Public Administration - Minutes of EvidenceHC 133

Oral Evidence

Taken before the Public Administration Committee

on Thursday 24 May 2012

Members present:

Mr Bernard Jenkin (Chair)

Alun Cairns

Paul Flynn

Robert Halfon

Kelvin Hopkins

________________

Examination of Witness

Witness: Sir Jeremy Heywood KCB CVO, Cabinet Secretary, gave evidence.

Q1 Chair: Could I welcome our witness to this session on the work of the Cabinet Secretary? Could you identify yourself formally for the record, please?

Jeremy Heywood: Sir Jeremy Heywood, Cabinet Secretary.

Chair: Can I just ask a gentle opening question? Your role has been split from your predecessor’s in terms of the Head of the Civil Service, so what is your average working day like now? What do you tend to be doing each day?

Jeremy Heywood: In terms of the length of time or what I do in a day?

Chair: What you do.

Jeremy Heywood: I come in to work in the mornings early on, usually with Bob Kerslake. It is a good opportunity to take half an hour to chat through the day with him.

Q2 Chair: What time is that, usually?

Jeremy Heywood: We normally get into the car together at about 7.30, or something like that. I catch up on emails when I get into the office, or have a meeting with Francis Maude or Oliver Letwin at 8. I usually have a session with the No. 10 team, often involving the Prime Minister, in the mornings.

Q3 Chair: So that is your morning briefing on press and what is happening that day?

Jeremy Heywood: Yes, which I try to get to if I can.

Q4 Chair: It is not a separate political meeting, then?

Jeremy Heywood: No, it is a combination of civil servants and political people-a useful session. Obviously on some days we have Cabinet, which dominates the morning. On other days, on Wednesdays, we have the Permanent Secretaries’ meeting whilst the Prime Minister is preparing for Prime Minister’s Question time. I will generally have a weekly bilateral with the Deputy Prime Minister. The Deputy Prime Minister has several other meetings, which I will attend. There are a series of policy meetings; then we have a regular routine where the Civil Service Management Board meets under Bob’s chairmanship. I obviously sit on that.

We try to get out and about to see Departments. I have been to Scotland, Wales and a few other Departments to talk to them about the issues they are facing. It is a combination of policy meetings, management meetings, catchup meetings and so on.

Q5 Chair: How often do you personally meet a journalist or commentator?

Jeremy Heywood: Very infrequently, frankly.

Q6 Chair: Is it at your invitation or their request?

Jeremy Heywood: I get requests from time to time, and I usually agree to meet people whom I have not met before. I have generally not met journalists over the years, but people have now advised me that, given that I have a reasonably prominent position and people write about me, it is useful to keep in touch with them from time to time.

Q7 Chair: Do you find if somebody is writing about No. 10, it is quite useful to ask them to come in?

Jeremy Heywood: Yes. I don’t usually take much of the initiative, to be honest, but I suppose I am slightly more receptive now when people invite me to have coffee or something. I will generally do that now, usually on background only, but basically my job is not to be in the newspapers and not to be in the magazines. I am not doing a very good job of that at the moment, but I try my best to stay invisible.

Q8 Robert Halfon: Are you on Twitter?

Jeremy Heywood: I am not on Twitter. Bob is on Twitter.

Q9 Chair: One of our concerns was that there was a lot of very negative criticism about the splitting of the role of Cabinet Secretary and Head of the Civil Service-that you would finish up with a lot of power but much less responsibility. Is that what it feels like?

Jeremy Heywood: No, it does not feel like that at all, to be honest. First of all, on the split, I think it is working really well. I think most of our Permanent Secretary colleagues would now argue that it is a really good idea. It gives me the opportunity to serve the Prime Minister, the Deputy Prime Minister and the Cabinet as a whole. Previously I was frankly working just for the Prime Minister, so it has given me extra bandwidth to do that. Secondly, it means that Bob can focus on the capacitybuilding side of the Civil Service, leading the Civil Service reform programme. Clearly they are different roles-very supportive of each other all the time, but distinct roles, dual responsibility. That is working very well.

In terms of how my role has changed, I definitely feel sitting in 70 Whitehall, which is what I do now, is a different role. I have a responsibility to the whole Cabinet, rather than just to No. 10. Obviously I need to maintain my close links with the Prime Minister’s office and with the Prime Minister, because he expects me to be one of his key advisers, but I work now for the Cabinet as a whole. I spend quite a lot of time with the Deputy Prime Minister or working issues across Whitehall for the Deputy Prime Minister, and I feel as though the role has evolved quite a lot.

Q10 Chair: What about the division between policy and implementation, or policy and administration? Do you feel that is an appropriate division of roles between you and Sir Bob?

Jeremy Heywood: No, I don’t think that is the division of roles. The division of roles really is between policy and implementation on the one hand, and the capacity of the Civil Service, the skills of the Civil Service, the longterm capability of the Civil Service, and obviously to some extent the performance as well, on the other.

On implementation, if you see it as a Venn diagram, there is an intersection: both Bob and I are acutely interested in implementation issues. You cannot divorce policy design from implementation. If you design policy without a mind to how it can be implemented, and without talking to any of the people who will be asked to implement it, it will almost certainly be bad policy. Policy and implementation issues are heavily intertwined and need to interact very carefully. It would be absolutely hopeless if I was just focused on policy without thinking at all about implementation. That would not work at all.

Q11 Chair: Sir Humphrey Appleby’s explanation of the division between the policy of administration and the administration of policy comes to mind. Do you think your relationship with Sir Bob would work so well if you did not get into the car together every morning?

Jeremy Heywood: I am sure it would survive that, but it is certainly helpful.

Chair: Obviously it is helpful, but-

Jeremy Heywood: It is obviously based on much more than that. Firstly, it is based on mutual respect. Certainly I respect him immensely. He has done lots of things in his career that I have not done, and he has a proven track record on change management. He is a tough, visible leader-toughminded, determined, with consistency of purpose and so on. He and I are obviously in a lot of meetings together. He chairs a lot of them: I chair some of them. We work a lot together. We have weekly bilaterals on top of our informal chats in the car, so it certainly is not dependent just on car journeys.

Q12 Kelvin Hopkins: Sir Jeremy, the Coalition is cited as one of the arguments for having a separate Cabinet Secretary role.

Jeremy Heywood: Yes.

Kelvin Hopkins: To what extent do you see your role as that of a referee between two political parties with disparate aims?

Jeremy Heywood: I would not use the word "referee". I am a civil servant; I don’t arbitrate between elected politicians. They have to come to agreements themselves. Obviously, the Deputy Prime Minister, the Prime Minister and other Ministers ask the civil servants occasionally to help them try and find areas of common ground, to filter through issues and pinpoint the issues that really do need to be resolved at a political level, so I do get involved a lot in issues that divide them, but frankly I also get involved equally in issues that divide Departments from one another, not just splits that break down along Coalition lines but Departmental lines. That is what I have been doing for much of the last 20 years of my career, frankly.

Q13 Kelvin Hopkins: It strikes me, as you say, that you meet the Prime Minister and the Deputy Prime Minister separately each week.

Jeremy Heywood: Yes.

Kelvin Hopkins: So you may have a kind of diplomatic role, trying to square circles between them. Is that fair?

Jeremy Heywood: That is one role. Other people play that role as well. Of course, the Prime Minister and the Deputy Prime Minister themselves meet on a very regular basis, and I attend most of those meetings, probably. I am one of the people around who plays a facilitative role, and tries to broker agreements and narrow down differences in good faith, working for both sides. That is what is very different about my new role as compared with my previous role.

Q14 Kelvin Hopkins: It has been argued that the need to keep the Coalition together has led to paralysis, or in the case of the Budget perhaps even contradiction, at the heart of Government. How do you seek to ensure that things get done under these conditions? Difficult.

Jeremy Heywood: I don’t recognise the word "paralysis" at all in the current context. I think the Government has achieved a huge amount. It set out with many hundreds of commitments and has made very good progress in developing them. The Budget, which was much criticised, was actually quite a bold Budget. It did not need to have been, but there was lots of churn and change. I don’t really accept that there is paralysis at all. Clearly, however, one of my jobs is to make sure that the machine is delivering on the commitments that were set out in the programme for Government that was agreed at the start of the Coalition Government.

Q15 Kelvin Hopkins: But there clearly are tensions. In the last week we have seen some quite serious divisions over Beecroft and so on-not necessarily the Deputy Prime Minister, although one assumes he is close with the Business Secretary. Is your work sometimes difficult, holding it all together?

Jeremy Heywood: I would not say it is particularly difficult. Government has always been like this. You always have disagreements between different Departments, different politicians, and you just have to knuckle down and try to find the points of agreement, even on something like Beecroft, which has had a lot of attention. The Government has an agreed position, which is to put out a document that is a call for evidence on Beecroft and an alternative to Beecroft. Obviously there is a lot of rhetoric in the newspapers, quite often briefed by different people, but the business of Government goes on.

