Strategic thinking in Government: without National Strategy, can viable Government strategy emerge? - Public Administration Committee Contents

6  The challenge for cross-departmental strategic thinking

59.  Our evidence set out a number of barriers to strategic thinking within Whitehall. Below, we have identified nine areas for action to ensure that short-term policy-decisions are aligned with the UK's long-term strategic interests.

Promoting the capability of the Civil Service

60.  PASC's 2010 report contained the following key conclusion -

It is essential to recruit, train and promote a community of strategists from across Whitehall with different experiences and expertise who can work collectively.[57]

We were encouraged to read in the Government's evidence to our inquiry that there is now "an informal network of strategists across Whitehall, which meets regularly to promote information sharing and [to] identify opportunities for joint work."[58] This is a welcome step forward, but we still await the capability review of National Strategy that we recommended. The Government inhibits the development of such capability by insisting that strategic plans must be "developed by Ministers through collective, inter-Ministerial Cabinet discussion" and, moreover, that they are based on a misplaced belief that "the UK's national strategy is set out in the Coalition's Programme for Government, which", they say, "captures the six strategic aims (see para 25 above) to promote the welfare of our citizens", even though these six aims were drafted long after they were "captured" in the Coalition Programme for Government.

61.  To invite suggestions about how to change the culture of Whitehall to strengthen strategic thinking capability, we held a seminar with strategy officials in the Civil Service and held meetings with strategic thinkers and officials in Ottawa and Washington DC. Attendees at our Civil Service seminar told us that it was necessary to change the culture in Whitehall to empower civil servants to take more risks. This approach recognises the distinction between risk-taking and recklessness: we heard that Google, for example, supports staff who take risks, even if they go wrong, but it does not support reckless and ill-informed decisions.[59]

62.  We heard contrasting views on the use of outside strategists. While the benefits of bringing into Whitehall greater numbers of people from academia, the voluntary sector and the private sector, who may be more open to new ideas were highlighted;[60] a note of caution was offered that external input into strategy making in the Civil Service has value because it provides an external challenge function, and as such, should not be absorbed into the Service.[61]

63.  The Cabinet Office evidence to this inquiry stated that strategic thinking was "a core part of the learning and development programme for Civil Servants" in central government.[62] Julian McCrae from the Institute for Government questioned whether this was achieved in practice. Mr McCrae accepted that strategic thinking was a "reasonably valued skill" but believed that the records of those who have been promoted suggest that it was not valued as highly as other skills.[63]

64.  Professor Nick Butler, a former Senior Civil Servant, believed that strategy skills were present in the Civil Service, but not valued. He argued that:

the gap is actually among the politicians and the leadership in setting the strategic questions, in defining the direction and then asking the right questions to these very able people. I am sure many Civil Servants would love to do more strategic work than they do, but they are not asked to, particularly across Government, and I think that is where capability lies: how to ask the right question.[64]

65.  Geoff Mulgan agreed that the role of Ministers must be addressed, warning that improving strategic skills in the Civil Service was futile if Ministers did not utilise and foster these skills.[65]

66.  We believe that there is considerable unused capacity for strategic thinking in Whitehall departments which should be allowed to grow and flourish. This cannot be achieved if Ministers continue to insist that strategic thinking should be largely the preserve of Ministers. We reiterate our recommendation for a capability review of strategic thinking capacity in Whitehall, the objective being not that Ministers should give up their strategic role (which seems to be their fear), but that their deliberations and decisions should be better informed.

67.  We are also concerned that the abolition of the National School for Government (NSG) will remove the last remaining elements of training in strategic thinking for the Civil Service. To ensure that this capacity is better valued and promoted in future, we invite the Government to set out how Civil Service Learning (which takes over from the NSG) will promote the training and embedding of effective strategic thinking skills.

