5 Scrutinising the change process
Principles for good governance
and change management
66. An important question for us at the outset
of this Inquiry was how we would be able to scrutinise the operation
and results of any change programme. In our call for evidence
we posited various principles or elements which should underpin
change in government and our examination of the effectiveness
of the Government's change programme.
67. Some of our witnesses focused on a more practical
set of questions to measure reform. One witness, Julian McCrae,
put it in the following terms:
Can the Civil Service and Ministers jointly articulate
what this Civil Service or [what] this Department will look like
in four years' time, and then answer the subsequent questions
of what that actually means? How do you get there? What are you
doing about investment in your staff, skills, and so on? Thirdly,
can you point to the things and the numbersthe figures
you are looking attelling you that you are definitely on
track to do that? If people cannot answer those types of questions
that means that they might be able to talk a lot about principles
but they are probably not on track to meeting the challenges faced
by the Civil Service.[102]
68. Another, Andrew Haldenby, saw a danger with
any set of principles that "they entrench the existing
model" and cautioned that "... this might be
a bit of a wild goose chase. One could get a bit lost in the search
for these principles, rather than focusing on the nuts and bolts
of the problem before us".[103]
Another of our witnesses, Professor Kakabadse, welcomed the idea
but said there were three issues to address, "first, the
context of why you are doing it; secondly, what the principles
are; and, thirdly, the leadership that will make those principles
work."[104]
69. A number of similar 'principles' have already
been proposed, and our predecessor Committee itself enumerated
five requirements for good government.[105]
The nature of such existing principles will also vary depending
on their context. Some, like the Seven Principles of Public Life
or the Civil Service Code, focus strongly on individual behaviours.
Others, such as the Parliamentary Ombudsman's Principles of Good
Administration, are more concerned with ensuring good systems
and processes. A number of submissions we received made reference
to the Good Governance Standard for Public Services developed
by the independent Commission for Good Governance in Public Services
in 2009, which in turn build on the Seven Principles of Public
Life (known as the Nolan Principles).[106]
70. The context for us was simple. The intention
for devising a further set of principles was to arrive at a framework
which would allow us to scrutinise the reform of the Civil Service
which is likely to prove both radical and challenging. To assist
us in working up these ideas we held a workshop with participants
from the NAO, the Parliamentary Ombudsman and academia.[107]
71. We considered whether we were really interested
in "good governance" or rather in a different or wider
concept around good government or good public administration.
We noted the International Monetary Fund definition of governance
within government as "the process by which public institutions
conduct public affairs and manage public resources."[108]
We concluded that the principles should focus on the good
governance and change management of the transformation in the
Civil Service that will flow from the pace of public service reform
and the fiscal retrenchment the Government is seeking to bring
about.
72. This Inquiry has helped
us to identify six main principles of good governance and change
management, summarised as leadership, performance, accountability
transparency, coherence, and engagement. We will draw on these
principles as the basis for our scrutiny work of the Civil Service
during the course of this Parliament.
Leadership: purpose, contribution
and outcomes
73. We intend to focus on examining the performance
and contribution of departments and their relationship with the
centre of Government, in their meeting of the aims they have been
set. Particular attention will be given to the exercise of leadership
by senior departmental management in driving through change.