Q16 Paul Flynn: Is part of your role to be the memory to the Government? Have you recently reminded them of the lesson of David Mellor, which is that a resignation delayed is a disgrace multiplied?

Jeremy Heywood: Well, I do have a memory of previous events. Sometimes that is useful, sometimes it is not.

Q17 Paul Flynn: Would you describe the Government’s policy on the Big Society as anything but paralysis, where Lord Wei resigns and is not replaced, Shaun Bailey, the Ambassador, goes and is not replaced, and meetings are not held for month after month about the Big Society? Is it time to declare it officially dead, put a stake through its heart, and consign it to the graveyard of all threeword wheezes by Prime Ministers of the past, like "The Third Way" "The Cones Hotline" and "Back to Basics"? Now the Big Society is officially dead-a dead wheeze walking. Is that right? Isn’t that paralysis? Or would paralysis be an improvement on the situation it is in now?

Jeremy Heywood: I would not use the word "paralysis" on that. I think the Big Society can be looked at on two different levels. Firstly, it is a piece of political narrative, an overarching theme covering things like decentralisation, the use of the third sector and the private sector, and more active participation in society by citizens. At a very high level, that is a cultural, almost societal, movement, which will take more than a couple of years to put in place, as it were. Certainly the Prime Minister remains every bit as committed to it as he ever was. Secondly-

Q18 Paul Flynn: Do you think it is legitimate of the Prime Minister to prostitute the honours system to distribute honours to heroes of the Big Society in an attempt to resuscitate the corpse?

Jeremy Heywood: No, I would not use any of those words, really. The Prime Minister is entitled to give strategic direction to the honours system––

Paul Flynn: I mean, we are in the Lloyd George Room-

Chair: Order, order. Let him answer the question.

Paul Flynn: It is an historic-

Chair: Mr Flynn, can you let him answer the question?

Paul Flynn: Well, yes. I think the questions are-

Chair: Well, could you let him answer the question you have asked? Order, order.

Jeremy Heywood: The honours system has always been used, I think, to reward people who have given community service, outstanding philanthropic work, and so on. That is very much part of the Big Society.

Q19 Paul Flynn: But to advance a political agenda?

Jeremy Heywood: I don’t think the Big Society is particularly a political agenda. I think political parties of all persuasions have welcomed more active communities, charities and philanthropic giving, people giving their time, and getting society itself to be less passive and more involved in the provision of public services, and so on. I don’t think it is a particularly partisan concept.

As I was saying in answer to your previous question, I think at one level it is a big political piece of narrative, in which a lot of policies fit. There are also one or two very specific policies that have been put forward under the Big Society heading, and they are very much work in progress. Probably the most successful one that I have come across is the National Citizenship Service, which is being piloted-getting 16yearolds from all social backgrounds to come together in the summer and go on summer programmes. I was speaking to some kids who have been on the first pilot recently-the first pilot, as it were-and they could not have been more enthusiastic about it. It is quite easy to be cynical about these things, but the specific proposals that have been put forward under the Big Society are being taken forward and, from what I can see, have been quite successful so far-but obviously time will tell.

Paul Flynn: I am grateful to you.

Q20 Robert Halfon: Could I just ask you about political advisers, if I may? Do you think the Government has too few political advisers or special advisers, or too many?

Jeremy Heywood: Broadly speaking, the number of special advisers is in line with what it has been for the last 20 years. I think it is somewhere around 80 or 85. It feels, roughly speaking, the right level, as it has done for much of the last 20 years. I think we have to recognise that in a Coalition Government it would not be that surprising if we had slightly more special advisers than we have had previously, because I think there is more complexity. It is not unreasonable that both sides of the Coalition have a decent number of special advisers.

Personally I have always been a big supporter of the concept of special advisers. It is helpful to the Civil Service to have people whose job it is to be political. Depending on the policies of the people involved, they play a very big role in some Departments. I am comfortable with the current levels. I would not particularly want to see them dramatically increasing.

Q21 Robert Halfon: I am interested that you say they are roughly the same, because the way it is reported in the media and elsewhere is that there are not enough political advisers, fewer than before, and this is a weakness in the Downing Street machine.

Jeremy Heywood: Overall the number of special advisers is broadly in line with where it got to under Tony Blair. It is probably slightly higher than it was under Gordon Brown. What is different is that there are obviously far fewer Conservative special advisers than there were Labour special advisers-I think there are around 60 as opposed to 80odd-and that is because we have two parties in the Coalition Government, not just one.

Q22 Chair: The criticism is that there are very few political advisers in No. 10, and that is making life difficult for the Ministers-

Robert Halfon: Particularly in the Policy Unit.

Jeremy Heywood: Yes. In No. 10 it is probably around 20 now, and that is possibly slightly lower. What is strikingly lower, obviously, is that the number of special advisers from the main governing party is significantly lower than it was. We can have a broader discussion about the Policy Unit, if you would like. The decision was taken by the Prime Minister and Deputy Prime Minister to maintain one Policy Unit for No. 10, rather than having two separate ones-a Lib Dem one and a Conservative one. If you take the view that you will have one, it has to be able to provide advice to both sides of the Coalition, as it were. It is quite difficult to see how that could be staffed with special advisers. The Prime Minister is not going to take political advice on immigration from a Lib Dem special adviser. The Deputy Prime Minister is not going to take advice from a Conservative special adviser on the Big Society. You are driven to having a more technocratic group of people. That is not to say that there are not also some policy special advisers at No. 10, on both sides of the Coalition. There are, but possibly slightly fewer than in previous years.

Q23 Robert Halfon: Why did you say a moment ago that you don’t think there need to be more special or political advisers? Would the Government not benefit? There are arguments being made that the Government would benefit from more special advisers.

Jeremy Heywood: You asked me for my personal view. I think that, broadly speaking, the number of special advisers we have now is roughly the right level.

Q24 Robert Halfon: Why?

Jeremy Heywood: Because I think the Government is working perfectly well with the number of special advisers it has.

Q25 Chair: But isn’t there a fundamental problem here, that Secretaries of State who want to talk to the Prime Minister indirectly through the Policy Unit-because the Policy Unit is presumably one of the driving creative places where policy is being generated-have to talk to a civil servant? There have been some complaints about that. The system is not working in that respect.

Jeremy Heywood: I think any Secretary of State who wants to talk to the Prime Minister should be able to speak to the Prime Minister, directly, not intermediated through-

Q26 Chair: But, practically speaking, the Prime Minister cannot be in permanent conversation with 18 Departments of State at all times.

Jeremy Heywood: That is a very fair point, but we have a Chief of Staff, a Deputy Chief of Staff, a Head of Political Strategy, five or six special advisers on policy-I am talking about the Conservative side now-and a slightly smaller number on the Lib Dem side. There are plenty of political people in No. 10-about 20, in fact. Would it be transformed if there were 25 rather than 20? I don’t think it would be transformative. You could make the argument. Even 25 would probably be slightly smaller than the number Tony Blair and Gordon Brown had of their own party in No. 10. This is complicated in that the overall numbers have to take into account both Conservative and Lib Dem.

Q27 Chair: We will come back to special advisers later on. Can I ask the other side of the question? In the second of our two reports on strategic thinking, we explicitly suggested that we need to think about the role of the permanent Civil Service as a stronger anchor of stability, and that there should somehow be a stronger role for promoting the longterm national interest. Ministers and Prime Ministers come and go, but many issues are much longer-term, and require a much longer-term view. The Civil Service needs to generate that longer-term view and put it in front of Ministers, and confront Ministers with the longterm difficult choices, which the political agenda and the 24hour news agenda tend to drive them away from. What do you think about that?

Jeremy Heywood: I think in the first year or two of a Parliament you are bound to spend your time focusing on what the new incoming Government, be it a Coalition Government or singleparty Government, has decided in its manifesto that it wants to do. The strategic thinking, if you like, was done politically in putting together manifestos. Frankly, for the first couple of years of any Parliament you will spend most of your time implementing the manifesto agreements and so on.

The question you raise is a perfectly good one in relation to the latter end of a Parliament. You and I, Mr Chairman, have spoken about this before. I personally think there is a case for the Civil Service upping its game on horizon scanning and strategic thinking, so it can offer Ministers a view about some of those longer term issues. It is then for Ministers to decide whether they want to listen to that advice or continue to do their strategic thinking in a political frame.

One of the things we have done recently is to recruit Jon Day as Chairman of the Joint Intelligence Committee. He has some extra time on his hands, as it is at the moment a threedayaweek post, so I have asked him to specifically review across Whitehall horizon-scanning capability in different Departments. Is it good enough? Is it coordinated? What do we do when we receive the horizon scanning outputs? What hangs on it, as it were? That is partly motivated by the work of this Committee in putting the spotlight on this.

