18.Since the start of this Parliament, we produced two substantial reports on the Civil Service: The Minister and the Official: The Fulcrum of Whitehall Effectiveness and Strategic Leadership in the Civil Service: Sustaining Self-Governance and Future Capability while Supporting the Government of the Day. In the wake of the collapse of Carillion, a large facilities management and construction firm that held contracts with the UK Government worth £1,719 million, in January 2018, we launched an inquiry to review the Government’s approach to letting and managing its contracts.
19.The relationship between ministers and the civil servants that serve them was a key aspect of our inquiry into Civil Service Effectiveness. It considered how officials need to balance being fully supportive of the agenda of their ministers with the need to offer them the very best and robust advice, regardless of how unpalatable the minister might find it. Although we were told of instances where ministers suspected their wishes had been ignored or resisted by their officials, our inquiry suggested an exceptionally strong commitment within the Civil Service to carrying out their ministers’ instructions. Indeed, at times, officials have been unwilling to challenge ministers’ instructions, even where doubts exist about their Value for Money. We stressed the continued importance of officials “speaking truth to power” and stressed the need for ministers to create the necessary culture of trust in their departments to encourage them to give their best advice, even where they fear that advice might be unwelcome.
20.The Civil Service needs to be sufficiently equipped with the skills, experience and leadership , both now and in the future, to give ministers the best available advice and administrative capability to deliver their policies and projects. We addressed the crucial issue of Civil Service capability directly in our inquiries on Civil Service Effectiveness and Strategic Leadership in the Civil Service. It is an area where there has been significant change in the last decade. In 2012, the National School for Government was abolished. In its place has emerged a series of specialised academies: while departments continue to oversee the development of subject knowledge, this is increasingly supplemented by technical knowledge driven by cross-departmental Professions and Functions, including through these specialist academies. We viewed the emergence of these academies, and the more general commitment within the Civil Service to developing its own skills in specialist areas, positively. But efforts have been highly decentralised. This has brought benefits, particularly in better integrating the development of skills and knowledge with career progression, something that been lacking historically. However, this has been at the price of consistency. For example, the level of development and integration of the Professions is uneven. Some have academies but many do not. But, most significantly, the means of funding them and the level of resource they receive varies significantly. Furthermore, with learning and development largely delivered through individual departments or through cross-departmental Professions, there is a lack of central leadership for the development of the Civil Service’s stock of skills and, consequently, a lack of coordination and, ultimately, a lack of clear accountability.
21.In addition, the Civil Service Leadership Academy (CSLA) was established in 2017 to provide training for those entering the Senior Civil Service (SCS) for the first time, those recruited to senior roles externally, and those members of the SCS entering new roles that involve a significant increase in their leadership responsibilities. We were pleased to see a body established specifically to build the Civil Service’s leadership capability and we were given a positive impression of its early operation. However, it has lacked the resources to establish a full-time faculty or even a proper location. We found the contrast in its level of funding with that received by the new National Leadership Centre, established to develop the most senior leaders across the public service, stark. We recommended remedying this in the next Spending Review.
22.We have drawn on the accumulated experience of the work of our predecessor committees in our work in this session. Civil Service effectiveness is less about structures and more about culture, by which we mean the values, attitudes and behaviours adopted by people in the organisation. Our two reports focus on how these need to be developed in order to improve effectiveness. Above all, ministers and officials need to develop, and to depend upon, openness and trust in all their working relationships, in order for truth to be told to power.
23.The collapse of Carillion prompted our inquiry into how the Government manages its commercial relationships with the private sector companies it has chosen to rely on to deliver some public services. A key conclusion was that governments have not sufficiently taken into account the state of the markets into which they have let contracts. Carillion was not unique in its strategy of reckless expansion, underbidding to ensure contracts were won, and its payment of unjustifiable dividends. A number of the Carillion’s major competitors with significant Government contracts have announced profit warnings, balance sheet write-downs or required major recapitalisation. Whilst this is the responsibility of the management of those firms, the Government is often in a monopsony position (a single buyer facing many competing sellers) when letting contracts and, as such, its decisions have a significant impact on the market. Decisions to prioritise minimising the cost of the contracts rather than balancing this against Value for Money or to aggressively transfer risk rather than ensure that it sits where it is best managed (as the Government’s guidance suggests) incentivises certain types of behaviour in the market. Furthermore, as the case of Carillion highlights, the Government retains the ultimate responsibility for a service, even when it is outsourced. As such, greater appreciation of when to let contracts, how, and to whom is vital. To address this, our recommendations included a greater development of specialist contracting and contract management capability and the establishment of a Centre for Excellence for public service contracting.
