Select Committee on Public Service Report



  44.    Up until 1968 the system of promotion to deputy secretary and Permanent Secretary had been largely informal, based on consultations and recommendations to the Prime Minister from the Head of the Civil Service. In 1968 a significant change was made; since then a committee of senior officials has met monthly to assist the Head of the Civil Service in making his recommendations. This committee meets with the approval of the Prime Minister, and is called the Senior Appointments Selection Committee (SASC).

  45.    However, perhaps the most far-reaching change in personnel management at the end of the 60s was the reform of the class system. Reform was recommended by the Fulton Committee (see paragraph 26(b) above), and on the day the Committee's report was published, the Prime Minister, Harold Wilson, announced that consultations would begin immediately with the staff associations to work out a unified grading structure. Problems arose concerning the merging of the Administrative, Executive and Clerical classes, but by August 1969 it was announced that progress had been made, and that it was hoped that an interim settlement would be reached in 1970 and that the changes would be brought into effect in 1971. It was also announced that a scheme would be introduced to establish a unified grading structure for the top of the Civil Service down to the grade of Under Secretary (Grade 3).

  46.    As for the gradings below Under Secretary, a research project was launched to determine the best way forward. About 1,800 Civil Servants were asked to complete questionnaires and were subsequently interviewed. One of the main difficulties was that for certain occupations, the status and pay level of that occupation outside the Civil Service was quite different from the status and pay accorded to that occupation within the Civil Service. A unified grading system, with pay structures attached to grades, could easily result in the Civil Service employing the worst paid actuaries and the best paid social workers in the country. This problem had to be resolved in order for the restructuring to be anything other than superficial.

  47.    Another difficulty associated with classification of staff was the need to make the best use of staff experience and potential. The Civil Service lacked a central record of staff details and so was inexpert at matching people with jobs. To overcome this the Civil Service Department acquired a new computer to run a new Personnel Record Information System for Management (or PRISM). Staff and departments were required to provide PRISM with information that could be used to identify individuals suited to new needs across the service. PRISM replaced the old post-war system of punched cards, which had become progressively inaccurate. PRISM had a relatively short life because of a lack of resources to keep it up to date.

  48.    Nevertheless, efforts to reform the class system continued, and on 1st January 1971, 200,000 members of the administrative, executive and clerical classes were merged into a single 'Administrative Group' within a new General Category of staff. In 1972, other rationalisations resulted first of all in a new Professional and Technology Category, and then in a new Science Category.


  49.    In 1967 there were two methods of recruitment of graduates to administrative work. Method I was based mainly on academic examination papers; Method II was based on the War Office system of selection of officers during the second world war. The Fulton Committee had been critical of the 'cult of the generalist' and had recommended greater weight being given to the subject of a candidate's degree. The Government did not accept this recommendation, and soon after the publication of the Fulton Report reaffirmed its commitment to select the best people as graduate entrants without reference to the subject of the degree. In the late 1960s suspicions existed that Method II produced a possible bias towards candidates from independent (i.e.'public') schools and graduates from the Universities of Oxford and Cambridge. To tackle these suspicions, the Prime Minister set up an enquiry under Mr J. G. W. Davies, who had formerly been the Secretary of the Cambridge University Appointments Board. The Davies Report was published in 1969, and concluded that Method II was 'something to which the public service can point with pride', because, it said, there was no evidence of bias in the procedures of selection or in the selectors themselves. Following this, in the same year, the Method I procedure was terminated.


  50.    The Fulton Report had recommended that those executive activities which were carried out by Government departments (or agencies) should be subject to 'accountable management'. Accountable management is a theory of management which had first been fashionable in the early 1960s. It requires those parts of the organisation which can be grouped into units or 'Centres' to be identified. Those Centres are then held responsible for performance (measured as objectively as possible), and operational costs are precisely allocated to the official in charge of the Centre. The Fulton Committee suggested that such accountable units should be organised into separate 'commands' which would correspond to the 'budget centres' developed in industrial organisations. Thus accountable management bore many resemblances to the general approach known elsewhere as 'management by objectives'.

  51.    Soon after the Fulton Report was published, an inter-departmental committee was set up to develop the concept. Pilot schemes were introduced in the 1970s in the Royal Navy Supply and Transport Services, in the Home Office and in HMSO. In HMSO, for example, consulting accountants advised that the introduction of an integrated budgetary control system on commercial lines would assist it in planning and controlling its activities. There was a move towards repayment by departments using the services of HMSO, and a study of whether departments should be tied to HMSO or should be free to purchase services elsewhere. At the same time, the CSD began to examine similar management trends in the United States of America and in Canada for setting objectives and measuring productivity.


  52.    The Fulton Report recommended that certain kinds of work should be 'hived off' from central Government departments and entrusted to autonomous boards or corporations. These, the Fulton Committee envisaged, would be 'outside the day-to-day control of Ministers and the scrutiny of Parliament'. The Fulton Committee referred to the hiving off of the Post Office (which had already been agreed-see Appendix 4, paragraph (iii)). The Committee recommended that the same approach might be adopted in relation to the Royal Mint, air traffic control and parts of the social services.


  53.    The introduction of both hiving off and accountable management in the late '60s and early '70s had implications for Ministerial accountability. The pilot schemes implementing accountable management in the public sector were all established in areas which had low political significance and which were most nearly comparable to private sector activities. It was much more difficult to envisage how accountable management could be applied where the work of officials was closely associated with policy formulation: in other words it was difficult to see how at any given time Ministers and officials could both be held fully accountable for a single area of activity.

