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

Appendix 2: Responses from the Department for International Development and the Department for Culture, Media and Sport

Response from the Department for International Development -13 September 2011

Thank you for your letter of 24 April. I am very sorry for the delay in replying, which was due to an administrative error. Please find our response to your questions below.

What impact, if any, are the reforms envisaged in the Government's "Big Society agenda" likely to have on the way the DFID is organised and operates?

Since May 2010, DFID Ministers have recalibrated our approach to reducing poverty in poor countries. This new approach reflects many of the principles of the "Big Society agenda" with a strong focus on empowering people to lead their own development, particularly women and girls. DFID's Business Plan sets out a number of commitments designed to give poor people more power and control over how aid is spent. We are also investing in new ways for UK citizens to become directly involved in international development, for example through volunteering on the new International Citizen Service and matching public appeals through UKAidMatch.

What structural reforms, if any, will be required in DFID as a result of the reductions in running costs arising from the Spending Review?

Following the Spending Review, DFID Ministers have set out clearly a new future direction for DFID in the three reviews of how the Department delivers development -the Bilateral Aid Review (BAR), the Multilateral Aid Review (MAR) and the Humanitarian and Emergency Response Review (HERR). At the heart of these reviews is a clear determination to improve the impact and value for money of UK Aid and make clear to the taxpayer what they results they can expect.

To deliver the settlement agreed at the Spending Review, DFID has an ambitious reform programme, including

• Reducing back office and other support function costs by £19 million over four years. The programme will look at staff and non-staff costs and, for our overseas network, look at greater sharing of services and other functions with the FCO and other Government Departments.
• Focussing our front-line delivery on providing development assistance to fewer countries and having fewer country-based offices. Our bilateral programme will now be supporting 27 focus countries and we have already closed offices, including in China, Russia and Serbia.
• Increasing our programmes and presence in fragile states. This will ensure that we can deliver on the Strategic Defence and Security Review commitment to spend 30% of aDA in fragile states. We shall also ensure that we help drive the "Building Stability Overseas Strategy".
• Focussing our effort and resources on securing significant improvements in the effectiveness of the multilateral organisations which deliver about 40% of global ODA.

How do you intend to implement these changes? Do you have a formal plan in place, and if so what are its objectives, and timelines?

These results (and others) and reforms captured by the three aid reviews, together with the priorities set by the Coalition Government in its Programme for Government and the results agreed as part of the Spending Review, are captured in DFID's Business Plan. Progress against the Business Plan is reviewed by Ministers.

The priorities and results of DFID's Business Plan have been cascaded down into individual operational plans. These plans -in many cases set at individual Departmental level -set out the detailed results and changes that each plan will expect to deliver over the next four years. The operational plans are also available on DFID's website.

What consideration has been given to retaining or acquiring those skill sets -for example (i) expertise in contracting and commissioning or (ii) facilitating community leadership and social action -necessary to deliver the Government's reform plans?

DFID has a clear strategy for retaining and acquiring the skill sets it needs to deliver Ministerial commitments and priorities and has already started to change the composition of the workforce to match the skills sets we need. We are committed to increasing significantly our professional capacity in procurement, private sector work and other areas, as well as the more traditional development expertise in economics, health, education, etc.

What lessons do you draw from previous reforms either within DFID, from other departments, or from other organisations outside central government?

Our reform programme embraces more than our previous change programme and brings together policy, development, human and financial resource management to ensure that reforms support the priorities set out in the Business Plan. A key lesson from our earlier programmes was the need to pay greater attention to the results and impact of our development programmes. We have also used Cabinet Office's Change Directors network to use the good practice being implemented elsewhere in Whitehall.

Does your reform process involve other government departments or public bodies?

The Secretary of State for International Development has undertaken a wholesale review of the role of CDC Group plc, the government-owned UK development finance institution, to ensure that it contributes fully to the coalition Government's development objectives. The outcome of the review was encapsulated in a new high-level business plan for CDC, which was announced at the end of May 2011. HM Treasury and BIS (the Shareholder Executive) has been involved throughout and the NAO has been kept abreast of developments.

Analysis by Professor Kakabadse

I have read the brief presented by DFID and have the following comments to make.