68.  We heard that turnover in the Civil Service was another factor against strategic working in Whitehall and across departments. Matt Cavanagh argued that:

you have people cycling through posts in two years, and they themselves have no incentive to think, "Well, actually, am I prepared to do something that is about me investing for a result that is going to pay off in three or four years' time?" They do not stay in post long enough and their career structure again does not incentivise them to work across Whitehall.[66]

69.  It is axiomatic that politics is increasingly driven by the news media agenda, and that it is harder than ever for Ministers to spend time considering the longer term. On our visit to Ottawa we heard that the Canadian Public Service has a recognised responsibility to look beyond short-term factors and work towards the long-term national interest. The Government's response to this Report must address the question of whether there should be a stronger, perhaps constitutional, role for the Civil Service in promoting the long-term national interest, to help counteract the negative, short-term pressures on Ministers.

Strengthening the centre of Government

70.  A recurrent theme of PASC reports in this Parliament has been to call for a stronger centre of Government to promote coherent cross-departmental working and better implementation of the Government's reform programmes.[67] The Government routinely rejects such recommendations. However, several witnesses shared PASC's view that a stronger centre of Government would improve the capacity for strategic thinking and ensure a coherent approach across departments. Lord Burns argued for a stronger centre, noting that the Cabinet Office served the Cabinet as a whole, and not the Prime Minister.[68] He highlighted the contrast between the Government and his business experience, adding that "the centres of companies have much more strategic power than I feel is the case with Government".[69]

71.  Julian McCrae from the Institute for Government reported research by the IfG that found that, in comparison to international examples, the UK had:

a very light function at the centre that was capable of questioning departmental policy and the work that was emerging from Departments, and asking, "Does this fit with a cross-government view?"[70]

He added:

Compared with a lot of other countries, it is light in the ability to question the content of what is coming to it as opposed to creating the processes that ensure that paper flows through the machine.[71]

72.  Sir David King stressed that strategic thinking would not improve "until we see leadership from the top saying, 'we need strategies and this is how we do it'."[72] There were differing views on how this could be achieved. Jill Rutter from the Institute for Government advocated a stronger role for the Cabinet Office,[73] while Lord Carter spoke of the possibility of introducing a "chief operating officer of the Government".[74]

73.  The Minister was once again a lone voice amongst our witnesses in his rejecting the suggestion that that the centre of Government needed strengthening, arguing that the power held by the Prime Minister and Deputy Prime Minister demonstrated that "there is quite a strong centre of Government".[75] He argued that this strong centre should, however, be balanced against the danger of "disempowering" individual departments who should retain "their considerable degree of autonomy".[76] The right role for the centre of Government was therefore not to tell departments what to do, but to have a coordinating role.[77]

74.  We have set out in previous reports our call for a stronger centre of Government to lead Civil Service reform. Ministers and the Senior Civil Service are alone in their complacency that that cross-departmental working is adequate. We therefore reiterate our recommendation for the Cabinet Office to be given the means and influence to act as an effective headquarters of Government, on behalf of the Prime Minister and Cabinet as a whole, or to explain how else the Government will address the endemic problem of failed cross departmental working. We believe that this stronger centre of Government is the only way to promote coherent National Strategy which is supported across all departments. We will return to this topic in future reports.

Address longer-term context as well as short-term problems

75.  Geoff Mulgan argued that strategic thinking was about:

promoting a way of thinking or a culture in senior Ministers and officials that is always looking at not just next two or three months, or the next couple of years of policy implementation, but also at the further horizon. [78]

He argued that, when Prime Minister, Tony Blair "regularly spent significant chunks of time with his colleagues, officials and outsiders looking at the UK's interest 10, 20 or 30 years ahead."[79] Sir David King, in his time as Chief Scientific Adviser also reported that the Strategy Unit in Number 10 carried out 'futures work' looking 10-100 years in the future, bringing in an expert community of "scientists, economists social scientists and technologists [to] advise on future trends, opportunities and risks".[80]

76.  The evidence we received was that such long-term thinking did not occur across Whitehall.[81] Sir David cautioned that long-term issues were pushed to the side while governments focused on urgent short-term problems. Lord Carter of Coles noted that "the urgent tends to trump the important".[82]

77.  The Minister told us that for the Government

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.[83]

He also stated that

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.[84]

78.  We welcome the Minister's assurance that the Government does consider the long-term impact of policies. However, we remain concerned that, in practice, decisions are made for short-term reasons, little reflecting the evidence or the longer-term interests of the nation. The clearer expression of the nation's strategic aims would help to ensure that short-term decisions are made in the context of the long term national strategic framework. This would also improve the ability of the Government to communicate a coherent narrative.