  54.    This area of confusion was thrown into sharp relief by the publication in 1972 of the Report of the Tribunal of Inquiry into the Vehicle and General Affair. The Report criticised two Assistant Secretaries for errors of judgment and accused a named Under Secretary of negligence. Accountable management allowed named officials to be criticised: yet Ministerial accountability prevented them from defending themselves. The Permanent Secretary and Ministers were never called to give evidence before the Tribunal. The situation was made worse by two factors: first, that Ministers did not defend the officials in question, and second that when the House of Commons debated the affair, Ministers were not criticised for absolving themselves of responsibility.

  55.    Hiving off created a different problem of accountability. If a public service is no longer provided by Government, but is instead provided by an autonomous board or corporation which is outside the control of Ministers and the scrutiny of Parliament, then the only oversight to which such service providers might be subjected is that of the Comptroller and Auditor General. In relation to hiving off, the Fulton Committee had been impressed with developments in Sweden, where hiving off had proceeded apace. Sweden, however, did not have any constitutional principle of Ministerial accountability to hinder this progress. The Fulton Committee did take note of this important constitutional difference, but simply pointed out that the questions which Ministerial accountability raised in this country related to the sphere of machinery of Government, and were therefore outside the Committee's terms of reference. The Committee therefore recommended an early and thorough review of the whole question of Ministerial accountability in relation to the hiving off of functions, but no such review was then carried out.


  56.    Throughout the 1970s there continued to be a great deal of structural reorganisation amongst Government departments. No attempt is made here to list or analyse all the changes which were made. However, a list of some of the bigger and more important changes is given in Appendix 5.


  57.    During the 1970s the Civil Service staff associations began to affiliate to the Trades Union Congress. At that time, the TUC worked closely with the Government, and the Civil Service staff associations hoped that affiliation to the TUC would enable them to influence Government policy on Civil Servants' pay. The First Division Association which represented Senior Civil Servants was the last of the associations to affiliate, but it eventually did so in 1977.

  58.    There was great dissatisfaction in the Civil Service over a series of incomes policies which had been more strictly applied in the public sector than in the private sector. The affiliation of the staff associations to the TUC provided the backdrop to what happened next: the Civil Service went on strike. The first strike in the Civil Service (as opposed to the Post Office) was in 1973. It was about pay, but more about Government pay policy and interference with the Civil Service pay system than about the level of specific pay increases. The larger scale strike of 1979 was the first major incidence of industrial action in which the Civil Service, and even Senior Civil Servants, took part. It was a precursor to the much bigger, more serious strike of 1981.


  59.    Soon after her election victory in 1979, the new Prime Minister, Margaret Thatcher, set up a critical review of non-departmental public bodies. The man appointed to conduct the survey was Sir Leo Pliatzky, a recently retired civil servant, who had been Second Permanent Secretary in the Treasury. Pliatzky examined non-departmental public bodies in different categories, asking questions which encouraged them to consider reducing the scope of their activities.

  60.    The Pliatzky Report was published in 1980. It drew attention to the very large number of public bodies which existed: some old, some created after the Fulton recommendations relating to the hiving off of functions. In all, Pliatzky identified 487 executive bodies, with expenditure on capital and current account approaching £5,800 million, and employing approximately 217,000 staff. In addition, Pliatzky identified 1,561 advisory bodies, and found that it was impossible to count the number of tribunals constituted each year.

  61.    The effect of the Pliatzky Report was to encourage the abolition of executive bodies, advisory bodies and tribunals. The Government made statements from time to time announcing how many bodies had been abolished and how much money had been saved as a result. The Report itself recommended 30 executive bodies for abolition in 1980 alone, and estimated that the abolition programme would save the taxpayer £12 million per year at 1980 prices.


  62.    In addition to reforming non-departmental public bodies, Mrs. Thatcher was keen to reform the Civil Service itself. In 1979 she appointed Sir Derek Rayner (now Lord Rayner) as her personal adviser on improving efficiency and eliminating waste in Government. Rayner, who was the joint managing director of Marks and Spencer Ltd, immediately set up the Efficiency Unit.

  63.    The Efficiency Unit undertook intensive, time-limited, studies of specific areas of Government work, and then proposed solutions to problems, and ways to achieve savings and increase efficiency and effectiveness in Government. These "scrutinies" (as the studies were known) replaced the system of Programme Analysis and Review (see paragraph 38), set up in 1970 following the Fulton Report. In the first six years of the Unit's existence, 266 scrutinies were completed, identifying annual savings of £600 million, and additional one-off savings totalling £67 million.

  64.    One early scrutiny took place within the Department of the Environment, where Michael Heseltine was Secretary of State. Following the scrutiny, and in accordance with Mr Heseltine's wishes, a new administrative system, called MINIS (management information system for Ministers) was set up. The system was designed to keep Ministers better informed about the work of their departments, and to stimulate officials to review their activities in order to improve efficiency. It had three stages: (i) the preparation by each section head of a statement about the section's activities and achievements; (ii) the consideration of these statements by Ministers and senior officials, leading to the formulation of decisions about the work of the section; and (iii) the implementation of those decisions within the section. The process is conducted annually, so that performance can be analysed against plans, and so that the information can be kept updated.

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