF. It is notable that the DEFRA Natural Environment White Paper clearly recognises the intrinsic value of the natural environment as a whole, yet that is not then carried over into the draft NPPF, which is clearly directly related to it. Then, of course, the NPPF has the presumption in favour of sustainable development, with the default answer being yes, but that clearly seems to trump DEFRA’s Mainstreaming Sustainable Development document of February last year, which says, "Our long-term economic growth relies on protecting and enhancing the environmental resources that underpin it." So, is that not a clear example that, from a strategic point of view, not just from a figures point of view, when it comes down to it, the Treasury is king and will dictate strategy across the Departments, as it clearly has in this case?

Mr Letwin: No. I think I disagree with each part of that. First of all, I would be happy to exchange correspondence about this, but if you read carefully the National Planning Policy Framework and the Natural Environment White Paper, on both of which I have been heavily involved personally, you will find that they have extraordinarily similar views about the policies in them, about the preservation of biodiversity, the natural environment, the natural habitats, areas of outstanding natural beauty, sites of special scientific interest, and many other things besides. They are well-aligned documents.

Secondly, it was not the Treasury by any means alone that was a party to the discussions about the need to have a clearer planning framework, and one which achieved a proper balance between social, economic and environmental concerns. On the contrary, that was a discussion in which the Department for Communities and Local Government, DEFRA, the Department for Business, Innovation and Skills, the Treasury, Number 10, the Deputy Prime Minister and a range of other Cabinet Ministers were very much involved. There is certainly a very strong view within the Treasury, quite rightly governed by our strategic aims, that we should have a strong and growing economy, but there is also a view that it should be a strong, sustainable and growing economy, and that is why the National Planning Policy Framework came out very clearly with these three legs of environment, society and the economy, and not just with an economic leg to it.

That is actually a good example of the opposite of the phenomenon you are talking about. What we have tried to do is to balance concerns for economic growth against concerns for the sustainability of our environment and against concerns for the sustainability, prosperity and well-being of our society. I would say that the Treasury plays its part, which is enormously important. When it comes to the money, it has an enormously important role in making sure that what we are proposing is financeable, but it does not drive policy.

Q323 Greg Mulholland: You are well aware that many people in a coalition of organisations-the National Trust, the Campaign for the Protection of Rural England-do not feel that balance is there in the current draft NPPF.

Mr Letwin: You have mentioned the two organisations that have campaigned very strongly about that. We have certainly taken, and are taking, very careful note of their detailed comments. As a matter of fact, their detailed comments do not relate to very many of the passages in that document, but in any event I do not agree with their campaign.

Q324 Greg Mulholland: Are you going to tell us if the default yes to development will be in the revised NPPF when it comes out?

Mr Letwin: You will have to see the final version when you see it. As I say, I am very clear that, as a matter of process, this is not Treasury-driven. I certainly would accept that tax policy is Treasury-driven. That has always been the case, I think. But outside that domain, actually, the Treasury is a participant-an enormously important participant, of course, but just a participant, nevertheless-in the discussions of policy. It is not driving policy across the range.

Q325 Greg Mulholland: Looking at spending priorities and decisions, clearly they are very much at the top of the Government’s agenda across all Departments. How strategically do the Government, led by the Treasury, make the trade-off between different spending priorities? Clearly it is more than just looking at how much things cost. Do we look at the rate of return for things like the BBC World Service or for foreign aid? Is that part of the strategic thinking when coming up with spending decisions?

Mr Letwin: This is a very important question. The decisions about the allocations of spending within the envelope that the Chancellor has proposed and the Cabinet has approved are collective decisions. Unlike tax decisions, they are not driven by the Treasury. Of course, the Treasury plays a major role in the discussions with Departments as we come up to the results of a given spending review. That was true in the last one, and I am sure it will be true in the next one. But the final decisions that are made, either in the context of the PEX Committee, on which some of us sat with specific Secretaries of State, or finally in Cabinet itself, are collective decisions. Do they involve judgments of weights of social and economic return? Yes. We have inherited much from the previous Administration but have also much developed the system of impact assessments to look at returns in a systematic and careful way. The Green Book stipulates that Departments in bringing forward a policy have to look at returns. When we were engaged in the most important activity that is focused specifically on return, namely investment activity, a collective decision was made, unusually, to bring the whole of the capital budget of Government within a single purview, and it was at the PEX Committee-not in interdepartmental negotiations, nor in the Treasury alone, but at PEX Committee-that we went through the entire set of bids from Departments for investment in capital projects ranked against their returns to see what it would be rational to allocate spending to. While inevitably those judgments are, as always, subject to uncertainty, it was a rational approach that I suspect we will want to adopt again in the next spending review.

Q326 Greg Mulholland: A final question from me. I think we would all agree that a strong economic base is a central plank of any Government strategy. Is there an argument, do you think, for the Government picking winners and supporting UK strategic assets through direct policy intervention?

