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

Conclusions and recommendations


1.  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. (Paragraph 22)

2.  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. (Paragraph 23)

3.  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.
(Paragraph 24)

Known trends and drivers

4.  The use of jargon in advice to ministers can obscure meaning, hide inaction and invite ridicule. Terms must be well understood for Government to be able to conduct coherent analysis and for officials to act accordingly. Jargon must not be used to lend a false legitimacy to otherwise ill-thought through ideas, concepts and policies. (Paragraph 45)

5.  Whitehall lacks discipline about how to think about ends, ways and means in part because people use different terms in different contexts. For example, for the Ministry of Defence, strategy is how you achieve policy aims. For many in the rest of Government, the reverse is true: they understand policy to be how you achieve strategy. In our review, strategy includes both: it is about how you choose your long-term objectives, and how you assess the ways and means of achieving them. Both require longer-term thinking. (Paragraph 46)  

6.  Without a coherent understanding in the Civil Service of the trends and drivers of change, the Government will fail to develop associated opportunities, which depend on developing skills, educational opportunities, and investment in the UK's science and industrial base. This is the most effective way to improve productivity and innovation. (Paragraph 47)

7.  The Civil Service usually responds brilliantly to fast onset, short duration crises, with clear responsibility taken by a lead government department. This capability is tried and tested, both through exercises and real events. Market-wide exercises have been conducted to test resilience, but not on a comprehensive basis to address the risk of systemic financial collapse triggered by an unexpected event. Yet there is seldom an emergency that one government department can handle entirely on its own. (Paragraph 48)

Current Government capacity

8.  There is an impressive array of high quality long-term thinking and horizon scanning across Government. The Civil Contingencies Secretariat and Met Office provide an excellent public sector capability. We welcome the Parliamentary Office for Science and Technology's work in this area, prompted by our previous recommendation. We also welcome the establishment of the Cabinet Office's horizon scanning programme team and its aim to coordinate work between departments. However, this central resource is much too small. It needs the capacity and the authority to address gaps and duplications and to coordinate a comprehensive and coherent analysis of the risks and challenges facing the whole of Government. (Paragraph 90)

9.  We commend the development of the National Risk Register. It is a vital tool to enable and encourage thinking about better management of short and long term risks. Together with Whole of Government Accounts, which provides a deeper understanding of long term actual and potential financial liabilities, they set down the context which decision makers must consider. The challenge is to ensure that this information is used in advice to ministers, and not ignored. (Paragraph 91)

10.  The Development, Concepts and Doctrine Centre is generating world class horizon scanning which embraces the whole of Government. Though its work is used across Whitehall it is not even acknowledged by the Cabinet Office in their written evidence. This shows that horizon scanning is still regarded as ancillary rather than central to the business of Government, and requires wider awareness of horizon scanning and changes in attitude. (Paragraph 92)

11.  Long-term thinking and the consideration of emerging trends need to be the driving force behind financial management and far more coordinated with public investment decisions. At present, horizon scanning has little impact on financial planning, though we commend the desire of the Cabinet Secretary, the Treasury Permanent Secretary and the Civil Service Chief Executive to address this problem. (Paragraph 93)

12.  Comprehensive Spending Reviews reflect the Treasury's legitimate preoccupation with setting spending limits department by department. But there is insufficient understanding of the cross-departmental effects of investment decisions, and a lack of capacity to create genuinely cross-government financial plans. The comment made by John Manzoni, Civil Service Chief Executive, that "normally, in the headquarters of a company, […] parts of the Treasury and Cabinet Office […] would be in one headquarters [… which] makes it slightly more complex", shows that the present structure does not serve the interests of financial planning and management. Other governments including the federal governments of Canada and the United States have a single body to conduct financial planning. Some, like the think tank GovernUp, have recommended that functions from the Treasury and Cabinet Office should be combined in a new Office of Budget and Management. The present divide between the Treasury and Cabinet Office is a structural impediment to effective financial planning and management. (Paragraph 94)

Known and unknown risks

13.  A core role of the Civil Service is to look beyond single Parliaments to the long-term. Its leadership must look beyond managing and controlling risks we already understand to systemic risks and uncertainty. The Civil Service value of impartiality implies a responsibility to provide advice about the longer term. Civil servants should not block or subvert ministerial decisions, but they should ensure their advice reflects a frank and honest assessment of the impact of ministers' decisions on the long-term aims of Government. (Paragraph 118)

14.  The Treasury acknowledges 'massive risks like banks collapsing' but has not absorbed the key lesson of the 2007-08 financial crash on the interconnectedness of financial uncertainty with wider uncertainty. This leaves the UK exposed to the risk of another adverse event on the same scale as the 2007-08 financial crash. Financial and economic risks are ever present but not included in the National Risk Register. The Treasury does not therefore consider financial risks alongside other, non-financial risks, such as pandemic flu. The division of responsibilities has changed but the Treasury retains its overall accountability for financial crises. (Paragraph 119)

15.  Resilience depends on informed challenge and putting in place sufficient resources to provide a buffer of redundant capacity. This is harder to justify at times of austerity but it is all the more essential to plan carefully if cuts are being made. Independent advice is key given that group-think contributed to the financial crisis: 'challenge' is not about contesting the authority of ministers, it is robust information and advice to help ministers make their decisions. There is not enough challenge to Government horizon scanning, either from external views or from nurturing dissenting voices within the Civil Service. (Paragraph 120)


16.  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 individuals Ministers to inform decisions about spending and policy. (Paragraph 124)

17.  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.   
(Paragraph 125)

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

19.  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. (Paragraph 127)

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

21.  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. (Paragraph 129)

22.  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. (Paragraph 130)

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Prepared 9 March 2015