3 The new drivers for reform |
35. The new Government came into office with
two main priorities: cutting the fiscal deficit and implementing
its Big Society agenda (opening up public services to a wide range
of providers, and devolving accountability to the lowest possible
levels). These specific priorities are two new drivers for Civil
Service reform, to add to the long-running concerns about the
Whitehall performance we have outlined above. This amounts to
a far more radical agenda for change than seen for many decades.
Ian Watmore has said that to meet the demands placed on it, the
Civil Service must "focus simultaneously on cutting costs
as well as improving services and reforming the way things are
done" adding that "it's that combination that
will dictate whether the government is perceived to be successful".
This sets the Civil Service with a substantial challenge to reform
radically and quickly.
Decentralisation and the Big Society
36. In May 2009 David Cameron promised "a
redistribution of power [which] will be felt throughout our politics
with people in control of the things that matter to them, ...
and power redistributed from the political elite to the man and
woman in the street".
He talked about the need to address the challenge of the "post-bureaucratic
consequences for the provision of public services were set out
by the now Minister for Government Policy, Rt Hon Oliver Letwin
MP, in a speech to the Institute for Government in January 2010.
He argued that citizens expected to have a wide range of choices
available and have those choices met, but that current service
provision fails to deliver this. Mr Letwin advocated three principles:
decentralisation, accountability and transparency.
37. Ian Watmore described the need for a "profound
change" in the Civil Service to address the Big Society
and post-bureaucratic age, but we have been given little indication
of the practical terms of such a change.
Mr Watmore indicated that officials would be required to "work
with communities at a very local level in different ways".
Sir Suma Chakrabarti, Permanent Secretary at the Ministry of
Justice, told us that "... a new task for the Civil Service,
or maybe a renewed taskis to ensure civil society does
have the tools to ask the questions that it needs to."
Dame Helen Ghosh, Permanent Secretary at the Home Office, described
the nature of the challenge as:
... both learning to let go, in terms of the levers
of power, moving into those different kinds of world, and learning
how to facilitate and ... helping support the capacity of local
people to make decisions and form their own future.
We have found little evidence of the detail of the
specific changes which will be required in terms of roles, structure,
accountability and training. We believe this is one reason why
the Government's decentralisation and Big Society policies are
perceived to be failing.
38. For the Civil Service to commission services
from a far more diverse provider base will require, as Professor
Flinders told us, "a quite different set of skills to
those traditionally cherished within the Civil Service".
Julian McCrae concurred:
The set of professional skills that you might have
had in the Sir Humphrey era won't be the set of skills that can
run disaggregated market provision with outcome-based contracts,
for example. You need to know a lot about how to write a contract
if you are going to do that kind of policy, which probably puts
less weight on drafting.
Professor Kakabadse has identified what this new
skill set or capability should be. In addition to the well established
three "core" Civil Service capabilities of policy design
and development, service delivery excellence and agency relationship
management he identified a "fourth capability", namely
stakeholder community support.
39. The main change of task, which will affect
many but not all departments, will be the increase in commissioning
and contracting. More onerous and time-consuming, however, will
be monitoring the contracting process and dealing with problems
and complaints arising. It must be recognised that the Government's
obligation is to the service user, not the contractor. The mechanism
by which this can be achieved by the affected departments, and
the implications for their resources, does not seem to have been
considered but is key to both success and accountability.
40. Whitehall has traditionally
performed three core roles: policy advice, the management of public
services, and the supervision of public bodies. If the Civil Service
is to connect with Ministers' ambitions for public service reform
a fourth capability will need to be added to this trio: the ability
to engage with groups from the voluntary and private sectors through
the contracting and commissioning process. Every government department
must focus on developing this fourth capability, and the Cabinet
Office must ensure that this is embedded in the Civil Service
change programme across government.
41. The 2010 Spending Review requires a 34% cut
in administration budgets across the whole of Whitehall and its
arms-length bodies with the aim of saving nearly £6 billion
a year by 2014-15.
