Public Administration CommitteeAdditional written evidence submitted by Cabinet Office (CSR 29)

Q1. Why does the Civil Service need reform?

What evidence is there that the performance or morale of the Civil Service needs addressing?

How legitimate is minsters’ public criticism of the Civil Service?

Economic and financial challenges, public service reform and rising consumer expectations mean that the Civil Service needs to operate very differently. The Civil Service needs to do things faster, be smaller, more open and less bureaucratic. Implementing the Civil Service Reform Plan will equip a much smaller Civil Service to meet current and future challenges. The plan sets out a series of practical actions to address long-standing weaknesses and build on existing strengths which, if effectively implemented, will together lead to real change.

We know civil servants want reform. The 2012 People Survey results confirm that there are long standing weaknesses where civil servants want to see improvement. These include better performance management, more active development of careers and, stronger leadership and management of change. The Civil Service Reform Plan was developed after a process of internal and external consultation, including with civil servants themselves.

There has been significant public attention on Civil Service Reform in recent weeks. Like any organisation, the Civil Service needs to continuously improve, and there are parts that do not operate as well as they should. The Reform Plan is about what needs to change for the whole Civil Service to raise its game to the level of the best, and it responds to concerns expressed by Parliament, by Ministers and former Ministers and, most importantly, by civil servants themselves.

Q2. Does the Government’s Civil Service Reform Plan reflect the right approach to the Civil Service?

What other reforms are necessary to improve responsiveness and performance in the Civil Service?

(What) impact will the Government’s reforms have on the ability of the Civil Service to serve the needs of future administrations, in different economic and political circumstances?

The Civil Service is already seeing considerable change in departments, but the scale of the challenges requires a Reform Plan that applies right across the Civil Service. The Plan sets out the priorities for action now focused on five key themes—clarifying the future size and shape of the Civil Service, improving policy making capability, implementing policy and sharpening accountability, building capability by strengthening skills, deploying talent and improving organisational performance across the Civil Service, and creating a modern employment offer for staff that encourages and rewards a productive, professional and engaged workforce.

The Plan is not the last word on reform and should be seen as the first stage of a continuing programme of reform and improvement. Through this programme the Civil Service will become better equipped to deliver the priorities of the Government of the day, and respond to future economic and financial challenges. The focus needs to be on delivering this Reform Plan, and we will publish a “one year on” report to evaluate progress and assess whether the actions remain relevant to the challenges.

Q3. How can corporate governance in the Civil Service be improved?

Can models of governance from the private sector be directly transferable to the public sector?

How can Government ensure that management information is collated usefully and effectively?

Are Non-Executive Directors on departmental boards being used effectively?

Effective corporate governance is essential to implementing the actions in the Civil Service Reform plan, and the establishment of the Enhanced Departmental Boards has demonstrated that there is much we can learn from private sector models of governance. The reshaping of the departmental boards has improved governance across Whitehall and brought a more business-like approach to government. Appointing world-class leaders from the public, private and voluntary sectors as Non-Executive Directors, and having Secretaries of State chair the boards, have been important steps in helping to embed effective change across departments.

Timely collection of relevant, comparable, accurate and reliable Management Information (MI) is vital to ensure that departments are obtaining the best possible value for taxpayers’ money. This will help hold Ministers and permanent secretaries to account. The refreshed Quarterly Data Summary, launched in October 2012, will improve the quality of MI across Government. The Red Tape Challenge for MI was created to reduce the burden for data requests on departments, and has led to a 61% reduction in such requests but there is still more that needs to be done.

The Non-Executive Director community should play a vital part in driving reform. Non-Executives should provide advice and bring an external perspective to the business of government departments. They have made a core impact in departments, bringing with them experience of leading large organisations through change, and delivering major projects.

Non- Executives have made significant contributions to their individual departments, including:

in DfE, Non-Executives advised on—and helped develop—the recent zero-based budget review of the department, as well as supporting the transition of eleven arm’s length bodies into four Executive Agencies;

in DfT, the Lead Non-Executive, Sam Laidlaw, led the review into the West Coast Mainline procurement;

in DECC, the Lead Non-Executive has helped to clarify financial reporting processes so that the Board receives more helpful information; and

in Defra, the Non-Executives participated in Triennial Review planning and a challenge group to bring independent and commercial views to the process.

Non-Executives have been involved in a number of cross-cutting initiatives across government, including:

Civil Service Reform—three Non-Executives are on the Minister for the Cabinet Office’s (MCO) Civil Service Reform Board (CSRB).

Establishing the Major Projects Leadership Academy (MPLA).

Improving departmental business planning and performance indicators—two Non-Executives advise the cross-Whitehall Policy Performing Steering Group.

Q4. To what extent does the Civil Service Reform Plan affect the fundamental principles upon which the Civil Service has operated since the Northcote-Trevelyan report?

Are the Northcote-Trevelyan and Haldane principles for the Civil Service sustainable in the modern world, or should a different model be considered?

The Reform Plan will not alter the Civil Service’s core values—impartiality, objectivity, integrity and honesty—and they will remain central to the ways civil servants do their jobs. What the Plan does recognise is the need to address a culture which is often seen as cautious and slow-moving, focused on process not outcomes, bureaucratic and hierarchical. Every organisation has to re-evaluate what it does well and what it could do better—change is essential if the Civil Service is to meet the challenges of a fast-changing world.

