Public Administration Committee - Minutes of EvidenceHC 74

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Oral Evidence

Taken before the Public Administration Select Committee

on Tuesday 13 February 2013

Members present:

Mr Bernard Jenkin (Chair)

Paul Flynn

Kelvin Hopkins

Priti Patel

Steve Reed


Examination of Witness

Witness: Sir David Normington GCB, First Civil Service Commissioner and Commissioner for Public Appointments, gave evidence.

Q417 Chair: Welcome to this session on the future of the Civil Service. Could you identify yourself for the record, please?

Sir David Normington: Yes, I am David Normington. I am the First Civil Service Commissioner and also the Commissioner for Public Appointments.

Chair: I gather you wanted to say one or two words.

Sir David Normington: No, I thought it better that I did not.

Chair: If you want to say two sentences, then please do.

Sir David Normington: No, I am fine. I think it is better that you ask me the questions.

Q418 Chair: We will jump straight in. Rather than getting into the rights and wrongs of the Government’s proposals for appointing Permanent Secretaries, why do you think all this has arisen? What is behind it? What is the problem that Ministers think they are trying to address, and what do you think the problem is that Ministers perhaps are not addressing in the right way? What is that problem?

Sir David Normington: Do you mean overall, or do you mean just in relation to the propositions about ministerial appointments?

Q419 Chair: I will let you decide that. Is it an overall problem or is it just a little spat?

Sir David Normington: I hope it is not too much of a spat. There is a need to improve the skills in the Civil Service. There is a need to get better people into the top of the Civil Service to improve leadership capability and so on.

Q420 Chair: So it is a skills problem?

Sir David Normington: The core of the issue for the Civil Service is about skills, capabilities and experience. Actually, the argument about whether Ministers should have choice is, frankly, a side issue-that would be my view-and the wrong issue to be arguing about. Ministers having the right to choose does not have very much to do with getting the best people into the Civil Service, which is what we are all about.

Q421 Chair: Would you agree that this has arisen because there has been a breakdown of trust between the ministerial class and the top administrative cadre, so to speak? Has something gone wrong in that relationship?

Sir David Normington: There seems to be some breakdown. There is a danger of taking individual cases and generalising them to the whole Civil Service. I am a little bit more distant from it than I used to be. I look in and I do not see a general breakdown of trust. Clearly, there are some difficulties, and clearly Ministers like Francis Maude have spoken about those difficulties.

Q422 Chair: This view you are expressing does reflect quite a strong view we get from professional civil servants: that somehow the problem is much less than Ministers think it is. Lord O’Donnell, whom we saw yesterday, would even go so far as to suggest-actually, he did not say it in quite so many words, so I am not putting words into his mouth-that quite a lot of the responsibility for this lies with Ministers not being clear, not setting objectives clearly enough, not communicating effectively what they actually want, or disagreeing with each other. He suggested that these were all problems that Ministers have made for themselves, rather than there being anything wrong with the Civil Service.

Sir David Normington: If that was his view, I do not completely agree with it. We need to unpack this. It is always the case that there is a tension between Ministers, who want to get on and deliver their political programme in quite a time-constrained period, and civil servants, whose job is to provide objective and independent advice and, sometimes, to point out the difficulties in doing things. That can be a creative tension, but sometimes-particularly in the middle of a Parliament, when Government is feeling that time is passing-it can become a real tension and it spills over into particular Departments in particular cases where Ministers feel things are not happening with enough pace and speed.

Q423 Chair: Sorry to caricature you, but that is another response we get from professional civil servants: that this is all part of a "mid-term blues syndrome"; particularly because the economy is so tough, it is all very tough for Ministers, so we need to understand how they feel-but there is not really a problem. I put it to you that there is a problem; there is something very seriously going wrong. It is not just these Ministers who are amplifying this noise. A lot of former Ministers from the previous Administration feel exactly the same way, and ex-Labour Ministers do not think the Government is going nearly far enough with their reform proposals.

Sir David Normington: Some do; I know that. If Ministers think there is a problem, there must be a problem, I guess. I am not now a civil servant. All I hear from civil servants is that they do not themselves believe it is as bad as the headlines would suggest. However, there clearly is a problem if Ministers think there is a problem. If they think they are not getting the service they need, or if they think things are being blocked, clearly there is a problem. I would say it was a problem of leadership and skills.

Q424 Chair: You introduced a new word: "leadership". I like that word; it is very important.

Sir David Normington: In a sense, if you want real pace and drive and very good implementation, then you need a very good leadership team who are able to do that.

Q425 Chair: The leadership team seems to have this dysfunctional element in it that bursts out into the newspapers, and obviously it is being exaggerated in many cases, but it is there.

Sir David Normington: There are many places where it is not there. Our problem is that it is very hard to get into individual cases, is it not? There are some places where there has been dysfunctionality and problems. Looking in, I personally do not think that is a general problem. Ministers clearly think that there is something that needs tackling, and I would say that there are leadership capabilities and skill gaps that need filling.

Q426 Chair: The Civil Service Reform Plan talks of strengthening the role of Ministers in Permanent Secretary appointments. What do you take that actually to mean?

Sir David Normington: I take it at face value. The Ministers of the Cabinet Office explained it on the day as meaning two things: firstly, they wanted to have the final choice in Permanent Secretary appointments; and secondly, they wanted to be able to bring in short-term appointments without open competition on secondment or for short periods to meet urgent business needs. Those were the two specific propositions that were then put on the table.

The ministerial appointment of Permanent Secretaries is not actually in the reform plan-it said "strengthening". If you take that at face value, that is what the Commission has tried to do. We tried to respond to what was actually on the face of the plan. We have put on the table something that says Ministers should be involved in the process. It would be ludicrous to hold them at arm’s length; they should be involved at each stage in the process. All we are saying is-and in this sense it is quite a small argument-we do not think we should step over the line and give them the final choice. The Commission has never done that.

Q427 Chair: You have hoisted the Jolly Roger pretty early in this conversation and made your views clear. Are we not in the middle of a conversation and have people not got dug in to their respective trenches? How do you think this is now going to be resolved?

Sir David Normington: I hope I am not hoisting the Jolly Roger. Look, when the plan was published last summer, it said that the Government wanted to engage in discussion with us, and that is what we did. Actually, we spent until December looking at possible options, and out of that came the statements we made in early December about how this could be resolved so that Ministers had more involvement in the appointment of their Permanent Secretaries. We offered that as a positive response to the Government.

Q428 Chair: Have you had feedback on that from the Prime Minister and senior Ministers?

Sir David Normington: The Government has said, "Well, we’re disappointed, but we’ll see how it works out for a year." That was the official response. In a sense, there was at least an acknowledgement there that we had shifted our position.

Q429 Chair: So you feel at the moment there is a truce, to use my adversarial analogies?

Sir David Normington: It is not my word, but yes, there is a truce.

Q430 Chair: Nevertheless, the noises coming out of Ministers in the Cabinet Office are still pretty aggressive about wanting to change the system. That is right, is it not?

Sir David Normington: They have not given up their wish to change the system and to have the final choice.

Q431 Chair: Do you agree with Lord Wilson, who described this as an attempt to bring back patronage? It is a good word, isn’t it?

Sir David Normington: Yes, and I know that it is an emotive word. The Commission, for which I speak, is clear that it is a step in the wrong direction and that it could lead to more personal favouritism and patronage. I do not accuse the Government of wanting to do that because, actually, both it and the Prime Minister himself said very clearly that they do not want to change the basic model of the Civil Service. The Commission’s judgment is that, whether or not that is the case, giving Ministers choice-even in this limited way-is a step down that road. It will not change the whole system overnight, but it is a step in the wrong direction.

Q432 Chair: Would you reflect on the assertion that, in fact, in the old days Ministers used to have much more influence over the appointment of Permanent Secretaries? Forgive me for mentioning that my father wrote a letter to The Times a little while ago explaining how he chose Sir Brian Hayes, or rather Sir Brian Hayes was chosen for him after he had made some indications. This had come after turning down the four previous candidates for that role in the Department of Trade and Industry in the early 1980s. Has the system lost something of that spontaneity and adaptability because we now have a rather bureaucratic process and we do not plan people’s careers properly anymore? People are not groomed for specific roles, or do not appear to be, as we have open selection because there is determination to-and rightly so-bring more women and ethnic minorities into top positions in government. We have actually made it very much more difficult to allow that informal influence of Ministers over the process.

Sir David Normington: What has changed is that there are now, usually, competitions to fill these posts, including Permanent Secretary posts. What you are describing is a system where, effectively, there was a word here and a word there-an informal process, usually. What your father was describing was a system where the choice was between existing senior civil servants, so there was no question at that point of going out to open competition. Once you open the filling of the post to competition-and particularly to external competition-you are, of course, in a completely different world, where I am afraid you do have to have some processes. In this world, the law actually says that you have to have fair and open competition leading to an appointment on merit.

Q433 Chair: We have tied ourselves in knots, have we not?

Sir David Normington: I am not sure, because it depends on whether you think the informal tapping on the shoulder was a good system. It usually led to the appointment of men and it usually led to the appointment of a certain type of person. If you were in the know or if you were in the in-group, you got appointed.

Q434 Chair: Is the right thing to say to my old dad, "That was a different world."?

Sir David Normington: It was a different time and it was a time when we did not open appointments to open competition. So it was a different time, yes.

Q435 Mr Reed: Yes, it is a bit of a false dichotomy, is it not, saying that the options are a tap on the shoulder or no ministerial involvement? There is a huge space between the two.

Sir David Normington: Yes, there is.

Q436 Mr Reed: I just wanted to draw a parallel with what happens in local government, where the elected leaders of local councils sit on a recruitment panel to appoint their own chief executives. The Audit Commission identified local government as being far more cost-effective than national Government. I wonder whether it is your view that one of the causes for that is that this model of recruiting chief executives fosters a greater level of trust in that critical relationship at the top of the tree.

Sir David Normington: Before I answer that, I just do not want to be characterised as being against ministerial involvement. I and the Commission I represent are strongly in favour of ministerial involvement.

Mr Reed: I did not mean to characterise you in that way.

Sir David Normington: We are in favour of ministerial involvement and, at the end of the process, the Minister-or the Prime Minister, in the case of Permanent Secretaries-makes the appointment or does not. It is a different case in local government. Actually, it depends on the standing orders of different local authorities. It would be very hard to say that there was a connection between the way people are appointed in local government and what the Audit Commission is saying. A chief executive is required to serve the whole council, and not the party that is in power. That is the safeguard: the appointment has to be a cross-party appointment. In reality, and when I see it going wrong, you get the chief executive identified very closely with the party in power, and if the other party, or parties, gets into power, you change the chief executive. That is, in a sense, the risk that you run in the Civil Service.

