House of Commons - Leadership for the long term: Whitehall's capacity to address future challenges

Leadership for the long term: Whitehall's capacity to address future challenges - Public Administration Contents

1 Introduction

1. The problem is well-rehearsed. Most policy making is short-termist, reactive and uncoordinated. While the Government rises to the occasion when faced with a crisis, equally vital but less pressing issues which require coordination across departments are not always addressed. These range from the failure to anticipate winter pressures on NHS beds, to the failure to prevent flooding, or failure to respond to the changing intentions of adversaries, leading to military conflict. There are a range of mechanisms for encouraging longer-term thinking which the Government could adopt, as Professor Jonathan Boston of the Victoria University of Wellington has set out.[1] They fall into four categories:

i) changing who makes important decisions,

ii) imposing formal constraints on decision-makers,

iii) changing incentives, and

iv) enhancing the capacity to make far-sighted decisions.

This Report focuses on the fourth category, particularly on the capacity of the Civil Service to give comprehensive and far-sighted advice to UK Government ministers, and the ability to implement policy. Future challenges confront all levels of Government from local councils to international institutions, but this Report focuses on the UK Government and Civil Service.

2. Our inquiry was prompted in part by the 2007-08 financial crisis (see Box 1). We have previously inquired into the strategic challenges facing the UK Government. In April 2012 we published Strategic thinking in Government: without National Strategy, can viable Government strategy emerge? and before that in October 2010, Who does UK National Strategy?.[2] Both reports concluded that to tackle the UK's complex, diverse and unpredictable domestic and global challenges, Government needs more capacity to support strategic leadership. There was little confidence that government policies were informed by a clear, coherent approach. Governing the future, published in 2007 by our predecessor Committee, also urged the Government to take a more coherent approach to strategic thinking.[3]

3. Written submissions and transcripts of our five oral evidence sessions are available on our website at www.parliament.uk/pasc.We are grateful to all those who gave evidence and to our Specialist Advisers, Dr Jamie MacIntosh of UCL and Dr Gillian Stamp, for their help with this inquiry.[4]

Box 1: Financial crisis and aftermath

The financial crisis of 2007-2008 resulted in the threat of total collapse of large financial institutions, the bailout of banks by national Governments, and stock market downturns around the world. Andrew Haldane, Chief Economist at the Bank of England, said in 2012 that: "in terms of the loss of incomes and outputs, this is as bad as a world war. That is the scale we are talking about."[5]
Real UK GDP, 2007-2014, index 2008=100[6]

A group of constitutional experts and economists wrote a letter to The Queen in November 2009 which contended that "the failure to foresee the timing, extent and severity of the crisis and to head it off … was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."[7]
The Treasury published in March 2012 a review of its response to the global financial crisis.[8] This records that as early as 2005 the principal forum for agreeing policy and coordinating action between the Treasury, the Bank of England and the Financial Services Authority, the standing committee on financial stability, identified the lack of a legislative basis to resolve failing banks. The review states that:

"Remedying this was not deemed to be a priority by the Treasury in the context of the benign financial climate. War games were played for the scenario of an individual institution failure but not for a system-wide crisis, which was judged to be highly improbable."

Limitations in government capacity

4. Our inquiry explored the problems and tensions which apply to policy making in the present and as Governments try to plan for the future (see Table 1). They all arise from the attitude, behaviour and structure of Government.

Table 1: Tensions when Governments look ahead

Strong futures analysis capability in central Government Strong external analysis and challenge outside Government

Open publication of futures analysis Quiet influencing freed from political considerations

If analysis looks too far ahead it may be ignored If analysis does not look far enough ahead it may be treated as business-as-usual

Stewardship role of the Civil Service, looking beyond the next election Strong ministerial leadership today

Specialist leadership may be able to think deeply about particular challenges and opportunities, but may lose the broader view Generalist leadership may be able to see the broader view but may be uninformed on particular challenges and opportunities

The centre of Government is able to take a long-term view and challenge departmental thinking Departments have practical experience and in-depth knowledge

