Public Administration CommitteeSupplementary written evidence submitted by FDA (CSR 22)

Introduction

The FDA welcomes the opportunity to provide further evidence to the Public Administration Select Committee’s enquiry into the Government’s plans for Civil Service Reform.

Summary of Supplementary Evidence

The FDA is supportive of reform but is concerned about areas of the Government’s agenda. This supplementary evidence incorporates further discussion and illustration of issues of paucity of reform debate, uncompetitive reward, inadequate resourcing and the dangers of civil service politicisation.

Chapter 1—Question 1

1.1 We reject the notion and tenor of some of the debate on Civil Service Reform that somehow the civil service is “broken” and needs to be “fixed”. The civil service is a large, multi-faceted organisation delivering public services, supporting the Government of the day and developing policy. It deals with issues and complexities that are beyond the experience or knowledge of most private sector organisations.

1.2 Added to this are the demands that change of Government and ministers bring. Policies and priorities change on what can seem like a whim, or in response to unpredictable external events. The political environment and often unrelated influences can result in changes of ministers and priorities overnight. This can have a profound effect on the functioning of a large organisation but this volatility is something the civil service is uniquely capable of, and experienced in, accommodating.

1.3 Like most large organisations, the civil service is constantly evolving in response to the changing operational environment. Ministers are right when they say that civil servants also want reform. Most civil servants can identify where they would want to see change or improvement; are exasperated by what seems like pointless bureaucracy; and have frustrations at long-term cultural problems such as a failure to address areas of under-performance. This is no different from any other large organisation, but in the politicized world of civil service reform it often becomes a stick to beat a previous administration, or a convenient vehicle to pursue a political ideology. The result is that those who could best inform a debate on civil service reform are often marginalised.

1.4 In this environment, championing the civil service can appear defensive and indicative of a failure to accept that reform is needed. That is not the case. However, for many civil servants, the public debate on reform feels neither balanced nor informed. Seldom do ministers praise the civil service or champion its successes, and when they do there is little press interest—conflict makes good column inches, harmony does not. The debate then becomes further distorted, as civil servants are restricted from responding publicly to the criticism levelled at them and it is difficult to justify spending scarce resource simply to respond to criticism or publicise successes.

1.5 It is in this context that civil servants feel let down by ministers when they are seen to criticise them in public. In our evidence to the Senior Salaries Review Body in October 2012 (Appendix 1), we quote senior civil servant (SCS) members’ comments from our annual survey:

“I am sick to death of Government Ministers publically saying or implying we are useless but privately being very grateful for all the work we do.”

“...with constant public statements that we’re not doing a good enough job; you have to take with a pinch of salt and statement of gratitude for what we do.”

1.6 Two-thirds of respondents to our survey indicated they have considered leaving the SCS in the last 12 months, and a similar number indicated they were more inclined to look for a job outside the civil service than 12 months ago.

1.7 There are a number of factors, most notably deficiencies of reward, recognition and resources that have contributed to this, and we will expand upon this elsewhere in the evidence.

Chapter 2—Question 2

2.1 As stated above, seen in the context of ongoing reform the FDA has welcomed a number of the proposals in the Civil Service Reform Plan. In particular, we welcomed the proposals to further improve the fast stream, commitments on strengthening the professions and the Major Projects Leadership Academy. We have provided detail of this in our evidence submitted in December 2012.

2.2 A major concern for the FDA however arose from elements of Chapter 5—the modern employment offer for staff. In reality this has simply been an exercise in worsening, not modernising the “offer” to civil servants. The Government and departments have so far failed to meaningfully engage in a genuine dialogue of what a modern employer would offer, ignoring their own substantial evidence on how far the current total reward package is behind market comparators for FDA members.

2.3 Many civil servants enjoy a rewarding, fulfilling and challenging job. These factors, together with a strong commitment to public service, are vital in minimising staff attrition in the civil service. That is now under threat as the reward element of the employment package continues to decline. There is growing evidence (including the FDA survey of SCS members referred to above) that increasing numbers of senior civil servants are considering alternative employment possibilities and that this has the potential to drain the civil service of skills and experience it needs to ensure that Government functions effectively. It is becoming increasingly likely that a combination of poor comparable pay levels, lack of recognition and inadequate resources resulting in long working hours will result in an exodus of talent once the economy starts to improve. This should be a concern for this and any future Government, but there is little recognition of this growing risk from ministers fixated with reducing staffing Levels.