Mr Letwin: There is certainly a strong reason for Government to try to put a large amount of ministerial effort and time into selling those parts of our industrial product and services abroad that we are particularly good at, and hence in which we have goods and services that are particularly competitive. That is why the Prime Minister personally, the Chancellor, Foreign Secretary, Deputy Prime Minister and others, including the Business Secretary, spend a much larger proportion of their time than in recent Administrations going to other countries selling British industrial and manufacturing services to people abroad. It is undoubtedly the case that we major on those where we have a competitive advantage.

Secondly, we are putting a great deal of emphasis on making sure that the fantastic science base that we have in our universities is linked in an appropriate way with our manufacturing industry; it has been a national failure that it has not been in the past. That is why we have adopted these new institutes from Germany, sometimes called Fraunhofer Institutes, translated into what we call Catapult centres, which bring together the best research in our universities with the best research and development in our firms, and indeed with nascent firms. There are some inspiring examples. If you go to Sheffield and you see the Advanced Manufacturing Research Centre there, you can see the kind of thing that can now be done. This has been a pattern beginning in the previous Government and much enlarged under the present one. That does inevitably involve the Technology Strategy Board making judgments about where we have the most powerful science base and the most powerful industrial muscle and putting the two together.

Thirdly, there is no doubt at all that, where we have outstanding capacity, for example in aerospace, pharmaceuticals, in IT, we need to ensure that people are trained to the requisite level. That is one of the reasons why we have been, among other things, promoting the Queen Elizabeth II Engineering Prize-to try to make it more attractive to the brightest young undergraduates to go into advanced engineering and the application of science in general. There are many other examples. I hope what I am illustrating is that, while we are certainly not in the business of trying to identify which company to back, we are trying to play to our strengths as a nation and to push other countries to buy our best, from our best sectors, and try to strengthen those sectors further, rather than simply spreading our limited money round all sectors as if they are all as globally competitive as each other.

Q327 Paul Flynn: 577 of our brave soldiers have died and 2,000 others live on, broken in body or mind, as a result of the strategy of going to Iraq on the basis of fear of weapons of mass destruction that did not exist. We have remained in Helmand province and fought on, on the basis of a terrorist threat to the UK from the Taliban that did not exist. We might well go to war in Iran for fear of attacks by missiles that do not exist carrying nuclear weapons that do not exist. While there might well be an honourable case for peacekeeping in the world, in Kosovo, in Bosnia and in Sierra Leone, the core reason of our involvement in these invasions of other countries seems to be the belief that Britain should punch above its weight. Why?

Chair: Ignore the preamble. The question is very interesting.

Mr Letwin: I cannot really comment very much on the Iraq situation as I was not a part of the Government then, as you know. In the case of Afghanistan, which I have obviously been much involved in over the last two years on the National Security Council, I have to say that I do not recognise your description of it. It is not a threat from the Taliban to our security that is the issue; it is the threat that arises from a destabilised Afghanistan and, indeed, potentially instability in the AfPak region as a whole, and the ability of al-Qaeda to capitalise on that that does pose a direct threat to the UK. I cannot speak for why we went in in the first place, because I was not part of the Government who made that decision, but the reason for staying there, only for a period, as we hand over to-

Paul Flynn: To the Taliban.

Mr Letwin: -what we hope will be a reasonably stable regime, is precisely to try to create a degree of stability that does not allow al-Qaeda to capitalise on the situation and become much more able to intervene in our own domestic security. So that is the reason. Whether this is right or wrong is a different question. But if your question is what the motive is, it is not to show that Britain can punch above its weight; it is to try to protect our own country by trying to hand over to a more, rather than less, stable regime, given the circumstances in which we found ourselves at the beginning of this Parliament.

Q328 Chair: We are not punching above our weight, whatever that means?

Mr Letwin: I think I would use a different phrase, which is that we have made a conscious decision not to engage in strategic shrinkage. We are trying to have a leading influence in the world-not an influence that pretends that we are the United States or China or Russia but, nevertheless, an influence that is very considerable. While I am sure that is not what motivated our remaining in Afghanistan, it is our intention to do that. The Somalia conference today is a good example of the way in which the Foreign Secretary, I think very ably, and the Prime Minister and Deputy Prime Minister have managed to bring other countries together to try collectively-not Britain alone, it would not be possible; and not incidentally by a great armed invasion, but by discussion and collective effort-to create more stability in a particular country that is particularly dangerous for all of the rest of us. So I think that is a good case of how the decision not to engage in strategic shrinkage and the efforts that have been put in to enlarging and making more effective our diplomatic effort have resulted in Britain being able to play a leading part.

Q329 Paul Flynn: Do you believe the loved ones of the fallen and those who have been so badly damaged in the war will be consoled at the outcome, where, in Iraq, a cruel, oppressive Government has been replaced by a cruel, oppressive Government, and in Afghanistan the likelihood is that a Taliban regime will be replaced by a Taliban regime?