Those who fail to learn from history are doomed to repeat it Those who do learn from history might learn how to refight the last war, not the next

SHORT AND INCONSISTENT TIME HORIZONS

5. There is long-term thinking in Government, but the evidence is that the short-term dominates.[9] There is more reward for ministers and civil servants in 'rising to the occasion' than in preventing such occasions from arising in the first place, so that analysis and action are skewed to the short-term, argues the School of International Futures, a consultancy.[10]

6. It is an additional challenge for Ministers and senior officials to find time to engage with issues that might not have an impact for anything up to 50 years, if at all.[11] HM Treasury Permanent Secretary Sir Nicholas Macpherson was our only witness who argued to the contrary. He told us successive Governments had taken long-term decisions on pensions and the age of retirement with "virtually no consequences in the short run" but "very big long-term financial consequences."[12] It is true that Adair Turner's Pensions Commission (2002-06) was identified by the Institute for Government as a policy making success story.[13] However, the sustainability of pensions policy had been the subject of criticism for many years by Select Committees.[14]

7. The time horizons adopted by different departments vary widely, as was shown by evidence to our inquiry on Strategic thinking in Government. Speaking in December 2011, former Special Adviser Matt Cavanagh cited policy on Afghanistan: the Department for International Development were working to a ten year time horizon, the Ministry of Defence were operating on a six month time scale, matching six month tours of operation, and the Foreign and Commonwealth Office on what felt to him like a one week time scale.[15] The Rt Hon Francis Maude MP, Minister for the Cabinet Office, told us that there was no particular future date the Civil Service should look to as it plans its future capacity and capability. He explained:

BEING REACTIVE TO EVENTS AND CRISES, NOT PROACTIVE

8. The ability to pre-empt a crisis can save a Government from enormous financial and political consequences. However, many commentators see government inaction in the face of an impending problem, only to be followed by a feverish response that begins once the crisis hits.[17] As Sir Nicholas Macpherson acknowledged in July 2014, "when projects fail or are running into difficulties, there is a huge amount of activity in the centre."[18] The Public Accounts Committee concluded in October 2014 that "the centre [of Government] is often reactive in its response rather than able to anticipate potentially serious problems."[19]

9. The Prime Minister has acknowledged that the National Security Council has tended to focus on crises rather than longer-term challenges, but appeared sanguine about this:

10. Francis Maude MP told us that government horizon scanning has tended to focus more on threats than opportunities.[21] However, the Government's Chief Scientific Adviser, Sir Mark Walport, has pressed for an emphasis on looking for opportunities: "innovation is essential if we are effectively and cost-effectively to futureproof our national infrastructure."[22]

'RE-FIGHTING THE LAST WAR'

11. There is a risk that policy makers address past problems, not future challenges, as our government witnesses acknowledged. The Minister for Government Policy, the Rt Hon Oliver Letwin MP, in respect of H1N1 swine flu, told us "I think you should always try to learn from what happened last time. You also have to be very careful not to learn the wrong lessons from it and not to think that the future will also look like […] the past".[23] Sir Nicholas Macpherson also shared this view:

Chair: What happens if the next financial crash is of a completely different type?

LACK OF COORDINATION BETWEEN GOVERNMENT DEPARTMENTS

12. We have previously identified the need for work across departments to help Government deal with current issues and react to future challenges.[25] Author and economist Wolfgang Michalski has provided a succinct summary of the problem of cross-cutting problems addressed in isolation by separate public bodies:

A number of our witnesses commented on the inter-connected nature of future challenges.[27] For example, the British Heart Foundation argues that public health prevention should not be the sole responsibility of the Department of Health, since a person's propensity to develop illnesses arises from interactions across Government, from habits learned at school, to the way cities are designed, to employers' responsibilities for workforce wellbeing.[28]

13. The Government acknowledges this problem. As Sir Jeremy Heywood, then Cabinet Secretary and now also Head of the Civil Service put it in July 2014, "many Governments over many years have struggled with the issue of how to ensure that cross-departmental issues are taken forward with the same vigour as issues that fall to one Department."[29] Oliver Letwin also recognised "a persistent tendency [...] for people [...] not to talk sufficiently between Departments and share enough the knowledge which they have and the understandings which they have."[30]

