The Minister and the Official: The Fulcrum of Whitehall Effectiveness Contents

3Capability and Priorities

35.Our predecessor committee was critical of the state of workforce planning within the Civil Service. It concluded that the Civil Service did not know what skills it had nor where they were deployed.68 In such an environment, a robust appraisal of where skills gaps exist is not possible.

36.Efforts have been made to address poor workforce planning. Rupert McNeil, the Government’s Chief People Officer, described the cross-government initiatives in this area. He explained that in addition to being employed by their department or agency, the Civil Service assigns its staff to one of 26 cross-departmental “Professions”, reflecting the expertise they are expected to have.69 The Professions are expected to facilitate recruitment of expertise, improve skills and set standards across government, aid retention through offering clearer career paths across government, make sure departments and agencies have the experts they need, and to ensure better succession planning.70 Each Profession has its own competency framework establishing the appropriate skills and knowledge that its members should have regardless of their department. In some instances, such as law and accountancy, this will be determined externally by a professional body. As well as their role in training and accreditation and the promotion of best practice, these Professions have allowed a better picture of the total stock of skills and their deployment across government.71 The ability to take a cross-departmental approach to workforce planning has also been strengthened through the HR Function, overseen by the Chief People Officer.72

37.The government has been determined to increase its cross-government stock of skills in three key areas: commercial; project delivery; and digital. However, in March 2017, the NAO was reiterating concerns that the Civil Service still lacked a detailed knowledge of the skills it has at its disposal or where they are deployed.73 Similarly, the Institute for Government (IfG) has noted that many departments have not had a clear idea of the profession of their employees, suggesting they have only a patchy idea of their stock of skills.74 That appears to have improved, but the IfG report that the Profession of one in ten civil servants is not known.75

38.For effective workforce planning, it is vital that the Civil Service has a comprehensive picture of its stock of skills and expertise. It is more than two years since our predecessor Committee reported on this matter. Progress towards this is welcome but there are still significant gaps in this knowledge. The Government must set out the measures being taken to gather the necessary information on the state of the Whitehall Professions and then to keep this information up to date. This should be set out in its response to this report, with targets and dates for achieving this, and how this will be done, or there can be little confidence that this will ever be achieved.

Prioritisation

39.Our evidence suggests that new government initiatives are introduced without regard for the capacity and skills to implement them. Dave Penman, General Secretary of the FDA, said “when the Government allocates resources to departments as part of the spending round, there is a clear disconnect between what is expected from the Civil Service and the resources it is given”.76 Professor Kakabadse agreed, suggesting that “Too many commitments are concurrently pursued […] The frustration and concern of civil servants attempting to meet the commitments made by the minister and the government is that they are unable to fulfil such a broad range of obligations”.77 John Manzoni, Permanent Secretary in the Cabinet Office and Civil Service Chief Executive, has said that government is “doing 30% too much to do it well” and that “We need to go back, we need to re-plan, we need to be realistic, we can’t do it all”.78

40.The process of exiting the EU has exacerbated this issue in those departments most directly impacted by it. However, the BGI noted that “even before the impact of our departure from the EU, there was widespread agreement that the Civil Service consistently takes on too much change, over timescales that are too tight, and without sufficient investment in the necessary skills and experience”.79 Similarly, the IfG argue that “Even before the result of the EU referendum, the Government was trying to do too much”.80

41.Attempts have been made to address this issue. The most significant of these is the introduction of Single Departmental Plans (SDPs). The aim of these SDPs was to bring clarity to government priorities and the plans to implement them. In particular, they were supposed to ensure that these priorities were properly aligned with the resources available to deliver them.81 However, John Manzoni, Civil Service Chief Executive, conceded that they have not achieved this.82 “Priorities” were too often rather vague statements of intent or platitudinous aspirations. For instance, in the Home Office’s SDP, the entirety of its Brexit-related work on immigration, customs, and security is contained in a single priority of “leaving the European Union” whilst even those departments most affected by Brexit contain only the most cursory references to it.83

