Change in Government: the agenda for leadership - Public Administration Committee Contents


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 numbers—the figures you are looking at—telling 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 problem—it 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   IbidBack

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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Prepared 22 September 2011