Due to the late submission from the Department for International Development (DFID), I will focus on the key considerations arising from their brief.

The DFID brief emphasises that the Department has taken account of the principles of the 'Big Society' agenda through its focus on empowering the underprivileged to exercise greater power and control over the spending of aid money. Such intention is exercised through three recent reviews surfacing how the Department delivers development, namely, the Bilateral Aid Review (BAR), the Multilateral Aid Review (MAR) and the Humanitarian and Emergency Response Review (HERR).

Parallel to these reviews, and with the aim to improve value for money, a further reform programme is pursued by DFID, which involves,

• Reducing back office and support function costs by £19 million over four years. This initiative will involve the sharing of services and functions with other departments.
• Focusing on front line delivery by providing development assistance to fewer countries and the closing of offices in other countries.
• Increasing programmes and presence in fragile states, leading to the 'Building Stability Overseas Strategy'.
• Ensuring for significant improvements in the effectiveness of multilateral organisation.

The changes and reforms outlined above are captured in DFID's Business Plan which, in turn, has been cascaded into operational plans.

Despite comment that a clear strategy for retaining and acquiring skill sets is in place and that lessons have been learnt from previous change and development programmes, little detail is provided concerning:

• Which skill sets are to be retained?
• Which skill sets are to be acquired?
• The challenges of leadership in integrating conflicting objectives (namely, cost reduction versus improvement in front line delivery and in multilateral organisation effectiveness).
• The morale of staff and management.
• The culture of the Department and whether that enhances or inhibits the pursuit of change.
• The level of change preparedness of the staff and management.

In the absence of such information, I feel obliged to raise the question of whether DFID has given sufficient consideration as to how its aims will be achieved.

The brief as written raises doubt concerning whether the senior management have, or will develop, the necessary leadership and management capability to lead through the changes they identify.

Response from Department for Culture, Media and Sport - 13 September 2011

I am very sorry that you have not had a reply to your letter of 24 April concerning the changes that we are implementing in the Department for Culture Media and Sport (DCMS) to meet Spending Review commitments. A reply was drafted at the time but not sent. I can only offer my apologies and note — as I said to the Committee last week — that this is particularly unfortunate because over a year ago we established a comprehensive Change Programme in DCMS that is now reaching the end of its first tranche and has already delivered significant savings and improved ways of working.[160]

Your letter asks about the impact of the Government's Big Society agenda. DCMS is essentially a policy and project delivery department, with most of our resources distributed to expert, delivery organisations. We already work in a way that ensures that we only intervene where we have to; where the market will not deliver or there is a need to remove barriers and encourage growth so that everyone can benefit from our sectors. Therefore on a practical level the Big Society agenda does not directly have an impact on the structural, administrative changes that we are making in the department.

However we are continuing to play our role in the Big Society. The DCMS Business Plan highlights our commitment to work with Cabinet Office and the Treasury to boost philanthropy and giving to cultural institutions. We have reformed the National Lottery so that more money goes to the arts, culture and heritage and the Big Lottery fund so that only voluntary and community organisations are funded. We have also scrapped the rules on local cross-media ownership to create more opportunities for local media and are encouraging the creation of new local TV stations.

What structural reforms will be required in DCMS as a result of the reductions in running costs arising from the Spending Review? How do you intend to implement these changes? What lessons have you drawn from previous reforms?

The Secretary of State, Jeremy Hunt MP has set out an ambition to reduce the administrative spend of the department by 50% by 2014/15[161].The arm's length bodies that we sponsor have also been asked to make similar reductions. This means that we are able to pass on only 15% reductions to front-line services and programmes.

The clear aim of our Change programme is to 'achieve 50% admin cost reductions in order to meet Spending Review targets and build the best possible Department with a highly motivated, diverse and talented workforce at the same time as prioritising critical deliverables, including the Olympic and Paralympic Games'. In December 2011 the additional challenge arose of the Machinery of Government changes which led to DCMS taking on responsibility for all competition and policy issues relating to media, broadcasting, digital and telecoms sectors. Although we are a small Department our responsibilities for overseeing the Olympics and delivering policy on key areas such as Communications and Broadband make the simultaneous reform of the Department very challenging and important.