This is work in progress, and I don’t have any firm conclusions from that work yet. However, as I look at the Cabinet Office and the Civil Service, one of the gaps I personally think there is is, "Are we doing enough coordinated thinking about the future challenges facing the country?" In the end, Ministers have to decide how relevant that is to policy formation. You cannot have a separate, parallel Civil Service exercise that in a sense is deciding what to do. Ministers have to decide what to do, but we can certainly do some more longer-term thinking.

Q28 Chair: Thank you for that. I am grateful, but I cannot resist just pointing out that there are shortcomings to horizon scanning. Horizon scanning can make you feel that you know things about the future that you cannot actually know. Very often, what happens next is not what you thought you saw on the horizon. Are you developing that kind of responsiveness and capacity as well?

Jeremy Heywood: No. I am using horizon scanning as a shorthand for future thinking, scenario gaming and so on-a whole clutch of issues. Jon has done quite a lot of this work. The MOD and the security side of Whitehall do this better, in some ways, than the domestic, economic side of the Government, so I think Jon Day is a good person to give me some advice on that.

Q29 Alun Cairns: Sir Jeremy, when the roles were split, and effectively split between you and Sir Bob, one of the driving forces was to reduce the 36 direct reporting lines that now Lord O’Donnell highlighted, and the responsibilities that went with those reporting lines. How have you decided to divide them between you, and what progress have you made in this respect?

Jeremy Heywood: I think we probably sent a note to the Committee on this some time ago, but if not, I am happy to send it to you. Effectively we took the crosscutting Departments, or people who had a crosscutting role, like the Treasury Solicitor, the Permanent Secretary of the Treasury, the First Parliamentary Counsel, and I will line manage those people, and then we have the main Departmental Permanent Secretaries, and Bob Kerslake will line manage them.

It sounds as though it is a clear division, and it is clear, because someone has to take responsibility for each of the Permanent Secretaries in a clear way. Obviously Bob and I talk a lot: I talk about his people; he talks about my people. Certainly I would not want you to think that there is a great divide here, such that I never talk to the people Bob is managing and vice versa. However, I think it is right that each Permanent Secretary or senior official has a line manager and knows who that is and there is clarity about that, so that is the way we have done it.

Q30 Alun Cairns: How do you then ensure consistency in priority setting and performance management between you and Sir Bob when you have different priorities?

Jeremy Heywood: Obviously when it comes to deciding who are the top 25% of Permanent Secretaries, we will end up having a moderation meeting between me and him, and some external people as well. We keep in very close touch on these issues. We are not doing these in little silos and never consulting each other; we work very carefully together to make sure that we are applying consistent standards. Frankly it is a joint endeavour. However, if you are to give people sufficient time to feel as though they are being properly managed and mentored, you do need to reduce the number, in my view, from 35 or 36, or whatever it was Gus had to deal with.

I have just been through all my endyear appraisals with all my Permanent Secretary direct reports. It is frankly quite a timeconsuming business. If I had 35 of them, I don’t think I would be doing anything else for this month. Even doing my 10 or 15, whatever it is, if you do it properly and have some meaningful feedback to give people and a real discussion about their objectives for next year, you need to put quite a bit of time aside for that.

Q31 Alun Cairns: You obviously have a close working relationship with Sir Bob. How much of that is down to personalities? The question should be then: could that work with someone else, or would it break down if you were working with a different individual?

Jeremy Heywood: I suppose in theory there could be such a character clash that it was impossible to work together, but I think most people at the top of the Civil Service get there because they are fairly collaborative, collegiate people who have a shared endeavour. I think it is likely to be sustainable beyond just pure personalities, though certainly getting on with someone helps.

Q32 Alun Cairns: Can I ask you about the responsibilities for the Civil Service Code and the Ministerial Code?

Jeremy Heywood: Yes.

Alun Cairns: I understand that Sir Bob is responsible for the Civil Service Code and that you are responsible for the Ministerial Code. Is that right?

Jeremy Heywood: It depends what you mean by responsible. The Prime Minister is responsible for the Ministerial Code. I give him the benefit of my views, from time to time, on whether people have breached it or not.

Q33 Chair: He did cite you recently, saying that you had given him advice.

Jeremy Heywood: I think it is clear in the Ministerial Code that that is one of the roles of the Cabinet Secretary, so I do that, and Bob, as you say, takes responsibility for civil servants’ behaviour under the Civil Service Code. As Head of the Civil Service that is the right demarcation.

Q34 Alun Cairns: Is it part of the Civil Service Code that a Minister should be encouraged to follow the Ministerial Code? If a Minister has not necessarily followed the Ministerial Code, how does that equate in terms of achievement of delivering the Civil Service Code?

Jeremy Heywood: I would have to look again at the detailed wording of the Civil Service Code, but in the end, if Ministers breach the Ministerial Code, it is the Minister’s responsibility. I don’t think he can blame the civil servant for that, unless the Minister’s culpability in some sense has been due to a failure by the Civil Service to bring something to his-

Q35 Chair: Gus O’Donnell did say that he wished he had been told earlier. He said it again and again in front of this Committee-that he wished he had been told earlier on the Liam Fox affair.

Jeremy Heywood: Yes, absolutely.

Q36 Chair: Surely that was a failure of the Civil Service?

Jeremy Heywood: I don’t think that was the root cause.

Q37 Chair: Obviously it was not the root cause, but it was a contributory factor.

Jeremy Heywood: Yes.

Q38 Chair: Now you have those divided reporting lines on the two Codes, does that not confuse the accountability for the good order of Government, which is both Codes?

Jeremy Heywood: I don’t believe so, no. I think it is pretty clear that if the Prime Minister is worried, or someone is alleging a breach of the Ministerial Code, he will ask me for my advice on it. I will then advise him on whether I think there is a case for bringing in Sir Alex Allan, or we will discuss between us how he wants to take that forward. If a subsequent investigation shows that there may have been a glaring mistake by a civil servant that has caused this in some sense, then we will bring in Bob Kerslake. I don’t think there is any lack of clarity about this at all, frankly, and I certainly have not had any difficulties in the first few months in this job.

Q39 Kelvin Hopkins: Sir Jeremy, what happened to make Ian Watmore leave his job after less than six months in post?

Jeremy Heywood: He has certainly been in post more than six months, I think.

Q40 Kelvin Hopkins: It might have been eight, but you know-

Jeremy Heywood: It was getting on for two years, I think.

Q41 Chair: No, no, as Permanent Secretary of the Cabinet Office it was less than six months.

Jeremy Heywood: Sorry, as Permanent Secretary, yes. He can speak for himself on this.

Q42 Kelvin Hopkins: Even two years is not very long.

Jeremy Heywood: It is a relatively short time, but Ian has said himself that he wants to spend more time with his family in the northwest of England. He is fed up with commuting up and down. I also feel that he feels he has got the Cabinet Office and its new role off to a very good start, and he now wants to move on. I don’t think there is any more to it than that, frankly.

Q43 Kelvin Hopkins: Obviously we would not expect you to tell tales out of school, but press speculation is that there were certain quite serious tensions in the centre between Ian Watmore, and indeed possibly even Sir Gus, and particularly Steve Hilton.

Robert Halfon: Can I just add something, Chair?

Chair: Can we just hear the answer to that question?

Robert Halfon: It is very relevant. When he came to the Committee, he was full of enthusiasm and passion for his job, and there was no indication that he would decide to give it up after a few months, so clearly something has occurred.

Jeremy Heywood: It wasn’t actually a question, I don’t think, but all I can say is that Ian did a really good job. Francis Maude certainly recognises that he has been an excellent person to have in the Cabinet Office in the formative stage, when we have been building this group, the Efficiency and Reform Group. They have notched up some tremendous achievements: they have created a really pacy, nonbureaucratic organisational culture, and brought in lots of very good people, and now Ian has decided it is time to move on. I think they will part on good terms. We can talk about Steve Hilton-I don’t want to get too personal about these things. The way Steve operates is to challenge; he is a very challenging person. I don’t believe that Steve Hilton, who in any event has now left, is the reason why Ian Watmore is leaving the Cabinet Office. As I say, Steve has now left for California, as far as I am aware.

Q44 Kelvin Hopkins: I won’t press you any further on it, but I must say I remain unconvinced that somebody walks away from this job lightly: at the centre of Government, fantastic power, interest, and whatever-but there we are. When do you expect his successor to be appointed, and how are prospective candidates being identified?

Jeremy Heywood: We are in a discussion with the Minister for the Civil Service and Cabinet Office at the moment on that issue, as to whether we have an external competition or not. Either way we are talking about the end of July or early autumn, I would hope, to fill the post. In the meantime, Melanie Dawes has been asked to step in as the Acting Permanent Secretary when Ian goes at the end of June.

