Select Committee on Public Service Report



  119.    The Committee invited evidence on the impact which the changes in the public service (described in Parts 2, 3 and 4 of this Report) had had on standards of conduct and service in the public interest, and on the two key questions with which we began our enquiry, and which are set out in paragraph 5 of our Report.

  120.    Many of the changes which have taken place in the Civil Service over the past 30 years have involved the transfer of functions between one Whitehall Department and another. The very extensive changes in the role of the Department of Trade and Industry, for example, were described by the Department's Permanent Secretary, Mr Michael Scholar (QQ 1548-1553) and details of other such changes are given in the earlier parts of this Report. The Committee considered that changes of this kind-the allocation of tasks between Government departments-were unlikely to have any particular impact on Ministerial accountability or standards of conduct or service in the public interest.

  121.    On the other hand we could not reach general conclusions without looking at the detailed changes which had taken place. We therefore concentrated instead on a few individual departments and on the reorganisation of functions within departments and the transfer of functions from the traditionally constituted Whitehall departments to bodies of a different kind. Such changes have been most extensive in the Department of Social Security, where 98 per cent of the staff now work in executive agencies. So we began with that Department and looked at it in some depth. Despite the scale of the changes, it was not clear that the changes had always been understood by the public as a whole.

  122.    We wanted to know as a result whether what had been done had resulted in greater efficiency and whether the results could have been achieved without the structural changes which had taken place. That inevitably led us to ask whether there were not some functions which ought to remain within the traditional Civil Service structure and if so for what reasons. Had any of these functions been transferred to new organs when it would have been better to keep them in the traditional Civil Service structure? That in turn inevitably led us to ask what was the particular quality or benefit of this traditional Civil Service structure. We heard much about the Civil Service ethos and we wanted to know what this really amounted to-whether it was necessary to preserve it and whether it had been damaged in a way harmful to the State by the changes which had taken place. Not least we were interested in knowing whether the traditional accountability of Civil Servants to Ministers and Ministers to Parliament had been changed through the new structures.

  123.    In summary we thus wanted to see first, whether what had happened had led to greater efficiency or an undesirable fragmentation; second, whether there had been real damage to the Civil Service ethos; and third, whether there had been maintained a sufficient degree of accountability to the people through Ministers and Parliament.

  124.    But we wondered, since the reforms recommended by Northcote-Trevelyan and the Fulton Committee had been in operation for so long, what had brought about these enormous changes of which we felt the general public was not really aware? What sparked off the changes since it could not be assumed that they had been self generating from within the Civil Service itself?

  125.    Much of the evidence-indeed most of the oral evidence-which the Committee received about the present condition and future development of the Civil Service was given by Senior Civil Servants. They were most helpful in enabling us to understand the extensive structural changes which have taken place within the Civil Service, but it was not their role to do anything other than explain the policies of their Ministers. For more challenging or possibly critical evidence on these aspects, and on the important question of Ministerial accountability, we had to look beyond serving Ministers and Civil Servants to observers from outside the Civil Service itself. We received much valuable evidence from the latter, but it must be borne in mind that because of the nature of the subject we had under review, the key players were not themselves able to express their personal opinions rather than those of Government to whose policies they were giving effect.


  126.    Some witnesses drew the Committee's attention to changes in the wider world which provided the context within which changes to the Civil Service had taken place. Sir Peter Kemp (Q 1273) suggested that critical events such as the intervention of the International Monetary Fund in Britain's economy in the 1970s prompted a recognition of "the fact that public services were as big as they were and for all that in many people's eyes not delivering the sort of services they expected, the fact that even then the private sector was starting to come forward and starting to deliver better services".

  127.    Sir Peter Carey (Special Report, p 224) said that the Civil Service was geared to the functions of Empire and a domestic economy based on clear, though declining, world industrial leadership. The cult of the gifted amateur was suited to these circumstances of prosperity, but the service was slow to adapt; it did not show adequate or sufficiently early awareness of the changes taking place around it in society, in Britain's position in the world and the technological revolution which was beginning. This failure led to political pressure for change. Sir Christopher Foster and Mr Francis Plowden argued in their written evidence (Special Report, pages 14 to 15) that the failure to improve productivity in public services over many decades had been the most significant indirect cause of the transformation of the public sector that had occurred. Mr David Faulkner, Fellow of St John's College, Oxford, (Evidence volume, p 220) pointed out that the Civil Service was also open to the criticism that it had been exclusive, elitist and inward-looking.

  128.    Referring to the wider public service, Dr Peter Barberis of Manchester Metropolitan University wrote (Special Report, p 213) that during the 1960s and 1970s the public service was sometimes encouraged to overreach itself, to exceed its sphere of competence. "The response in the 1980s and '90s has been to try to fit it with new competencies which are less distinct and which, frankly, are often available elsewhere. In the process it has been robbed of some of its traditional competencies. Some of the privatisations have been obvious candidates-BA, BT, gas, electricity and perhaps local bus deregulation. These are competitive trading activities for which the public service never had a strong claim. ... Both rail and postal services are replete with the latest managerial systems and so, to a consultant, may appear efficient. But the soul of the public service and the sense of public duty have been among the casualties, not to mention the public itself. The notion of doing a good job as an intrinsic virtue, of serving the public, is now very much passé."


The Extent of Change

  129.    The Committee wishes to draw attention to the very extensive nature of the changes to the United Kingdom's Civil Service which have been described in Parts 2, 3 and 4 of this Report. There have been changes in the boundaries of the Civil Service, in its structure within those boundaries and in the way in which the Civil Service is managed.