DEPARTMENTAL BOARDS
74. The Government took early action to enhance
the leadership and governance structures of departments, primarily
through revamping departmental boards. The Ministerial head of
the Department is now expected to chair that Department's Board,
which is to have a membership balanced with approximately equal
numbers of ministers, senior civil servants and non-executives
from outside government (including one 'lead' non-executive for
each departmental board, who will strengthen the role of the non
executive directors). In exceptional circumstances, the non-executive
board members of a departmental board "will be able to
recommend to the Prime Minister, Secretary of State and Head of
the Home Civil Service that the Permanent Secretary should be
removed from his or her post".[109]
The Minister has said that
those changes will "galvanise departmental boards as forums
where political and official leadership is brought together to
drive up performance."[110]
75. However, Professor Kakabadse warned that
the changes to departmental boards would not solve issues of poor
performance in the Civil Service, and might indeed exacerbate
them:
I think [departmental boards] will not only reinforce
silo mentality but create irritation with external non-executive
directors, because they will find they are helpless. Their hands
are tied. I think you will make things worse.[111]
Andrew Haldenby referred to anecdotal evidence from
non-executive directors in the public sector that they would not
put themselves forward to serve on departmental boards, because
they felt that it would be a fruitless exercise.[112]
Julian McCrae also expressed
reservations:
While the experience coming in is very important,
you have to bring that to bear in a way that people understand
and that respects the accountabilities of Ministers and the role
of the permanent secretary as accounting officer. We are hopeful
that this will improve the governance of Departments, but it needs
careful thought and planning[113]
76. In fact, the Permanent Secretaries who gave
evidence to us said that new-style departmental boards would not
change the fundamental accountability relationship between the
Permanent Secretary accounting officer role and the Secretary
of State role for looking after the Department.[114]
77. It is not clear to us how
the introduction of lead non-executive directors and changes to
the role of departmental boards will affect the management arrangements
in departments. We intend to conduct an inquiry into this question.
We recommend that the Government conduct an evaluation of how
these changes have improved the management of departments, with
particular regard to the supervisory and advisory aspects of their
remit, and to what extent, if any, the new boards have affected
the accountability relationship between the Secretary of State
and the Permanent Secretary. In setting out the transformation
programmes going on throughout departments, the Government should
also set out each board's role in it and whether such programmes
are consistent across departments and in keeping with good practice.
CHANGE MANAGEMENT LEADERSHIP
78. In his assessment of departmental change
management plans, Professor Kakabadse told us that "...under
current conditions of maintaining and enhancing service whilst
also substantially reducing costs, the demand for high quality
leadership from Whitehall is far greater than I have witnessed".[115]
He went on to describe the nature of the leadership challenge
as:
- a clear vision of how to meet priorities;
- stringent management of costs, and
- motivating staff.[116]
79. Sir Gus O'Donnell concurred that the change
had to be led from the top.[117]
He assured us that he would hold Permanent Secretaries to account
to make sure change happened throughout departments but he added
that there also had to be "leadership throughout the organisation".[118]
80. Nonetheless, as Dr Haddon's historical analysis
has also shown, it is also necessary to have a lead official whose
focus it is to drive the reform agenda throughout Whitehall.[119]
Ian Watmore, Chief Operating Officer of the Efficiency and Reform
Group, told us that Cabinet Office was advertising for a director
general to lead on reform across Government, working to Cabinet
Office Ministers and the Cabinet Secretary, in effect, on the
cross-cutting role.[120]
However, the internal competition to recruit for the post of Director
General, Civil and Public Services Reform resulted in no appointment
being made.[121] Instead
it was decided that "an alternative team-based approach"
would be led by two Senior Civil Service 2 level executive directors.[122]
81. We agree that the leadership
for a transformation programme has to come from the top of each
department, particularly in such challenging circumstances. However,
we are concerned that it has not proved possible to recruit a
Director General to drive reform from the centre of Whitehall.
This may suggest a lack of commitment to fundamental restructuring
at senior official level.
Performance
82. To meet the challenges it faces, the Civil
Service will require a training programme on a limited budget,
a situation summarised by the NAO:
The current period of budgetary constraint means
that departments will need to embark on ambitious transformation
programmes in order to sustain and increase levels of performance.
Skills requirements and workforce planning must be aligned and
considered alongside the adoption of new delivery models and technology.