79.  Where some departments did work to longer-term timescales, this was not replicated across Government, causing conflict. Former Special Adviser Matt Cavanagh told the Committee that individual departments planned their own strategy, and operated on differing timescales. He cited the example of Afghanistan, where he described DfID as working to a ten year timescale, Ministry of Defence as operating on a six-month timescale (the same as tours of operation), and the Foreign Office, in contrast, working on what felt like "a one­week time scale". [85]Mr Cavanagh argued that having differing timescales for each department did not pose a problem of itself, but that the departments involved "all needed to get together and agree on a strategic time-scale, in which they would have a conversation about what was going to happen in the next two or two and a half years", which at present did not happen.[86]

80.  The Minister accepted that such different timescales existed, describing it as one of the "great complexities of government". It was not, he believed possible to "obliterate these differences" but the work of Cabinet Committees and the National Security Council was 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.[87]

81.  The Cabinet and its committees are capable of carrying out little more than a patch-and-mend to the policies which reflect differing departmental strategies and timescales. The system makes ministers accountable for decisions, but makes it hard for individual Ministers or the ministerial team to determine how decisions are considered from the outset. There remains a critical unfulfilled role at the centre of Government in coordinating and reconciling priorities, to ensure that long-term and short-term goals are coherent across departments. Only a clear national strategic framework can place day-to-day decisions in the long-term context, or emergent strategy is more likely to throw up unanticipated problems, such as the need to revisit carrier aviation policy, to revise feed-in tariff rates for micro-renewables or the over-optimism of the government's initial economic forecasts.

Improve the proper use of Scenario Planning in managing uncertainty

82.  When considering strategy over a long timescale, many witnesses recommended that to work strategically, governments should undertake scenario planning. In meetings in Washington DC we were told that it was critical that scenario planning is tied into a wider strategic framework through the willingness of senior officials and politicians to act on the findings.[88]

83.  Dr Mulgan highlighted the example of Singapore, where, he said, "officials and Ministers are regularly taken through scenario exercises to game play or role play bad things happening". He argued that if such exercises had been carried out by the Treasury in recent years, the Government would have been better prepared for the economic downturn in 2008.[89] However, the Treasury was unwilling "to think through negative scenarios" such as to consider "a slowdown of the world economy, the credit crunch and … rises in unemployment". The reason for this unwillingness was how it would be interpreted in the media if it were to leak.[90] Professor Kay agreed, arguing that in addition to the fears of leaking, the Treasury was also unwilling to undertake scenario planning because "the people at the top do not welcome challenge".[91] This evidence echoes the findings of our 2010 inquiry .

84.  Lord Burns expressed his doubts about the use of scenario planning involving "people trying to paint big pictures of all kinds of different things that might happen in the world and to devise a series of policies to suit each of them".[92] Instead he highlighted his belief in 'stress-testing' policies, a process which was used during his time in the Treasury "to identify some ways in which the external world may come to impact upon what the policy was doing or where things may turn out differently from expectations, and then trying to see how robust the policy was."[93]

85.  Geoff Mulgan argued that carrying out such scenario planning "would require a very different mode of thinking from what is normal in Government ... [who] are repeatedly victims of essentially wishful thinking and believing that growth will continue".[94] Lord Burns agreed:

Government have never been very good, in my experience, at what you might describe as looking at plan B, because Government do not like to think that plan A is not going to work. They fear that, by looking at plan B, there will be a loss of confidence in plan A. Of course, when plan Bs have been looked at, they never turn out to be a plan B, because by the time there is a problem with plan A, there are usually a lot of other factors that by then have changed as well.[95]

86.  Professor Gwyn Prins from the London School of Economics highlighted the danger of 'wicked' problems: "open system issues, incompletely understood with no bounded data set, no stopping rule for research, no possibility for iterative experimentation and notorious for producing perverse, unintended consequences when governments try to act on them."[96] By their very nature such problems cannot be detected by horizon scanning processes. He directed our attention to two countries, Australia and Sweden, who have already embraced this challenge and have developed and fielded techniques of strategic analysis which make a virtue of acknowledgment of doubt. These techniques permit open recognition of what is and is not known and knowable. He recommended that benefit might be drawn from study of such methods which do not commit the errors of horizon-scanning to which several witnesses, as well as Professor Prins, drew attention.