Mr Letwin: I do not accept your description of equivalence in Iraq. I think that the regime in Iraq is vastly preferable to its predecessor, but, as I say, that is not a decision in which I was myself involved. In the case of Afghanistan, I do not think that anyone would be comforted if they thought that it was just going to be the same thing as there was many years ago. Our hope, in building up the Afghan national security services-the army and the police-and in handing gradually over to them a situation that is stabilised, is that there will be thereafter a degree of stability in that country greater than there was before, where alQaeda will not be able to run free, and where the situation vis-à-vis Pakistan will not be destabilised, and where, as a result, there will be less fear of terrorism being exported to our own country. So then, yes, I do think that even those who suffered tragic loss would recognise that that loss is a noble sacrifice if what it means is that it protects us better at home. I think we should celebrate the enormous efforts that our troops have made to deliver us from that kind of threat.

Q330 Chair: Minister, we must shortly draw to a close, but this last exchange causes me to look again at the six strategic aims. Not engaging in strategic shrinkage and maintaining our influence in the world I think by any standards would be regarded as a strategic aim. That is not expressed.

Mr Letwin: No.

Q331 Chair: That would be a bit more controversial than what you have put down here.

Mr Letwin: But those are two policies that we think contribute to the achievement of the strategic aim of "a free and democratic society properly protected from its enemies". I was just describing precisely the point.

Q332 Chair: But I think that if you wrote down, "maintenance of our influence in the world", it would be a bit more informative about what you are trying to achieve.

Mr Letwin: No, it would not. That is a policy goal that arises from the aim. I think that this is really very important. We do not see maintaining our influence in the world as an end in itself. The end we are seeking is a free and democratic society properly protected from its enemies. Therefore, we are intervening in Somalia through the Somalia conference and other means, and in Afghanistan, because those are places where there is a direct threat in our view.

Q333 Chair: These choices form a very subjective area, do they not? For example, you have not got, "maintenance of the unity and independence of the United Kingdom". That sounds like a good strategic aim.

Mr Letwin: It is perfectly possibly, Chairman, for you to formulate any number of aims.

Chair: Exactly.

Mr Letwin: But our aim is a free and democratic society properly protected from its enemies in this context, and we regard the maintenance of the United Kingdom as an entity as something that will contribute to achieving that.

Q334 Chair: Presumably you select some strategic aims because that is where you are going to concentrate your effort. I would have thought that maintenance of the independence and unity of the United Kingdom is going to come under considerable challenge because of the situation in Scotland. One of your strategic aims might have been deficit reduction, because that seems to be possibly the greatest threat to our stability and the security of the lot.

Mr Letwin: That is our policy, and it is a policy not because deficit reduction is an end in itself but because we think that, contrary to other parties, reducing our deficit by as much as we are trying to do is the way to maintain low interest rates and a strong, sustainable and growing economy as a result.

Q335 Chair: My argument is that your chosen strategic aims do not actually tell you anything. They do not tell anybody anything about what the Government are really trying to achieve.

Mr Letwin: They tell you only what it is we are actually aiming for. That is what aims do.

Q336 Chair: Some people would say motherhood and apple pie.

Mr Letwin: Okay, Chairman. The difference between us is that I do not think that you are allowing for the fact that we have actually done some thinking about the things that are ends in themselves, as far as we are concerned, and the things that are approximate aims, policies, which you pursue in order to get to those ends.

Q337 Chair: When were these six aims first written down?

Mr Letwin: They run through the programme for Government.

Q338 Chair: But when were they expressed?

Mr Letwin: I expressed them to you because you asked me what our strategic aims were.

Q339 Chair: So you came up with these six strategic aims because we are having an inquiry into strategy?

Mr Letwin: I put them down on a piece of paper because you asked me, but if you read the programme for government, you will find them running through the whole document.

Q340 Chair: One might say that they would never have emerged had we not had an inquiry.

Mr Letwin: On the contrary, any reader of the programme for government would have to see that those aims are there. They are spelled out over and over again in the document.

Q341 Chair: I hope you have enjoyed this session as much as I have. I would say that we give credit to the Government-well, one or two of us might.

Paul Flynn: I wish him all the best for his brief career.

Chair: But we are likely to suggest that the Government could improve their score on strategic capability, which is what we are really concentrating on, in terms of co-ordinating cross-departmental strategic thinking more effectively, ensuring that resources match strategic objectives more effectively and ensuring that there is greater demand for strategic thinking at the top of the Civil Service to avoid crowding out by day-to-day activity. I certainly give you credit for what you now claim to be an informal network of strategists across Whitehall. I do not think that was acknowledged as existing before our previous inquiry. What plans do you have to address the gaps we are likely to highlight in our report?

Mr Letwin: Well, Chairman, I cannot tell you what plans we might or might not have to address gaps you may or may not identify.

Q342 Chair: I have explained to where I think they are.

Mr Letwin: When you have spelled them out, we will no doubt wish to respond to them. I have to tell you that I do not think that there is a deficit in the capability of Whitehall to think about how to formulate coherent policy that aims at coherent results.

Q343 Chair: So, whatever we put in our report, you will regard it as completely otiose and unnecessary?

Mr Letwin: No, very far from it. If your report identifies gaps that we were not aware of, we will respond to you with constructive suggestions about how we fill them.

Q344 Chair: We shall continue to try to make you aware of them.

Mr Letwin: Thank you.

Chair: Minister, thank you very much.

Mr Letwin: Thank you very much.

Prepared 20th April 2012