These same constraints mean that departments face significant
reductions in administrative budgets, with corresponding reductions
in staff numbers and in available resources for learning and development
to support remaining staff.[123]
As a comparison, an example of the potential cost
and timescales involved in a major skills programme was provided
by Professor Kakabadse, who drew on his experience from the private
sector to suggest the cost of the training programme for an organisation
of approximately 300,000 people would involve training 5,000 people
at a cost of between £10 and £12 million and would take
two to three years.[124]
83. The training programme must ensure that the
four capabilities required for the 'post-bureaucratic age', as
identified by Professor Kakabadse, are present across Whitehall.[125]
This includes three core Civil Service capabilities: the delivery
of direct public services, the management of government agencies,
and traditional skills of policy making and preparing legislation,
which, as Dame Helen Ghosh confirmed, remain essential:
I think I have four Bills going through the House
in the course of this year, which require a lot of those traditional
skills about policy making, evidencebased and dealing with
Parliament, all of that kind of stuff. I need to make sure I
retain those skills.[126]
84. The additional 'fourth capability' - opening
up public services and stakeholder management will require new
skills in Whitehall. Ian Watmore elucidated:
in order to bring about the local, Big Society type
options we have talked about, we need people at the front line
who are very good commissioners of those services ... Commissioning
is not procurement. What we will always be in danger of is saying,
"Yes, we need commissioning," and then at the local
level recreating a sort of procurement process that might have
been designed for an aircraft carrier, whereas what we really
want to be able to do is get people to commission services and
outcomes from people, in a quick, short, sharp way with minimal
bureaucracy and minimal overhead from the local community providers.[127]
85. In addition to developing these four skill
sets, to successfully reform, the Civil Service also requires
what Dame Helen describes as "really good change managers".[128]
Sir Gus confirmed that this was a particular challenge for Whitehall,
telling us "I think what we need now is to prove, as a
modern Civil Service, not just that we do the policy stuff but
we can actually manage change well."[129]
86. The Government has recognised the need to
develop both change management and contracting skills. In a speech
to the Civil Service Live Conference in July 2011, Francis Maude
warned that "we shouldn't just assume that these skills
are inbuilt. They need to be learned. And we'll ensure that they
can be."[130]
The Minister set out the need for "a
massive upgrading in project, programme and contract management
skills" across
Whitehall which would be achieved through the creation of a project
management academy for civil servants.[131]
87. A new Civil Service Learning programme, set
to replace the work of the National School of Government (NSG),
announced earlier this year, will provide "a common curriculum,
based on our strategic priorities including the need to contribute
to Civil Service reform" at each grade or level.[132]
However, a former Principal of the NSG, Robin Ryde, warned
that the closure may affect the shared core of the Civil
Service, reducing the number of unifying factors for officials
across Whitehall, and diluting the sense of shared purpose necessary
to reduce departmental silo-thinking and achieving substantive
reform.[133]
88. Given the nature and size of the skills challenge,
the Government must take a pro-active approach to addressing the
need for new skillsets in the Civil Service. It is the responsibility
of the Cabinet Office to address capability issues within the
Civil Service as a whole.
89. To achieve the aims of
decentralisation and the Big Society, the Civil Service will be
required to undertake very different roles, necessitating skills
in contracts and commissioning, procurement and market design.
The Government's approach to addressing the skills shortage and
ensuring that Whitehall is equipped for the new reality it faces
falls short of what is urgently required. We hear that spending
reductions are leading to the loss of key skills required for
change in Whitehall. In the light of the closure of the National
School for Government, we recommend that the Government swiftly
sets out how these new skills will be retained and developed.
Accountability
90. The structure of British government is still
shaped by the recommendations of Lord Haldane's report of 1918
which recommended that:
In the sphere of civil government the duty of investigation
and thought, as preliminary to action, might with great advantage
be more definitely recognised.[134]
Civil servants, as advisers to ministers, were to
have an indivisible relationship with them. It is this notion
which has underpinned the convention that "civil servants
are accountable to ministers, who in turn are accountable to Parliament".[135]
The Haldane model of structure and accountability has operated
largely unchanged throughout the last 100 years.
