Public Administration CommitteeWritten evidence submitted by Nick Butler (ST 13)

Presented by Nick Butler, Visiting Professor and Chair of the Kings Policy Institute, Kings College London—formerly Senior Policy Adviser to the Prime Minister 200910 and Group Vice President for Strategy and Policy Development at BP plc from 2002 to 2006.

To answer the questions posed by the Committee it is perhaps helpful to consider what a national strategy would look like. From that starting point one can begin to see the gaps between what is and what could be, and to question why the gaps have not been filled in recent times.

A national strategy would start from a statement of purpose—what is our aim as a country over a defined period of time?

The statement of purpose should be as unambiguous and as simple as possible in order to make it explicable to the widest possible number of people. In the absence of war or a direct military threat such a statement of purpose can be complicated because most Governments will have multiple objectives—from enhancing health care to protecting the natural environment. But to constitute a true national strategy there needs to be a clarifying and unifying objective—against which all other aspirations are secondary.

That clear statement of purpose should be followed by an objective analysis of the context within which the purpose is to be delivered and of the factors within that context which make success more or less likely.

That in turn would be followed by an assessment of the means available to achieve the stated strategic objective, and the policies which Government intends to pursue to achieve the desired intent.

Good strategy can only flow from cool realism about the strengths and weaknesses of one’s position, and to be realistic that must include some assessment of limitations of public power.

This is where consideration of national strategy can be confused by conventional thinking about military “Grand Strategy”. Much of the literature on grand strategy assumes that the power of Government is undivided and almost absolute. Governments are considered able to deploy resources at will including private resources such as corporate assets. That is in part because so much strategic writing is focused on wartime when Government powers are greater and the strategic national purpose carries the imperative of survival. But the problem also arises because much of the literature on national strategy has not caught up with the real life constraints on any Government imposed by open international markets and modern communications technology:

As we are seeing on a daily basis in the current Eurozone crisis the financial markets do not wait for an orderly process of analysis to be completed or for the emergence of consensus through the normal six monthly cycle of summit meetings. Once weakness is perceived the market pursue that weakness until they see that action has been taken to manage the problem. The power of Government is thus constrained by market perceptions of strengths and weaknesses.

Secondly, and again in contrast to the conventional view of “Grand Strategy”, Governments do not hold or control all knowledge about what is happening. To limit the flow of information to citizens and to those hostile to one’s objectives is now hard if not impossible because of the power of technology, and the diversity of global information systems. Problems and challenges cannot be censored away, and few decisions can truly be taken in secret. Nor can the flow of knowledge and opinion be controlled even by Governments with extensive powers to close down communications systems. The Mubarak Government in Egypt fell despite having such controls. The Chinese Government continues to struggle with the dissemination of opinion across the internet.

Thirdly there is the question of ownership and control particularly in respect of industrial assets. A hundred years ago most major UK firms were owned and led by UK citizens. Their shareholders and directors were also UK citizens as were most of their employees; even if the companies were operating around the world. Government could legitimately expect to be able to influence the decisions of such companies. Now a typical multinational, even if headquartered in Britain, has a non British CEO and Chairman, majority foreign ownership and only a tiny minority of staff who hold a UK passport. Commandeering the assets of such a company is no simple matter.

Fourthly, the strategic context facing Governments is set not just by their own actions and decisions but by the actions of numerous non state actors. The financial problems which afflicted Ireland and which in a different way are now affecting France are the result of actions taken predominantly by the private financial sector. The scale of the negative impact of those actions has weakened both countries and severely constrained the strategic freedom of both Governments.

An honest national strategy will acknowledge such limitations and will be clear on what the UK government can and cannot do to pursue any particular policy objective.

On this basis the UK does not have a national strategy and has not had one for many years.

Different governments have expressed national purpose in different ways but outside times of war there has been a tendency to express multiple objectives with little clarity on priorities. Governments do not like to admit weakness and there has been little or no discussion of the limits of public power.