87.  The Minister recognised the limitations of planning for the future citing the very recent example of the failure to predict the Arab Spring:

In the National Security Council we have gathered with us the heads of the intelligence agencies [...] 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.

88.  The Minister stressed that failures to predict events in this way did not occur because the officials or strategists "were stupid or ill-informed. It is because they were human beings. We just do not know very much about the future."[97]

89.  For this reason, the Minister believed that the "only rational approach" is the Government's current position 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".[98] In this way, the Minister argued:

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.[99]

90.  We are concerned that the increase of horizon scanning gives politicians and officials a false sense of security that they are prepared for all eventualities. We advocate a greater recognition of the unpredictable nature of the issues which face us as a nation. We recommend a review of the use of horizon scanning and its purpose. This should be undertaken on the grounds that speculative study of alternative futures is necessary but on the understanding that strategic assessment must also consider unknown future challenges and be prepared to respond to uncertainty.

91.  We very much welcome the Minister's advocacy of analysis and policy which takes account of risks and uncertainties. However this must be reflected in the Government's emergent National Strategy and in the policy-making process, and to do so requires the Government to have the skills and capacity for such assessment and analysis across Whitehall. This underlines the need for a capability review of strategic thinking capacity.

Ensuring the proper use of science

92.  There are differing views on how useful evidence from science can be in determining strategy in an uncertain world. Professor Gwyn Prins of the London School of Economics emphasised the need for National or 'Grand' Strategy to take into account the need to distinguish between, and to employ consciously, four different types of knowledge (as defined by Aristotle in the Nicomachean Ethics).[100] These are firstly 'masterful know how' knowledge which changes things; secondly reproducible, theoretical knowledge which is rule setting. These two are the fundamentals of what is popularly called 'scientific' knowledge appropriate for fields of knowledge with clear boundaries. But the third type of knowledge is essential for human affairs (says Aristotle), as well as for all 'wicked' problems. This is 'practical wisdom' which must guide us when we face the unknown for which we have no rules. To it is joined 'conjectural knowledge': the learned capacity for handling complexity that combines flair, wisdom, forethought, subtlety of mind, deception, resourcefulness, vigilance, and opportunism. It can provide the ability to anticipate, modify and influence the shape of events. It makes one comfortable with the absence of precision in a 'wicked' world and skill to deploy human ingenuity. The third and fourth forms are not rule-giving and are not 'scientific' in the popular sense. Professor Prins suggested that it is essential to choose the correct form of knowledge for the type of problem. In this way we can "make choices in the face of uncertainty".[101] Such choosing underlies the Swedish and Australian strategic assessment methodologies to which he had earlier referred. He suggested that mismatch, and particularly the view that the first two types of knowledge are best applied to bounded, understood fields, can be universally applied, is a common error.[102]

93.  Professor Prins argued that the belief that there is a scientific solution to all significant problems has made "it appear shameful for civil servants to admit to ignorance or to say that nothing can be done (or should be done) by Government". [103]

94.  Simon Anholt shared this view, arguing that:

Britain's failure in strategy is precisely our refusal to acknowledge the importance of imagination and creativity in the game - our determination to believe that national strategy can be a purely ratiocinative process, informed by pseudo-scientific approaches such as 'horizon scanning'. This criticism has often been repeated throughout this enquiry, but it is a criticism we should test against ourselves too, for strategy is more art than science, so to exclude the artistic from the game is surely an error.[104]

95.  The Minister argued that the Civil Service did have "a great deal of practical wisdom", but that when he "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."[105]

96.  The evidence we received from leading scientists stressed that Professor Prins' concerns about uncertainty in science were recognised and managed. Lord Rees stressed the importance of using scientific knowledge, saying that "we got on better with it than without it" once its limitations were accepted.[106] He emphasised that as "a larger proportion of the long-term issues confronting us as a nation have a scientific dimension", decisions on these issues require scientific input, alongside public opinion.[107] This input however, did not mean setting policy but giving politicians "a best estimate of what the scientific consensus is and the balance of probabilities". Lord Rees added that:

What is even more important is that scientists should realise that, even if the science is certain and fully worked out, there can be a range of policy responses.[108]

97.  We also heard that the scientific advice offered to governments went far beyond strict physical or chemical science. Sir David King, the former Government Chief Scientific Adviser told us:

when I was advising Government, I would bring in the appropriate physicists or engineers but also appropriate economists and social scientists to tackle the problem with me before giving advice. I think the way in which I can answer that question best is in the old Latin meaning of the word "science", from scientia—in other words, use the knowledge base as a means of advising Government. That formed the basis of my position in Government.[109]

98.  Sir David King struck a note of caution about the political ramifications of accepting uncertainty:

It is part of the job of training a scientist to make sure that they understand the uncertainties in what they are dealing with. The difficulty is, as Lord Rees says, that when scientists discuss uncertainties, it can be picked up by the Daily Mail and others as indicating that the scientists do not know what they are talking about.

99.  Any emergent strategy must address uncertainty: the 'wicked' problems we cannot define or predict. There are limits on the use of scientific knowledge in strategic thinking and the management of uncertainty must be embedded into the strategy process. The Government should not be afraid to acknowledge that this uncertainty exists and to promote an open discussion about risk and uncertainty in policy-making and development of National Strategy.

Breaking down departmental silos

100.  The barriers between government departments can prevent Civil Servants from working strategically, and across departments, creating incentives to defend their departmental territory at the expense of the good of the whole.[110] This produces particular problems for working strategically on issues which cover a range of government departments, often without clear agreement on the lead department. Our witness Nick Butler spoke of a policy initiative for which five different departments felt they had the lead role.[111] For many of these cross-government issues we heard that there was no system currently for bringing together different departmental strategies, which in turn encouraged turf wars.[112]

101.  In a seminar with a number of Whitehall strategists, held under the Chatham House rule, we heard that the presence of silos in Government meant that where strategic thinking does occur, it is dispersed throughout government, with strategists placed in a range of uncoordinated positions in individual departments including as part of private offices and 'insight teams'.[113] Central strategy units were therefore useful in ensuring coherence between individual departmental strategies, but the trade-off was a lack of ownership by departments and ministers of the resulting strategic thinking.[114]

102.  This was, Geoff Mulgan told us, because of the constitutional position of the Secretary of State in terms of accountability to Parliament which, he said, "really locks in the department as the key unit". Lord Carter of Coles agreed that breaking down government silos to enable strategic thinking would require a change to the current mechanisms of accountability:

It seems to me that nobody has found a better way than silos. We talk about it, but if you want accountability and roles and responsibilities that are actually well defined, then, sadly, silos seem to have been the best way to achieve that so far.[115]

103.  We heard suggestions that an 'ecosystem' was needed which would build the connections between the departments and all the stakeholders that are required to work strategically. We understand that there are procedures in place in Canada to enable strategic work across government, and to collectively work to a longer timeframe than individual departments. This is achieved through a semi-formal system which brings together Permanent Secretaries in a series of topic-based committees, such as economic, social, climate change and global trends). Committees are required to look at least five years ahead, but can choose the issues to address within this timeframe, and periodically these committees are brought together to share and realign thinking and disseminate this thinking across departments.[116]

104.  Unless National Strategy involves the whole of government and is embedded in the thinking and operations of all departments it not strategic. The Whitehall silos act as a roadblock to National Strategy. To break down these silos we recommend the introduction of thematic committees of Permanent Secretaries for the purpose as in the Canadian public service, to underpin the combined work of their Ministers.