91. However, the Government's radical reform
agenda may require some reassessment of the status quo. In their
evidence the Institute for Government foresaw "an increasingly
complex web of accountability" and consequently that
"meeting the principle of accountability to Parliament
without compromising the operational independence of decentralised
services or constricting new sources of accountability will be
a challenge".[136]
Andrew Haldenby shared that analysis:
The idea of ministerial responsibility ... does centralise
power, ... and does give the impression to Whitehall that it is
in charge of public services. That is completely out of line with
what the Government are doing.[137]
Professor Smith stated in his evidence to the Committee:
The convention of ministerial responsibility was
written when things were done mainly in Whitehall and Westminster.
Now that things are done all over the place, there is a need to,
at least, restate what the principle should be in a very different
context.[138]
This question must be addressed if localism and the
re-empowerment of local authorities is to be effective, or the
traditional model of accountability will drive local issues back
onto the desks of Ministers.
92. There is a view that the convention of ministerial
responsibility should be recast to make officials more directly
accountable for operational decisions.[139]
Andrew Haldenby believed that:
... the doctrine of ministerial responsibility is
a big problemit has made the performance of individual
civil servants invisible which is obviously not true. ...That
is why it needs to be reviewed.[140]
Although the Minister did not favour a move towards
a system where the top tier of civil servants became political
appointees, strongly endorsing the Northcote-Trevelyan principles,
he was prepared to concede that decentralisation does mean stretching
the traditional definition of accountability.[141]
93. The convention of ministerial
accountability and the Whitehall departmental structures derived
from the Haldane Report at the beginning of the last century have,
on the whole, stood the test of time. However, in light of the
radical devolution of power and functions proposed by the Government,
it is timely to consider the development of a new Haldane model
to codify the changing accountabilities and organisation of Government.
We invite the Government in their response to this report to explain
how they will take forward this work or how the existing model
remains relevant in these changed circumstances.
Transparency
94. The evidence we received supported the Government's
commitment to placing of transparency and openness at the heart
of government. Indeed, as Professor Hood stated to us "transparency
is one of those principles that seems to be unexceptionable: how
could anyone be against it?"[142]
95. However it cannot be assumed that simply
releasing data will increase transparency, and thus contribute
to good governance, particularly given the belief of Francis Maude
that "speed trumps accuracy" when releasing data.[143]
96. Professor Smith argued for a feedback mechanism
to ensure that transparency will results in greater accountability:
what are the mechanisms of accountability that arise
from the fact that the data are being released? It is fine to
release lots of data and say, "This is what's happening."
However, what then happens? What is the feedback mechanism for
citizens to say, "Clearly something is going wrong here.
What is going to be done about it?"[144]
97. We welcome the Government's
commitment to open government through greater transparency and
we share the belief that this will lead to better, more accountable
government. However, while transparency is necessary it is not
sufficient. We look to the Government to explain how the public
in general, and the 'user community' of statistics in particular
will be empowered to use newly published information. 'Data dumping'
does not on its own constitute transparency and good governance.
We recommend that the UK Statistics Authority should take a proactive
role in ensuring that data released is intelligible, objectively
interpreted and in a readily accessible format.
Coherence
98. Civil Service reform must be coordinated
within and across departments; and across the wider public sector
to achieve success. It is, according to Professor Kakabadse, the
responsibility of the centre of Government to act as a world class
corporate centre that fully engages with all departments:
On the question of the Cabinet Office being held
accountable, if you want a good change programme, the Executive
are held accountable; if you want a good change programme, the
board is held accountable; if you want a bad change programme,
we will have a change officer here and he will take full responsibility.