Q437 Mr Reed: If that fosters a stronger relationship that is better able to drive the kind of change that the democratically elected Minister wants, what is wrong with that?

Sir David Normington: I do not disagree with the need to have a very strong relationship at the top. I would just dispute that the only way of achieving that is for the Minister to make that final choice. As soon as you move from the panel making its assessment and making its recommendation of the candidate to one individual making that choice, which is the proposition, you inject an element of subjectivity into that. You take away, in a sense, the work that the panel has done to assess the evidence.

Q438 Mr Reed: The model of local government is not an individual; it is a panel that includes politicians.

Sir David Normington: It is a panel that includes them, yes.

Mr Reed: Therefore the check on the individual politician is the rest of the panel.

Sir David Normington: I do not know local government well, but I think mainly it is a panel of politicians.

Mr Reed: Not necessarily. It can be other senior officers or other people.

Sir David Normington: It depends. If we were talking about a chief executive, it would be rare for other officers to sit on that appointment panel.

Q439 Mr Reed: Would it be impossible to envisage a model in national Government where the Minister would sit on the recruitment panel?

Sir David Normington: We have looked at that possibility. At this moment, our judgment is that that blurs the line, which has always been drawn, between an independent panel overseeing the process and making its recommendation and the Minister being involved in that, but actually not making the decision or the choice. Look, this is a matter of judgment. We are having an argument with the Government in this space. There is a whole lot of space here about politicisation, which the Government had said absolutely clearly it did not want to move into. Our judgment is that we should not concede this point because it is fundamental to the way in which the Commission was set up and to the way the Civil Service was developed.

Q440 Paul Flynn: Regarding your recommendation on David Kennedy, did you get it wrong?

Sir David Normington: In the sense that the Prime Minister vetoed it, I suppose we did get it wrong.

Q441 Paul Flynn: Do you not have more of a role than rolling over and letting the Prime Minister walk all over you under those circumstances? It was a clear recommendation and a very distinguished board, and it is very rare for these recommendations to be overturned. We understand the Secretary of State, Ed Davey, was happy with the appointment. He was a very strong candidate. Why do you accept that the Prime Minister should dismiss it and you have no complaint about that?

Sir David Normington: Because the law passed by Parliament says the Prime Minister has the final decision.

Q442 Paul Flynn: But there are certain strengths in the system. There is another matter that concerns this Committee, and that is the role of the Independent Adviser on Ministers’ Interests, which is a reform that has virtually been trashed by the Prime Minister; we will be reporting on this later. We are concerned that bodies that are set up to act independently of the political process are being undermined, and is this not what has happened in this case?

Sir David Normington: Actually, what happened was the process, which is underpinned by the law, worked. It is always regrettable if we get to a stage where the Prime Minister vetoes the appointment; it is the only case that I know of where that has happened. The system is set up so that there is a double lock on the whole process. The panel has no power other than being able to recommend a single candidate: the one it judges to be best. That is what it did, and the Prime Minister, by law, can decide to appoint or not, and that is what he did. I cannot have any complaints about the law, in a sense, working. I would have preferred it if the candidate judged best by the distinguished panel, as you describe it, had been accepted.

Q443 Paul Flynn: Are you not making a stand for the process? Most of us would say that the process is one that has worked well for a long period and in hundreds of cases already.

Sir David Normington: It has.

Paul Flynn: They are independent, and it does work. If it goes through like this, it means the politicisation of the honour if the Prime Minister is doing it for clearly political reasons-because of this shift in the number of global warming deniers in his party and the pressure he is under to kick out someone who seems to be sympathetic to dealing with climate change. That is the political part behind it. Your distinguished body took their decision independently, and the Prime Minister put two fingers up to you.

Sir David Normington: You have to accept that, if you have a system of checks and balances, occasionally every check and balance in that system will operate. The Government is saying to me that Ministers do not have enough involvement. Actually, this is an example of the way in which the law works so that, ultimately, the elected Prime Minister can say, "No, it’s my judgment. I’m not having that person." Ultimately, the Prime Minister has to have the power to override a non-elected body like me and my Commission; that is how it works. I cannot have any complaints about that.

I work very hard to try to make sure that panels operate independently, assess the best evidence and produce the best candidate. In the end, the check is that the Prime Minister can veto, but this is also why he cannot choose; otherwise, you cross a line. Vetoing means, "I am not working with that person," but choice means, "I am going to choose someone else." At that point, you really do risk a political choice being made.

Q444 Paul Flynn: Previous Prime Ministers have worked according to the traditions and the precedents, which meant a respect for the independence of his choice. The present Prime Minister seems to be working from the Ceauşescu manual of how to run a country. It is a profound change here on this and the Independent Adviser on Ministers’ Interests. Why are you not shouting to the rooftops that this is an outrage? What we are going to have is someone appointed who is a wheeler-dealer and who will probably okay the £30 billion subsidy to foreign countries to build nuclear power stations and do new deals, rather than what we need, someone who has a paramount need, as David Kennedy did, to attack global warming.

Sir David Normington: I will just repeat again that the Prime Minister exercised properly his legal power, and I should not complain about that. However, what then happened was-and this is what we insisted on-that the competition was rerun.

Q445 Paul Flynn: At what cost?

Sir David Normington: I do not know. I could probably find out. Of course, it was costly to rerun a competition.

Q446 Paul Flynn: Are these equally distinguished people happy to sit there and go through the same rigmarole again, knowing that the Prime Minister might well reject the person they appoint? Does it not demoralise them?

Sir David Normington: I do not know if it demoralises them. They believed they had chosen the right person. It included the chief executive of Diageo, it included one of the country’s leading experts on climate change, and it included the Head of the Civil Service.

Q447 Paul Flynn: The panel knew what they were talking about. They assessed this man, who was obviously the best one for the job, and the Prime Minister has trampled over their decision. Why are you not outraged? Why are you not banging the desk this morning and saying, "This is an outrage!"?

Sir David Normington: The Prime Minister is entitled to do that, in the end.

Chair: You have exhausted this line of questioning, Mr Flynn.

Paul Flynn: You did say you would be gone in two-

Chair: Last question, Mr Flynn.

Sir David Normington: May I just make one point? When we reran the competition, the person appointed was a civil servant. The person who was rejected was from outside the Civil Service; it was a rather surprising turn of events. Though you made some implied criticisms of the person we chose the second time round, you will find that that person is also a very good person to head that Department. That was a decision that the panel took and not a decision that the Prime Minister took.

Chair: So, the empire struck back in the end.

Sir David Normington: No, everybody was happy in the end.

Q448 Kelvin Hopkins: It is said, and I know this to be a fact, that the private energy companies have undue influence in DECC. They have people working inside DECC, and it looks to me like they blackballed David Kennedy. They told the Prime Minister they did not want David Kennedy and that he should find someone else. Is that not the reality?

Sir David Normington: I do not know that, I am afraid. I just do not know. In a sense, I do not really know what happened in that period, after the Secretary of State had agreed and the Prime Minister paused.

Q449 Kelvin Hopkins: If it proves to be true, would that not be very worrying and damaging for the Prime Minister?

Sir David Normington: If it were true, but I do not know whether it is true.

Q450 Chair: Before we go on to the next question, if the Ministers championing this idea actually succeeded in their aim, so that the Secretary of State in that Department had the final say over the Permanent Secretary in that Department, would that not make the case for pre-appointment hearings for Permanent Secretaries in front of Select Committees absolutely unanswerable?

Sir David Normington: If there was ministerial choice, do you mean?

Chair: Yes.

Sir David Normington: There would be a strengthened case for it. When the Liaison Committee met the Prime Minister last time, that question was asked of the Prime Minister. Once you move down a road of Ministers making the appointments and making the choice, you probably do have to start redesigning the system and thinking about what other checks and balances you put in. The American system, which is, of course, right at one extreme, does effectively have that, because you have to have Congress approving, effectively, the appointments. You do that because you cannot just have a system where the Executive appoints all its people.

Q451 Kelvin Hopkins: Your predecessor, Dame Janet Paraskeva, told us in 2010 that the Constitutional Reform and Governance Act would "safeguard the impartiality of our Civil Service". Are you surprised that, less than three years after the Act was passed, there are calls-not universal calls, but in certain quarters and even on this Committee, though not by me-for a more political Civil Service? Are you surprised that, just shortly after this Act was put into statute, there were calls for a change in the impartiality of the Civil Service?

Sir David Normington: I am very surprised and extremely disappointed. I thought that a settlement had been reached in 2010. Interestingly, when I was in the Civil Service, I was never a particular advocate of having a Civil Service Act because I did not think that it was necessary. Clearly, in the role I now have, I begin to think differently because, obviously, if that is to be challenged, and if the move to more political appointments is to be made, that is something that would have to be debated by Parliament and you would have to change the law. That is the proper way to make such major change. Do not ask the Commission to make it; the Commission is part of the 2010 settlement, put there to safeguard the impartiality of the Civil Service, and you might say in the nick of time.

Kelvin Hopkins: It strikes me that it is rather like when people have lived together for a very long time and then get married just before they break up. That is what it looks like. At the last minute they want to make a point-just before the whole thing changes.

Sir David Normington: Maybe. You have to take at face value, though, the very strong statements in the Civil Service Reform Plan and from the Prime Minister that he does not want to change the fundamentals of the model. I do not think we are having an argument with the Government about politicisation; we are having a smaller argument about whether what they are proposing would-inadvertently, maybe-be a step in the wrong direction. I am sure that the Government is not challenging the whole settlement. The value of the 2010 Act, though, is if Parliament wants to challenge that whole settlement, then it should do so. The Government can put the proposition before Parliament and the debate can be had.

Q452 Kelvin Hopkins: I have put this question many times before at various other interviews, including with Lord O’Donnell yesterday: in the past, we had a much easier relationship between politicians and the Civil Service, because they were philosophically much closer together. In the last two or three decades, there has been a dramatic change in politics. The direction of politics has been towards globalisation, privatisation, liberalisation, marketisation and dismantling the state-those are the drives. It sits very uncomfortably with the Civil Service, who are used to serving an active state, and this problem has arisen because of ideological and philosophical changes in the way Governments have operated.