Q45 Kelvin Hopkins: Are you thinking about the structure of the relationships within the Cabinet Office and Downing Street? I must say, I remain unconvinced by the diagram we were given some months ago. I think it was prepared fairly hurriedly. One of my staff has drawn a rather more convincing diagram.

Jeremy Heywood: I would like to see that. Can we see that?

Q46 Kelvin Hopkins: I will show it to you afterwards. Are you thinking about the structure and looking at it again? It is unusual, to say the least, what has happened.

Jeremy Heywood: The short answer to your question is: yes, we will have a look at the structure again. I don’t expect to see major changes, but whenever someone leaves and someone else comes in, it is always a good time to review whether it is working properly. I don’t see any need to fundamentally change it, but we will definitely have a short, sharp review of that.

Q47 Kelvin Hopkins: Is the Permanent Secretary to the Cabinet Office responsible to you or to the Head of the Civil Service?

Jeremy Heywood: Head of the Civil Service.

Q48 Kelvin Hopkins: Head of the Civil Service-but it looks as if everything comes through the Head of the Civil Service to you, and you don’t have direct handson responsibility for staff and so on at all.

Jeremy Heywood: I line manage a number of them. I am obviously a major customer for a lot of them, so I have a huge stake in the Cabinet Office’s performance, and I take a very close interest in it. However, the formal line manager of the Permanent Secretary is Sir Bob Kerslake.

Q49 Chair: I am reminded of the utterance of one of your most eminent predecessors, Lord Butler, who said, when we asked how this would work: "The Cabinet Secretary will be top dog." Are you top dog, Sir Jeremy?

Jeremy Heywood: No, no, I am not. There are two top dogs in the Civil Service. Sir Bob Kerslake is the Head of the Civil Service, and I am supporting him in my role as Cabinet Secretary.

Q50 Kelvin Hopkins: Moving on to other questions, is it the policy of No. 10 to slash the number of civil servants by up to 90%? That is one suggestion made by, I think, Steve Hilton.

Jeremy Heywood: No, it is not the policy of the Prime Minister or anyone else at No. 10.

Q51 Kelvin Hopkins: To what extent do you think that the Prime Minister and Deputy Prime Minister understand the impact that such public utterances have on the morale of civil servants?

Jeremy Heywood: I think they are very conscious of that, and they are just as frustrated and angry, frankly, as Sir Bob Kerslake and I are when that is put in the newspapers apparently as an authorised briefing, which it certainly was not, and it does not remotely reflect the Prime Minister’s or the Government’s view of the Civil Service. They totally share that anger, and that is enough to be said about it. We are already spending too much time on something that has no authority whatsoever.

Q52 Kelvin Hopkins: Is this anger at the press comment, or anger at Steve Hilton?

Jeremy Heywood: I don’t know whether it has definitely come from Steve Hilton, but whatever it is and wherever it has come from, it does not reflect the policy of the Government. I think that is the only thing to be said about it, frankly.

Q53 Chair: I wholly respect your determination to maintain a swanlike serenity about everything that is happening around you in public, but circumstantially there does seem to be some tension and even mistrust around the relationship between civil servants and some Ministers and some advisers. What do you think can be done to build up trust? The relationships will not work unless there is trust.

Jeremy Heywood: First of all I would say I think you have expressed it very well. Some Ministers, some advisers, are more frustrated with the Civil Service-and with the progress of change, frankly, not just the Civil Service-than others. I would say the clear centre of gravity of the Government, and certainly the Prime Minister and the Deputy Prime Minister, have a very good relationship with the Civil Service, and respect and admire it. The Prime Minister and the Deputy Prime Minister are both very firmly on the record along those lines, and my own personal dealings with them suggest an openness to Civil Service advice and so on, which is in my view obviously very welcome. It suggests that there is no real tension at all. I certainly do not, in my daily job, feel any great problem here, although I have to acknowledge that there has clearly been briefing in the newspapers and some sense of that, and it is true that some Ministers and advisers have been more frustrated.

How do we deal with this? The first thing we have to do, and the whole Permanent Secretary Group are very committed to this, is to prove by our daytoday competence and dedication in public service that we are basically supporting the elected Government of the day in a competent way. That is what we have to do. The first test is competence. The second thing is that we are putting together, with a lot of input from Ministers and other parliamentarians, the Civil Service reform plan, which we hope we will be in a position to publish in the next few weeks, probably next month, but it is not finally pinned down. Hopefully that will be a point at which all the points of criticism and concern can be addressed and discussed and put together, and the Government can then get behind that plan. That is certainly our hope.

Q54 Chair: But doesn’t there need to be some kind of programme that is not just sanctioned by the Prime Minister but driven by the Prime Minister to, if you like, train? Very often special advisers are not trained, and civil servants very often are suspicious of advisers, and this inevitable triangularity between Ministers, advisers and civil servants is potentially always an unstable relationship. Doesn’t there need to be some programme to create those bonds of trust that will inevitably make a Department work much better, or undermine the work of that Department if those bonds of trust are not met?

Jeremy Heywood: I don’t think there needs to be a programme of training or anything like that. I don’t think we have a general problem. I think generally speaking, relations between Ministers, special advisers and their civil servants are excellent, and I think most Departments are functioning in a very effective way. I genuinely don’t believe this is a major issue. I know it has been in some of the newspapers, and I know in some quarters there is frustration with the pace of change. There are some perfectly legitimate criticisms of the Civil Service, which the Public Accounts Committee and others make on a regular basis, and we definitely need to address them. We are not at all complacent. We need to improve our project management, we need to improve our use of management information, we need to be better at certain commercial skills, and so on. We are not at all complacent. Some criticism of the Civil Service is entirely valid. Is there a general problem in relations between Ministers, special advisers and civil servants? I don’t believe there is.

Q55 Robert Halfon: Could I just ask about the "enemies of enterprise"? When the Prime Minister talked about the "enemies of enterprise in Whitehall and the town hall", who was he talking about?

Jeremy Heywood: I think he was just talking generally about the system: the bureaucracy generated by successive Ministers and civil servants, Parliament, processes, the media and so on. It was interpreted as an attack on the Civil Service. I don’t think it was a conscious attempt to attack the Civil Service. I think it was more a rhetorical flourish myself.

Q56 Chair: Did Sir Gus take it too personally?

Jeremy Heywood: At the time we were all a little surprised by it, in a sense, and by the way it became such a big story, because it was not at all reflective of our daily experience of dealing with this Government. I genuinely don’t think it was intended as a great attack on the Civil Service. Certainly, in all my contacts with the Prime Minister, that is not the way he approaches the issue.

Q57 Robert Halfon: I was there at the Conservative party conference when he said this, and clearly all the background at the time was that the Government wanted to do things, remove red tape, remove regulation, but it was the Civil Service that was stopping it. The Prime Minister was very clear in making that point.

Chair: And so were many Ministers, incidentally.

Jeremy Heywood: I think we understand the context of what Ministers say in party conferences.

Q58 Chair: They say it privately to me; they mean it.

Jeremy Heywood: Yes, and on occasions civil servants have been responsible for insisting on due process and slowing things down, and making sure that things go through a proper decisionmaking process. That is our job. Equally, however, I think most Ministers would recognise that we are collaborating very fully with the efforts of the Government to introduce cuts in regulation through the Red Tape Challenge, which you may have heard about, which Oliver Letwin has been leading, and by the general policy of the Government. If the general policy of the Government is to deregulate, to remove regulation and so on, we will turn the tank around and start applying ourselves to that agenda. Unfortunately, one or two of these things are laid down in statute, or are quite difficult for the Civil Service to do very much about, frankly.

Q59 Robert Halfon: Tony Blair talked about the "forces of conservatism" in a similar way.

Jeremy Heywood: Yes.

Robert Halfon: Does this not indicate that the Prime Minister’s view is that the civil servants are acting as a brake on reform?

Jeremy Heywood: I don’t think that is the Prime Minister’s overarching view, or Ministers’ overarching view. Clearly, one of the roles of the Civil Service is to give Ministers the benefit of our experience, and to give our best, fearless advice as to whether or not we think something will work, or whether something is contrary to the law, and occasionally that will come across as trying to slow things down or stop things happening. That is part of our job. It is absolutely right that the Civil Service plays that role. Equally, the Civil Service is a great source of innovation and a great generator of ideas. I certainly don’t recognise the picture that the Civil Service as a whole is a force for conservatism in the sense you mean.

Q60 Robert Halfon: Or an enemy of enterprise?

Jeremy Heywood: Certainly not an enemy of enterprise.

Q61 Kelvin Hopkins: Openly attacking Whitehall and town hall officials as "enemies of enterprise" is hardly a way of getting on well with officials, and must have, I would have thought, caused shockwaves at the time. A role of the Civil Service traditionally is to speak truth unto power, is it not?