14. This problem affects longer-term thinking in Government. Sir Jeremy told us that "in many individual Departments there are pockets of people doing work on future thinking—horizon-scanning; strategic planning; whatever you want to call it—but […] those people do not join up."[31] The establishment of the Cabinet Office's horizon scanning programme team aims to address this problem. Jon Day, Chairman of the Joint Intelligence Committee, is one of the two senior civil servants to whom the unit's staff report.[32] He told us that: "Each Department has its own horizon scanning policy development machinery" but "this work is stovepiped and inconsistent."[33] This results, said Professor Michael Clarke of the Royal United Services Institute, in "too many overlapping horizon scanning documents."[34]

15. We prompted Jon Day and Professor Dame Sally Davies, the Government's Chief Medical Officer, to explain why there had been such a slow response to the threat posed by the 2014 Ebola outbreak in West Africa. Dame Sally said "there was slowness from everyone, including the WHO [World Health Organisation] and our international partners […] what we expected to happen was the same as in the Democratic Republic of the Congo, where it starts in villages and they isolate it and contain it and it doesn't spread.^"[35] Dame Sally said the lesson is that the WHO needs reform, though later accepted that "we should have discussed it [Ebola] with the Joint Intelligence Committee".[36] We pressed Jon Day to explain why there had been such a slow response to the threat posed by the outbreak. He acknowledged that intelligence processes and analysis of health developments could have been better connected, and he said:

The result was that Ebola was not discussed in the Joint Intelligence Committee, COBR (Cabinet Office Briefing Room, which coordinates the Government's response in an emergency), or the National Security Council until 7 August 2014.[38] The outbreak was first reported in March 2014.[39]

16. Numerous attempts have been made to improve cross-departmental working. Sir Jeremy rejected the criticism that cross-government working by civil servants did not equate to working for the Government as a whole: "if you pull together a group of civil servants and give them a cross-cutting task to work out, they are perfectly capable of working to that common task."[40] Sir Nicholas told us the Treasury had "a role" to play in removing the obstacles to cross-government working.[41]

17. In 2007, the Scottish Government abolished the departmental structure, with head of department roles redefined around outcomes or functions rather than departments, reinforcing the idea of Government as a single organisation with a sole purpose and a single way of setting out and tracking progress towards desired outcomes, the 'National Performance Framework'.[42]

18. There are examples of good cross-government working. In evidence to the Joint Committee on the National Security Strategy in January 2014, the Prime Minister argued that the National Security Council is "a real success" in bringing together different departments' perspectives, "making sure that the great fiefdoms of Whitehall—Defence, the Foreign Office, DfID—play together rather than separately."[43] The Ministry of Defence's report Global Strategic Trends - Out to 2045, was published in June 2014. Rear Admiral John Kingwell, Director of the Ministry of Defence's Development, Concepts and Doctrine Centre, told us that this publication is "the best of class, best of its type […] in the amount of cross-government work and workshops and engagement."[44] We found this work is internationally respected.[45] Campbell McCafferty, Director of the Cabinet Office's Civil Contingencies Secretariat, told us the report is used "to inform the work that we are doing in the national security risk assessment, which will inform the next national security strategy".[46]

19. Major General Jonathan Shaw, former Assistant Chief of the Defence Staff 2009-2012, argued that counter-terrorism was another example of good cross-departmental working, thanks to effective leadership in the Office for Security and Counter-terrorism in the Home Office.[47] A large scale "civil defence preparedness event" called Exercise Watermark took place in March 2011 to test flood readiness, involving more than ten UK government departments.[48] The review team's report found it had "clearly demonstrated that England and Wales has the capability to respond to a severe, widespread flood emergency."[49]