Sir David Normington: That is a slightly dangerous argument, because if you believe, as I do, in an impartial and objective Civil Service that serves the Government of the day, then if the Government of the day is not in favour of, for instance, the active state, or wants to change it in some way, then it is the role of the Civil Service to get behind that. I am afraid you cannot have it both ways here; if you want an impartial Civil Service, it has to be willing to serve the Government of the day, and that is whether it is a radical Government wanting to change everything or one wanting to preserve the status quo, or whether it believes in the active state or not. The Civil Service has to be able to adapt, and if it does not, you are risking an objective Civil Service. You would then have a legitimate worry about whether the Civil Service is standing in the way of change. The Civil Service is not there to stand in the way of change.

Q453 Kelvin Hopkins: What about when the Civil Service is being asked to engage in the progressive dismantling of itself over time?

Sir David Normington: It is a very difficult time for the Civil Service, because there is a lot of change, huge cuts, no pay rises and there is a lot of pressure. I am afraid-well, I am not really afraid, as I believe in it. I believe the elected Government is entitled to set the direction and to be served by the Civil Service. If the Civil Service does not do that, it is not doing its job.

Chair: Maybe the Civil Service is afraid.

Sir David Normington: It may be afraid. In this environment, where the jobs are being lost and there are 20% or 30% cuts and so on, people are entitled to be afraid about whether it will be their job next. I do not blame anyone for that; it is just what is happening and the economic environment is very difficult. In that sense, Mr Hopkins, it is very different from the environment 10 or 15 years ago.

Kelvin Hopkins: I am an unreconstructed statist, so I am on the side of the Civil Service.

Chair: Every Committee has to have one.

Q454 Priti Patel: I would like to develop the discussion around the whole issue of competence in the Civil Service. Many previous witnesses to this Committee have raised the issue of competence among the Civil Service and tensions with Ministers, and we have seen quite a bit of that in the press as well. What do you think is the source of the current ministerial frustrations or concerns with competence in the Civil Service?

Sir David Normington: There are probably quite a number of answers to that, but at core I would identify two things. A lot of government now is either about managing big programmes and projects, or managing relationships and contracts with external bodies, which are increasingly delivering services on behalf of the Government. Those sets of project management skills-commissioning or contracting skills, as they are often called-are in relatively short supply and you see things going wrong. The big cases of things going wrong are often about projects that are not being managed properly or arm’s length contracts that are not being properly managed. There is quite a lot of frustration about the delivery of Government policy, and that is one set of issues.

I go back to what I said to the Chairman about leadership. Ministers are frustrated, sometimes, about pace, drive and determination. Leadership, for me, is about setting the direction very clearly and driving that forward. The best Civil Service leaders, as in other sectors, do that, but there is not quite enough of that capability. It is not a specific skill; it is a leadership competence and it is harder to teach. Nevertheless, it is what makes the difference. If you have a very good leader who is inspiring the staff, setting the direction, really driving it on and removing the barriers, then Secretaries of State have no disagreement with that-they are happy.

Q455 Priti Patel: On the issue of leadership, we had Lord Browne here yesterday as well, and he gave the comparable analogy of leadership in the private sector. Much of that obviously will come from those driving policy as well. Do you have any observations or any comments about the leadership skills of Ministers? You have already said that Ministers can get frustrated with the pace of progress or lack of progress. How do you think the two can be reconciled together-the leadership gap, potentially-among both the Civil Service and Ministers?

Sir David Normington: It depends what you think Ministers are there for. I think they are there to set very clear political direction, which is leadership, and also to go out into Parliament and to the public to argue about and for that direction, and to listen to people’s views and change that direction if there is a need to. Yes, Ministers and Secretaries of State need to be leaders. What they do not need to have is the detailed capability of implementation; they have a right to expect that to be in their Civil Service. That is part of where they get frustrated because, very often, elected politicians do not have that experience of leading a detailed implementation, though some do. That is what the Civil Service is supposed to be for.

Q456 Priti Patel: In your mind, there is an issue regarding competence around implementation, as well as a competence and skills gap-you have touched on procurement commissioning. These are not new gaps at all, as previous Governments have also highlighted them. What do you think Government is getting wrong? Do you think they are not placing enough emphasis and resource around skills training? What do you think Government should do about this?

Sir David Normington: When I was in the Civil Service, I believed that there was not enough investment in those skills, and it is also very difficult to recruit for those skills from outside. As a Commissioner and as a Commission, we see the difficulty with the present constraints on pay, for instance, of recruiting from outside the very skills that the Civil Service needs. You therefore have a double whammy. There has not been enough investment in those skills. There has not been enough recognition of the importance of those skills to Government. There has not been the route to getting people promoted. That is the way you get recognised in the Civil Service: you get promoted, if you are any good. Therefore, you need to promote some people who have made a success of some of the skills I am describing. There has not been enough of that either. Therefore, you have a mismatch, to some degree, between the skills at the top of the Civil Service that are needed, and also it is very hard to recruit those skills from outside.

Q457 Priti Patel: Surely there has been a recognition that the Civil Service cannot carry on with this deficit in the skills gap for a start? Also, can you just explain to me why it is so difficult to bring people with the right skills, perhaps from the private sector and outside the Civil Service, into the Civil Service? What are the barriers?

Sir David Normington: It happens, and the Commission is very keen on opening up these processes so that, if the Civil Service has not got the skills we are talking about, it can go out and get them. However, there are some barriers to that. If you are a big successful project manager in the private sector, you are paid four or five times what you are paid in the Civil Service. There is no way of competing with that; a bit more flexibility on pay would be desirable, because sometimes you can attract people. It is not just about pay, though.

At the senior levels, we see that people looking as to whether they should transfer into the Civil Service are weighing up the risks of coming in. At the moment, some of them are saying, "Well, actually, the Civil Service is losing everybody. There appears, from the media, to be quite a tense atmosphere. We are not going to get any more pay; in fact, we are going to have to take a pay cut." It does not look like much of an offer. If you want to go out and get the skills that are described in the Civil Service Reform Plan, then Government needs to change the whole way it thinks about attracting those people, as well as the offer it makes and the pay it offers. You need to structure the pay for those people so they are incentivised to stay in the role and to get their main pay when they have delivered something, not at the beginning. It is not rocket science. It is obvious, frankly, and it is time somebody got on with it.

Q458 Chair: Is there a paper that is going to emerge from the First Civil Service Commissioner on this matter? You are saying something very clearly with great passion, which has great force.

Sir David Normington: I could do a paper for you at this Committee on this subject, if you would like.

Chair: We would like that very much, because we are very concerned about the skills deficit.

Sir David Normington: Fine. I will do that.

Q459 Priti Patel: What I do not understand, though, is why there is not greater collaboration and partnership working with those in the private sector who have expertise. Government has been known to bring in consultants and has spent a lot of money on consultants in the past. As part of that contractual arrangement, we could actually have a skills and knowledge transfer. I do not understand why that has not taken place and why there has not been enough focus on it.

Sir David Normington: In the past, that has not happened enough. It has sometimes happened, but there has not been, in the past, enough written into the contract. It ought to be a central part of the contract so that consultants, in various guises, leave something behind. We have to just aim off for the fact that the private sector is also out to make money and it does not necessarily always want to leave a lot behind, because then it can sell its services again.

Priti Patel: They are not all bad in the private sector. There is a desire to make it happen.

Sir David Normington: You can build that into the contract; I agree with you.

Q460 Mr Reed: This probably pre-empts the fascinating paper we are going to receive from you shortly. I was thinking, with respect to the points that Priti was asking there, do we need more of a project-management approach or project-based approach to the whole of government in the way that the Scottish Government has been experimenting with? That is my first point. To underpin some of that and some of the points you have just been discussing, what infrastructure will we need to deliver the appropriate leadership skills through that? I am thinking of things like a different model of training college or training programmes or career routes that may take career civil servants not just through the Civil Service, but through local government, elements of the National Health Service, the third sector and the private sectors, where they are involved in the delivery of public sector services.

Sir David Normington: On that last point, that is essential. It does, in a sense, mean that you have to have some different thinking about how you develop people within the Civil Service with those skills and how you progress them through, and where they are going to get that experience. That is desirable. There is a proposition and I think Lord Browne has been championing it; I think it is called a major project academy, or something, which actually is about precisely what you are describing. It is a very good idea.

On the issue of how you organise Government, you cannot organise the whole of Government on a project basis. However, I have always been a fan of that way of thinking because programme and project management is about being very clear about the objectives, and being very clear about the resources and organisational structure you are putting behind those objectives to deliver them. It is also about being very clear how you assess the risk and who is responsible for assessing that risk. In other words, the disciplines of project management are the disciplines of good government. Although I do not go the whole way on organising the whole thing on a project management basis, there is a lot to be said for it, because when things go wrong, it is because the objectives are a bit fuzzy, nobody is quite sure what they are doing, there are not quite enough resources and nobody is assessing the risks. I exaggerate, but those are the sorts of thing that go wrong in Government and, as we have seen, in things like the West Coast Main Line, those sorts of issue are present.

Q461 Mr Reed: How far could we push that concept? Could you develop the idea of a public service leader, rather than a civil servant, who was sector neutral, operating in a sector or across different sectors as appropriate to any particular outcome that was intended? Are you then looking at a totally different concept of the Civil Service?

Sir David Normington: Possibly. I think they are closer to that thinking in Wales, for instance, where, because it is smaller, it is easier to think about the public service as a whole. In England, the size of it makes it quite difficult to contemplate it in quite that way. However, much more movement across sectors and actually sharing the development of project leaders and so on is a good idea.

Q462 Chair: This whole business of leadership and competence and joining policy with implementation is what our two Reports on strategic thinking were really about. Why do you think strategic thinking skills seem to be so missing from Government as a whole? It is staringly evident from the way that Government reacts on a day-to-day basis to things that they are far more driven by the daytoday than the strategic. Why do you think that is?

Sir David Normington: That is sometimes the case, but it is not always the case. There has just been a proposition for building a railway line that will not be built until 2030, so it is not always short term.

Chair: Okay, but there is a Treasury infrastructure plan that looks forward for four years. HS2 is in stark contrast to the rather political airports policy-if you can call it a policy-that we have at the moment.

Priti Patel: It is a position.

Chair: It is a position; it is not a policy.

Sir David Normington: Something about the way the political system works is it works in political cycles, frankly, and it is very hard for a Government to set longer-term goals. When it does, nobody really believes it, because it seems so far away from people’s lives. Many of us will be dead before the line is built, so it is hard for any of us to think very seriously about it, is it not? There is something about the political process, and probably about our lives, that means we do not think quite in the longer term.

Chair: Other countries manage to do this better than we do, at the moment.

Sir David Normington: Do they?

Q463 Chair: Yes, they do. Do you think that policy has become separated from implementation by the way the Cabinet Secretaryship is split from the Head of the Civil Service, in that all the delivery reports go to one individual and all the policy reports go to the other individual? Is that not militating against a strategic approach?