Chapter 3—Question 3

3.1 The role of non-executive directors has been broadly welcomed and the experience of their contribution to the governance and management of departments has generally been positive. Too often, criticism of performance in the civil service comes from ill-informed observers with little or no experience of the realities of delivering complex public services. There is a real opportunity with non-executive directors to tap in to a broad spectrum of experience covering all sectors and management disciplines.

3.2 Greater consideration should be given to how the experience of non-executives across departments can be harnessed to inform the process of on-going reform.

Chapter 4—Questions 4 and 5

4.1 Opinion seems starkly divided on whether elements of the Government’s Civil Service Reform Plan undermine the very principles that underpin an impartial and permanent civil service, or if they are simply further evolutionary reforms in the operation of the civil service.

4.2 Each of the relevant reforms on their own is a response to a particular set of circumstances and each has the potential to change the nature of the civil service. The question is—taken together, do these reforms fundamentally change the nature of the civil service as we understand it? If they do, what then are the consequences? Change in itself should not be resisted, but the full ramifications of those changes should first be considered.

Strengthened ministerial role in appointments

4.3 The first—and probably most contentious—proposal relates to the strengthened role of a minister in permanent secretary appointments. We recognise that, faced with an important agenda and significant public scrutiny, any minister would see the appointment of the lead civil servant in their department as a decision they would want to influence. As noted above, the priorities of departments can alter with changes of Government, minister or outside events. The adaptability of particular candidates and their skills is therefore critical to responding to these challenges.

4.4 It is vital that a minister has confidence in their permanent secretary, a key relationship for effective Leadership of what may be an organisation with a budget measured in the billions and staff in the tens of thousands. It is vital therefore that ministers have an input in to the skills and competencies required for the role and are able to meaningfully input to the selection of candidates. It is folly to argue otherwise.

4.5 How this is achieved, however, is critical to the longer term consequences. Are we confident that ministers have the necessary capability and experience to make an enduring decision such as the appointment of a permanent secretary? Many ministers have almost no experience of management or business. Some have managed only a handful of staff in a private office. It would be naïve to suggest that ministers would always be immune from being influenced more by an appointee who supported a particular agenda than one who did not, but had the requisite skills.

4.6 There are risks that particular appointments will be closely associated with particular ministers and once re-shuffled to another department the minister would want to take their permanent secretary with them, creating further instability in the civil service.

4.7 Whether overt or covert, the risk is that permanent secretary appointments would be made on the basis of what a candidate believes rather than what they can do. This would overturn a fundamental principle of a non-partisan civil service. This would then permeate below the ranks of permanent secretary, as this would be seen as the path to promotion.

4.8 Reconciling these issues, the legitimate aspiration for a greater ministerial role in appointments with the equally legitimate concerns over the politicisation of appointments, is, we believe, both possible and necessary.

Open policy making

4.9 We await with interest the outcome of the first open policy making initiative. Any civil servant involved in the policy making field will emphasize the importance of external expertise in evidenced based policy making. External research is often commissioned and consultation of stakeholders is routine.

4.10 It is imperative for good Government that policy making remains evidence based. The maintenance of that approach is vital, particularly where many think tanks, research institutes and third sector organisations are rarely free from political or financial influence. There may well be areas of policy development given that it will be difficult to find a truly impartial organisation with expertise in the field. Good policy-making takes time and resource to consult and research; open policy-making should not be seen as a cheap alternative.

4.11 The Government also recognises that “implementing policy should never be separate from making it” in Chapter 3 of the Reform Plan. We have yet to see how this can be reconciled with the objective of effectively outsourcing the majority of policy advice.

Political appointments

4.12 The FDA recognises that as with any large organisation, there needs to be a balance between promoting internal talent and bringing in expertise and experience from outside. The principles of recruitment on merit are at the core of a political impartial civil service. If expertise is sought and not available internally, then recruitment through open and fair selection should follow. We remain skeptical around the requirement to suspend this for particular appointments.