Jeremy Heywood: Absolutely.

Kelvin Hopkins: And when Governments get it wrong-and they frequently get things wrong, and they go off charging in misguided directions-it is the job of the Civil Service sometimes to rein them in. I am personally deeply suspicious of the Blair style and the Cameron style, and a great admirer of the Sir Humphrey style. We have an extremely centralised form of Government, with extreme power at the centre, and it is important that we have these pluralistic forces working against each other to make sure that power does not make big mistakes or become overweening. Would you not agree with that kind of analysis?

Jeremy Heywood: I certainly think the Civil Service has a responsibility to give Ministers fearless advice, to speak truth unto power, and to set out its views if it believes that something is not implementable, or if something is not feasible for some other reason, legal or otherwise. My experience with Ministers, including the two Prime Ministers you mentioned by name, is that they want their civil servants to be quite brutal, truthful and honest in the advice they give. These are not people who want to be surrounded by yes men, or yes women. They want to be told by the Civil Service: "Can this work? Does it work?" They won’t always take the Civil Service advice. They will sometimes say, "I understand the truly riskaverse approach would be to do nothing in this particular case, but on this occasion I will take a risk, and I will do that." That is entirely legitimate. I also don’t want to get stuck in a parody where the Civil Service is always the voice in the room saying, "Don’t do it." That is not the Civil Service that I represent, and it is certainly not the culture that Bob and I want to see in the Civil Service. We want to see a "can do" culture, or a "can’t do" culture if we genuinely think it cannot be done.

Q62 Chair: Moving on to the accountability of civil servants, you know this is another tension that has built up recently, particularly with the Public Accounts Committee, and the House of Lords Constitution Committee is conducting a very welcome inquiry into the accountability question. The conclusion I am coming to is that the Civil Service has moved on from the days when civil servants were broadly anonymous, that Ministers have become more adept at shuffling responsibility for things that go wrong onto civil servants, and yet civil servants remain very adept at avoiding the answering of difficult questions in order to protect themselves and their Ministers from accountability. Accountability is falling between stools. Billions of pounds could be wasted on projects, and nobody seems to be responsible. Do you understand Parliament’s concern about this problem?

Jeremy Heywood: I understand that Parliament thinks it is a very important issue. So do I. I think it is quite healthy to have a debate, from time to time, on these sorts of issues. I therefore welcome the Lords inquiry, and we will look forward to participating in it as best we can help. I don’t fundamentally think there is a problem with the current system, and I don’t really recognise the picture you are painting there, Mr Chairman.

Q63 Chair: Billions being wasted and nobody being held accountable? That is not a problem?

Jeremy Heywood: No, people are held accountable. I think the Accounting Officer role, and the accountability of civil servants to Parliament-

Q64 Chair: Who is being held accountable for the billions wasted on the carrier programme?

Jeremy Heywood: The Public Accounts Committee can call the Accounting Officer at any stage, or anybody else they want to call, and ask whatever searching questions they want of the Civil Service on those sorts of issues. Civil servants are not hiding at all. They have a responsibility to turn up when the Public Accounts Committee summons them, and I can certainly assure you that in Whitehall that is seen as a very serious responsibility of all civil servants. I am clearly not suggesting for a second that there is no wasted money or things that could have been done better. I am simply saying that I think the existing role of the PAC and Accounting Officers, and the requirement on them to turn up in front of the PAC, works very well, in my judgment.

Q65 Chair: When the Haldane Report of 1918 first foreshadowed, very prophetically, the prospect of Departmental Select Committees, as we now call them, the phrase used there is that "Ministers, as well as the officers of Departments, should appear before them" in order to furnish those Committees with the necessary information, the emphasis being the surprising fact that Ministers would be brought before those Committees, not civil servants. Presumably, civil servants are meant, therefore, to furnish these Committees with the necessary information. If the Civil Service just stonewall on matters of fact in order to protect the system, then the system is not working, is it?

Jeremy Heywood: No. Civil servants should co-operate fully with parliamentary Committees. They certainly should.

Q66 Chair: The Armstrong Memorandum said, very forcefully, that civil servants’ first duty was to their Minister, and this is taken to mean, by some civil servants, that their only duty is to their Minister. It is not, though, is it? Even if you are not the Accounting Officer, you should be answering questions on matters of fact.

Jeremy Heywood: Yes. Civil Servants are told they should co-operate fully by providing whatever information is requested to Parliamentary Committees. Clearly they are accountable to their Ministers, and Ministers ultimately are accountable to Parliament and Committees for policy and strategies.

Q67 Chair: I think my colleague Mrs Hodge would argue that she has been stonewalled on matters of fact.

Jeremy Heywood: There was a very specific problem, I think, in relation to HMRC at the end of last year. I think there was a genuine question, which I have not gone into in great detail myself, because it happened before I took this job on. There were some particularly difficult issues for the witnesses there in relation to legal professional privilege and taxpayer confidentiality over and above what you would think of as a normal situation.

Q68 Chair: All that was being asked was whether a minute in the hand of the chair of that committee was an accurate minute of the meeting the official had attended.

Jeremy Heywood: I am sorry, I don’t know the details of that case.

Q69 Chair: But as I have described it to you, it would seem reasonable for the official to answer the question as to whether that was an accurate minute or not?

Jeremy Heywood: Yes. On the face of it, that does sound a little unusual, but I am not a lawyer, and I don’t fully understand the complexity of the concept of legal professional privilege, nor have I learned the statute about taxpayer confidentiality. I am simply saying that I think in that case you had two additional complicating factors that are not normally present when a civil servant appears before a Select Committee. There is not normally a statute that prevents you from giving information, and you are not normally being asked to divulge something that you have under legal professional privilege. I fundamentally agree with your general point, which is that civil servants should co-operate to the fullest extent possible in giving factual information at the request of Parliamentary Committees, and that is generally speaking what we try to do.

Q70 Chair: I think Select Committees will carry on testing that.

Jeremy Heywood: Absolutely.

Q71 Chair: That is not undermining the doctrine of ministerial accountability. Ministers are still ultimately responsible, and I would point out that legal professional privilege does not apply to Select Committees, and unless it is strictly sub judice, which would be covered by our own rules, a civil servant is required to answer.

Jeremy Heywood: I think generally speaking we understand that. I don’t know all the details of that specific case. I certainly was not suggesting the contrary.

Chair: We may write to you further on that question.

Jeremy Heywood: Of course.

Q72 Kelvin Hopkins: How likely is it that the forthcoming Civil Service Reform White Paper will contain proposals to rank civil servants by performance?

Jeremy Heywood: I don’t think it will go as far as that, literally taking each one of the 435,000 civil servants and ranking them in performance order. However, organisations I have worked in have used the same sort of technique, and I think in trying to work out broadly speaking whether people are in the top bucket, the top 25%, or the bottom bucket, the bottom 10%, around the margins you have to make some judgments as to who falls on the right side of that line and who falls on the wrong side of it. Within a subset, therefore, you need to have a sense of who is in what category, as it were.

The big point we will be making in the Civil Service paper is that we do need to be tougher with ourselves about how we deal with poor performers. We have not finalised all of our detailed proposals yet, but one of the things Bob and I are definitely keen to establish as a norm is that, if you can identify the bottom 10% of performers, effectively you give them a year to turn their performance around, and if they have not, basically it is time to go. How we codify that and what the precise details of that are, we are still working through, but you can see that in order to be able to operate something like that, you need a sense of who is in the bottom 10%. A legitimate criticism of the Civil Service over quite a few years now is that we are not as good at getting rid of the poorest performers as some other organisations, and that is definitely something we have taken to heart and tried to find a way through. It does not require the forced ranking of every civil servant in the country.

Q73 Kelvin Hopkins: If you were all ranked, I imagine you would be expected to be number one, I guess.

Jeremy Heywood: I doubt that very much.

Q74 Kelvin Hopkins: A recent survey by Civil Service World suggests that civil servants themselves are keen to see improved performance management mechanisms put in place. Given that nobody seems to be disputing this, why have senior Ministers been briefing the press so aggressively on the subject?

Jeremy Heywood: I am not sure that senior Ministers have been briefing the press, to be honest. I think there is a degree of consensus here. It is certainly true to say that nothing annoys the bulk of good, honest civil servants more than seeing people who are badly performing allowed to stay in their jobs year in, year out. It is not something that is being done to the Civil Service from on high. It is something the Civil Service itself wants to do. The vast majority of good, honest civil servants want to see bad performers weeded out, provided that they have been given a chance to sort out their performance. You do not push them out at the drop of a hat from an organisation like the Civil Service. You give them an opportunity to address their performance failings, but if they fail to address them, then it is time to move them on.