24.Above all, we have learned that successful contracting is as much about human relationships and trust in any single organisation, and that over-reliance on processes and legal agreements alone is bound to lead to misunderstandings and a breakdown of trust.
25.We returned to the work of our predecessor Committee in its report, Accounting for Democracy. Whilst the Committee was satisfied that the integrity of Government accounts in the UK was of a high standard, the accounts were not giving as complete a picture of Government activity and performance as they might. The Committee felt that they could be made more useful for consumers, including Parliament, rather than focussing only on satisfying accounting standards. The Committee set out four purposes that Government accounts should fulfil:
a)To maintain and ensure the House of Commons’ control of Government spending, enabling the House of Commons to hold the Government accountable for its spending;
b)To enable the public and researchers (both in civil society and Parliament) to understand and consider the value for money offered by public spending, so that they can make decisions about the effectiveness, efficiency and economy of particular policies or programmes;
c)To provide a credible and accurate record which can be relied upon;
d)To provide managers inside Departments (including both ministers and civil servants) with the information that they require to run the Departments and its agencies efficiently and effectively.
26.The Government’s (very late) response was broadly positive in tone but did not directly engage with the report’s recommendations. Instead, it proposed a review of Government accounts. In the report we produced to accompany the Government’s response, we made recommendations for the conduct of that review, notably that its membership include external users of accounts. This was accepted and the review completed in April 2019. The review set out some positive commitments for making accounts more user-friendly. However, we hope we will be interrogating the Government about the concrete actions that it is taking to ensure these are put into practice.
27.Our overall impression is that parts of government are far better at conducting public spending control on a year-to-year basis, than on longer-term financial planning and management, but we are pleased that the government is showing an appreciation of what improvements can be made.
28.During the 2017–19 Parliament we held the following three pre-appointment hearings:
29.On each occasion, the Committee was able to endorse the Minister’s recommended candidate and this led to the appointment of all three candidates. However, on all three occasions, the Cabinet Office failed to give the Committee the minimum one week’s notice of the identity of its preferred candidate that its own guidance stipulates. This was disappointing and must be improved for future pre-appointment hearings within the remit of the Cabinet Office. We have also learned how to make pre-appointment hearings most meaningful. It is important for Committees to have early engagement with the appointment process, including how the role is specified and advertised, and of how the interview panel is composed.
30.In September 2018, the Committee published its report Pre-Appointment Hearings: Promoting Best Practice, which outlined best practice in pre-appointment hearings, including the use of questionnaires prior to hearings, and highlighted the urgent need for greater diversity in public appointments. The report recommended that the Cabinet Office list of posts subject to public appointment hearings should be updated but should not be regarded as exhaustive and select committees should not be bound by it. A new list of posts subject to pre-appointment hearing was published by the Cabinet Office in January 2019. The Liaison Committee followed up on the work of PACAC in its own report, Pre-Appointment Hearings, published in June 2019, which includes as an annex, revised guidelines for Select Committees carrying out pre-appointment hearings.
11 5th Report of Session 2017–19 HC 497; 19th Report of Session 2017–19 HC 1536
12 The NAO report that in the 2016–17 financial year, Carillion held 423 contracts with departments and agencies, providing revenue of £1,719 million. See NAO HC 1002 Session 2017–2019
13 7th Report of Session 2017–19 HC 748
14 14th Report of Session 2016–17, HC 95
15 14th Report of Session 2016–17, HC 95, p.4
16 6th Report of Session 2017–19 HC 1197
17 HM Treasury CP 67 April 2019
18 Tenth Report of the Public Administration and Constitutional Affairs Committee, Session 2017–19, , HC 909.
19 See Cabinet Office Guidance: pre-appointment scrutiny by House of Commons select committees, January 2019.
20 Third Report of the Liaison Committee, Session 2017–19, Pre-Appointment Hearings, HC 2307.
Published: 8 October 2019