Attached at Annex A is short summary of the Change programme and the projects we have completed in Tranche 1. In setting up the programme we have built on previous reforms and feedback from the last capability review to design a new model Whitehall department that:

• Focuses on where we can have the most impact and prioritises delivery of the commitments in our Business Plan particularly, but not limited to, the Olympics
• Is flexible. People are encouraged to use their skills and expertise across the business, resources are only assigned to work that needs to get done and people are able to move quickly from one project to another
• Is less bureaucratic and continues to look at how to remove layers so work gets done quickly. One example of this is that we have merged our Private Office and Correspondence/briefing teams to form a coordinated and streamlined Ministerial Support Team.
• Has a flatter structure and stronger focus on empowering and equipping people that do the day-to-day work. We have substantially reduced the number of Senior Civil Servants (outside of the Olympic team) and now have a small, strong senior leadership team. Staff outside of the SCS are empowered to lead work and take decisions.
• Utilises project management techniques, with a strong focus on risk management, milestone mapping and outputs. The Change Programme itself has been set up using the MSP approach to running successful programmes. The SRO is a member of my small Director team. It reports to the Department's Executive Board and a Programme Board which concentrates on risk management and the measurement of benefits.

During the first phase of the programme we have ensured that Secretary of State and Ministers are content that the Department is delivering effectively. There are also other indicators that we are a high performing organisation that offers value for money. For example we are responding to about 60% of our correspondence within 48 hours. We are continuing to deliver on our Business Plan priorities; last month we missed only one deadline and this was for important strategic reasons not project slippage. We are also on track to exceed our target of reducing the 2011-12 pay bill by £3 million, through the reductions to the SCS group and a voluntary redundancy scheme offered to all grades.

Throughout the Change Programme I have placed a strong emphasis on communication and the people that work in DCMS have helped shape the new organisation. We have also refreshed Our People Strategy and updated our Performance and Development systems so they are compatible with our new ways of working and meet the needs of our people. As we complete the first phase of the programme we are seeking people's views on how the first tranche has gone (through an online questionnaire, interviews and focus groups) and we will act quickly to react to this feedback.

Planning is now under way for the second tranche of the programme. This is a particularly busy period for us as we move into final stages of planning and then delivering the Olympic and Paralympic Games. I therefore want to make sure that there is a stable environment for the people that work here. As we now have the organisational infrastructure in place, the next tranche will focus on: embedding the organisational changes and culture; developing our people; exploring options for reducing our non-pay costs; and preparing for the next phase of downsizing below the Senior Civil Service which will happen after the Olympics.

Does your reform process involve other government departments or public bodies?

The Director for organisation design in the Department for Work and Pensions is a member of the Change Programme Board and has been a useful source of expert advice. We are also working closely with the Institute for Government (IfG) to assess the impact and measure the benefits of the programme. I meet Lord Adonis next week to discuss their initial findings. As the IfG is working with a number of Government Departments we have found this an efficient way of keeping in touch with good practice in Whitehall.

We have chosen to only consult our stakeholders on the Change Programme where absolutely necessary, so not to distract from our primary objective of delivering on our projects and policies. The arm's length bodies that we sponsor have been informed about the programme and its progress and some of our strategic arm's length bodies have had the opportunity to feed in their views on the Change Programme. We are also working with our arm's length bodies to review how we can more efficiently manage our sponsorship and strategic policy making relationships. As we move through the programme we will consider how we can further involve our stakeholders to help assess how we are delivering and performing.

I hope this is helpful and can only apologise again for the delay. I would of course be happy to provide further information if needed.