Dame Helen Ghosh explained the urgency of the funding situation,
telling us that there was no question of the department not living
within its means as "the money has simply disappeared
from our budgets. This is not a theoretical exercise."
42. Sir Suma Chakrabarti told us that the scale
of spending reductions of £500 million a year from his
budget meant that his department had to make more than just incremental
spending reductions could therefore not be achieved without structural
reform to departments, as they go far beyond what could be achieved
solely through recruitment freezes and natural wastage.
To achieve such savings, one of our witnesses, Julian McCrae,
said that this would require a reform of the Civil Service different
in type and scale from those carried out previously:
I think we have something that is very different
now from the historical approaches to Civil Service reform. The
spending review settlement forces change upon Whitehall in a way
that we haven't had before.
Professor Christopher Hood agreed:
... you are looking at reductions for which the nearest
parallel would be what happened after 1945 in the demobilisation
years. ... the Civil Service pulled right back from being a big
delivery organisation controlling timber, milk and everything
like that. It pulled right back into a policy role. In that case,
you did seenot all at once but over timea shift
in the role of the Civil Service. If these levels of reduction
are to be achieved, it can't just be done in an incremental way.
43. The Office of Budget Responsibility (OBR)
in March 2011 forecast that the reduction in general government
employment as a consequence of the Spending Review would be around
310,000 between 2010-11 and 2014-15.
While the full impact on each individual department is not yet
clear, all departments have introduced voluntary redundancy schemes,
and some have disclosed their predicted reduction in staff numbers.
For example, the Ministry of Justice estimated they would "lose
around 15,000 posts".
44. Recent analysis by the Institute for Government
of the most recent Office for National Statistics data on Civil
Service headcount shown that there has already been an "an overall
headcount reduction of 4.2% in Whitehall since the spending
The main impact at this stage has been at the most senior levels:
there has been a 14.5% reduction in top civil servants in Whitehall
departments since the summer of 2010.
45. The decrease in staff numbers will make it
impossible for Departments to deliver the same functions as previously.
Instead, Departments must focus on the key functions only they
can provide. Dame Helen Ghosh, Permanent Secretary at the Home
We know we will have fewer staff and less financial
resource at the centre, and what we need to focus on is doing
the things that really make a difference.
46. Beyond such statements, we have seen no clear
evidence of how staffing reductions will be achieved. The NAO
reports that it is not clear how these reductions will be managed
and what the potential effect will be on the business of government
and on public service delivery.
47. We heard of the possible dangers of planning
spending reductions without clear knowledge of the future role
and functions of each department. Professor Kakabadse said that
"the best way to damage a sophisticated structure is to
have an unthinking across the board cost reduction exercise that
takes out the good with the bad."
Similarly the Association of Chartered Certified Accountants warned
Ministers to be "alert to the 'tipping point' where budget
reductions go too far and adversely affect policy outcomes."
48. We were also advised by Martin Stanley, former
Chief Executive of the Competition Commission and Principal Private
Secretary at the Department for Trade and Industry, that reductions
in spending should not happen without consideration of what the
role and key functions of the department should be.
Instead our evidence recommended that the process of change
should be "a deliberate transformation with a clear vision
at the end of it",
creating a Civil Service "fit for present and future generations."
49. Voluntary redundancy programmes
are being carried out in some departments without a thorough assessment
of required roles and functions. We recommend that the Cabinet
Office monitors individual departmental change programmes to ensure
that redundancy programmes are conducted in accordance with departments'
requirements to retain and develop the key skills required to
maintain the core commitments and long-term performance of each
50. The Civil Service has prided
itself on reform through gradual change, building on past initiatives
and adjusting to the priorities of each new government. We recognise
that this is particularly challenging at a time of both an increase
in requirements and a reduction in staff. We consider that incremental
improvements of this sort will not be sufficient to meet the scale
of change implied by both the decentralisation agenda and the
structural impact of a reduction by one-third of the administration
budget of Whitehall. This will require considerable structural
organisational reform of the Civil Service.
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