If a Cabinet is not held accountable, please tell me where the
body is.[145]
99. Ian Watmore told us that the Cabinet Office
was indeed taking on a coordinating role:
... we help people share what they are doing, so
that department A knows about what department B is doing, and
put the two of them together so that they can learn from each
other, which is incredibly powerful.[146]
This should not need to be a matter of such celebration,
but should be axiomatic across Whitehall. However this is not
the case in practice. Speaking in 2010, Dame Helen Ghosh said
I want someone saying: 'Did you know that the Ministry
of Justice is doing that, or could you piggy-back on what the
communities department is doing, or had you thought about doing
it in this way?' That's something that I do think we need to work
on, and once we've all got clear plans through the structural
reform and business planning process, I think we need to make
sure we're joining all that up and making sure we know what everyone
else is doing.[147]
More recently, following his analysis of departmental
change programmes, Professor Kakabadse concluded that
... there is no point in placing extensive demands
on the delivery Departments of Whitehall, asking them to reconcile
the 'Big Society' agenda with extensive cost reduction requirements,
without then being able to provide reasonable oversight, namely,
governance.[148]
100. This lack of oversight and governance leaves
Departments to be preoccupied by their own responsibilities, possibly
at the expense of cross-cutting policy areas. This underlines
Dr Haddon's analysis of the limitations of central reform bodies
such as the Efficiency and Reform Unit, and the need for more
sharing of lessons and good practice.[149]
101. There is a clear danger
of uncoordinated change programmes within departments and across
government. It is essential that the Cabinet Office take leadership
of the reforms and coordinate the efforts in individual departments
and across Whitehall as a whole.
Engagement
102. The scope of Civil Service reform goes beyond
skills of officials and structure of departments. Professor Kakabadse
warned that Whitehall requires "a fundamental change of
mindset [which] has bedevilled many an organisation."[150]
Francis Maude has described the changes required as being
mostly about expectations, culture and behaviour.
I don't claim to know how all this gets to happen. We will need
to mobilise some of the best and most experienced operators both
inside and outside Whitehall to help us deliver it.[151]
However, the Minister refuses to adopt the mechanisms
to ensure this happens.
103. The evidence from Dr Haddon emphasised the
importance of engagement and collaborative methods.[152]
Julian McCrae also insisted that officials, Ministers and "the
wider political infrastructure with which the Civil Service relates
at all levels" believing that reform "is the
right thing to do for itself".[153]
Mr McCrae warned that "if there isn't a clear blueprint
that everyone is agreed on, there will be real problems in taking
this forward."[154]
104. In our 'End of Term Report' Professor Kakabadse
identified a number of departments who had highlighted extensive
work underway to engage with their staff.[155]
The Institute for Government has also noted that in the Ministry
of Justice's change programme "staff from across the department
were empowered to drive change themselves, with 1,000 staff signed
up as advocates of Transforming Justice."[156]
This is an excellent initiative which we would like to see more
widely pursued.
105. Sir Gus O'Donnell recognised that staff
engagement with reform programmes has been a particular challenge
for Whitehall:
I think this is our chance to get that thing that
has been persistently a problem for us, which is our staff do
not think we manage change well.[157]
We think his staff are right about this point. Sir
Gus also cited figures from the latest Civil Service staff survey
on staff engagement which showed only a 2% decrease in engagement
(from 58% to 56%) following the 2010 Spending Review which announced
the cuts to administrative budgets.[158]
Sir Gus assured us that future staff surveys, following individual
departmental change programmes, will show an increase in workforce
engagement.[159]
106. Making organisational structures
work requires the highest level of engagement amongst the top
managers of the Civil Service. If the UK is to have a world class
government, we consider that a world class centre for the operation
of government is required, fully engaged with each delivery department
and providing value that uniquely addresses the challenges that
they face. This ought to deliver a shared clarity on purpose and
contribution, rather than limiting individuals to their specific
job titles and responsibilities. This engagement requires the
establishment of a change programme involving the top management
of all departments, including the centre of Government, which
will identify the barriers to progress. This will be the focus
of a future Inquiry into the role of the Head of the Home Civil
Service.
107. For Whitehall to change
to achieve the Government's objectives, civil servants of all
grades must be engaged with the process of reform. Attempts to
empower lower levels of management without engagement will fail.