Sir David Normington: I would not have split it; I have never been a fan of splitting it. However, I am not sure that it has had that effect, because, looking from the outside, I see the Cabinet Secretary and the Head of the Civil Service working hard to join themselves up and make sure there is not the split and the division you describe. I do not think it has had that effect, but you will not get me defending the split, because it is always better to have a single line of authority from the Prime Minister through the Head of the Civil Service and the Cabinet Secretary. You will get more effective delivery, in the long term, in that way.

Q464 Chair: It does reinforce the impression that policy next to the Prime Minister is the real McCoy in the Civil Service, and deliveries stuck out there in DCLG are not of such a high status. How do we address that problem?

Sir David Normington: The only thing I would say-because I do not have to defend my former colleagues-is I get no sense at all that somehow the Cabinet Secretary is divorced from implementation. He is very focused on that, because policy is nothing unless something happens and it is delivered, and he knows that and is very focused on that. The danger is that the Civil Service Reform Plan could be over here, and actually it is also part of implementation, because it is all about the skills you need for implementation and the way you organise Government to implement. The danger is that it gets slightly sidelined because people think it is somehow about Civil Service reform.

Chair: That is where Civil Service reform has always been: it has been down the corridor, the door is on the left, she does Civil Service reform and everybody else gets on with the day job.

Sir David Normington: I fear that has sometimes been the case with past reforms, yes.

Q465 Chair: Thank you for that, most interesting. One of the deficiencies identified as leading to the West Coast Main Line rail franchising fiasco was the high turnover of senior posts. Now, in the private sector, if you are turning over your management at more than about 15%, you are reckoned to be dying. The Treasury’s percentage is 23%. Would you agree that, across Whitehall, it is much too high?

Sir David Normington: Yes.

Q466 Chair: What is the First Civil Service Commissioner going to do about it?

Sir David Normington: I am sorry, but I do not run the Civil Service, and I am limited in that respect. People want to give me lots of jobs and I do not have that job.

Q467 Chair: What recommendations would you make?

Sir David Normington: You have to unpack the facts a bit. It is a fact that there is a substantial turnover in the Treasury, and it is a fact that there was quite a lot of movement at the top of the Department for Transport. I did have a look, the other day, at the average length of stay of Permanent Secretaries who left in the year after the election, when there was a lot of turnover. The average length of stay was just short of five years for those Permanent Secretaries. There are some exceptions to that, but actually there was a very stable period of leadership. There was then a lot of turnover at the end of 2010 and into 2011, which was on the natural cycle. I just thought I would put that fact on the table.

To your general point, if the message is that the Civil Service needs to be reduced by 20% to 30%-and that is a very sharp and principled message-you must expect some of the best people, and some of the best people are in the Treasury, to think about going and looking elsewhere. The Treasury has always had a bigger turnover, because it has very able people who are poached by people in the City and elsewhere. Therefore, I do not think you can get away from that basic problem, which is added to by the fact there is a big shake out of people at the moment. Although you always want to keep your best people, of course, the best people are the ones most capable of going off and getting another job.

Q468 Chair: In your paper that you so kindly offered us-and I appreciate that very much-perhaps you can address how your proposals would address this question of churn and short-term appointments. If we are going to move to a project-management concept of policy delivery, then you need single senior responsible owners who see those projects from inception through to conclusion, because that is what happens in the private sector.

Sir David Normington: Indeed, and I will address that because it is at the core of how you structure jobs and pay systems to ensure that you have the best possible chance of people staying.

Q469 Priti Patel: We have already touched on an element of the difficulties and the barriers regarding the private sector coming in. You have said that there are problems with pay and with it being attractive enough to take some of the brightest and the best from the public sector. What are your views on things such as salary caps and whether or not they should be removed, and also on the condition that Departments are required to stay within a fixed-pay budget? In responding back, how do you think, if we were to make changes to salary caps and pay offers, that would stand up to public scrutiny and also the overall principle of fairness and fair pay within the Civil Service?

Sir David Normington: It is very difficult, in the current environment, to argue for higher pay for civil servants. The Commission is not arguing for general uplifts in pay; it is simply saying that, if you need to go into the market to recruit the skills and the capabilities that you have not got in the Civil Service, you will have to have more flexibility, and the pay cap is a barrier. Now, the pay cap is not always enforced; it is possible to persuade the Treasury to lift it for certain posts. However, the Commission sees it being enforced very rigorously and it has held senior pay in the Civil Service down. You cannot have it both ways, and you can make the public case for selectively taking that cap off where you need to recruit particular types of skill. I would focus it on particular cases, but I am completely aware you cannot argue for a general uplift. I am sure the people who come after me today will want to do that, but I cannot go as far as that.

Q470 Priti Patel: Is this just about pay? We heard, as I said earlier, from Lord Browne yesterday that, in the private sector, there are other ways to incentivise people to come over or move jobs and so on. You have also touched on another non-executive member involved in a different appointment as well. Do you think we could learn from the private sector about different forms of incentive? Do you think the non-executives themselves-those with extensive business backgrounds-could bring from the private sector some of their own expertise and insight as to what works in project management or consultancies on pay and opening it up, making it much more diverse and attractive to people from the outside to come into the Civil Service?

Sir David Normington: Possibly. It is very difficult, in a public sector setting, to offer the kinds of pay and incentive that the private sector gets. Actually, I would not want to go down that road, generally. Public scrutiny will not allow that and, anyway, as we have seen in the private sector, it sometimes has unintended consequences. There may be ways you can structure the jobs. There may be ways in which you can develop your promotion systems. There may be bonuses you can use. Having appeared before the Home Affairs Committee in my previous job three times, and having been criticised relentlessly for the bonuses we offered to our senior staff, I just concluded it was not worth the candle. It just was not worth it.

Now, the Civil Service does have something that is very precious: it does have its ethics and its integrity. It does have a very important ethos. It was very interesting, yesterday, to hear the chief executive of Barclays wanting to change the whole nature of Barclays, and actually that was all about the kind of ethical approach that the Civil Service has. You ought to be able to sell that; you can sell it to young people coming into the Civil Service-they get that. The chief executive of Barclays might die for those objectives of integrity, honesty, impartiality and objectivity. That is a selling point. We should not undersell what the Civil Service already has.

If I may make one other point, the Civil Service Commission chairs senior competitions at the top three levels in the Civil Service, and over the last five years we have chaired 370 or so competitions, and half of those competitions have been filled by people coming from outside. About a third of those have come from the private sector. It is mainly at the third level down. But some of those people have then progressed up, so it shows that it can be done if you design the jobs properly, if you sell those jobs properly and if you get your pay offer right. It is not a hopeless cause.

Q471 Chair: May I just chip in there? We heard, anecdotally, that very often the outsiders who apply for Permanent Secretary posts are way behind the internal candidates, because they simply are not used to operating in Government. That is hardly surprising, because Government is such a complex space in which to operate. If we are going to bring outsiders in, they need to be brought in at DG level and groomed for these top posts, rather than just brought straight in to the top job. How do you think the Civil Service should address that? Maybe you could address that in your paper as well.

Sir David Normington: I do not want to write your report for you. I need to be careful here, because what is happening at Permanent Secretary level is that, under the leadership of the present Head of the Civil Service, the default position is that Permanent Secretary posts are opened up to competition. If I, as the Chair of those panels, say, "Well, we’ll never recruit anyone from outside," I think, actually, I am setting up too high a barrier. So it is horses for courses. I do not think I would go with the argument that you could never recruit someone from outside the Civil Service as Permanent Secretary. However, the most successful examples of Permanent Secretaries who have been recruited from outside are indeed the ones who have come in at director-general level, where they have been part of a team, have not been quite as exposed-as of course you are as the head of the organisation-and have learned the bit that they do not know and have progressed to be Permanent Secretary. That is a good model.

Q472 Priti Patel: You mentioned the numbers and percentages of those who have come in from outside and we have mentioned pay as a potential barrier. What other feedback have you received from external candidates as to why they were interested in coming in and, when they were unsuccessful, how did they feel about the process? Are there any lessons that the Commission itself has learned about the recruitment process?

Sir David Normington: We have quite a lot of people who have made their money in the private sector who feel that they want to, as they say, give something back, and they are prepared to accept a cut in salary because they believe that they have something to offer the public service, so we have that motivation. We have another group of people, particularly at the Permanent Secretary appointments, who, when approached or when they get into a discussion about it, say, "I just wouldn’t touch it because it is a step into a world at the very top of my career-at the end of my career-that I just don’t know about. It’s too unfamiliar. I might go to another company, but, actually, it’s too big a step to a world I don’t know. I don’t know about appearing before Select Committees. I don’t understand the public accountability arrangements. I don’t really understand the relationships with Ministers. I have too many views of my own." At Permanent Secretary level, you get people who can see how they would bring the leadership skills. However, the other bit, which is operating in the policy and political space, they cannot see themselves doing. In many cases, that is a realistic assessment, which is why coming in at one level down and learning it or experiencing it does prepare you better.

Q473 Mr Reed: Last one, Sir David. In your evidence, you stated that it is now the norm for Permanent Secretaries to be recruited by open competition. Now, in your time as First Civil Service Commissioner, have you presided over any managed moves of Permanent Secretaries?

Sir David Normington: I do not think I have presided over them. In a sense, the Commission does not preside over them. It is always open for the Civil Service leadership to agree with the Prime Minister or the Secretary of State to move some Permanent Secretaries around, and not through a competition but just to do that. I would have to just think about it. There may have been those instances in my time as Civil Service Commissioner.

Q474 Mr Reed: Outside your time then. Perhaps you have seen some of that or been aware of it from outside.

Sir David Normington: Yes, there would have been one or two around the end of 2010. For instance, I do know of a case or two where there was-rather like what we were talking about earlier with your father, Mr Jenkin-a discussion with the Secretary of State, and an existing Permanent Secretary, who had done four or five years, was moved without a competition.

Q475 Mr Reed: Why was that done that way rather than through an open competition?

Sir David Normington: It was because there was somebody who was a very good fit for the job that needed to be done. To put that person, who had five years of experience and was very suitable for that job, through a competition was thought to be a waste of time. What you would end up doing was spending money and ending up with that person.

Q476 Mr Reed: Who takes the decision as to whether it is best to have a managed move or an open competition?

Sir David Normington: At a Permanent Secretary level, it will be taken by the Head of the Civil Service-and probably the Cabinet Secretary as well-in consultation with the Prime Minister and the Secretary of State in the Department that is involved.

