Public Administration CommitteeWritten evidence submitted by Institute for Government (CSR 5)

Summary

1. For this submission the Institute for Government has drawn on its work on civil service reform, transformation in departments and related issues:

Our Open Letter1 to the leaders of the Civil Service on the key issues we thought they needed to focus on.

Our verdict on the Reform Plan2 when it was published—which in turn drew on our research into the characteristics of successful and unsuccessful reforms3—and used our seven key tests for reform.4

Our recent report Transforming Whitehall presenting our research on how departments are dealing with the significant changes they face.5

2. In summary our answers to your three questions are:

Is the Civil Service in need of radical reform?

Yes.

Are the government’s plans for reform, as outlined in the civil service reform plan and related documents, likely to lead to beneficial changes?

They have the potential to do so. But there two crucial factors which will determine whether this potential is realised:

Is there an effective model for further developing and implementing key reform ideas that applies the lessons of past reform?

Are ministers and senior officials seen to be getting behind the reforms?

What is the best approach for achieving consensus on the future size, shape and functions of the Civil Service?

Firstly, focus on a few departments where there is serious ministerial and official desire for reform. They can demonstrate the promise of some of the potentially radical ideas in the reform plan, and develop a blue print for the department of the future.

Secondly, the Civil Service Board (CSB) should prioritise and support a number of cross departmental opportunities to rethink core functions across Whitehall in order to produce proposals for substantial efficiencies and savings ahead of the next spending review.

Is the Civil Service in need of radical reform?

3. The Civil Service has no choice but to reform. It is at an historic turning point. With the Civil Service radically reducing its numbers of staff and with demands from the Government’s radical reform of public services increasing, it is already undergoing massive change. The question is whether reform can be guided so that the Civil Service will adapt to meet these challenges as a confident and capable organisation. The alternative will be to shrink in both stature and capability.

4. Departments have already moved rapidly to deliver savings and are ahead of the planned “run rate”. The Civil Service has shrunk by over 54,000 full-time equivalents or 11% since the 2010 Spending Review. It is now the smallest it has been for almost 70 years.6

5. As a result many departments are now fundamentally changing how they work to maintain their effectiveness and, in some cases, build whole new capabilities. Departments have restructured, introduced new operating models and developed major policy initiatives and programmes. However many changes are only partially complete. Their ultimate success will depend greatly on continuing ministerial commitment, leadership and engagement with staff.

6. Our report Transforming Whitehall found that change has largely been in isolation within departments. There must be a significant risk that departmental changes will not add up to coherent change across the Civil Service that realises the vision for the future Civil Service set out by Sir Bob Kerslake.

7. Our open letter7 highlighted six key issues that should be the focus of civil service reform. These are the issues we believe require cross civil service action.

(1)Value for money.

(2)Spending review.

(3)Design policies for implementation.

(4)Relationships beyond the Civil Service.

(5)Raising capability and knowledge.

(6)Accountabilities in Whitehall and Westminster.

Are the Government’s plans for reform likely to lead to beneficial changes?

8. Our assessment of the plan was positive. It has the potential to deliver beneficial changes on the most crucial issues demanding civil service wide reforms. It fared quite well when we applied our seven key tests for successful reform8 back in June:

(1)Is there a clear direction of travel for reforms that people understand and support? Direction is clear and speaks to the majority of civil servants. There is a strong emphasis on management, productivity and performance. The case for change goes well beyond savings. There are some powerful statements that signal a serious appetite for reform.

(2)Does the plan address strategic issues like “value for money” and better policy making? The plan covers many of the issues from our open letter, including the two most contentious: accountability; and, questioning the core functions of the Civil Service. There is a strong focus on value for money, capability, effective project management and delivery.

(3)Has work begun to identify cross-departmental savings for the next spending review? This one off challenge was not in the reform plan. But it remains a key test for the new leadership of the Civil Service over the next three years. Delivering existing savings and preparing for the next round will continue to preoccupy departmental leaders.