Annex A - DCMS Change Programme

The DCMS Change Vision: To achieve 50% admin cost reduction to meet Spending Review targets and build the best possible Department with a highly motivated, diverse and talented workforce at the same time as prioritising critical deliverables including the Olympic and Paralympic Games

The Programme was launched at an all staff Conference on the 29 September 2010. It will be delivered in three Tranches:

Programme Governance

Tranche 1 Projects

		Project		Completed		Objectives
1		Supporting Delivery Reviews		December 2010		Strategic reviews for Executive Board on: How we manage our Press and. Communications function in the new organisation, Recommendations for merge of PERU and Private Office How we lead and manage our analytical and evidence work Establishing the current level and nature of support provided to SCS (PAs) Establishing Grade A (u) current position and the need for the grade in the future How to manage flexible resourcing
2		Recalibrating Business Scoping: DCMS Core Policy Corporate Services BIS GOE(Legacy)		Core policy 31 Jan 2010 Corporate services 30 June 2011 GOE (legacy) 31 July 2011		Gain a detailed understanding of the Department's current policy portfolio Identify key strategic issues of the Department's future policy portfolio Produce a revised resourcing map to capture all medium, long term and on-going policy work To recommend options-and for how to manage corporate services in the new organization, To recommend the structure and timetable for transition of GOE functions back to the rest of DCMS, and estimate the post-Games resource requirements
3		Aligning resources to the Business Plan		March 2011		To agree what we need to stop or reduce To decide approach to cross cutting policies: International, Local, Lottery, Gambling To initiate implementation of consequences of those decisions To allocate resources (post selection and VR) to agreed and reduced delivery areas To map out delivery as V1 of our flexible resourcing spread sheet.
4		Managing transition		April 2014		To support policy teams to make the transition from existing to newly agreed delivery priorities. To identify and resolve resourcing issues post SCS selection and VR exits To bring together newly appointed Heads of to discuss issues, gaps and interfaces for example between Press and Policy, MSU and Policy, Finance and Budgets.
5		Accommodation —to deliver savings			01/03/2011		To analyse the current position and Spending Review requirements To Identify available options for relocation and produce detailed costs and benefits for those options To implement option agreed by ExBoard To adhere to Green Book methodology.
6		Downsizing Phase 1			01/03/2011		To select and implement the new senior management structure To achieve headcount targets that deliver £3.035 million in year savings for 2011-12 through downsizing the SCS, a VR exercise for all staff and further Workforce Planning measures To support staff through the process To maintain an effective partnership with the Trade Unions
7		Machinery of Government Transfer and integration of staff and policy from BIS			12/04/2011		To agree the scope of the transfer and produce a Memorandum of Understanding to ensure clarity of responsibility and ways of working between the two departments. For all associated staff and budgets to be transferred and all necessary support systems in place by April 2011. To support people in the transition and integrate.
8		Flexible Resourcing			31/05/2011		Set up the combined Programme Office (bringing together scoping and existing Programme Office) to support the work of new Policy Committee
9		Industry Sponsorship			31/07/2011		Produce a report that defines the sector liaison and business sponsorship role in the new DCMS seeking savings for re-deployment on priority projects and clear expectations of Heads of Sector subject areas.
10		Systems update			31/08/2011		An audit of Departmental systems, including DCMS Matrix, Nakissa, Integra, Liberata, Library Services, LiveLink, Oracle, Outlook, Records Centre Database, Correspondence System, Hub, Lottery Grants Database and PQ Database: To identify what needs to be done so that they are in sync with the organisation, and fully reflect the new structure and new flexible ways of working which have been introduced.
11		DCMS purpose and defining our Culture			September 2011		To define the organisation we want to be. Developing the vision for DCMS this Parliament (purpose, approach and behaviours) To identify outputs/activities to anchor culture change To engage staff buy into the culture change
12		Governance and Committees			August 2011		The delivery of a new governance structure to reflect the department's revised structure, and to reflect new requirements form the centre around Board level approaches.
		Business Performance Management					New governance structures, required new reporting and measurement approaches. This work needed to reflect the TOR of the new committees, new continuous improvement approaches and new requirements from the centre (particularly at Departmental Board level).
13		Developing the Senior Leadership Team					Supporting the development of the new Senior Leadership Team and putting in place the foundations for help the team develop.
14		Empowering Grade			31/07/2011		To define what the Department expects from and offers to Grade As for the future
As
15		Review of Our People Strategy			31/07/2011		Review and refresh the DCMS Our People Strategy so that it reflects the needs of the people that work in DCMS, our new approach and culture.
16			Matrix Management- New approach to management in DCMS		September 2011		Developing a new policy (through consultation) and implementing. Allocation of new Development Managers Forman Training for all on matrix management (beginning with Development Managers
17			Grade Descriptions		August 2011		To support the recently introduced ways of working and in particular the roll out of flexible resourcing, To draft a set of grade descriptions which reflect the new organisation and which can be used for recruitment, development and redeployment. To describe a work environment that reflect what the Department does and is attractive to people in particular with a view to bring in talent To provide enough information to inform decisions from potential applicants: are they suitable? Are they interested To consult with colleagues and seed feedback from the Unions
18		Performance and Development (ADR)			31/07/2011		Understanding and full support of the DCMS leadership team The system effectively differentiates high levels of performance and unsatisfactory one The new system is affordable, fair, transparent, simple sustainable, non discriminatory and supportive of departmental and Civil Service values. HR systems timely undated and synchronised Effective Learning and Development to make the process more effective
19	Resourcing and Promotion Policy						Developing a new resourcing and promotion policies that enables us to work within the available resource and supports the new ways of working.
20	Learning at Work week				April 2011		To bring to life the new ways of working (sharing knowledge and creating a feel of one DCMS) To raise awareness of our key work and projects. Help integrate new employees
21	Staff Awards 2011				July 2011		To celebrate achievements across DCMS. To help people feel "One DCMS". Improve morale during a time of change
22	New DCMS Panel and Sounding Board				August 2011		To set up a new DCMS panel that reflects our new ways of working and introduce a new 'Sounding Board'
23	Internal Internet    Hub Restructure				July 2011		To ensure that the Hub reflected the new DCMS structure and ways of working.