Q477 Mr Reed: Does that expose the Civil Service, in those circumstances, to the risks of patronage and favouritism that we talked about right at the beginning of the session?

Sir David Normington: A little bit, but not too much, because these are people who are already Permanent Secretaries and it is rare, though not unknown, that the Secretary of State, particularly in a new Government, knows the person particularly well. They are not choosing somebody they know and like in those cases. It is a little step down that road, but not very much usually.

Q478 Mr Reed: Are you comfortable with it?

Sir David Normington: Yes. It is okay sometimes. I would not want to go back to that being the norm. The Commission would not like that, because it thinks that there should be fair and open competition.

Q479 Chair: You do oversee them, do you not?

Sir David Normington: I get told about them, but I have no legal role at all in them. I do not oversee it, in that sense.

Q480 Chair: Should there not at least be an informal arrangement?

Sir David Normington: There is an informal discussion with me, but I have no locus in it, except that they involve me in the discussion.

Q481 Priti Patel: Are you able to comment and actively respond? What if you disagree with what is being suggested?

Sir David Normington: Because the Commission prefers open processes, I might argue for an open process. In the case I described, if I really believed that the open process was going to lead to the selection of the person who was first thought of, and that person was already at that level and had a proven track record, I probably would not argue against it. I am not the decision taker in that case.

Chair: I appreciate that your meat and drink is organising these open selections and that is your raison d’être, but if we were able to plan a little bit more succession in some Departments it might actually improve the continuity and the corporate knowledge held at the top of those Departments. One of those managed moves has worked extremely well; one of them did not last for very long. It is horses for courses, as you say. You sound as though you are religiously inclined to open selection.

Sir David Normington: No. I am in favour of succession planning, because it is the responsibility of the leadership of the Civil Service to ensure that there is always a supply of very good candidates for top jobs from within the Civil Service. All I would say is that I am not greatly in favour of the tap on the shoulder as the way of promoting people. That is not fair, usually, and it does militate against people who ought to be considered, and are not considered, getting a fair hearing. I am in favour of open processes, generally. There are three ways of filling Permanent Secretary and other senior posts: a managed move, which we have been talking about; an internal competition, which need not take long, but allows the internal candidates to put their hands up and say, "I’m suitable for this"; or a full, open competition. You should choose a horse for the course there.

Q482 Chair: If you started a full open competition and you looked at the applicants and you said, "Well, it’s so obvious; it’s this person," you might short-circuit the process, because the time taken to make these appointments is another problem.

Sir David Normington: It does not have to take long. Where it takes a long time, it is often because the choice is difficult and there are a lot of candidates, or because there is not much choice and the decision is taken to go out again and to try to search the field more actively. You can run competitions in about six weeks.

Chair: Sir David, you have been very forthright and given us a lot to think about. I am looking forward to receiving a bit more to think about from you, and I am very grateful for that. Thank you very much indeed for coming this morning.

Sir David Normington: Not at all. Thank you very much.

Examination of Witnesses

Witnesses: Dave Penman, General Secretary, FDA, and Hugh Lanning, Deputy General Secretary, PCS, gave evidence.

Q483 Chair: Welcome to our two witnesses on our next panel in this session on the future of the Civil Service. Could you please, each of you, identify yourselves for the record?

Dave Penman: I am Dave Penman, General Secretary of the FDA.

Chair: Just describe to us what the FDA stands for.

Dave Penman: The FDA used to be called the Association of First Division Civil Servants. It is now just called the FDA. It is a union that represents about 18,000 members who are senior managers and professionals, mainly in the Civil Service, but also in the NHS. Our members are senior civil servants, lawyers, tax professionals, diplomats and school inspectors, so there is quite a broad range between managers and professionals.

Chair: You are relatively new to your post.

Dave Penman: Yes. My predecessor, Jonathan Baume, who was rather familiar with this Committee, retired at the end of October.

Hugh Lanning: I am Hugh Lanning, Deputy General Secretary of PCS, which is the Public and Commercial Services Union. We represent 250,000 members from the most junior through to senior civil servants, and I am not new to the job. I have been dealing with Government and Ministers and the Civil Service and the Cabinet Office for over 30 years, so it is a number of Administrations that I have seen from start to finish.

Q484 Chair: You do not always agree with each other?

Hugh Lanning: Dave and I, we-

Dave Penman: We go back a long way.

Hugh Lanning: I appointed him.

Q485 Chair: You seem to agree, to begin with. The FDA’s evidence to this Committee "reject[ed] the notion … that somehow the Civil Service is ‘broken’", and PCS’ evidence rejected "the perception" that Civil Service reform was necessary "as a solution to a perceived ‘problem’". So, everything in the Civil Service is fine?

Hugh Lanning: No, I would not say that. You have not started with your normal question, which is, give us three sentences about what is wrong with the Civil Service. I had prepared for that.

Chair: Now is your opportunity.

Hugh Lanning: The first point is that we do welcome there being a discussion at the Committee. One of the problems with the Reform Plan is that it was essentially a private discussion that took place without consultation and it was rushed. There has not been a public debate about Civil Service reform. If it is going to last more than one Administration, there needs to be a consensus on it, otherwise it will just swing from one way to the other. We think this is a good step.

I came up with three sayings, perhaps not sentences, if you like, that describe where we think we are at: "The Government is stupid," or, to be more precise, Ministers. This is, if you like, focused on a lack of stability and consistency from Ministers, micromanagement by Ministers, lack of clear objectives and also a lack of political support to Ministers. We have said that it is not that there is nothing wrong in the Civil Service, but you have to look at two sides of the equation and not just at one, if you are going to come up with a solution.

"It’s the cuts what done it," is the second phrase. Why is there churn, loss of experience and expertise-the things you are talking about-and low morale? We think the primary causes are cuts, privatisation, the use of consultants, and the lack of funding and commitment to training. If you look at it, it has actually been resources, rather than reform plans, that have driven change over the years.

Lastly, "Stop rearranging the deckchairs." Reorganisation and machinery of Government changes, on the whole, are a waste of time and money, and we need to encourage cross-departmental working, rather than trying to rearrange the Departments to suit the latest plan. If you look at some of those issues and the things underlying them-and I am happy to go into more detail-there are things that need improving. But is the Civil Service so fundamentally broken that it needs a change in how it is structured and how it is organised? No, I do not think that is the case, nor do I think there is evidence for it.

Q486 Chair: Mr Penman, are you in agreement with that?

Dave Penman: We are simple folk in the FDA, so we talk about the three Rs-recognition, reward and resources-as being critical. We put the expression in our evidence about the Civil Service not being broken. It is not dysfunctional. Reform is constant. If you talk to any civil servant, probably at any level of the Civil Service, they would have experienced, over the last 20 or 30 years, constant change and constant reform. We broadly welcome the Civil Service Reform Plan, as there are a lot of good ideas in there, but there are areas where we have some significant concerns as well, and it is simply the latest iteration of the constant change that takes place in an organisation of over 400,000 staff delivering a significant proportion of what the public expect the Government to deliver in public services.

Any organisation should expect reform and change to happen on an ongoing basis. This is not something that simply happens as a result of ministerial whim. The politics of management, rather than philosophy, takes us into a bit of danger. Change happens from within the Civil Service all the time. That was my experience as a civil servant and that is my experience as a trade unionist as well.

Q487 Chair: If you were to focus on what is particularly frustrating Ministers and giving rise to this public friction and public criticism in the newspapers and has given rise to the Civil Service Reform Plan, what would you say that these particular things are? Are they a problem for the Civil Service?

Dave Penman: This Government has come in and has set the Civil Service a very significant challenge. It has got quite a radical reform agenda and, at the same time, it is asking the Civil Service to significantly reduce the resources that it has to deliver that reform agenda. That is a very difficult management challenge for the Civil Service, and it requires a different skill set, at times, than the Civil Service has-and Sir David Normington talked about that previously. The Reform Plan was not simply a response to a frustration about the Civil Service. It was the Government taking stock, looking to the future and saying that the demands are going to be different, and this is an attempt to try to identify how the Civil Service should address those demands. In some of those areas, we think the Reform Plan makes sense. There are a lot of ideas about procurement on major projects, which is an increasing feature in the way the Government works. There are a lot of good ideas, but there are also some issues that seem to be the focus of a lot of media attention and a lot of discussion here about ministerial involvement in Permanent Secretary appointments and so on. That is actually at the margins of what is taking place in reality and the experience of most civil servants.

Hugh Lanning: I mentioned a lack of a stability and consistency. Under the last Administration we had 17 Ministers for the Civil Service during the period. How on earth can there be a delivery of objectives with that sort of regime?

Chair: The Prime Minister is meant to be the Minister for the Civil Service. You only had two.

Hugh Lanning: There were 17 people directly responsible for the running of the Cabinet Office and the Civil Service who had that sort of brief; I counted them as they came in and out. To be fair to the current Administration, there has only been one. Our problem is that it has been Francis Maude, all of the way through. It is a better model, and there is consistency and stability. The difficulty you get into is Ministers wanting to micromanage. They want to run the Civil Service, rather than focus on the big political objectives and having clear objectives.

Just to give you another example, I did not like a lot of what the Blair Government did, but it delivered on its election pledges in the first period, where it had very focused objectives that they had worked out and planned. It was an effective period. It is not a model that has been used by very many. There are big, broad objectives. I know, from talking to a lot of the Ministers, that they are not clear what their role is when they are there and what the jobs are that they actually have to deliver on behalf of the Government. There is a frustration there, because they are not experienced and they are not given enough political support or training, as Ministers, and therefore you blame the Civil Service-you do not blame the part that you come from.

Q488 Priti Patel: I would like to discuss morale. You both cite low morale in the Civil Service right now. Could you provide an insight to the Committee on how significant it is, how widespread it is and the level of this dissatisfaction, and, in particular, how this can be addressed?

Dave Penman: Most civil servants really enjoy the work they do. They do some of the most interesting and challenging jobs that are out there in the economy. Many of them make a very specific choice. When one of our members is asked what he does, he says, "I’m a builder." He says, "I build schools and I build hospitals." He is a tax inspector. He brings revenue into the country. He could earn two or three times the money he does if he wanted to work in the private sector, but he does not because he passionately believes in what he does. That underpins a lot of what our members enjoy about the job and the value they bring to it.