(4)Is it clear how reform intent will be turned into actions? There are some bold ideas with specific actions. Other areas await a review. For most it is too soon to judge whether the actions will be bold enough to achieve reform. The model for resourcing reviews and actions is critical—it is not yet possible to judge if this is addressed. There are some early signs of variable progress.

(5)Is the dual civil service leadership of Sir Bob and Sir Jeremy effective? The duo is working well so far. They will need stronger support from the Cabinet Office if they and their Civil Service Board are to succeed. They have made some bold statements about what is expected from senior leaders. Senior appointments will need to be watched closely.

(6)Is there the right political support? At this early stage there is sufficient support—despite divergent views in Cabinet. There are elements of reform that could engage the active support of heavyweight Cabinet Ministers. It is important that they do. Support needs to be visible as intent is turned into actions. The Prime Minister has said little about Civil Service reform in public.

(7)Are senior leaders in the civil service committed to leading the plan? There was good initial engagement. The agenda reflected the concerns of senior leaders and frontline staff. However our research into departmental change suggests that so far at least, the Reform Plan has not reached the point where it is a significant component of their approach to delivering major change in their own departments. If this remains the case, the Reform Plan will become less and less relevant to senior leaders in departments. The model for leading and resourcing action should continue to be civil service wide. More, high quality, support will be needed at the centre.

What will determine whether the plan delivers beneficial change?

9. The plan itself is the very first step in the process of delivering the change. Our assessment of the reform plan highlighted two areas of concern where there is great need for sustained attention.

(i) Moving from ideas to actions and implementation

10. Back in June at the early stage of the reform programme we did not expect to see much detail in the plan on how the various reviews will be undertaken and how the actions will be developed and implemented. Instead in our key test 4 above we asked two questions:

Does the plan include some radical ideas which provide the fuel for reform?

Does the model for developing and resourcing actions draw on lessons from past reforms?

11. The answer to the first question was fairly positive. There are some potentially radical ideas in the plan. Whether they have strong backing and are followed through by leaders, or turn out to be drafting flourishes, will be revealed as the plan is updated, and detailed action plans are made public.

12. On the second question there were some encouraging signs. There are some good practical proposals for testing new approaches and learning as they develop. If Sir Bob and Sir Jeremy stay focused on a limited number of the most promising ideas then they are more likely to be able to concentrate enough resources and political support to see them through to success.

13. It is clear that Sir Bob expects senior leaders across the Civil Service to play their part in the development and implementation of actions in the reform plan. There is no doubt that there is significant commitment and enthusiasm from civil servants to take on that role.

14. However unless those leaders have access to full time dedicated resources drawn from around the Civil Service, and are able to call on outside expertise and support, they will struggle to create the capacity and momentum required to turn the reform ideas into effective actions.

15. Additionally, Institute for Government case studies on successful reforms show the need for a strong, credible team at the centre to support those leading reform. The Cabinet Office must provide excellent support and make further resources available to those leading the work. It is unclear that this capacity exists in the present Cabinet Office structure.

16. The long delay in the appointment of key director generals in the Cabinet Office, combined with very high of turnover of those involved in the original development work on the reform plan means that central support for reform is still forming, and therefore inevitably less well placed to have driven significant progress thus far.

17. The Institute will be carrying out research in the new year into the different approaches being taken to developing and implementing key elements of the reform plan.