Q75 Kelvin Hopkins: I am not convinced by what has been suggested here. If one has reached the top of the Civil Service, one must have some skills, I would have thought. Also, this again suggests some tension between politicians and civil servants, which is not healthy, I would think. Would you accept that?

Jeremy Heywood: If there were to be significant tension between the Civil Service and Ministers, that would not be healthy, and it would not be helpful to good government and so on. In one of my answers to the Chairman earlier, I said that I think Ministers and civil servants coming together behind the Civil Service Plan, which I hope we will be able to do in the next few weeks, will reassure quite a few Ministers, if they have concerns, that some of the concerns that have been expressed are being addressed through this Reform Plan. I cannot comment on the specific press reporting there, and I have no idea who was behind it, but if anybody was concerned that the Civil Service was not gripping the issue of poor performance, I hope they will be reassured when they see the document.

Q76 Kelvin Hopkins: I am much more convinced that there are poorly performing Ministers. Would you like the opportunity to weed out some of the poorly performing Ministers, perhaps?

Jeremy Heywood: That is not a matter for me.

Q77 Chair: But we can take it that there will be casualties among the bottom 10%?

Jeremy Heywood: Many Departments do this sort of thing anyway, so I don’t think this is a radical change. I think best practice would be to be much firmer in identifying who are the poorest performers, and finding a way of saying to them-

Chair: Addressing it, yes.

Jeremy Heywood: -"Unless you address your problems within a reasonable period of time, you will be out." Yes.

Q78 Chair: What I hope is that the Civil Service White Paper will address, far more clearly, how people’s roles, tasks and responsibilities are being defined, and where there are shortfalls in people’s personal capabilities, how they are either addressed or, if they won’t change, how they will be weeded out.

Jeremy Heywood: That is exactly what we are trying to get to.

Q79 Chair: What about the key gaps, the gaping holes, in real capabilities like procurement, project management and IT-the things we really know about? Will it address those things?

Jeremy Heywood: Yes. I would not go so far as to say gaping holes. Clearly there are areas of really good practice, in commercial skills, procurement skills and so on, and indeed IT skills, but we definitely recognise that systemically we have not done enough to fill gaps in all of those areas. We will definitely put the spotlight on that. I don’t want to anticipate the entire document, which as I say has not yet gone to Cabinet. I won’t go into all the details of it, but definitely one of the issues it will address is: "What are the skills the Civil Service needs, taking a fiveyear view? Where are the gaps between what we need and what we have, and how do we address them?"

Q80 Chair: And the evident difficulty that the centre of Whitehall has in encouraging effective crossDepartmental working? Whenever I say that it is endemically bad, the only people who disagree with me are Permanent Secretaries.

Jeremy Heywood: I think we accept that it is easier to sort out issues if they fall to one Department than if they fall across Departments. We do not disagree with the basic proposition. It is quite difficult to find practical solutions to it, though, within the current Departmental structure, where people have accountabilities up through their Minister to Parliament. It is a work in progress.

Q81 Chair: One of the notable successes in local government is how local authorities, despite having separate departments, seem to work as a cohesive whole much more easily than central Government.

Jeremy Heywood: Yes. We continue to work on that. That is a very good area of future challenge.

Q82 Kelvin Hopkins: One more question, if I may. I was on this Committee in previous Parliaments, and something that arose at that time, which was very concerning, was that some civil servants seemed to be moved for ideological reasons, because they did not fit with the zeitgeist or philosophy of the times, specifically under Blair and possibly even under Thatcher. Isn’t that much more worrying? Don’t you want a range of views within the Civil Service, so that you have different views of any problem that arise and you do not have an ideologically rigid group of people going in a particular direction, with no possibility of anybody saying, "We have got this wrong"?

Jeremy Heywood: That would be a major problem. I have not seen that to date in this role. I think both parties in the Coalition, and indeed all parties in Britain, as far as I can see, are committed to the current model of the politically impartial Civil Service, and in my experience do not seek to move civil servants from jobs out of any concern about their political ideology. That would be a very rare case indeed.

Q83 Alun Cairns: Sir Jeremy, in terms of the split of the roles between you and Sir Bob, one of the roles you have accepted is Chairman of the main Honours Committee.

Jeremy Heywood: I am not the Chairman of it. I am a member of it.

Q84 Alun Cairns: Member of the main Honours Committee; I accept that. Do you agree with evidence that has been given to this Committee that too many awards are given to people for simply doing their job?

Jeremy Heywood: No, I don’t. Strenuous efforts are made by the Committees to make sure that standards are maintained and that people do not get it just for doing their job; they get it for exceptional service-going well beyond the normal expectations of a job. That is, in a sense, the quality control that is built into the system.

Q85 Alun Cairns: The Committee has received strong evidence from several quarters saying that, as soon as an individual reaches a certain rank, they expect an honour, be it a knighthood, a CBE or something similar. Do you think that is appropriate?

Jeremy Heywood: Automatic honours would not be appropriate. I would not agree with that. I think in the past that may well have been more the case. I am not an expert, but my sense is that 10 years ago that probably was more like the norm. It certainly is not the case now, and I don’t think that sort of automaticity can be justified at all.

Q86 Alun Cairns: You received your knighthood the day before you took up your current role. Were they linked at all?

Jeremy Heywood: To be honest I don’t know why I was given a knighthood at that point in my career. I was not privy to that decision. I was just very pleased to get it.

Q87 Alun Cairns: If you believe that it was not because of the role that you were getting that the knighthood was bestowed upon you, what other assessments might have been made that would have warranted that sort of honour?

Jeremy Heywood: I don’t want to sit here and discuss my own achievements, but presumably the Committee that made that decision looked back on my career and decided that it was sufficiently meritorious to justify a knighthood. But it is an embarrassing subject for me to be asked about, because I was not involved in the decision.

Q88 Alun Cairns: That was unfair, granted. Can I then extend it to other Permanent Secretaries?

Jeremy Heywood: Yes.

Q89 Chair: It is not quite as bad as President Obama getting the Nobel Peace Prize before he had done anything.

Jeremy Heywood: I am not responsible for that either.

Q90 Alun Cairns: What would other Permanent Secretaries have to do in order to receive an honour in the future? Sir Bob Kerslake told us in written evidence that Permanent Secretaries can no longer expect knighthoods or damehoods as a matter of course.

Jeremy Heywood: I think Bob will have gone on to tell you that what they will have to show is exceptional public service over a sustained period. One has to recognise that the honours system started off, essentially, as a system for rewarding Crown servants, and so I think it is legitimate, and extremely welcome, from where I sit, that public servants, not just in the Civil Service but across the whole country, are honoured in this way. However, they do have to perform exceptionally well in order to get those honours, which is no different from anybody else in the country.

Q91 Alun Cairns: We would expect Permanent Secretaries at that rank or level to perform exceptionally well in their daily duties, would we not?

Jeremy Heywood: Even within the Permanent Secretary rank there are some people who perform better than others. We are looking for exceptional performance on a sustained basis, or something over and above that as well.

Q92 Alun Cairns: How many Permanent Secretaries don’t have honours, then, or don’t have knighthoods?

Jeremy Heywood: I don’t have those numbers to hand. Quite a few don’t have honours at the moment, and a number have left in recent years who did not have knighthoods or damehoods. I agree that most people do end up getting one, but it is not automatic.

Q93 Alun Cairns: Can I turn to the Honours Forfeiture Committee? Can you explain the background to when that Committee meets, how often it meets, why it meets, and any recent meetings it might have had?

Jeremy Heywood: I hope you have had a chance to question Bob about that, because Bob obviously chairs the Forfeiture Committee. I have only attended one meeting myself, and I think the Forfeiture Committee has now been reformed and I have been rotated out of it. I have only attended one meeting, and that was set up in the wake of the FSA’s report into RBS, which sparked another wave of public concern and questioning about Sir Fred Goodwin’s knighthood. On the back of that, the Committee decided it ought to meet to consider this afresh, and that is the meeting I attended. I have not attended one since, and frankly, I am sorry but I don’t know whether it has met since then. I am sure Bob could help you with that.

Q94 Alun Cairns: Is it not right that the Forfeiture Committee usually meets when someone who has received an honour has committed a criminal offence, or has been censured or struck off by a relevant professional body? That was not the case in relation to Fred Goodwin. Why did it meet on that basis, if that is the meeting you attended?

Jeremy Heywood: The judgment is whether someone has brought the honours system into disrepute, rather than whether particular technical criteria have been triggered. My recollection from the Committee is that both John Major as Prime Minister and Gordon Brown as Prime Minister had made clear to Parliament in short statements that the overarching question was whether someone brought the honours system into disrepute, so that was basically what we took as the framework for thinking about this question.

Q95 Alun Cairns: Can you confidently say that judgment has been extended to others who have received honours in the past, and whether the honour should be withdrawn or not?