Increasingly, there are issues there that are impacting upon morale and motivation, and I am talking about our members. A recent survey of senior civil servants showed that two-thirds were looking to move outside of the Civil Service. We have pay levels. You have just tasked Sir David Normington with coming up with a report on pay; he did so in 2008 when he was the Permanent Secretary at the Home Office, and identified the long-term problems that there are at the senior levels of the Civil Service over pay. Increasingly, there is the potential that it gets out of kilter, with cuts on resources; attacks from Ministers and the public denigration of the professionalism and competence of the Civil Service; pay levels that, as I said, are so far behind the market; and the balance between what you get from the day job-and it is a fantastic job-and all the other bits that come with it. We are starting to see some of the comments that are our members are making, and some of the responses we are getting indicate that there is a morale and motivation problem, and it is a problem that is building for the future.

You talked about turnover rates just now. We are in the middle of a double-dip recession, and pay levels are so significantly behind the market that, when the market picks up, we feel there will be an exodus of the most talented civil servants to the private sector. There are issues about morale, but more importantly there are a number of indicators that this Government should wake up to about what civil servants are saying about those issues, and it should try to address them over a longer term, although we recognise that that is quite difficult in the current fiscal environment.

Hugh Lanning: I agree with a lot of that, but you do not have to take my word about what the morale problems are. There is the Civil Service People Survey that management run and that we quoted, and we help to promote that. The four things that came out from that that hit morale were pay and benefits, with the cap and freeze; the undermining and the continual changing; the lack of learning and development opportunities; and also the lack of resources, in a context where you are being vilified. It is a difficult balance. If you are being constantly vilified and you are putting up with all of that, whatever the values of the job, you end up having a low morale because you do not feel appreciated

Q489 Priti Patel: Can I just come back with a couple of questions there? Do you sense that there is a great or a significant enough understanding among Ministers about what the Civil Service is there to do in terms of supporting Government and supporting Ministers and so on? You have both mentioned pay and touched on the issue of prospects of progression too. Do you think, as a society, we actually understand the Civil Service and the value that the Civil Service brings?

Hugh Lanning: I would say not. One of the constant points of feedback we get from our members-the biggest groups of our members are in the Department for Work and Pensions, Revenue and Customs, and so on-is that when they say what their job is, people do not feel they are the Civil Service. The public image of the Civil Service-this is probably more Dave’s members-is Whitehall, "Yes, Minister" and it is that. It is not the day-to-day jobs, the operational jobs, that are done in the local DWP offices or on the borders, or in the prisons and so on. The reality of what the Civil Service is is quite out of kilter with what the public image is. That is a frustration. A lot of Ministers come with a prejudiced view, rather than with the working knowledge of what their Departments do in practice. They come to like the Civil Service as they get to know what their Departments actually do and the responsibilities, but that is not where they start the process, especially if they have not been in government. Where would you learn that? We are not very public-facing in selling the Civil Service as a whole.

Q490 Priti Patel: Can I just ask one other question? If Francis Maude were here right now, what one recommendation would you put to him to change and uplift morale?

Hugh Lanning: Engage with us. Engage with the staff of the unions. It all feels, at the moment, as if it is being top-down driven with a command approach, with no engagement with the staff about what the change is and no explanation, and no say on where the changes need to be and how they will take place. It is that absence of consultation and discussion, both from a management and political perspective. It is being done to them, not with them.

Chair: Mr Penman, do you agree with that?

Dave Penman: I would start with recognition. On that point about Ministers celebrating the success of the Civil Service, Francis talks about the £13 billion worth of savings that the Civil Service has delivered over the first two years. That is not lauded as a success. The Civil Service has delivered that and, at the same time, has consistently delivered high-quality public services. The Civil Service does not champion itself very well, and Governments do not champion the Civil Service very well either. That leads to the problems that we have. We do not respect their competence. We do not think we should necessarily pay the going rate. "It is always better to get someone from outside in the private sector, because they know what they are doing and the Civil Service does not." That leads to some of the problems that manifest themselves in the concerns that our members have.

Hugh Lanning: Could I just pick up on that point? There was a discussion you were having previously about the lack of skills and expertise within the Civil Service, and the need to go outside. One of the problems we have is that we give away the expertise in the Civil Service to the private sector. If you take all the IT projects that were there, we sold the expertise in the Civil Service and they said, "Oh, we’ve got no one who can run an IT project." We have just done it with MyCSP. We have given away all of the people who ran pensions administration to MyCSP and we are left with nobody. It is a constant pattern that you see. We decide we are going to sell off, privatise or reorganise something. Subsequently, we denude the Civil Service of the skills and the expertise that were there previously, and then you have to rebuild it all again from scratch, which seems to me a daft approach. When we are thinking about reorganisation, we do not say, "These are the skills we need to keep within the organisation and these are the ones we can afford to let go."

Q491 Mr Reed: It is very rare that you see a leader in a major private sector or third-sector organisation stand up and vilify their own employees, but some Ministers do it. Why do you think that is?

Hugh Lanning: It is because they do not think the Civil Service is theirs. It is not the same as if you are running a company, where you get the profit, you have ownership and you have a stake. The Civil Service is seen as there to do your bidding and to be there, and they do not feel the same ownership or the same commitment. The driver is the politics. The driver is the politics rather than the management; that is seen as being the main task. Actually, the people who do it best, if you look at it, are the people who get their civil servants and their Departments behind them in line with what their political objectives are, so that those two are aligned in the process. That happens when there is a good dialogue between the two, so that the Civil Service understands what the Minister is trying to do.

Q492 Mr Reed: What do you think they hope to achieve politically by doing that, then?

Hugh Lanning: They probably hope for promotion out of that job into another one. If you look at it, it is about getting political credibility. It is not about, "My long-term commitment is to be here," unless you are in one of the big offices of state, such as the Chancellor of the Exchequer, or something. On the whole, there is a political ladder for people to go up, which is probably more important than the job.

Mr Reed: The churn of Ministers contributes to the problem?

Hugh Lanning: Absolutely, yes.

Dave Penman: It is interesting, and you heard this in previous evidence from Lord Hennessy, who talked about this, that it is almost at exactly the same point in this Government where those sorts of comment are being made as with the Labour Administration and the comments that Tony Blair and other Ministers made. It is part of the political process. You have a party in opposition that comes into government. It finds that what necessarily made good politics in opposition does not necessarily make good policy. Things are a lot more difficult than they first thought, and suddenly they get frustrated. A convenient scapegoat often is the Civil Service and the civil servants. Probably too much is made of it. A lot of our members say that they are thanked in private and criticised in public. Ministers recognise the value of civil servants and what they do. They recognise the resource and the expertise that they get, but sometimes they feel they have to make these sorts of comment or there is a more philosophical point. It is, "Everybody else’s civil servants are incompetent, but mine are actually very good." That is sometimes the experience of some of our members. Sometimes Ministers do it deliberately, and sometimes they fail to recognise the long-term impact that has. They can say positive things seven times, but they should know, because they are adults and they are politicians, that the one time they say something controversial, whether it is Permanent Secretaries blocking policy or it is questioning the competence of civil servants, that is the bit that is going to get picked up in the press. Too much is made of it, and politicians need to learn those lessons because there is an awful lot said about leadership in the Civil Service.

Q493 Chair: To defend Francis Maude, as Paul Flynn would expect me to do, I am sure Francis did not come into the Government intending to have to say these things about the Civil Service. He is, genuinely, very frustrated about things that seem to be decided and seem to be agreed, but then are undone behind his back. That is what he feels very strongly about. He feels things are just not implemented or deliberately obstructed. Why do you think this happens?

Dave Penman: We have worked with Francis for nearly three years.

Chair: You must have discussed this with him yourself.

Dave Penman: We have, and sometimes I fail to recognise the timid Minister who is cowering in fear of their Permanent Secretary. They want to implement something, but their Permanent Secretary says, "No, Minister," and it does not get implemented. Government is complex and difficult.

Q494 Chair: That is actually not the problem. What happens is the officials say, "Yes, that’s what we will do," and then it just does not happen. Months later it is still not done.

Dave Penman: Ministers have ways of dealing with that. I can understand that. As we say, government is complex. There may be these frustrations. There may be tensions about what can be done, the pace of reform, the pace of change and what a Minister wants. In making some of those comments in public, Ministers need to recognise that it is not simply about the particular situation they face; all civil servants feel it when a Minister makes some of those comments. That is the responsibility of leadership.

Q495 Chair: You do accept that this obstructionism exists, but you are just begging Ministers to deal with it privately and not go public?

Dave Penman: I cannot say whether it does or does not, but I am sure that every Government Minister would say, at times, they have been frustrated with pace and reform and change and all of that with the Civil Service, whether justified or not. I cannot say whether, in the individual instance, the Minister was justified or not. But they have a broader responsibility for the whole of the Civil Service when they make those sorts of criticism.

Hugh Lanning: Again, Francis is not timid. He is not cowering away from his civil servants. He has got a hugely ambitious agenda. In terms of clear objectives, he is taking on the planet. He is not just trying to reform a bit here; he is trying to be a driving force for the whole of Government for making major changes-and not just in the Civil Service, but in the public sector as a whole, be it pensions or be it a range of areas. It is at a time when the manager at the Civil Service has been undermined. I agree with what the previous witness said about the Head of the Civil Service: I do not think that helps. From our own discussions when we are trying to have negotiations, I wonder, "Whom do we go to?" Actually, you end up having to go, normally, to the political advisers. There is a vacuum of power in the middle of the Civil Service, and that is one of the frustrations that Francis has. If you look at it, Permanent Secretaries are not able to move. There is a dilemma: in the report it talks about having devolution and decentralisation and so on, but if you look at most of the initiatives that are currently going on, they are being directly driven by a central authority from the Cabinet Office. On things such as shared services, conditions of service and facility time, it is having to have Cabinet Office approval for all of those in what is meant to be a delegated framework. There is a dilemma there: you cannot say you want delegation and managerial and entrepreneurial skills to be used if they are not allowed to budge without the Cabinet Office Minister saying he agrees.

Q496 Kelvin Hopkins: This continues from that but it is really to Dave Penman: the FDA’s evidence is that Ministers view "robust challenge and testing of policy ideas" as their ideas being blocked.

Chair: Kelvin, you ought to declare your interest. Sorry to interrupt.

Kelvin Hopkins: Yes, sorry. I am a member of the PCS support group in Parliament; I should say that. I know Hugh very well, of course, and Dave. The FDA’s evidence is that Ministers view "robust challenge and testing of policy ideas" as their ideas being blocked. Is not the reality that some Ministers come up with ideas that are not practical or sensible, and civil servants have got a job to do in explaining to Ministers, fairly forcefully at times, that it just will not work and it is not sensible. Is that not the reality?