(ii) Visible leadership and commitment from officials and ministers

18. Back in June there were early signs that the new Civil Service Board was providing effective leadership of parts of the reform plan. There is certainly widespread support for the issues that the plan addresses. But that support can be short lived:

“…savvy civil servants will watch closely to see who is leading and supporting the programme—from officials to politicians. They will spot quickly any divergence, loss of momentum and make their own judgment of whether it’s a programme worth putting their energy into. They need to see action quickly. They will look to see if the bold reforms ideas are being pursued with ambition and the right resources. The positive start will quickly dissipate if there isn’t enough drive, resource or political engagement behind the key actions in the plan.”9

19. If the reform plan is to succeed it needs to be relevant and helpful to those leading and managing the huge changes underway in departments. Because the plan goes with the grain of the Civil Service it started off in a good place. However our research into the state of change in departments suggests that so far at least, the Reform Plan has not reached the point where it is a significant component of their approach to delivering major change. If this remains the case, the Reform Plan will become less and less relevant to senior leaders in departments. Even those senior leaders who believe in the reform plan will not have the capacity or incentives to actively lead corporate work on reform.

20. It is an unusual minister who takes a deep personal interest in Civil Service Reform. However there are elements in the reform plan that could engage the interest of some heavyweight cabinet ministers. Past reforms that succeeded required clear direction from the Prime Minister and senior ministers—and visible Prime Ministerial support to the officials who must shape the ideas and actions for civil service reform. So far the Prime Minister has said virtually nothing in public about civil service reform

21. The increasingly tetchy public debate over the commitment of senior civil servants to reforms championed by ministers will not increase the likelihood of civil servants going the extra mile on reform. As the Institute’s Director put it earlier this year: “It is no good ministers and their advisers treating the civil service as a populist punchbag. They cannot change government on their own. Cameron should publicly and strongly back the civil service leadership and the reform plan. The alternative is that reform will falter, as it so often has in the past, leading to a downward spiral of morale and performance.”10

Some critical risks to successful change

22. The rapid pace of change to date belies a deeper fragility and challenges ahead. Two out of three large change programmes fail to achieve their aims in the private sector and there are reasons to think Whitehall may fare worse: only 27% of staff across the Civil Service think that change is well led and managed in their department; and there is limited experience to draw on of leading change on this scale

23. The Government has already acknowledged that the fiscal consolidation will continue until at least 2016–17. There are major risks when leading change over this timescale with further difficult rounds of savings inevitable. The big risks that we have identified for departmental changes apply just as much to the Civil Service reform programme:

Fragile leadership coalition. The fate of reform plans created solely by the Cabinet Office for the Cabinet Office is miserable. This plan and the programme of reform it supports will be more likely to succeed if it focuses on the issues of greatest concern to senior leaders of the transformations already under way in many of the biggest departments. Our initial rating was optimistic that the plan had enough support to get it off the ground. But the longer it takes to turn ideas into action, and the less reform actions seem relevant and essential to delivering the major changes that departments are having to make—then the greater the risk that the initial leadership coalition will dissolve.

Departments still working in isolation. Leaders in several departments have said it will not be possible to make further large-scale cuts solely within their own departments’ budgets, but barriers to joined-up working remain and the spending review process only reinforces this. In para 30 below we explore some opportunities to start to create purposeful working across departmental boundaries.

Falling staff engagement. A decline in staff engagement would make longer-term support for change extremely difficult. The experience so far has been draining for staff at all levels. Motivating and keeping staff who have the skills will be tough, with many seeing a bleaker future than when they joined with little prospect of improvement. The variable ability of leaders and managers to support their teams has been shown up by the hard realities of downsizing.

What is the best approach for achieving consensus on the future size, shape and functions of the Civil Service?

24. This is a logical question to pose. But it seems an oddly difficult one for the Civil Service to address in practice. One of the more thoughtful pieces of work on this area in recent years was carried out—albeit at a fairly high level—as part of the analysis for the “Excellence and Fairness”11 report at the tail end of the last Labour government. However, it failed to engage civil servants or politicians and sank without trace. This is surprising as it was a very logical exposition of the implications of the previous 10 years of reform.

25. As we said in our open letter both political and Civil Service leaders need to address the fundamental issue of what the enduring functions of the Civil Service are. Consensus is improbable and in fact less important than clarity from senior leaders and a strong sense amongst staff that the direction set will survive the perpetual churn of permanent secretaries, director generals, ministers or a new government.

