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

6  Recommendations

124. The centre of government must strengthen its capacity for analysis and assessment of long-term issues and challenges. It should be capable of providing comprehensive advice to ministers based on this foresight and horizon scanning, as the basis for strategy and comprehensive cross-departmental financial planning. This capacity should inform spending reviews and decisions about financial priorities. It must be capable of formulating and overseeing the implementation of cross-government financial plans. The Government should set out how leadership of this work will be shared by the Chief Executive of the Civil Service and the Treasury, under the overall direction of the Cabinet Secretary and Head of the Civil Service, who should have overall responsibility for cross-departmental risk and radical uncertainty, so that this work is integrated. It should be presented in the form of advice to Cabinet, its committees and individual Ministers to inform decisions about spending and policy.

125. In order to demonstrate that the Treasury is fully prepared for another financial crisis as a consequence of the systemic risk arising from the interconnectedness of wider risks and uncertainties, the Treasury should:

·  Plan for a range of different crisis scenarios, based on a broad range of forecasts, data sources and assumptions, and which may be triggered by non-financial as well as financial events;

·  Conduct desk-top simulated exercises ("war games") involving the Bank of England, and the Financial Conduct Authority, to test institutional responses and systemic resilience. This should inform a wider programme of cross-government exercises to test policy resilience (financial, economic, political and strategic); and

·  Ensure that lessons learned from the above are synthesised into policy making and spending decisions, not just to ensure financial and systemic resilience, but to counter the risk of 'secular stagnation' in the economy, by seeking out and exploiting opportunities to promote growth through innovation.

126. The Cabinet Office, working with HM Treasury, should include systemic financial and economic risks in its National Risk Register.

127. The Cabinet Office horizon scanning programme team should be strengthened, to allow it to:

·  promote a stronger appetite in the Civil Service for the understanding of risk, uncertainty and the longer term;

·  continue its efforts to encourage the use of systematic and imaginative analysis of trends, risks and possibilities in the Civil Service professions. In due course it should expand this work from targeting just the policy profession to all the Civil Service professions;

·  find out what horizon scanning and foresight is going on across government and in public bodies, and report annually on the coherence and effectiveness of this work; and

·  work with departments to ensure named individuals are responsible for the quality, quantity and application into policy of this work in each government department.

We recommend that civil servants' career development should include a period with the team in order that they understand its role, and they are exposed to long-term thinking, fresh ideas and challenge, and able to think about systemic risk, risk management, uncertainty and future challenges. This would also provide the team with some much needed extra capacity.

128. All Government strategic planning documents must state how they are using the results of-not just conducting-horizon scanning.

129. The Treasury's next spending review must not be rushed, to allow time necessary for it to be based upon cross governmental analysis and assessment and so to address the cross-governmental impact. It should then be possible for the spending review to reflect other cross-departmental strategy and plans, such as the next Strategic Defence and Security Review and for opportunities in areas such as infrastructure and technology.

130. All Select Committees should inquire at least once per Parliament into government actions to analyse trends, risks and future challenges and opportunities relevant to their remit. We also recommend that in the next Parliament, our successor Committee should lead by example in this, and offer to take a coordinating role in respect of the parallel work of other Select Committees.

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© Parliamentary copyright 2015
Prepared 9 March 2015