This is the means by which human potential will be maximised:
but, in all but one department, there is little compelling evidence
to suggest that all are wholly engaged at present. The Government
should continue to use opportunities such as the Civil Service
staff survey to gauge support for their reforms among staff, and
act on the findings, to ensure that good change management practice
is replicated across Whitehall.
102 Q 105 Back
103
Q 103 [Andrew Haldenby] Back
104
Q 103 [Professor Kakabadse] Back
105
Public Administration Select Committee, Eighth Report of Session
2008-2009, Good Government, HC 97-I, para 10 Back
106
Ev w16 Back
107
Workshop held in March 2011 Back
108
IMF, Manual on Fiscal Transparency (Washington D.C, 2007),
p. 128 Back
109
"Enhanced Departmental Boards: Protocol", Cabinet
Office website, cabinetoffice.gov.uk Back
110
"Lord Browne appointed to key Whitehall role", Cabinet
Office website, 30 June 2010, cabinetoffice.gov.uk Back
111
Q 100 Back
112
Q 101 Back
113
Q 99 [Julian McCrae] Back
114
Q 188, 190 Back
115
Public Administration Select Committee, Eleventh Report of Session
2010-12, Good Governance and Civil Service Reform: 'End of
Term' report on Whitehall plans for structural reform, HC
901, Appendix 2, p. 7 Back
116
Ibid. Back
117
Q 303 Back
118
Q 304 Back
119
Ev 72 Back
120
Q 205 Back
121
Civil Service Commission, Annual Report and Accounts 2010-11,
HC 1180, 18 July 2011, p 8 Back
122
Ev 71 Back
123
Report by the Comptroller and Auditor General, Identifying
and meeting central government's skills requirements, Session
2010-2012, HC 1276, para 1 Back
124
Q 58 Back
125
Ev 69 Back
126
Q 178 Back
127
Q 183 Back
128
Q 178 Back
129
Q 207 Back
130
"Francis Maude speech to Civil Service Live", Cabinet
Office website, 5 July 2011, cabinetoffice.gov.uk Back
131
Ibid. Back
132
Ev 71 Back
133
"Déjà vu for Civil Service training",
Guardian Professional, 25 February 2011, guardian.co.uk
Back
134
Ministry of Reconstruction, Report of the Machinery of Government
Committee, Cm 9230, 1918 p. 6. Back
135
Cabinet Office, The Cabinet Manual - Draft, December 2010,
p. 92 Back
136
Ev 61 Back
137
Q 50 Back
138
Q 24 [Professor Smith] Back
139
"Whitehall's Black Box" IPPR, 7 August 2006,
ippr.org.uk, "Fit for Purpose" Reform, March
2009, reform.co.uk Back
140
Q 102 [Andrew Haldenby] Back
141
Q 209, 224 Back
142
Q 19 [Professor Hood] Back
143
Q 228 Back
144
Q 19 [Professor Smith] Back
145
Q 95 [Professor Kakabadse] Back
146
Q 291 [Ian Watmore] Back
147
"Profile: Helen Ghosh", Civil Service Live Network,
11 October 2010, network.civilservicelive.com Back
148
Public Administration Select Committee, Eleventh Report of Session
2010-2012, Good Governance and Civil Service Reform: 'End of Term'
report on Whitehall plans for structural reform, HC 901, para
7 Back
149
Ev 72 Back
150
Q 43 [Professor Kakabadse] Back
151
"Francis Maude speech to Civil Service Live", Cabinet
Office website, 5 July 2011, cabinetoffice.gov.uk Back
152
Ev 72 Back
153
Q 46 Back
154
Q 46 Back
155
Public Administration Select Committee, Eleventh Report of Session
2010-12, Good Governance and Civil Service Reform: 'End of
Term' report on Whitehall plans for structural reform, HC
901, Appendix 2 Back
156
Ev 61 Back
157
Q 207 Back
158
Q 299 Back
159
Q 299 Back
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