4.13 Recruitment processes can be accelerated whilst still satisfying the requirements of the Civil Service Commission. If individuals are truly outstanding candidates, then they would succeed in any competition. The concern is that these effectively become political appointments, brought in at the behest of ministers. There needs to be clarity over whether an individual is brought in through merit or political sympathies: essentially, the difference between those who can and those who believe.

4.14 There is a clear role for special advisors and in the main they play a vital role in the working of Government, but their role is clear and governed by guidance. It is in the nature of Government that tensions can arise between political priorities and the business of Government. These should be expected in any modern democracy. There needs therefore to be clarity over the nature of a civil servant’s role as distinct from the nature of a political role.

4.15 A permanent and politically impartial civil service is capable of serving and retaining the trust of Governments of any political persuasion. This fundamental principle that underpins the civil service has served many Governments well, including in the creation of the current coalition Government. There is always scope for improvement, but we are not aware of any evidence that the current system is not working.

4.16 Good ministers welcome robust evidence-based challenge, whilst retaining the ultimate power to make decisions on policy. This makes for better Government and better policy development. Effective use of the expertise and experience of a permanent civil service is critical to the success of any minister or Government.

4.17 Ministers come from very different backgrounds and have very different Levels of expertise. The result is that this challenge of “speaking truth unto power” as it is often characterised, can be more or less welcome. Ministers used to operating on a political basis can assume that robust challenge amounts to “blocking” of particular policies. Delivering effective and coherent Government is a complex and difficult task and robust challenge and testing of policy ideas is essential to its success. It is not a fair reflection of reality to represent this as blocking.

4.18 Creating a broader cadre of politically-appointed civil servants may ensure that ministers hear the word “yes” more often, but we remain to be convinced that this would ultimately lead to better Government. It would also require the senior leadership of a department to change with every new Government and potentially with every new ministerial appointment. The Civil Service Reform Plan has commented on the turnover of senior appointments and the need for stability in key appointments and we would support this ambition. Any initiative which undermined this for the most senior roles in a department we believe would be counterproductive.

Chapter 5—Question 6

5.1 Attached is our evidence to the Senior Salaries Review Body from October 2012 (Appendix 1). In this evidence we highlight our major concern that the current system of reward for senior posts—recognised as not being fit for purpose over five years ago—not only remains unreformed, but that the current Government has made clear that it sees no pressing need to address in any meaningful way.

5.2 Comparative pay levels for the grades that FDA represent in the civil service have consistently been behind the market by a significant but varying degree over many years. That gap continues to widen, as data the Government recently supplied to SSRB shows.

Pay band 1

Pay band 2

Pay band 3

£

% of SCS median

£

% of SCS median

£

% of SCS median

SCS median

2009

£73,699

-

£102,005

-

£135,150

-

2010

£73,421

-

£100,000

-

£133,000

-

2011

£72,649

-

£99,959

-

£133,000

-

2012

£72,964

-

£97,900

£131,296

National wider public sector median*

2009

£78,507

106.5%

£125,827

123.4%

-

-

2010

£83,419

113.6%

£133,896

133.9%

-

-

2011

£82,425

113.5%

£146,343

146.4%

-

-

2012

£83,052

113.8%

£136,000

138.9%

-

National private sector median*

2009

£87,447

118.7%

£167,324

164.0%

-

-

2010

£90,953

123.9%

£170,500

170.0%

£267,000

200.8%

2011

£93,019

128.0%

£168,318

168.4%

£299,250

225.0%

2012

£96,134

131.8%

£171,644

175.3%

£298,920

227.7%

*Source: The Hay Group Reward Benchmarking reports dated 2009, 2010, 2011 and 2012

5.3 The gap between the total reward package (including pensions and other benefits) has also been growing over many years. Most civil servants recognise that reward is only one element of the package that motivates them in their daily working life and it would be impossible, both practically and politically, to expect that the civil service would match the pay levels of the most senior roles in the private sector.