42.Jon Thompson, the Permanent Secretary of HMRC, has said that its existing reform agenda cannot be accommodated alongside its Brexit-related workload: “I do not believe that it is possible to take 250 existing programmes of change and simply add Brexit on”.84 Yet its SDP gives little indication that the department has acknowledged the need for significant trade-off.85 The SDPs make no systematic link between priorities and the resources that might be needed to deliver them.86 Without this, “priorities” can continue to be set without any actual sense of priority that an acknowledgement of resource constraint would bring. This was highlighted in reports by the Public Accounts Committee (PAC) on the Department for Business, Energy and Industrial Strategy (BEIS) and on the Department for Environment, Food & Rural Affairs (EFRA) which found no apparent attempt to balance the heavy Brexit-related workload of those departments with their significant domestic policy agenda or efficiency savings.87

43.Two versions of the SDPs are produced: departments produce a more substantial version for internal purposes whilst publishing a much less comprehensive version.88 However, there is no sense that the unpublished versions address the shortcomings that have been identified in the published ones. The NAO reviewed the unpublished SDPs and found that links between objectives and budgets were haphazard at best.89

44.John Manzoni, who has championed the introduction of SDPs in his role as the Civil Service’s Chief Executive, conceded that, to date, they have not succeeded in properly aligning departmental policy with resource. However, he said that SDPs were improving with each iteration and he remained optimistic that they would do eventually achieve this: “Are we there? No. But the direction of travel is good”.90

45.In its report on Accounting for Democracy, our predecessor committee reiterated criticisms of the Single Departmental Plans (SDPs) process made by bodies like the National Audit Office and Institute for Government. The Committee concluded that the SDPs “contain too little detail on either spending or performance”.91 In spite of this criticism, that report concluded that SDPs should be developed and improved rather than abandoned. It also recommended that, subject to the omissions on grounds of national security or commercial confidentiality, full SDPs should be published. We reiterate these recommendations and expect the government to respond positively.

Recruitment

46.Making the Civil Service more “porous” or “permeable” to recruitment from outside has been a priority of the recent reform agenda.92 External recruitment is needed to address areas where the Civil Service lacks the skills it needs and which cannot be filled from within. But broader benefits are also claimed for external recruitment. By recruiting those with previous experience in other sectors, the Civil Service can improve its capacity to interact and work with those sectors in the delivery of policy.93 And by bringing in those with experience gained in other sectors, the Civil Service can learn from best practice in those sectors.94

47.The Civil Service’s default position is for vacancies to be open to internal and external applicants on an equal basis. Nonetheless, Lord Maude criticised the Civil Service’s cultural resistance to incorporating and learning from those recruited externally. He likened the culture to that of an exclusive country club:

anyone who comes in from the outside, if they are going to make progress they have to conform to the rules of the club. There is no sense that the club might learn anything from those who come in from the outside, other than specific hired-hand skills that they have brought in.95

48.Lord Maude was concerned that external hires were not properly incorporated into the Civil Service as a result and, in 2014, hired Catherine Baxendale, an independent HR consultant, to review their experiences. In her report, she portrays a mixed picture with too many instances where external hires were not absorbed successfully and where their experience was not properly drawn on.96 This is a view reiterated in comments from former figures in the Government Digital Service (GDS), for example, who, having been recruited externally, felt frustrated at their inability to effect change on a scale that they had hoped.97

49.The Baxendale Report highlighted a number of areas, such as recruitment processes and talent management, where the Civil Service could improve and could usefully learn from private sector experience and the Civil Service has sought to address these. But at the heart of the problem of assimilating external hires and incorporating their expertise was the Civil Service’s strong internal culture. In some respects, this culture is a positive force. The Baxendale Report highlights the strong public service ethos at its core, for example. However, in other respects the culture is not positive, particularly in its resistance to change and “unwillingness to learn new ways of doing things, or to harness the experience that external hires bring to the organisation”.98 External hires were left feeling excluded and frustrated.99

50.The range of recommendations in that report also included:

51.In addition to induction schemes, the cultural challenges external hires face could be improved through:

52.After apparently receiving fairly cursory attention (Jill Rutter of the IfG described the Government’s initial response as “entirely inadequate”),101 the recommendations in the Baxendale Report are now being addressed. The appointment of a Chief People Officer to head the cross-departmental HR function is evidence that workforce issues are being treated more systematically across government. The Chief People Officer, Rupert McNeil (himself an external hire), told us he found the Baxendale Report helpful in getting to grips with his new role and that many of the Baxendale recommendations have been, or are in the process of being, addressed.102

53.Many of the areas where gaps have been identified—digital, commercial and project management have been identified as priorities—are also in high demand in the private sector and can command a far higher salary there. The BGI notes that “Attracting people from a range of sectors to join and remain within the Civil Service requires a reward package broadly related to that received elsewhere in the economy for similar roles”. Yet the SCS’ reward package, they suggest, is lower than those available not only in the private sector but in similar roles in local government, universities and NHS trusts.103

54.The BGI also warned against what they regard as an overreliance on external recruitment. They suggest that privileging open competition to fill posts risks undermining a more strategic approach to staffing that takes into account the need for workforce planning and preserving a degree of institutional memory.104 Garry Graham of Prospect was also unhappy with what he saw as the privileging of external and, particularly, private sector experience.105 He said:

one of my concerns when I saw the workforce plan was the phrase “external by default”, because it seemed to me to be ideologically driven. There is no private sector organisation of repute that I deal with who has this approach. To use management consultant phrases, they grow their own timber and upon occasion they ventilate their structure as well and they get people in from outside. Taking that kind of proportionate view seems to me to be the sensible way to go.106

55.If the Civil Service is to make appointments based on experience applicants have gained in other sectors, it is important that this experience is exploited as effectively as possible. Not to do so undermines the logic of external recruitment.

56.The appropriate balance between external recruitment and building capacity internally will vary over time. External recruitment is sometimes necessary to address short term skills gaps in key areas. More generally, a degree of external recruitment can be valuable in bringing different experiences and perspectives to the Civil Service. We note the successful external recruitment to key positions in the Civil Service. Some of those appointees were witnesses in this inquiry.

57.We welcome the commitment made to address the recommendations of the Baxendale Report. But better monitoring of this is needed. At a minimum, external hires should be included as a sub-category in the Autumn 2018 Civil Service People Survey.

58.However, the Civil Service must maintain and renew its capacity to generate its own talent and future leadership, which reflects the experience of the vast majority successful organisations.

Churn

59.The lack of a strategic approach to staffing is particularly evident from the rate of churn: the rapid turnover of officials in key posts. Currently, the average tenure in a post for members of the SCS is two years.107 This is far shorter than the tenure of many ministers. Only two of the permanent secretaries who were in post at the time of the 2015 General Election remained so by Easter 2018, suggesting that the proposals for five year fixed-term contracts contained in the CSRP would have had very limited impact.108

60.The BGI argue that:

a better balance is required between departmental requirements - for the development of expertise and length of service in each post related to the needs of the job and sustaining the organisation’s corporate memory - and the personal interests of individual members of staff pursued through self-management of careers with little understanding of or guidance on appropriate career paths.109

In their view, a much better balance needs to be struck between the interests of ambitious civil servants, anxious for rapid promotion, and the need for continuity and maintaining corporate memory.

61.The detrimental effect of a rapid turnover of staff has been highlighted as contributory factor in the early problems implementing Universal Credit, in the cancellation of the franchising process for West Coast Mainline in 2012, and in the failure to foresee the financial crisis in 2007.110 Sir Oliver Letwin MP told us that he was frustrated that, after six years in post, the rotation of officials was such that he found himself better versed in the details and history of a project than the officials who were supposed to be advising him on it.111

62.Some of the evidence we received suggested the root cause of churn was the prolonged period of pay restraint in the Civil Service. In a climate of real wage falls in the Civil Service, there is a clear incentive for ambitious civil servants to gain promotion, and the accompanying pay rise, as quickly as possible. Even horizontal moves can lead to a pay increase. Cabinet Secretary Sir Jeremy Heywood said that:

One of the issues we have alighted upon is that in the environment where you have a 1% pay increase, basically the best way in which people can get an increase of more than 1% is to move jobs and get an increase on level transfer or on promotion.112

63.In a similar vein, Catherine Baxendale told us that “the restrictions around pay, people often felt the need to move more than they would have wished, in order to get improvements in their terms and conditions”.113 Inconsistency between departments can exacerbate this, with individuals able to secure themselves a pay increase for what is ostensibly a sideways move to another department.114 In other cases, pay restraint is encouraging officials to leave the service for better remunerated roles in other sectors.115

64.In 2013, the Pivotal Role Allowance (PRA) was introduced to aid the retention of key staff. It enabled the payment of a salary increment where it was deemed “business critical” to retain an individual in their post for a period when there was a strong likelihood that they might leave it. Use of the PRA is restricted: it is limited to the 0.5% of the overall wage bill for the SCS and cases must be approved by the Treasury and Cabinet Office ministers. The Senior Salaries Review Board (SSRB) reported that although the PRA was being used appropriately—only for pivotal roles and withdrawn when the role was no longer critical—it was being underutilised. It has been used only 67 times since its introduction five years ago, with the average increment of around only £16,000 per annum.116 Many departments found the process too bureaucratic and had not made use of them.117

65.In respect of how the Pivotal Role Allowance can help retain experience and expertise in particular posts, it is right to ensure that the PRA is only used for genuinely pivotal roles and that it does not become a de facto means to gain a pay increase. However, if one of the main means of addressing the problem of churn amongst key staff is being undermined by the bureaucracy surrounding its application, it suggests that the safeguards are excessive. We note that the revised strategy outlined in the Cabinet Office’s most recent submission to the SSRB sees the PRA continuing only as a transitional measure as a new reward strategy is developed.118 However, for as long as it remains, it needs to be effective. The Government told us that it “will continue to monitor and review the appropriateness of the PRA process, including the scope for streamlining”.119

66.The Government must complete its review of the Pivotal Role Allowance and we look forward to the next steps in this process being set out in the Government’s response to this report.

67.However, though the current period of prolonged pay restraint may be a contributory factor, it is evidently exacerbating a more long-standing problem. The problem of churn predates this recent period of pay restraint: as long ago as 1968, the Fulton Committee complained that civil servants were moved far too rapidly between posts. As a consequence:

They do not develop adequate knowledge in depth in any one aspect of the department’s work and frequently not even in the general area of activity in which the department operates. Often they are required to give advice on subjects they do not sufficiently understand or to take decisions whose significance they do not fully grasp.120

68.The default position that vacancies should be filled through open competition has created a “free market” in which civil servants have to manage their own careers without regard to departmental priorities. This has come at the expense of a more strategic approach that takes into account the need for stability, succession planning and preserving a degree of institutional memory.121 It also means it is impossible for a civil servant to plan their career progression. Julian McCrae of the IfG said

We used to have overly managed careers […] where people would work in their own department all the way through. It gave them great experience of the department but potentially quite a narrow experience of actually what it is to be an adviser and be part of government. We have moved now to a system where if you want a salary increase you know you need to move job, and you can do that across departments, so it is not even as though your own Permanent Secretary could say, “No, you have to stay in this role”.122

69.Career progression is evidently perceived to be enhanced through the rapid accumulation of the widest range of experience with less regard for developing deeper expertise through remaining in a particular post or area. Sir Oliver Letwin MP said he had been frustrated in his efforts to have an official with a deeper but less broad range of experience promoted.123

70.There has been some official acknowledgement that, in some instances, people move posts too often. For example, the Civil Service Workforce Plan said that “we need to ensure people are encouraged to develop deep expertise, not move too frequently from job to job”.124 However, this remained only an aspiration in the Workforce Plan and had no associated action points.125

71.The issue of churn is a longstanding and widely acknowledged one that has evaded solution to date. Lord Maude said that, in office, he had “totally failed to tackle it”.126 He said he had tried to reverse the “free market” for Civil Service jobs in a limited way by creating a cadre of current and future leaders—the High Potential Stream—whose moves would be strategically managed according to departmental priorities as well as through restricting the right of SROs to move posts.127