I do not believe that the absence of a clear national strategy is reflective of lack of capacity in Whitehall. My experience, both in Government and in working with Ministers and officials from a private sector perspective, has suggested that there were many extremely able people, perfectly capable of developing good strategic thinking.

Some serious attempts at long term thinking have been undertaken by variously named Strategy Units in the Cabinet Office and Downing Street but the end results have been a series of reports which were largely unread and therefore irrelevant. There is much good strategic thinking on policy at a Departmental level, though there is remarkably little linkage across Departments.

Why then does this weakness of analysis and linkage persist? Why has no national strategy emerged?

First, and most obviously, the time scales of politics are very short. Strategy sessions are at best a low priority when Ministers and senior officials are struggling to keep up with pace of events. The lack of interest in long term strategy is compounded by the timescales involved. National strategies take time to deliver. For most people in Government the extreme horizon is four years, and the practical horizon is the end of the week.

Time pressures alone, however, are not a sufficient reason for the absence of a national strategy. I believe the more important reason is that national strategy has simply not been judged necessary.

Just as strategy has to be grounded in reality so it must be based on the imperative of necessity. For businesses, and many other institutions, strategic analysis focuses on positioning in particular markets, choices on products and skills to develop, decisions on the balance of financing between debt and equity. Choices have to be made, and are taken in the context of intensive competition which cannot be ignored. In many cases the future of the company depends on strategic judgments and corporate executives and company boards probably spend more time on strategy than on any other single issue.

Government has shown itself capable of rising to strategic challenge in wartime—when necessity drives the integration of action in support of the single imperative of survival and victory.

Until recently, however, such an imperative was absent from the narrative of peacetime politics.

The UK has been stable, at peace, reasonably prosperous by international standards, with manageably low levels of unemployment. Our trade routes are open and there has been little or no major internal dissent. Individual issues which might have threatened this situation—such as the future of Northern Ireland, or the dispute over the future of coal mining have therefore been managed in isolation.

Different governments might pursue different approaches to particular questions—from the quality of secondary education to the relief of poverty but these were within the context of a broad acceptance that the UK while clearly no longer a world power retained great strengths in both economic and political terms. Such complacency was never likely to drive the development of national strategy.

Equally there has been no clear understanding of the potential role which Government could play in developing a national strategy—especially if that strategy involved interventions in economic decision making. This takes us to issues beyond the scope of the Committee’s enquiry, but it is important to note that for many, including some from the left of the political spectrum, the notion that Government could and should make strategic choices has smacked of a belief in centralised planning and even public ownership—both of which were largely discredited by the failures of the 1960s and 70s.

That is, I believe, a deeply misguided view of what strategy is really about—but the confusion persists, especially in the Treasury, and has limited genuine strategic thinking. This stands in contrast to the development of national strategy elsewhere—for instance in Germany and France where the public power and private resources are aligned in support of the national interest.

I would argue that the situation has now changed and that the economic insecurity which threatens the status quo and the comfortable view of the UK’s strengths justifies the need for a much stronger and more integrated national strategy centred perhaps on the objective of securing the UK’s economic role in a rapidly changing world and maintaining the standard of living to which the British people have become accustomed. The risk that relative decline (which is inevitable given the rise of China and other economies) could turn into absolute decline as both industry and services migrate elsewhere is real and in many sectors already evident.

That seems a worthy and indeed essential strategic objective because if we cannot earn our living all other strategic objectives, including our desire to defend ourselves and our strategic interests, will be that much more difficult to achieve.

From that starting point the construction of a national strategy would be relatively straightforward, even if the delivery of the detailed objectives remained extremely difficult.

One could define the context, the goals, the means available to achieve those goals, and the limits of those tools. One could also bring together the analytical resources and direct experience of both the public and private sectors to develop an understanding of what could and should be done and to identify the different roles of the different actors involved.

If the importance of the strategic objective was widely accepted—including the risks associated with failure—I believe many of the misunderstandings could be overcome and national strategic thinking could be seen not as a reversion to some form of state control but rather as a means of combining the creative use of public power with the incentives provided by an open market economy to secure our national future.

November 2011

Prepared 20th April 2012