Jeremy Heywood: I have not gone back and looked at all the cases that have been referred to the Forfeiture Committee over the last 20 or 30 years, so I could not honestly attest to that.

Q96 Alun Cairns: Finally, then, can you tell me: do you believe that Forfeiture Committee in any way was politically motivated?

Jeremy Heywood: No, I don’t think it was politically motivated. It was set up because of extreme concern expressed about RBS right across the political spectrum, and by many members of the public, the Treasury Select Committee and the FSA. In the only contact I had with Ministers about this, they were very clear that this was a decision that the Committee had to make, and it was not an issue where they wanted to lead the Committee, if you like. We looked at this from first principles in the Committee, as a group of civil servants, and we gave our best recommendation, which was unanimous.

Q97 Alun Cairns: Finally, did it meet at the Prime Minister’s request? We have not quite had clarification in the past on that.

Jeremy Heywood: I cannot quite remember, but frankly it would not have mattered whether the Prime Minister requested it or not. Bob decided, and the Committee were very comfortable with that decision-that given the degree of public concern and interest in this topic, it was quite right for the Committee to meet.

Q98 Robert Halfon: Could I ask why you think it was that it was the decision of the Honours Committee to remove the honours of one banker, rather than the many other bankers who had honours who had colluded with politicians and had also been responsible for the collapse of the banking system?

Jeremy Heywood: The concern that we had was that the scale and size of the losses triggered by the RBS situation were quite different from the scale of any others, and as far as we could see, only Sir Fred Goodwin-Fred Goodwin now-had been given an honour for services to banking. There were other people who might have been caught up in this who had their honour for something completely different. We felt that the uniqueness was the scale of the RBS situation, the fact that this person was well known at the time to be the person who effectively controlled the strategy and direction of that business, plus the fact that he got his knighthood for services to banking. If the question was put as to whether the continuation of the knighthood of someone who had been given their honour purely for services to banking and had been responsible for a complete collapse that cost the British taxpayer £45.5 billion pounds brought the thing into disrepute, our view was that it did.

Q99 Robert Halfon: So the people who ran Lloyds Bank, for example, who colluded with the former Prime Minister to also destroy a great bank and cost the taxpayer millions and millions of pounds, don’t lose their honours, but one particular individual is focused on. Is it not more of a lynch mob, because of the popular media, rather than actual natural justice? I cannot understand why one individual was specifically singled out, because there were many people responsible for the banking and economic crisis.

Jeremy Heywood: I don’t think it was a lynch mob. It was a very calm, considered meeting, and we looked at it and thought that, on the basis of the reports we had seen from the FSA, from the Treasury Select Committee, and what we could see ourselves as the damage done by the RBS collapse, the person who was in charge of that bank had been given an honour for services to banking and it would bring the honours system into disrepute not to remove that knighthood. I don’t think anybody running Lloyds Bank at that time had a knighthood. If you are talking about peerages, that is outside the remit of the Forfeiture Committee. It is not something we had any power to do anything about.

Q100 Robert Halfon: Could it not be argued that it was the politicians at the time who created the framework that enabled the bankers to do what they did? In any sense of natural justice it is the politicians who should be held responsible, not someone who is given an honour and then used as a scapegoat, and has his honour removed?

Jeremy Heywood: Not all of the banks collapsed in this way. I think the RBS situation was uniquely damaging to the UK.

Q101 Robert Halfon: And Lloyds Bank?

Jeremy Heywood: We were not trying to make a scapegoat of anybody. It gave us no pleasure at all to consider this, but we were asked the question, and we asked ourselves the question, "Is it reasonable that someone who got his knighthood for services to banking, who then led a bank that caused a complete collapse and cost the taxpayer £45.5 billion-"

Q102 Chair: Sir Jeremy, I am darkly amused that a new criterion has been introduced about the removal of honours, concerning how much money someone is deemed to have cost the public purse. That is a new criterion.

Jeremy Heywood: It is not the only criterion. It is just one of them.

Q103 Chair: Our general concern is about the objectivity and natural justice of this process. Would you have any comments to make? The public reaction to the decision taken was quite negative. I don’t think the public had much confidence in the objectivity of the decision. What do you think could be done to improve that?

Jeremy Heywood: I think, to be honest, whatever decision we had taken would have been severely criticised by one group or another. It was a fairly thankless task, and it was not one we had any relish in taking forward.

Q104 Chair: It is rather like the execution of Charles I: it just had to be done.

Jeremy Heywood: It did not have to be done. We looked at it from first principles and decided that actually the right thing to do was to recommend getting rid of the knighthood. It was not something we came into with a closed mind at all. As to the objectivity of the process, you had five senior civil servants who had no particular axe to grind in this thing. I think what struck all of us involved in that process was that the Forfeiture Committee itself could do with a bit more independence of the Civil Service. Bob has been very keen to bring in some more external members, slim it down a bit, and try, if you like, to increase its sense of independence.

Chair: We may well have some further proposals to make.

Jeremy Heywood: Fine.

Chair: Can I move on? We are running out of time.

Q105 Robert Halfon: Very briefly-I have to go because I have a question downstairs-I still cannot comprehend why it is that you guys focused on Sir Fred Goodwin, not on any of the politicians or the civil servants who have honours, or people at the Bank of England or whoever it may be, who created the framework that allowed Sir Fred Goodwin to do what he did. He was only acting, rightly or wrongly, within the existing law, and I hold no brief for Sir Fred Goodwin, but it seems to me very easy for the establishment to focus in on a particular scapegoat, and nobody else seems to lose their honours.

Chair: Just to emphasise, the FSA itself said that they did not intend any charge of incompetence or personal censure of Sir Fred Goodwin, or Fred Goodwin, as he now is.

Jeremy Heywood: No, but all I can do is repeat myself: a number of other banks, subject to the same framework, did not collapse in the same way that RBS did.

Q106 Chair: I think we need to move on, but thank you. Back to the question of special advisers, and in particular concerning Adam Smith, on what basis did you feel it was right to advise the Prime Minister to allow Jeremy Hunt to be questioned by Lord Justice Leveson on that subject, instead of referring the matter to Sir Alex?

Jeremy Heywood: I genuinely felt that Lord Justice Leveson’s would be the right and most rigorous and searching investigation that could be done, and if we had tried to suggest that an alternative approach was set up in anticipation of that, I think we would have been criticised very strongly for trying to preempt in some way, or duplicate or undermine, the Leveson Inquiry. That was my advice to the Prime Minister. He agreed with it. It was good faith advice. You could argue it either way, but my genuine belief is that if you have set up an inquiry that will question somebody under oath, with a leading QC, in public, that is bound to be a very effective way of getting to the bottom of this.

Q107 Chair: There have been rather mixed signals out of Leveson, however. On the one hand, he does not want other people trampling all over his patch, but on the other hand he has no jurisdiction over matters concerning the Ministerial Code.

Jeremy Heywood: No, he does not, and the Prime Minister never suggested that he does. Clearly the Prime Minister has to decide whether the Ministerial Code has been breached.

Q108 Chair: He is reliant on your advice, and you are very honestly saying what your advice was, and I appreciate that.

Jeremy Heywood: I am sure he will seek my advice at that point, but in the end he has to decide. It is his decision, not my decision. The question, if I could just complete this point, is: what is the best process for getting to the facts and investigating Jeremy Hunt’s conduct, and that of his special adviser and so on? Is it better to set up a private inquiry under Sir Alex Allan, or is it better to go with the inquiry that has already been set up, which has full powers to compel witnesses and all the rest of it? We took the view that it was better to leave it with the Leveson Inquiry. In the light of that investigation, if something comes up on his day of evidence that warrants further investigation or bears on his adherence to the Ministerial Code, then we may have to take some further action at that point.

Q109 Chair: The very way you expressed that underlines how circumstantially this looks like an exercise in buying time.

Jeremy Heywood: I don’t think that is fair. It is not buying time. It is basically using the established process. Jeremy Hunt did volunteer to appear earlier.

Q110 Chair: The established process is to refer a prima facie breach of the Ministerial Code to the Independent Adviser. That is why the Independent Adviser is there. Otherwise, why do we not have a judgeled inquiry on every potential breach of the Ministerial Code?

Jeremy Heywood: Because in this particular case we happened to have a judgeled inquiry already under way.

Chair: How convenient.

Jeremy Heywood: It was the fact, and Jeremy Hunt was due to appear before it, so it seemed perfectly sensible to let that run its course. Jeremy Hunt did volunteer to try to do it earlier, but obviously the judge decided he wanted to keep to his established timetable, which was entirely his prerogative.

Q111 Chair: When did you first know that Adam Smith was furnishing News International with a running commentary about the progress of the referral or not of the BSkyB bid?