72.The Government’s recent submission to the SSRB clearly accepts that there is a problem with churn. It outlines a new framework for SCS pay which has as its key principles:

73.The framework places a much greater focus on the Civil Service Professions as the foundational structure for pay, using them to bring consistency to pay across departments. Under the framework, for remuneration purposes the Professions would be divided into three categories. Category A would comprise most of the Civil Service-wide Professions. Category B would include a handful of “market-facing” Professions where the far higher salaries available in the private sector is having a detrimental impact on Civil Service recruitment and retention. Category C would include the high skilled but niche Professions concentrated in individual departments. Category B Professions would be paid at a higher rate.

74.In addition to reducing churn through removing differences in pay between departments, it is further targeted with a “carrot and stick approach”. The carrot is through giving departments the autonomy to concentrate pay awards on high performers, meaning that pay rises are not dependent on officials moving to new roles. The stick comes from eliminating pay rises from level transfers and limiting pay rises from promotion to 10% or the bottom rung of the scale of the new post at Director and Deputy Director grades.129

75.The average time in post for the Senior Civil Service is less than two years. This is shorter than the tenure of many of the ministers they serve, and makes a nonsense of the idea of a permanent Civil Service providing ministers with the subject expertise, long experience and corporate memory they are entitled to expect. The Fulton Committee’s 1968 report on the Civil Service criticised “the cult of the generalist”,130 but the evidence is that this persists. The system fails to value subject expertise and relevant experience in the field. A departmental permanent secretary in particular should be the pre-eminent policy and delivery expert in their field, but many appointments of permanent secretaries are made from outside the department.

76.Just as the Civil Service as a whole needs to concentrate more on developing its own talent and future leadership, so departments need to do so as well. We expect the government to demonstrate it is giving this aspect of Civil Service effectiveness some fresh thinking in its response to this report.

77.The issue of churn and “the cult of the generalist” has been identified as an issue under successive governments but the problem persists. Complaints about churn predate the present period of pay restraint of the last ten years, suggesting that pay is not the only, or even the major, cause of the problem. The perception amongst civil servants seems to be that the best route to seniority is through rapid movement. Until depth of knowledge or specialism provide a similar prospect of career progression, churn is likely to remain an issue.

78.The Professions have developed unevenly. They are structured differently, have differently degrees of leadership, and varying degrees of integration.131 Garry Graham of Prospect told us that 72% of its members had little or no engagement with their profession.132 Given this, we are not convinced that the current Professions are robust or coherent enough to provide the basis for a Civil Service-wide reform of pay.

79.We welcome the Government’s acknowledgement of the issue of churn and the need to reward the development of specialist skills and deep knowledge. But, to date, only limited initiatives have addressed this. The problem goes to the heart of how the Civil Service thinks about itself and how it plans remain self-sustaining.

80.We are concerned that the system of cross-government Professions is insufficiently developed to provide the basis for the strategy contained in the Cabinet Office’s submission to the SSRB. Before any strategy introduced, we recommend the Cabinet Office undertake a review of the readiness and embeddedness of the Professions to address churn, and how they will also address the need to strengthen experience and expertise relevant to each government department.


68 PASC Developing Civil Service Skills: A Unified Approach 4th Report of Session 2014–15 HC 112, paras 18–21

69 There are currently 26 Professions. These differ from the 12 cross-government “Functions” which have been established to provide better coordination across government. We discuss Professions and Functions in more detail in Chapter 4

71 Q469 (Rupert McNeil)

72 Civil Service Civil Service Human Resources Function 20 January 2016. We address Functions in detail in the next chapter.