Aligning financial resources with strategic thinking:

105.  Several witnesses have argued that strategic thinking in Government is driven by the spending round. Peter Riddell, Director of the Institute for Government, said:

what is inherent in the whole discussion we have had this morning is the role of the Treasury. If you look at what happened with defence, instead of things being sequential between having a national security strategy and then the review, they were coincidental. But, it was quite clear what was driving the process. If you look at the evolution of the business plans, the connection with the CSR of that year was clear. The very interesting question is how much of the spending round comes prior to any strategic consideration of what the priorities are for any department.[117]

106.  Former Permanent Secretary to the Treasury, Lord Burns, agreed, saying:

I find it very difficult to imagine that one can really think about making strategy without taking into account financial considerations.[118]

He added:

Strategy has to drive finance, and finance has to be, it seems to me, a very important aspect in any strategic thinking. [119]

It was, Lord Burns said, the role of the Treasury to make sure that the strategies of individual departments "are being brought together in a way that is affordable and fits in with the economic strategy".[120]

107.  It is not apparent that spending is linked to strategic aims at present. As the Joint Committee on the National Security Strategy has pointed out, the National Security Strategy [NSS] was published on 18 October 2010, the Strategic Defence and Security Review [SDSR] on 19 October 2010 and the Spending Review on 20 October 2010. The Committee concluded that "it is significant that the NSS and SDSR were produced in parallel with the Spending Review—rather than guiding or following it".[121]

108.  Nick Butler argued that the Treasury was not a strategic department, suggesting that in his experience:

the Treasury concentrates on that side of the economy [controlling the budget] at the expense of the other side, which is growth and development for the future, and the role of both public and private policy in achieving that growth. I think that is now an imperative and I still do not see it happening in the Treasury, which is regrettable.[122]

109.  The Minister denied that policy was driven by the Treasury, stating that the Treasury is "a participant—an enormously important participant, of course, but just a participant, nevertheless—in the discussions of policy." He argued there was instead a "constant dialogue between what we seek to achieve and what it is possible to achieve in the light of the financial constraints".[123]

110.  Attempts to work strategically without considering tax and spending considerations cannot be properly termed 'strategic thinking'. The strategic goals and ambitions of the country, informed by the public's perceptions of the national interest and by their values and aspirations, should be the basis of the Spending Review and Budget processes. It should be possible to see how the key strategic aims are reflected in the business plans and spending estimates for each department, and also in individual policy decisions.

111.  Geoff Mulgan suggested that the Australian Treasury was a good example of strategic thinking as it "has seen itself as a guardian of linking budget allocations to a sense of where the economy is going and where society is going", carrying out detailed studies for example on issues like ageing.[124] On our visit to Washington DC we discussed the similar work of Singapore, which aligns resources with the strategic plan over a lengthy timescale.[125]

112.  In Canada, as in the UK, the Cabinet is responsible for setting overall strategic policy direction, based on input from stakeholders. There, the annual budget process begins with a structured review by Ministers of financial commitments, emerging pressures, political priorities, and economic and fiscal developments since the last Budget. This review provides departments with a broad strategic direction to help shape their bids for discretionary spending. This is followed by a Fall Statement, which sets out economic and fiscal forecasts for the five years ahead as well as policy priorities and issues to be addressed in the Budget. A broad public consultation is then launched on how the available money should be allocated within these parameters. Members of the public are able to contribute to separate consultations run by the Canadian House of Commons Standing Committee on Finance, and the Finance Department itself, and Ministers are held accountable for their responses to points raised in these consultations. Departmental Ministers then present their discretionary spending proposals for consideration by their colleagues in three cross-cutting policy Committees which focus on Economic Prosperity and Sustainable Growth; Foreign Affairs and Defence; and Social Affairs. The Finance Department then reconciles the spending agreed by these Committees with updated economic forecasts and prepares the Budget.[126]

113.  On our visit to Washington DC we heard about the importance of a more open discussion of how public spending is divided between entitlement and investment. Increasing entitlement claims and burdens often do not form part of a discussion about spending despite the danger of compromising investment in current and future capabilities that secure our prosperity, wellbeing and security.[127]

114.  In Canada, the Fall Statement sets out a framework for departments to make spending decisions. The decisions are in line with political priorities and long-term considerations, as defined by the Cabinet and informed by independent fiscal forecasting. Specific departmental proposals are then subject to a public consultation on how spending should be allocated. We recommend that the Government, in its response to this report, considers the benefits of opening up the Budget process in this way and drawing clearer links between long-term objectives and specific budgetary measures.