Analysis by Professor Kakabadse

I have read the brief presented by DCMS and have the following comments to make.

Due to the late submission by the Department for Culture, Media and Sport (DCMS), I will focus on the key considerations arising from the brief.

The brief emphasises that 'Big Society' does not clearly impact on the Department due to the fact that DCMS is a policy and project delivery department, distributing DCMS resources to expert delivery organisations. However, the point is made that the DCMS Business Plan emphasises the commitment to work with the Cabinet Office and Treasury to boost philanthropy and giving to cultural institutions.

The brief further highlights the Change Programme projects completed and the focus on designing a new model Whitehall department that:

• Prioritises delivery of commitments in the Business Plan in order to ensure for greatest impact.
• Encourages people to be flexible in their use of skills.
• Removes organisational layers in order to be less bureaucratic and encourage work to be done more flexibly.
• Empowers people through a flatter structure and through having access to a smaller senior leadership team.
• Draws on project management techniques and skills in order to address issues of risk and focus on outputs.

The brief informs of certain successes already realised through the adoption of the principles highlighted above, such as more efficient response to correspondence and being on track to reduce costs of remuneration by £3 million. The brief also indicates that the expertise and experience of other departments and bodies, such as the Institute for Government, have been called upon to progress change in DCMS.

The brief further highlights that these changes are being pursued in conjunction with an administrative spend reduction target of 50% by 2014/15.

The targets outlined in the brief are ambitious, particularly those of reconciling flexible use of skills and expertise, empowering staff and management, reducing organisational layers versus driving through a cost reduction programme. In order to realise such aims, further information is needed on the motivation and morale of staff and management, their preparedness for change, the leadership capability of senior DCMS managers to drive through change and whether the culture of the Department is supportive of the change programmes identified. Mention is made of these points in the Business Plan but no further information is available in order to gain sufficient insight as to the likely success of the change. From the level of detail provided, it is likely that DCMS management has given due consideration as to how its aims will be achieved. However, with the minimal information provided, the question I raise is whether the management have the leadership capability to pursue the contrasting objectives of cost reduction and encouraging staff empowerment and flexible use of skills. More information is needed on how the senior managers of the Department are able to address the challenges they face in bringing about change.

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160   Oral evidence from Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport, 6 September 2011, HC 1389-ii, Qq 215-22. Back

161   At the beginning of the Programme this meant that the Department would need to cost £26m by 2014/15. This has been revised following the Machinery of Government changes to £30m. Back

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Prepared 22 September 2011