73 NAO Capability in the Civil Service HC 919 Session 2016–17, paras 2.4–2.8

74 Gavin Freeguard et al Whitehall Monitor 2015: The Coalition in 163 Charts Institute for Government 2015 p.70

75 Gavin Freeguard et al Whitehall Monitor 2018 The General Election, Brexit and Beyond Institute for Government 2018, p.40

76 Q123

77 CSE0014, section 9

78 S.Brecknell “Civil service leaders must re-prioritise for Brexit, says chief John Manzoni” Civil Service World 9 November 2016. Also Gavin Freeguard et al. Whitehall Monitor Institute for Government 2017, p.6

79 CSE0004, para. 9

80 Gavin Freeguard et al. Whitehall Monitor Institute for Government 2017, p.6

81 Lewis Lloyd Burying Brexit in the Government’s plans Institute for Government 22 December 2017

82 Q471 (John Manzoni)

83 Gavin Freeguard Single Departmental Plans have improved but they need to go further Institute for Government 2 January 2018

84 Oral evidence taken before the Public Accounts Committee on 25 October 2017 HC (2017–18) 401 Q21 (Jon Thompson)

85 HMRC HM Revenue and Customs Single Departmental Plan 14 December 2017 para. 2.3

86 Q471 (John Manzoni)

88 In its report on Accounting for Democracy, our predecessor Committee recommended that the Government should publish the internal SDPs. At the time of writing, we have received the Government’s response and are now considering it. See PACAC Accounting for Democracy: Making Sure Parliament, the People and Ministers Know How and Why Public Money is Spent 14th Report of Session 2016–17 HC 95

89 National Audit Office, Government’s management of its performance: progress with single departmental plans, Session 2016–17, HC 872, July 2016, p.40

90 Q471 (John Manzoni)

92 Q249 (Lord Maude); Civil Service Civil Service Workforce Plan 2016–2020 2016, p.2

95 Q249

96 Q12 (Catherine Baxendale); Catherine Baxendale How to Best Attract, Induct and Retain Talent recruited into the Senior Civil Service September 2014 paras 2.3–2.5

97 See B Glick “Interview: Government digital chief Mike Bracken – why I quit” Computer Weekly 13 August 2015

101 O Wright “Senior Civil Service is like a ‘snake pit’ that isolates and rejects outsiders, report warns” Independent 11 October 2015

102 Q503; CSE0015 (Cabinet Office)

103 CSE0004 (BGI), para. 14

104 CSE0004, para. 12

105 For example, the Civil Service Reform Plan included an objective that candidates for permanent secretary posts in large delivery departments should have a minimum of two years commercial and operational experience (p.25). Commercial experience was defined as having experienced “the motivation and approach of a private sector, profit driven organisation”. The majority of the existing post holders fulfilled the criteria. Cabinet Office Permanent Secretaries’ Operational and Commercial Experience 14 January 2015

106 Q206

107 Letter from Oliver Dowden MP, 21st May 2018

108 Gavin Freeguard et al Whitehall Monitor 2018 The General Election, Brexit and Beyond Institute for Government 2018, p.35; Cabinet Office Civil Service Reform Plan: One Year On 2013, p.31

109 CSE0004, para. 10

110 NAO Universal Credit: early progress HC 621 Session 2013–14 paras 3.29–3.31; NAO Lessons from cancelling the InterCity West Coast franchise competition HC 796 Session 2012–13, paras 2.5–2.12; S White Review of HM Treasury’s management response to the financial crisis 2012 HM Treasury 2012, para. 4.14

111 Q263 (Sir Oliver Letwin MP)

112 Q476 (Sir Jeremy Heywood)

113 Q37 (Catherine Baxendale). See also CSE0004 (BGI), para. 14; CSE0014 (Professor Kakabadse), p.22

116 Letter from John Manzoni, 31 January 2018

117 Review Body on Senior Salaries Thirty-Ninth Annual Report on Senior Salaries 2017 Report No.87 Cm9455 July 2017

119 Letter from John Manzoni, 31 January 2018

120 Fulton Committee The Report of the Committee on the Civil Service Cmnd 3638 1968, p.18

121 CSE0004 (BGI), paras 10–12

122 Q316

123 Q265

125 CSE004 (BGI), para. 11

126 Q247

127 Q247

130 Fulton Committee The Report of the Committee on the Civil Service Cmnd 3638 1968

131 J. McCrae and J. Gold Professionalising Whitehall Institute for Government 2017

132 Q189




Published: 18 June 2018