Promote Ministerial Leadership on National Strategy

115.  Several witnesses argued that it is critical for Ministers to set the right conditions for strategic working. Geoff Mulgan stressed that "it is key for Ministers to be involved" in strategy work.[128] Jill Rutter from the Institute for Government and formerly of the Prime Minister's Strategy Unit warned that "there is only any point in working in a strategy unit if there is demand for strategy".[129]

116.  The reality, however, is that short-term and media pressure means that Ministers have little time to work strategically. On our study visit to Washington DC we found that short-termism was a common problem in other legislatures, with foresight extending only as far as the next election.[130]

117.  A further factor against strategic thinking for Ministers was that, similar to Civil Servants, they face incentives and career structures that are linked to departmental objectives. Geoff Mulgan told us that, "unless you align the politics, the career incentives of your Ministers and the political kudos", strategic thinking would not occur.[131]

118.  While our 2010 report has provoked some positive thinking in Whitehall about National Strategy and strategic thinking, we find that Ministers remain largely complacent about the way things are, and that there has been little overall improvement in the value which ministers place on National Strategy and on those who could contribute to strategic thinking. We also hear consistent reports, as we reported in 2010, of Ministers' frustration with the machinery of government that is failing to deliver their ambitions. Strategic thinking in the Civil Service and in Government depends upon leadership from Ministers and is an act of leadership. Greater demand for the essential task of National Strategy should be promoted through, for example, the use of quarterly Cabinet meetings to focus solely on long-term strategic issues. Clearer National Strategy will help give direction to the whole administration.

119.  Jill Rutter suggested that being held to account by Parliament for thinking strategically would elevate strategic working to a higher level of importance:

perhaps one of the reasons why politicians do not see the need to be so strategic is that their peers do not hold them to account in quite the same way by asking whether they are being strategically consistent. If they felt it was necessary to have an underpinning clear narrative that they were judged by over the longer term, there might be more demand to think in that way in Government.[132]

120.   International examples indicate that Parliament, through the Select Committee process, could take a greater role in leading a politically neutral conversation with the public about longer-term issues such as membership of international institutions, energy assets/infrastructure, and the referenda on the state of the Union. This role cannot be carried out simply through general elections, which are both too infrequent, and too partisan in nature for an informed discussion about major strategic issues. Elections are both insufficient and the wrong environment (as a partisan fight) to discuss issues that are of national strategic concern.

121.  Parliament has a role in helping to promote, and challenge, National Strategy. PASC will continue to scrutinise National Strategy. We invite the Government to publish an annual 'Statement of National Strategy' in Parliament which reflects the interests of all parts of the UK and the devolved policy agendas. This would be a snapshot of how National Strategy has developed, providing an opportunity for reassessment and debate about how tax and spending decisions support the Government's national strategic aims. This would reflect the Canadian practice of a structured review of financial commitments, emerging pressures, political priorities, and economic and fiscal developments since the last Budget. If published in late spring or early summer, this would mark the start of the new spending round and be a precursor to the Autumn Statement. This would be consistent with making the annual spending and budget round more transparent. It would also give Select Committees and Parliament as a whole the opportunity to scrutinise National Strategy and to contribute to the formation of future policy.

Broadening the role of the National Security Council (NSC)

122.  In our first report we pressed for the remit of the National Security Council (NSC) to be extended beyond narrow definition of security to cover key strategic issues such as the economy. We followed up this recommendation in this inquiry and received considerable evidence that the narrow view of the NSC remained an area of concern. Nick Butler described the NSC as "a most disappointing body" arguing that:

I do not think it takes into account whether we have the capabilities to sustain the commitments that we are making. We make a lot of commitments and we seem to keep making them, but I do not think it pays attention, not just to skills, but to the economic strength that is required to spend sufficiently on defence and security to achieve what you say you want to achieve. I do not think it has paid any attention to the industrial base, which is being weakened by decisions being taken, rightly or wrongly, and which once weakened is very hard to replace.[133]

Geoff Mulgan pressed for the NSC to consider wider strategic issues such as skills, migration, drugs policy and energy, as "the biggest source of security for any nation is having its overall strategic stance right".[134]

123.  The Joint Committee on the National Security Strategy concluded along similar lines, that:

We are not convinced that the Government gave sufficient attention in the NSS to the potential risks that future international economic instability might pose for UK security. These go beyond the UK being unable to afford to defend itself. International economic problems could lead to our allies having to make considerable cuts to their defence spending, and to an increase in economic migrants between EU member states, and to domestic social or political unrest. The NSC needs to take all of this into account.[135]