WEAK CENTRE OF GOVERNMENT

20. Strategic capacity at the centre of Government (in the Cabinet Office and HM Treasury) provide a counterbalance to short-term thinking.[50] The Cabinet Office's headcount has increased since 2010 and it is seeking to influence a growing proportion of government spending, and we the Public Administration Select Committee, together with the Public Accounts Committee and the Institute for Government have repeatedly recommended a stronger centre of Government.[51] Central units with a strategic remit have come and gone over the years. The Performance and Innovation Unit was established in 1998. This was succeeded in 2002 by the Prime Minister's Strategy Unit, which was dismantled in 2010. This left a gap in the capacity for identifying and analysing future challenges, in the eyes of the Institute for Government.[52] The Government stated that the "central strategy role" is performed by the Cabinet Office Government Innovation Group, the Horizon Scanning Programme, the Number 10 Policy Unit and the Deputy Prime Minister's Research Unit.[53] However, Major General Shaw said Whitehall lacks a central strong secretariat "that creates government plans, as opposed to merely collating departmental actions, putting a ring around them and calling them a government plan, which is the sum of its individual parts."[54]

21. Voters expect governments to think longer term. Nearly three-quarters of adults polled in August 2014 for the Institute for Government said they would prefer politicians who are focused on the long term-even if that means making decisions more slowly-rather than politicians who prioritise quick action.[55]

22. Change is a constant challenge. Governments cannot foresee all the changes and unexpected shocks that will come, so flexibility, resilience and imagination are essential. Plans must be adjusted in response to political and other developments, rather than fixed upon. The UK must have the capacity to take advantage of trends and shocks, so the Government must see them as opportunities, not just threats.

23. There are good examples of successful cross-government working, including the National Security Council in respect of crisis management, and counter-terrorism policy and planning. We also commend the Government for its intentions in introducing the Better Care Fund, which aims to improve integration between NHS services and social care services, addressing the pressure on the NHS caused by local government spending reductions.

24. These examples of far-sighted policy making demonstrate what is possible. The evidence, however, is that these are the exception. Officials strive to work together but tend to stay within their department boundaries. The UK Government could learn from the Scottish Government, for example, which has restructured so that policy is coordinated across the administration as a whole. We reiterate our conclusion in "Strategic thinking in Government" that the Cabinet Office must be given the means and the influence to act as an effective headquarters of Government or the failure of cross-departmental working will continue to create wasteful conflict. We commend the Cabinet Secretary and Treasury Permanent Secretary for their determination to improve this and we will keep the matter under review.

1 Jonathan Boston, Governing for the Future: How to bring the long-term into short-term political focus, Paper prepared for a seminar at the Centre for Environmental Policy, School of Public Affairs, American University, Washington D.C., November 2014. Back

2 Public Administration Select Committee, Twenty-Fourth Report of Session 2010-12, Strategic thinking in Government: without National Strategy, can viable Government strategy emerge?, HC 1625, April 2012 and Public Administration Select Committee, First Report of Session 2010-12, Who does UK National Strategy?, HC 435, October 2010 Back

3 Public Administration Select Committee, Second Report of Session 2006-07, Governing the future, HC 123i, March 2007 Back

4 Dr Jamie Macintosh, who is a Ministry of Defence employee on secondment as Director of the UCL Institute for Security and Resilience Studies, was appointed as a Specialist Adviser for this inquiry on 10 September 2014. He declared the following interests: Member, Advisory Council of Royal United Services Institute (RUSI), First Division Association, and International Institute of Strategic Studies. Dr Gillian Stamp was appointed as a Specialist Adviser to the Committee on 22 December 2014. She declared no relevant interests. Back

5 'Bank crisis impact bad as world war, Andrew Haldane says', BBC News, 3 December 2012 Back

6 Office for National Statistics, June 2014 Back

7 Press release, British Academy, 22 July 2009, including text of letter Back

8 HM Treasury, Review of HM Treasury's management response to the financial crisis, March 2012 Back

9 For example, Institute of Risk Management (WFC2), Institute for Government (WFC10), School of International Futures (WFC11) Back

10 School of International Futures (WFC11) Back

11 Cabinet Office, Review of cross-government horizon scanning, January 2013 Back

12 Q 262 Back