5.4 Reward does, however, play an important part in the package that attracts and retains talent. If pay Levels are seen to fall significantly behind the market, then not only does this create a risk of losing key members of staff, but it demotivates the remaining workforce who feel undervalued.

5.5 Civil servants have endured a two-year pay freeze, (three years in the senior civil service) and a cumulative increase in pension contributions resulting for most in net pay falling over a number of years. Further changes to the pension scheme are in the pipeline from 2015, which will further erode the value of the package. Taken together with staff cuts, longer working hours, planned cuts to terms and conditions under the Civil Service Reform Plan and an undermining of their value by public statements from ministers, many feel that their motivation for remaining in the civil service is waning.

5.6 In response to our annual survey members stated:

“My job is rewarding but the increasing hours and responsibility without sufficient pay...coupled with the very negative comments about the inadequacy/incompetence of the SCS in general make me Less motivated to continue working in the public sector...I will have to look elsewhere.”

“The salary gap on ‘like for like’ jobs has to be seen to be believed—probably in the range of 40% or higher.... As a result the brain drain is gathering pace. I am regarded as a high performer who should be looking for promotion to SCS2: but the pay rewards for that would be minimal and the sacrifices in terms of family life significant—the SCS pay system provides no incentives to get on, and every incentive to get out!”

5.7 The result is pay disparities that Lead to resentment, de-motivation and a Long term dual market between internal staff and external hires.

5.8 These issues are not simply confined to the senior civil service, as is evidenced by recent research commissioned by the Government on market-facing pay and published in December 2012.

5.9 The Government cannot simply talk about a world-class civil service, greater accountability, productivity, transparency and risk taking without recognising that the current pay arrangements are completely out of kilter with any market analysis.

Chapter 6—Question 7

6.1 Leadership, good or bad, is often hard to quantify or define. In the civil service this is also complicated by the relationship with ministers and their role in providing Leadership from the Government of the day and determining the resource and priorities for the civil service.

6.2 Ministers often talk of a Lack of bold Leadership and risk taking, yet create an environment which restricts the ability of the most senior managers to demonstrate these skills. Ministers need the political courage to allow their most senior leaders to genuinely manage their organisations with the fear of constant micro-management and bureaucratic restriction placed on them.

6.3 No-one would contest that the civil service needs a strong talent pool of senior Leaders capable of addressing the ever changing demands of Government. The question is how this talent pool is identified, nurtured and deployed. The civil service has a rich pool of talent but does not effectively manage that talent across departmental boundaries.

6.4 Too often in the senior ranks of the civil service individuals are left to their own devices to manage careers. This can lead to behaviours which may benefit individuals, but are not in the longer term interests of the service. Matching of skills to jobs beyond existing departmental boundaries and incentivising genuine cross departmental working are all too rare in the service.

6.5 A genuine commitment to manage the senior civil service as a corporate resource is required to ensure that there are no perverse incentives in progressing an individual’s career. The plans on managing the fast stream are a welcome development in this field and demonstrate that cross departmental talent management can be a reality. The proposals for greater corporate management of the SCS are welcome but as ever these need to be matched with resources and commitment, both politically and within the civil service.

6.6 Senior civil servants are already successful and talented individuals capable of identifying the most effective way to progress their careers. Incentivising corporate behaviours will be critical to the success of any initiative.

Chapter 7—Question 8

7.1 In many parts of the civil service, operational delivery stands alone and departments, agencies and NDPBs operate successfully in isolation.

7.2 At more senior levels, and where there are cross cutting policy or delivery objectives, the operation of delegated departments in a cohesive way can be difficult to manage. Management structures and performance objectives need to reflect the priorities of the Government and policy objective.

7.3 Delegated pay arrangements add complexity to machinery of Government changes, career paths and add very little tangible benefit

Chapter 8—Question 9

8.1 The process of reform is ongoing in the civil service is, to a great extent, independent of the direction of ministers or Government agenda. This ongoing process needs to be properly considered, managed and directed and involve a genuine dialogue with those affected. This, rather than what appears to be a reactive review, is the appropriate option for the civil service, Government and the public.

January 2013

Prepared 5th September 2013