Dave Penman: It can be. We talk a lot about the competence and experience of civil servants, and not many people talk about the competence and experience of Ministers. At times, there is that issue. Interestingly, there was a debate on Radio 4, and an unlikely advocate for the Civil Service, Dr John Reid, talked about being in the Home Office. He talked about good Ministers wanting strong challenge. That is the point of the Civil Service: it is there to speak truth unto power. It is there to give robust, evidence-based policy advice, but, ultimately, it is for Ministers to make a political decision.

That is what civil servants want as well. Civil servants want the ability to advise Ministers, but, ultimately, to serve the Government of the day, regardless of their political colour. That is actually why they came into government. Most civil servants will serve a number of Governments of different political formations. That is part of the job that they want and that is what makes good government. It might make for a difficult job as a Minister, but having that tension in the system makes for better government. I think it is sometimes about the experience or competence of Ministers, who operate in a political environment and, therefore, are making judgments from that perspective rather than from a good-government perspective.

Q497 Kelvin Hopkins: It is, then, more than just a disparity in styles; actually, there is a problem there. There is evidence from a report in last Sunday’s Observer-about a civil servant who has been paid off as a result of a case of bullying, particularly by special advisers-of the tensions inside the Department for Education, where, apparently, foul language and extreme temper are commonplace, with special advisers allegedly bullying civil servants and saying, "Don’t argue. Just get on with it." It is that kind of style, but using rather stronger language than that. That, clearly, is not a way of operating a sensible Government.

Dave Penman: It is not. Again, political advisers are, I think, a welcome development, because Ministers need strong political advice. As long as the boundaries are clear-and special advisers operate under a code-I think the Civil Service recognise that and they understand what their boundaries are and what the boundaries of special advisers are. Again, it sometimes makes good politics to come in and say, "We will do away with all these special advisers," without recognising that they can be a healthy and welcome development in how a Minister will operate and how a Department will operate. It is where they cross those boundaries or, critically-and this comes back to our concerns with the Reform Plan-where those boundaries are blurred: the degree to which someone is employed because of what they believe or what they can do, and that is the clarity that civil servants would seek to understand.

If it is a special adviser, then a civil servant will understand what those boundaries are, but if the basis upon which someone has been appointed as a permanent civil servant is unclear-whether it is political patronage or whether it is through open and fair competition-that, I think, is where you get some of those tensions. Ultimately, under this Government, and successive Governments and previous Governments, you will get occasions where, as we have seen under the Labour Administration, when it was a good day to bury bad news, individuals will overstep the mark, but the clarity of role, I think, is what allows challenge when individuals do overstep the mark.

Q498 Kelvin Hopkins: That clarity of role: this Committee looked at special advisers in a previous Parliament, and one of the things I said very strongly is that special advisers advising and meeting Ministers is one thing; but in terms of special advisers interposed as a layer between Ministers and civil servants, giving orders, and often in a brutal way, as we have seen, nothing seems to have been learned and, in fact, it may be getting worse.

Hugh Lanning: Can I just comment on that? It is worse than that. It is all Administrations; it is not new. In a way, Ministers need more political support, and they need to be given the support to enable them to focus on what their political responsibilities are, but what you are getting is special advisers substituting themselves not just for the Minister, but also for management. There are management decisions where the special adviser is the person effectively taking the decision, over and above the Permanent Secretaries or the Head of the Civil Service and so on. If that is the scenario that exists-we have had it under both Administrations-when you are trying to have discussions, negotiations and talks, and you are, effectively, having to do those through the special adviser, I think that is wrong managerially and wrong democratically. I do not think it sustains itself.

Q499 Kelvin Hopkins: Even at my modest level, I have a political officer who gives me advice. He does not give orders to my other staff; he talks to me about politics. That is very different. On a completely different question: you touched earlier on HMRC and tax-revenue collection. The Government has a funding problem, but it has been argued very strongly that their funding problem is not about spending, but about failure to collect revenues. The tax gap, allegedly, could be as much as £120 billion a year-a staggering amount of money-and yet the Government has insisted, over decades now, on squeezing staffing at HMRC, when every individual tax officer collects many times and a large multiple of their own salary.

Chair: Question?

Kelvin Hopkins: Would it not be sensible to advise Government, if they want to collect more money to pay civil servants better and to employ more tax officers?

Dave Penman: We published a document, "Being Bold: a Radical Approach to Raising Revenue and Defeating the Deficit", around this very point-investing in tax professionals. That was quite successful. The Government, I think, has started to recognise that point. Where you then come across a tension is that the Chancellor announced an extra £78 million, I think, in the Autumn Statement for particular initiatives around revenue collection, but you cannot simply create those sorts of experienced tax professional, and the Civil Service cannot recruit them from outside. The people with the expertise that is needed are paid two, three or four times the amount of money that the Civil Service pays. We have argued strongly that that is an investment for the country and that it can deliver significant tax revenue, but that needs to be planned. You also need to recognise that the salary level that you will pay tax professionals in what is quite a competitive market is a real issue and a real barrier to that being a success.

Hugh Lanning: That is true at the levels that Dave is talking about, but there is a much simpler equation: there are an awful lot of not-collected taxes. This is not about complicated evasion or difficult arrangements, but just taxes that are not being collected. If there were just more people on the ground enabled to do that, there is a very simple sum-there would be more coming in. If you look at the size of the Civil Service, the DWP goes up when unemployment goes up, and HMRC goes up as more tax is collected. If we want more taxes in, you have more people in the HMRC doing it. Then there is a debate about how you apply them, what skills there are, how you retain them and how you do it, but, in principle, the sums are tens, if not hundreds, of billions. There is evasion, avoidance and non-collection, but, if there were resources driven in there, you know you would get more money back.

Regarding the things we have argued for in terms of having a more central framework of pay and conditions of service, there was a debate that went on around, "Why can’t we just move people from HMRC to DWP when there is unemployment and we do not need them in tax, and vice versa?" They are on different pay and conditions, because they are on different arrangements, so, if there was a more cohesive commonality, those sorts of issue of shifting the resources to where they are needed would be a lot easier to manage as well.

Kelvin Hopkins: I have to declare my interest as a member of the support group.

Chair: Gentlemen, you are both giving extremely full answers. We need to crack on, so can you compete to see who can give the shorter answers?

Q500 Mr Reed: I will join in with that, then. What are the root causes of the current skills shortages in Whitehall?

Hugh Lanning: A lack of commitment to it. I sat on the Government skills board that was abolished. We have reduced the amount of money that is going into skills in the Civil Service. There was the Skills Pledge, which was meant to bring up basic skills, which the last Administration failed to deliver. There is just not really that commitment to driving down and putting the resources into skills. We have argued, for a long time, that there should be accreditation of skills in the Civil Service, and that is still not happening 10 years on since we put it forward.

Dave Penman: I would agree with that. I think it is a very glib comment to talk about skills in the Civil Service. Every Government and Administration will say, "We do not have the right skills."

Chair: The First Civil Service Commissioner says it as well.

Dave Penman: But then it is a constant. Again, we are back to that constant, because, as the organisation develops and as the challenge changes, you need a different skill set. The Civil Service is constantly trying to refresh and renew its skills, but the point Hugh is making is that requires resource. It is always the first thing to be cut when budgets are under pressure.

Q501 Mr Reed: The Government has made a commitment to improving skills in the Civil Service. How confident are you that that is a priority for them?

Hugh Lanning: I am confident it is not, because it is saying it is going to do it by cutting the level of resource it is putting into it, so I do not see that the two are saying it. You have to look at the reality, and the reality is there is less going into training.

Dave Penman: I think that they are focusing on particular areas where there are improvements being made, and there are some positive stories there, but a lot of this takes place at departmental level. It is not something that comes from the Cabinet Office. The skills renewal takes place in almost every Government Department, and that is about the resources that they have to identify and deal with that.

Q502 Mr Reed: Can I ask what your view is of Civil Service Learning as a training provider?

Hugh Lanning: I think it was a mistake to move away from the sector-skills approach, which was more inclusive-it involved us, it involved having discussion-to it being just a pure provider, because then there is not the debate about what skills are required and what is needed. I think that is what is missing. It is not the provider; it is how you determine what the training needs are.

Dave Penman: We are doing some good work with Civil Service Learning. We have developed our own learning strategy as well, trying to identify what those are. I think, if you look at the learning environment in the Civil Service, it has, again, been through constant change, and we need some stability. There was greater engagement in the past, but what we need is stability around how Civil Service Learning has developed and, crucially, how that then impacts upon what is happening in Departments, rather than just some clever idea at the centre.

Q503 Chair: The Fulton Committee established the Civil Service College, which became the National School for Government. The Civil Service plan almost abolished it at a stroke. It that a good thing or a bad thing?

Dave Penman: It is a bad thing. I think the previous person to give evidence, Sir David Normington, talked about some of these issues: looking at the central skills and the Civil Service planning for the future, which is what the National School for Government, formerly the Civil Service College, was really good at, and it was training civil servants throughout the world to that level of expertise. I think it was a very bad thing and something that we would hope to try to influence to bring back, and maybe this Government might be more interested in that, as it looks more to provide some central direction around some of these issues.

Hugh Lanning: It is a bad thing. We thought it could have played a role in accreditation. It could have been something that could have set standards and been more involved. I think that it had a weakness in that it was very focused on the Senior Civil Service and not on the generality of the Civil Service.

Q504 Chair: There needs, then, to be a kind of Shrivenham Defence Academy for the Civil Service, which does right up to doctorate-thesis level and degree level, but also does the vocational skills?

Hugh Lanning: Yes. I mentioned accreditation because one of the problems the Civil Service has is they have lots of skills but there is no way in which they can be identified or proved to the outside world, if you are going to try to do them. Even for progression internally, it is quite difficult, so some way in which those skills are identified and acknowledged, and a body that does it and verifies it, is essential.

Q505 Chair: Were you consulted about the abolition of the National School for Government?

Hugh Lanning: We were told about it.

Chair: You were told about it. There was no consultation?

Dave Penman: I think it was quite clear the decision had been taken.

Q506 Kelvin Hopkins: The PCS’s evidence criticised the Government for "simply importing business and management techniques from the private sector". What approach would you take to making the Civil Service more efficient and effective?

Hugh Lanning: You should cherish and grow your own. It is back to the same skills. When we were doing the sector-skills stuff, the general assumption was that 80% of your future workforce was already with you-you already had them-and you need to train and support them. There is talk in the plan about an offer, and if you are going to make better morale in the Civil Service, the offer at the moment is all negative. We have to think of what the positive offer is that is going to be made to staff in terms of job security, pay and something going forward. At the moment, it is a very negative agenda, so that would contribute to efficiency. There is a view that, if you do not invest, you are making it better, but actually you need to invest in the Civil Service to get a more efficient Civil Service.