Q5. If policy-making is to be opened up to external organisations, what is the distinctive role of the Civil Service in the modern world?

What are the advantages and disadvantages of a permanent and impartial Civil Service compared to a cabinet or spoils system with more political appointees?

Do the Government’s proposed arrangements for “contestable” policy making exercises do enough to prevent bias and conflicts of interest as well as encouraging experts to take part?

Although many continue to see the policy role as what the Civil Service is about, in fact seven out of ten civil servants work in operational delivery and only a small fraction work in policy.

We will however continue to need excellent policymakers within the Civil Service. At its best policy making in the Civil Service can be highly innovative and effective, but the quality of policy advice is not always consistent or designed with implementation in mind. We must draw on the broadest relevant range of inputs, and make the best use of innovative approaches.

We are working to embed open policy making across Whitehall. The Contestable Policy Fund is one part of this wider open policy making agenda. As we set out in the Reform Plan, the Fund enables Ministers to commission policy advice from outside the Civil Service. It opens up policy making to potential suppliers from a range of fields—including think tanks and academia—bringing in expertise on specific subject matters when it does not already exist in-house. This is one way of incentivising the development of high-quality, creative policy. Successful bidders are subject to contracts to maintain accountability and avoid conflicts of interest.

The permanent and politically impartial Civil Service exists to serve the Government of the day, while retaining the flexibility to serve future Governments. While we are rightly proud of what our Civil Service does it would be arrogant to assume there is nothing we can learn from abroad. The MCO has commissioned a report from IPPR under the Contestable Policy Fund to examine how the Civil Service operates in other countries, and whether there are lessons that can be learned.

Q6. Can, or should, employment terms and conditions in the Civil Service ever be comparable with those for posts of similar seniority and responsibility in the private sector?

The Reform Plan set out the commitment to Civil Service employment terms and conditions of service remaining among the best available. The review of terms and conditions has presented an opportunity to adopt best practices from private and public sectors, creating an employment package that a good, modern employer would offer and tackling those terms that could leave the Civil Service open to criticism.

Pay and other terms in the Senior Civil Service are set at levels that enable us to recruit, retain and motivate our staff. Around 22% of SCS were external to the Civil Service on their entry to the SCS. This illustrates that senior roles in the Civil Service remain attractive in a competitive marketplace. Overall Civil Service turnover rate is lower than that seen in the private and public sectors.

Q7. How effective is the senior leadership of the Civil Service, and how does it compare to previous periods?

Do departmental permanent secretaries embody the correct balance of generalist skills and specialist knowledge and expertise?

What effect has the division of responsibilities between the Cabinet Secretary and Head of the Civil Service had on the Civil Service and its effectiveness?

The Reform Plan set out the aspiration that Permanent Secretaries appointed to the main delivery departments will have had at least two years’ experience in a commercial or operational role. The Cabinet Office published aggregated details of Permanent Secretary experience in December 2012. Currently, four out of fifteen Permanent Secretaries have high levels of operational and commercial experience. This provides a baseline against which we can measure our progress towards a more equal balance between Permanent Secretaries with a background in operational delivery and those with a background principally in policy.

The division of responsibilities between the Cabinet Secretary and Head of the Civil Service is working well. The Cabinet Secretary supports the Prime Minister, the Deputy Prime Minister and the Cabinet as a whole. The Head of the Civil Service concentrates on leading and developing the capability and capacity of the Civil Service, and driving forward reform and modernisation of the Civil Service. Whilst these are two distinct roles, the Head of the Civil Service and Cabinet Secretary are committed to a shared endeavour on implementation of the Reform Plan across departments. This includes encouraging a much greater sense of corporate leadership of the Civil Service, where there is shared engagement in decision making.

Q8. What are the strengths and weaknesses of the current federalised system of Whitehall Departments?

Historically, the Civil Service has operated as a federal model, consisting of a collection of different, and often disparate organisations. This has advantages and disadvantages. It means that departments are free to decide which areas they focus on and can act accordingly, quickly and efficiently. On the other hand, there are many challenges that do not fit neatly into departmental portfolios, and the Civil Service has become too siloed.

One of the most fundamental changes being driven through the Reform Plan is the shift towards a more unified Civil Service. This will ensure greater consistency between departments, so that much more of the Civil Service operates to the standard of the best. This is not just about sharing services which should become the norm, but about embracing a more corporate approach to talent management, capacity building, and performance management. This will require greater joint working across departmental boundaries to tackle cross-cutting issues such as youth employment and fraud, error and debt.

Q9. Does the long-term future of the Civil Service require more comprehensive and deeper consideration and, if so, how should this be done?

The Public Accounts Committee (PAC) has asked the Cabinet Office to make an assessment of departments’ long term operating models. This work is underway. The Civil Service is facing pressing challenges but only by implementing and embedding the Reform Plan actions across departments, and the Civil Service as a whole, will we have the momentum and credibility to further shape the future Civil Service. The Civil Service has always adapted with the times, and flexibility is part of its core strength—the Reform Plan continues that tradition.

March 2013

Prepared 5th September 2013