124.  Witnesses also pressed for greater analytical support for the National Security Council. Matt Cavanagh recommended that "the Secretariat needs to be beefed up if the NSC is really to play a role in terms of co-ordinating the different Departments".[136]

125.  The work of the National Security Council (NSC) demonstrates unfulfilled potential for driving strategic thinking across Government. It needs to avail itself of greater capacity of the analysis and assessment of departmental papers in the light of its own independent research, so NSC members are better able to challenge orthodoxy and think outside their departmental brief. We also recommend again that the NSC and its secretariat should take a wider view than just the security issues facing this country and should oversee National Strategy: the UK's long term security is dependent on far more than simply military and terror issues.

57   Public Administration Select Committee, Who Does UK National Strategy?, para 72 Back

58   Ev 72 Back

59   Seminar with Whitehall strategists, February 2012  Back

60   Ibid. Back

61   Meetings with strategists in Washington DC, February 2012 Back

62   Ev 72 Back

63   Q 98 [Julian McCrae] Back

64   Q 49 [Nick Butler] Back

65   Q 49 {Geoff Mulgan] Back

66   Q 11 [Matt Cavanagh] Back

67   Public Administration Select Committee, Nineteenth Report of Session 2010-12, Leadership of change: new arrangements for the roles of the Head of the Civil Service and the Cabinet Secretary, HC 1582  Back

68   Q 197 Back

69   Q 198 [Lord Burns] Back

70   Q 81 Back

71   Q 83 Back

72   Q 258 [Sir David King] Back

73   Q 108 Back

74   Q 198 [Lord Carter] Back

75   Q 317 Back

76   Ibid. Back

77   Qq 317, 320 Back

78   Q 13 Back

79   Q 13 Back

80   Q 251 [Sir David King] Back

81   Q 5 Back

82   Qq 258 [Sir David King], 247 Back

83   Q 316 Back

84   Q 298 Back

85   Q 11 [Matt Cavanagh] Back

86   Ibid. Back

87   Q 296 Back

88   Meetings with strategists in Washington DC, February 2012 Back

89   Q 13 Back

90   Ibid. Back

91   Q 143 Back

92   Q 210 Back

93   Q 24 Back

94   Q 13 Back

95   Q 203 Back

96   Ev w35 Back

97   Q 306 Back

98   Q 206 Back

99   Q 311 Back

100   Ev w35 Back

101   Ev w35 Back

102   Ibid. Back

103   Ibid. Back

104   Ev w63 Back

105   Q 313 Back

106   Q 47 Back

107   Qq 74 [Lord Rees], Q 221 Back

108   Q 74[Lord Rees] Back

109   Q 221 [Sir David King] Back

110   Qq 70, 12 [Nick Butler] Back

111   Q 11 [Nick Butler] Back

112   Seminar with Whitehall strategists, February 2012  Back

113   Seminar with Whitehall strategists, February 2012 Back

114   Ibid. Back

115   Q 195 [Lord Carter] Back

116   Meetings with strategists in Ottawa, February 2012 Back

117   Q 104 [Peter Riddell] Back

118   Q 180 [Lord Burns] Back

119   Ibid. Back

120   Q 182  Back

121   Joint Committee on National Security Strategy, First review of the National Security Strategy 2010, para 6 Back

122   Q 7 Back

123   Q 321 Back

124   Q 6 [Geoff Mulgan] Back

125   Meetings with strategists in Washington DC, February 2012 Back

126   Meetings with strategists in Ottawa, February 2012 Back

127   Meetings with strategists in Washington DC, February 2012 Back

128   Q 39 Back

129   Q 84 Back

130   Meetings with strategists in Washington DC, February 2012 Back

131   Q 10  Back

132   Q 91 Back

133   Q 23 Back

134   Q 20 Back

135   Joint Committee on National Security Strategy, First review of the National Security Strategy 2010, para67 Back

136   Q 19 [Matt Cavanagh] Back

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© Parliamentary copyright 2012
Prepared 24 April 2012