Dave Penman: I would echo some of those points. I think that the idea that we can import all of the good ideas just has not worked. Again, Sir David Normington talked about the senior-level recruitment we have had from outside. For about the last decade, about half of the appointments of the Senior Civil Service have come from outside, which has created significant tensions, because you are also importing external pay levels, so you have a two-tier workforce on pay at senior levels of the Civil Service. That commitment, which is there in words in the Civil Service Reform Plan, about commitments to development across the whole of the Civil Service, has to be delivered. Critically, that takes resource. If the Civil Service or the Government is genuinely committed to that, it needs to match it. That is very difficult at a time when departmental budgets are being cut to the extent that they are.

There is, however, an awful lot of good news out there. We are back to the point that the Civil Service has delivered £13 billion worth of savings, and the lights are still on. We continue to deliver quality public services, reform public services, deliver the Government’s agenda and, at the same time, cut resources significantly. The Civil Service is delivering efficiencies already. It can improve and get better, but we need to move away from this idea that somehow it is broken and the Civil Service Reform Plan is fixing it. This is simply about the continual pace of reform and change.

Q507 Paul Flynn: I greatly appreciate your evidence, gentlemen. In the written evidence, Mr Penman, you have a very striking graph about the pay of civil servants and the private sector, and the common canard is that civil servants are overpaid, but in the public sector they are underpaid. You give this account in which, without going into the details, you are suggesting in your table that the pay of the Civil Service has been reduced since 2009 by about 1%, and the pay in public-sector-equivalent jobs has gone up between 8% and 10%. Is that your conclusion?

Dave Penman: That is actually the Government’s evidence; it is not ours. The Government, in its evidence to the Senior Salaries Review Body, is effectively saying, "We will ignore the market." The Chancellor stood up and talked about market-facing pay in the Autumn Statement in 2011. We said, "We will have some of that, thank you very much," and then, when the reality dawned on him that that was the case, the Government’s position now is, "We must ignore the market." What we are saying is that no one joins the Civil Service expecting to be paid market levels of pay. That is not what you do. You recognise-the point that I made-that the job you do is of enormous value and, to some degree, of monetary value. You accept lower pay because of the nature of the job you do, but when you get such a level of disconnect as we are now seeing, that balance goes out of kilter and people will be more attracted.

To come back to the point, we are saying we believe there will be an exodus of talent from the Civil Service. This Government might not have been here before, but we have. We have seen this previously. We have seen at times that you have periods of pay austerity in the Civil Service, the market changes and then, suddenly, you are running to keep up. You are throwing money at individuals rather than planning for that. That was the case in the early part of the last decade, where the Civil Service had to make radical pay reform quite quickly. It was the case in the late 1980s and early 1990s. The Civil Service is not very good at planning for this and adapting to it, as it happens, so that is the case that we are trying to make, and we recognise that that is difficult, politically, for the Government, particularly in times of austerity.

It is not necessarily about doing it and addressing it immediately; it is about recognising it as an issue, which the Government will not, and about trying to plan and deal with that. As was said to me when I was giving evidence to the Senior Salaries Review Body, we are talking about perhaps a crisis in two or three years’ time, and that is a very long time for a Minister. The idea that they will think about what that means in two or three years’ time is quite difficult, I think.

Q508 Paul Flynn: We have to accept that this present Lib Dem/Conservative junta is something we just have to put up with for the next two years, and presumably they will then disappear over the hill. The point you are making is our effort is to make sure that they do not do permanent damage to the Civil Service, but one of the points you were making, Mr Lanning, in your written evidence, was about outsourcing. You were talking about the waste of opportunities and the waste of talent. One of the Civil Service departments in my constituency is the Intellectual Property Office, which actually makes money. The amount might be surprising; every year, there is a surplus of £5 million, £8 million or £10 million. There is a great opportunity, I believe, for in-sourcing, because there are huge, unique skills that they have, which could be used, in fact, to take over work that is done very expensively in the private sector.

Generally, because of the need of this particular doctrinaire Government to throw some red meat to the yahoos in the tabloid press now and again, and use the Civil Service in an attempt to demonstrate their virility, do you think they are missing opportunities like this to build on the great skills that are in the Civil Service in order to boost the morale of the workers involved and to increase the profitability of the Civil Service in these areas?

Hugh Lanning: That is a tricky one to answer. Yes.

Paul Flynn: Sorry to give you such a difficult one.

Hugh Lanning: No, no.

Chair: A nice short answer.

Hugh Lanning: Just one example: Francis came in promoting mutuals as an objective, and MyCSP was the trailblazer because it was a better model. There has only been one. The chief executive has gone. It is showing a loss in its first year of operation. It has denuded the Civil Service of skills. If that is the model you want to take forward in terms of doing things, it is not a very good precedent. It has been used time after time in other areas, so I think we should look at how we can make the Civil Service better.

I would just comment on pay as well. It is not a Senior Civil Service issue alone. The majority of the Civil Service is low-paid and underpaid against comparators in the private sector. If you look at the economy, making sure there was some money going back to the lower-paid would help boost the economy, rather than the other way round.

Q509 Paul Flynn: I am sure that is right. The impression I had from the Office for National Statistics, the shared services in the Prison Service and the Intellectual Property Office is the appallingly low standard of pay that is accepted there by people with great skills, compared with what is available outside. I think this comparison was made yesterday, about people building a career in the financial areas in London compared with the Civil Service, and it is a no-brainer. Is it your view that the general level of pay among the junior levels in the Civil Service is dreadful? I am giving you these difficult questions; I realise I am really taxing you.

Hugh Lanning: It is low-paid and the public perception is that it is not. Also, there is no light at the end of the tunnel. There is no process by which there is any engagement about thinking that it might change at some fair point. A statement was made earlier on about fair comparison or paying a rate that is reasonable. How do we come at that? At the moment, there is a pretence of pay delegation, which is a fiction. If you look at it, there is a pay freeze/pay cap, conditions of service and all of the things that have been determined at the centre. All that departments can talk about is not to be flexible and not to do things that are innovative, but to distribute the few crumbs that are left. There is no structured pay system in the Civil Service, so you cannot even have the debate about what should be a fair reward at the centre. There is no discussion taking place around what a proper pay policy should be for the Civil Service.

Q510 Paul Flynn: Finally, would you like to say a word about the way that chiefs and indians are treated? Many of my constituents have been told they have to take on extra jobs. They have to do the job of two people; sometimes, they have to do the job of three people. But when it came to a decision on the top of the Civil Service, when GOD left, he was replaced by a trinity, three people. Why is it one rule for one and a different rule for the lower ranks?

Hugh Lanning: Dave might like to comment on that. The general problem across the whole of the Civil Service is that there have been huge cuts-20% to 30%-at a time when the level of work is increasing, not decreasing, so there is pressure at all levels. I think you will inevitably get into the situation where, if you like, the chiefs will think the problem is lower down, but the number of chiefs has been cut. The Senior Civil Service has been cut as well. I think the issue of resources as a whole is being driven, if you like, purely by, "We need to save 20% to 30%," not what is needed to do it. It is back to the Revenue or back to the level of unemployment and DWP: you need the right number of people to do the job. You cannot just do it arbitrarily and expect the job to be done, unless you get the problem that you are talking about.

Dave Penman: The reality is that the Civil Service at all levels has faced an almost-equivalent cut in numbers-about 20%-including the Senior Civil Service. I do not see this as being about chiefs and indians. There is a really interesting point in the Civil Service Reform Plan, and one I know you are looking at, which is how Government determines an appropriate size and how they match resources to commitments. As a union, we have always taken the view that Government has an elected mandate to determine what it wants to do. That includes the size of the Civil Service. We, as a union, are not going to say, "It should be x amount or y amount," but Government has to genuinely try to match those commitments, which is where we see the tensions and difficulties.

The Department for Education is looking at that, in the zero-based review. We have yet to have, as a union, a proper evaluation of whether or not that has been successful. It was, I think, a genuine attempt to look at what we need to do legislatively, what the priorities of Government and policy are, what is discretionary and how we match resources. I think that is an enormous challenge for Government, because, when it gets it wrong, it is our members who pay the price. Our members are working 10 or 15 extra hours a week to cope with the mismatch of resource and commitment, and it is not an easy thing to do. We are not producing widgets, and you can analyse it to the nth degree. It is a very difficult thing to do, and I think we would welcome the scrutiny of whether the Government is genuinely looking at that issue and trying to match those resources to commitments, at whatever level the Government determines the Civil Service should be.

Q511 Chair: Moving on, on the question of the appointment of Permanent Secretaries, do you think that this threatens to damage the impartiality of the Civil Service if the Government gets its way?

Dave Penman: We would very much, as a union, support the line that has been taken by the Civil Service Commission. We think there is a line to be drawn about that individual choice of a Minister. As you have recognised yourself, and in the experience of your father, Ministers have exerted influence, either overtly or covertly, over the appointment of Permanent Secretaries for a long time, but I think there comes a point where you ask, if a Minister makes a specific choice of a Permanent Secretary and says, "I want that person," on what basis are they doing that?

Many Ministers come with absolutely no management experience whatever, other than managing their own private office, so what are they bringing to the show in relation to that selection and that choice? Inevitably, Ministers are political animals and, therefore, to some degree, either in reality or perception, that is going to look like a political judgment. If I was a Government Minister tasked with enormous reform, with a real challenge and feeling like I was accountable for everything, I would say, "Why can I not just choose the key official in my Government Department?" We have said we absolutely understand that, but we think it has long-term, profound consequences for the Civil Service. Will they want to take that individual with them if they move from one Department to another? What message does that give to civil servants below, if that appointment is perceived to be on the basis of politically agreeing with the Minister-again, real or perception? We very much support the line that the Civil Service Commission has taken, which is trying to square that circle of ministerial influence over appointment without crossing that particular line.

Q512 Chair: Mr Lanning, in the interests of brevity, is there anything you disagree with in that?

Hugh Lanning: I have two things to add. It is not just about the politicisation. We believe in fair and open competition. Also, there was some talk of the New Zealand model. I think that approach would lead to more compartmentalisation. We want cross-departmental work and more flexibility to do things. If you have the direct appointment, with people appointed to a particular post by the Minister, they will live and die in that role and defend that role. They will not take the wider view of the Civil Service or the country as a whole, and that will not be their brief.

Chair: I think we have had a very full set of answers from you. Thank you very much to you both and, if you have anything you want to add, please let us have it in writing. Thank you very much for being with us this morning.

Hugh Lanning: Thank you very much.

Dave Penman: Thank you.

Prepared 5th September 2013