26. Our research into departmental transformation found that whilst many departments have articulated a different future there were some worrying gaps opening up between the rhetoric of reform and the reality that many staff were experiencing. For many staff the reality so far has been doing similar work in similar ways, but working harder to make up for the absence of former colleagues. When leaders talk about changing the culture and ways of working this is often not perceived to be matched by their behaviour and what is really rewarded and recognised.

27. These gaps are worrying. They need to be closed, and departments need to do so in a way that is consistent with the general direction set out by the Head of the Civil Service when he describes the Civil Service of the future. Long term change requires a broader leadership coalition than is currently the case.

28. There are two quite practical ways to try to get clearer about what the right size, shape and functions are for the future Civil Service.

(i) Focus on a few bold actions in departments where there is serious ministerial and official interest

29. There are some potentially significant actions in the reform plan which could become powerful examples of what the future is going to look like, and what it will mean for the core functions of the Civil Service. CSB should invest significant support into the most promising areas in a selective and ambitious way.

The plan’s first action is a review led by the Cabinet Office to identify further opportunities in this parliament to use alternative delivery models. The review was due to be published in October 2012. It is an opportunity to create a sound framework for making better decisions about when to use which sort of delivery model. But it is as important to challenge whether we have right delivery models for existing functions as it is to make better decisions about when to use new delivery models.

There are actions in the plan that could take the shared services approach well beyond its usual territory into functions like programme and project management, policy and analytical services. They were due to publish plans in October 2012 for sharing others services and expertise. Depending on the scale of ambition in these plans—they could begin to reshape what a typical Whitehall department looks like.

One action in the plan could become a practical way to shed much needed light on the vexed question “what are the core functions of the Civil Service?” This was the decision to “complete a zero based review to identify the resources required to carry out the Department for Education’s statutory and other functions... identifying a range of options for the future size, shape and role of the department.” Done well, with ambition, this review could create strong ministerial interest and become a significant catalyst for further reform.

(ii) Pick a number of cross departmental issues and develop ambitious options for reform and savings ahead of the spending review

30. Our report Transforming Whitehall recommended that civil service leaders address the reasons why departments do not work better together to make savings. Breaking the deeply ingrained cycle of siloed working requires committed leadership from the Head of the Civil Service, Cabinet Secretary and Civil Service Board. It will require:

(a)Identifying the biggest opportunities for reform and sustainable savings;

(b)Making changes to current Treasury rules and processes; and

(c)Actively supporting those in departments to challenge existing priorities and siloed behaviour.

Because this issue preoccupies most senior leaders, there is no question that there is the appetite to work in this issue across departments. If CSB was to actively lead a new approach to working on this issue—it would provide a practical and visible symbol of a more unified approach to change across the Civil Service.

November 2012

1 Riddell, P [Institute for Government March 2012] An open letter: two challenges and an opportunity.

2 Thomas, P [Institute for Government June 2012] Civil Service Reform: our verdict

3 See for example: Haddon, Dr. C, [Institute for Government July 2012] Reforming the Civil Service: The Efficiency Unit in the early 1980’s and the 1987 Next Steps Report; Haddon, Dr. C, [Institute for Government July 2012] Reforming the Civil Service—CMPS

4 Thomas, P [Institute for Government June 2012]. Civil Service Reform: Seven Tests

5 Page, J [Institute for Government November 2012] Whitehall Transformation: leading major change in Whitehall departments

6 ibid

7 Riddell, P [Institute for Government March 2012] An open letter: two challenges and an opportunity.

8 Thomas, P [Institute for Government June 2012]. Civil Service Reform: Seven Tests

9 Thomas, P [Institute for Government June 2012]. Civil Service Reform: Seven Tests

10 Peter Riddell, The Guardian, 17 May 2012

11 Cabinet Office 2008, Excellence and fairness

Prepared 5th September 2013