Jeremy Heywood: At the same time as everyone else: the day before he resigned.

Q112 Chair: So you were completely unaware?

Jeremy Heywood: I was completely unaware, as was his Permanent Secretary.

Q113 Chair: Do you think anybody in No. 10 was aware?

Jeremy Heywood: I don’t think anyone was, no. We had no advance warning of that at all.

Q114 Chair: If you had been aware, what action would you have taken?

Jeremy Heywood: I think I would have taken the action that was subsequently taken, in a sense, which was to make clear that was not authorised and not acceptable.

Q115 Chair: That is an implicit criticism of Mr Stevens, who said he was "aware and content".

Jeremy Heywood: I don’t think he was aware and content with what appeared to have happened.

Q116 Chair: So it would have been all right for the special adviser to be talking in some fashion to News International? It was merely the content of the emails that was unsatisfactory?

Jeremy Heywood: I won’t go into great detail about this, because almost as we speak he is probably in front of the Inquiry himself.

Q117 Chair: In principle, should a special adviser be involved in talking to parties in a matter where the Secretary of State is making a quasijudicial decision that might be subject to judicial review? Is that a sensible policy, or do you think you will be tightening up the control of special advisers on these matters?

Jeremy Heywood: To be honest, I don’t think I would completely rule out special advisers being involved, provided that they operated at all times in line with the guidance given. It is not in principle the involvement of a special adviser in any conversations with an interested party, because that is perfectly legitimate, provided it is done in a controlled and fully transparent way. I would expect the main point of conduit to be through the officials and the lawyers acting for the Department, but I don’t rule out as a matter of principle special advisers being involved. However, they must do so in line with the procedures laid out for handling quasijudicial processes. It became very clear to Jonathan Stevens, I think, as it became clear to all of us at the time, that the contacts had been much more extensive than anyone had understood, and that is what the surprise was.

Q118 Chair: For the record, can I say I have the greatest sympathy for Adam Smith, because I rather suspect he thought he was doing what was expected of him. However, does that not raise questions about how special advisers in Departments are held accountable, to whom they report, and who is responsible for their conduct?

Jeremy Heywood: I don’t think it raises new questions about that. I think special advisers have to report to their Ministers, who appoint them, and are accountable to their Ministers.

Q119 Chair: They are actually appointed by the Prime Minister, aren’t they?

Jeremy Heywood: The Prime Minister approves their appointments, definitely.

Q120 Chair: We have a confusing reporting line there. The Minister is responsible for their conduct under the Ministerial Code. The Permanent Secretary is the nominal employer, and is responsible for the good conduct and propriety within the Department. However, it is also quite widely understood that on a daytoday basis they report into No. 10 on the activities of their Ministers and are expected to keep No. 10 informed about what their Ministers may be doing, and who they are talking to, particularly in contacts with the press, and so on. I think a lot of special advisers will be quite confused about whom they are ultimately responsible to.

Jeremy Heywood: I take your point, but I think most special advisers would see themselves as working basically for their Minister. Yes, the Permanent Secretary has a role in the pay and rations element of it, and I would expect Permanent Secretaries to be keeping tabs on whether or not conduct is satisfactory, and so on. Fundamentally, however, they are working for their Minister. That is the relationship that matters.

Q121 Chair: Would you give some thought to the question of how they are employed, supervised and held accountable as part of our inquiry into special advisers? I think we will be minded to make some recommendations in the light of all this.

Jeremy Heywood: I think it is a perfectly good line of inquiry. One of the things we have been trying to do over the last couple of years, with the full support of the Prime Minister’s Chief of Staff, Ed Llewellyn, and Deputy Prime Minister’s Chief of Staff, Jonny Oates, is to see whether we can develop a slightly more managerial framework around special advisers, and in particular give them some feedback on their performance.

Q122 Chair: On recent history, it is quite a hazardous profession to go into, is it not? You never know what is going to happen to you next.

Jeremy Heywood: High risk, high reward.

Q123 Chair: What, special advisers? High reward?

Jeremy Heywood: Many special advisers go on to greater things.

Chair: They certainly do, don’t they?

Q124 Kelvin Hopkins: I was very concerned during the Blair years that special advisers, rather than working to Ministers, were often working to the Prime Minister and seen as commissars keeping Ministers under control, and indeed the Civil Service beneath them. The classic case was Lord Adonis, when he was at Education. It was very clear to most of us that Estelle Morris resigned as Secretary of State for Education because she felt she was redundant, because the power was really in the hands of the Prime Minister and then Lord Adonis. They were running Education, not her, and interposing special advisers between either civil servants and Ministers or the Prime Minister and Ministers is a quite different role from sitting to one side and advising Ministers.

Chair: That kind of arrangement is not very conducive to trust and strong relationships, is it?

Jeremy Heywood: No, and of course in the course of one hearing we have heard both sides of this argument, with some people saying there should be more special advisers sitting in No. 10, interposing themselves between Ministers and the Prime Minister, and some people saying that is not at all right.

Q125 Chair: The whole argument is quite destructive, isn’t it?

Jeremy Heywood: You need to strike a balance. The best special advisers manage to strike a balance, and are able to support their departmental Minister, if they are based in a Department, whilst keeping No. 10 in the loop as to what is going on and making sure that their Minister is operating within the strategic framework of the Government. There is a perfectly legitimate role for the centre to say: "That is all very well in your Department, but how does that fit in with the overall policy and strategy of the Government?" The special advisers at the centre play that sort of role in helping line Departments.

Q126 Kelvin Hopkins: I do use the word "commissar" advisedly. I think that has changed-my impression is that they have changed. I wondered if you could confirm that that relationship now is different, and that, setting Steve Hilton to one side, most special advisers work to Ministers and do not work above Ministers.

Jeremy Heywood: Definitely. I certainly would not ever accuse my good friend Lord Adonis of being a commissar. This Prime Minister and the Coalition Government came in with a very clear view that Secretaries of State and Departments had to be given more freedom to manage their Departments, and not be micromanaged from No. 10. That is another aspect of the discussion about the Policy Unit we talked about earlier, and I think that basically works very well.

Q127 Chair: Moving on to the question about vetting, and in particular in relation to Andy Coulson, it was unfortunate that Andy Coulson was not deep vetted, as we call it, and that was your decision, wasn’t it?

Jeremy Heywood: Yes. I took the decision after the 2010 election to try to limit the number of people who would have access to top secret intelligence on an unsupervised basis-not out of any particular concern about Andy Coulson, but just because in general I think that sort of highly confidential, secret intelligence material should be seen only by those who have an absolute operational need to see it.

Q128 Chair: But nevertheless he got into those kinds of meetings and saw that kind of material.

Jeremy Heywood: Anyone who has the slightly lesser level of vetting, SC, is entitled to have supervised access to this material on a controlled basis. That is perfectly reasonable, and as Director of Communications for the Prime Minister, Andy needed that sort of access. I took the view at the time that the priority after the election was to do DVs with other people. I did not see myself why necessarily all members of the Communications side of No. 10 needed to have uncontrolled access to top, top secret intelligence. That was a judgment I made. Over a few months it became clear that, to do his job properly in the way the Prime Minister wanted, it would probably make more sense to give him that sort of access, particularly in relation to terrorism material, which could blow up at very short notice. He needed to be well on top of it before it was communicated to the outside world. We took the view several months later that it made sense to have a few more people added to the DV list.

Q129 Chair: Nevertheless, he was not deep vetted, was he?

Jeremy Heywood: The process started, I think, but had not completed by the time he left.

Q130 Chair: And he was seeing that material anyway?

Jeremy Heywood: He was seeing material on a controlled basis.

Q131 Chair: I can see why decisions like this could be made, but it leaves a very unfortunate impression with our allies, for example. I should not think the Americans are particularly impressed to read in the papers that unvetted people are seeing the high level material. Would it not be better as a matter of course to decide that certain people are going to be deep vetted, or they do not see the material?

Jeremy Heywood: We are very careful in No. 10 and the Cabinet Office to make sure-

Q132 Chair: I have no doubt about that, but I am talking about the public impression, particularly with our allies. The Americans mind about this sort of thing.

Jeremy Heywood: The Americans know very well how seriously we take this, and in fact the point I was trying to make here is that I was very keen to limit the number of people who had access to the most secret, sensitive intelligence. My presumption was that you did not need to have access to this material, unless experienced proved that you did. That was the cautionary approach I took precisely because I want to limit the number of people who have access to supersensitive material. It was for that reason, and that reason alone.

Q133 Chair: I have no further questions today, unless there is anything more to add in the light of our exchanges?

Jeremy Heywood: I don’t think so. Thank you very much.

Chair: You have been extremely helpful, and we are very grateful for your time and for your frankness.

Jeremy Heywood: It is a pleasure. Thank you very much.

Prepared 9th October 2012