  130.    Public sector involvement has decreased over the last thirty years.

Most, but not all, of the public sector industries have been sold to the private sector on the Stock Exchange.

Increasingly, functions such as the design, construction, financing and management of individual prisons or highways, or the design and manufacture of defence equipment, or the provision of nuclear energy, have been let to the private sector under long term contracts.

Some central Government functions, such as the Recruitment and Assessment Services and Her Majesty's Stationery Office, have also been sold to the private sector by private treaty, the Civil Servants working there being transferred with the business. Other businesses such as the National Engineering Laboratory, Chessington Computer Centre, the Building Research Establishment, the Transport Research Laboratory, the Teachers Pension Agency and AEA Technology are now also run by the private sector.

  131.    Government Departments are now required by the Office for Public Service regularly to review whether work carried out within the department could more appropriately be done elsewhere. In the 1994 White Paper The Civil Service-Continuity and Change the Government said that the aim of the 1991 Citizen's Charter had been to introduce choice and competition, and that the key questions to be applied to activities performed by the Civil Service were:

Does the job need to be done at all?

If the activity must be carried out, does the Government have to be responsible for it?

Where the Government needs to remain responsible for an activity, does the Government have to carry out the task itself?

Where the job must be carried out within Government is the organisation properly structured and focused on the job to be done?

  132.    The Council of Civil Service Unions quoted in their evidence (Special Report, p 243) a statement made by the then Financial Secretary to the Treasury, Mr Stephen Dorrell, in 1992 (Times, 23.11.92): "we are no longer simply looking for obvious candidates for privatisation. The conventional question was 'what can we sell?' That question must now be turned on its head. Now we should ask ourselves-what must we keep? What is the inescapable core of Government?".

  133.    Functions which remain within the public domain are now carried out either by core Government departments, or by executive agencies working within such departments, or by a wide range of diverse organisations created by or working for the public service. Mr Christopher Clifford of Nuffield College told us (Q 349) "I would say if you look at the history of the Civil Service as far back as Northcote-Trevelyan I cannot think of anything as radical or as far reaching as the Next Step reforms and the later reforms, the interest in market testing and privatisation. Essentially it is leading to the fragmentation, and some might say the breakdown, of what we once knew as the Civil Service." Professor Vernon Bogdanor of Brasenose College, Oxford (Special Report, p 36) wrote that "the public service reforms of the past few years-privatisation, the introduction of executive agencies, market testing, contracting out and the introduction of a more decentralised system of Civil Service pay-are undoubtedly the most important since Gladstone, by Order in Council, laid the foundations of the modern Civil Service in 1870." Professor Peter Hennessy of Queen Mary and Westfield College, London described the Next Step Agencies (Q 1888) as the most dramatic change in the Civil Service since the late 19th century.

  134.    In their written evidence to the Committee (Special Report, p 14) Sir Christopher Foster and Mr Francis Plowden summarised the main structural changes in the public sector as: "privatisation, the contracting out of many public services and inputs into public services, the creation of internal markets and the devolution of many departmental activities to executive agencies which co-exist with many types of quango and often with ill-defined difference of purpose from them". They considered that in general these changes are beneficial, but Foster and Plowden conclude their evidence (p 25) with the observation that the changes constitute a fundamental revolution in public administration and that "whether the outcome is defensible for a modern democratic state depends on identifying and overcoming the problems of adapting the traditional notions of public service, of public ethos and of such constitutional conventions as those of Ministerial responsibility, public accountability and natural justice to these new structures".

  135.    Sir Robin Butler, Secretary of the Cabinet and Head of the Home Civil Service, did not agree. He said (Q 2135) "I do not think it amounts to a constitutional change, but I suppose it is a characteristic of the British constitution that it evolves all the time. You could perhaps describe the presence of more political appointees in the system as a way in which our system of Government and perhaps even our constitution is changing".

  136.    The Council of Civil Service Unions said in written evidence (Special Report, pp 238 to 239) that "one of the most essential characteristics of the British Civil Service since the Northcote-Trevelyan reforms has been its unified hierarchical structure. The Government's objective of transferring Civil Service work to the private sector through initiatives such as Competing for Quality, privatisation, and the Private Finance Initiative has unnecessarily fragmented a Civil Service which is the envy of the world. We would also contend that the Government has pursued these initiatives as ends in themselves, not necessarily in the pursuit of better quality of service or value for money."

  137.    Dame Ann Bowtell, Permanent Secretary of the Department of Social Security, said (Q 414) that by far the most important change made in the Department of Social Security in the last 25 to 30 years was the creation of the executive agencies, which had really transformed the way in which the Department operated. "Unlike some Departments with agencies where the agencies are peripheral to the Department's business, in the DSS the agencies are absolutely central to it; 98 per cent of our staff are in the five large agencies we have created and there is a very small headquarters staff. So the creation of the agencies has really shifted the emphasis in the DSS, so we now have a much clearer emphasis on operations, a much clearer dividing line between operations and policy, and a much greater focus on service to the customer brought about by that re-focusing of the operational effort in agencies".

  138.    The other very significant change Dame Ann mentioned was the introduction of information technology in the Civil Service (Q 414). "In operational areas computers have absolutely transformed the kind of business that it is, and what most of our operational staff are doing now is working with computers to deliver the service, and that has transformed both how we deliver it and what it is we are able to deliver, because we are able to deliver things for the benefit of customers we could not have attempted without computers".

  139.    Mr Michael Scholar described in evidence the extensive structural changes which had from time to time been made in the Department of Trade and Industry. When asked (Q 1558) if such frequent change had a very disruptive effect on the administration of the Department, he replied, "It is something we cope with. I cannot pretend that it is something we seek" and suggested (Q 1560) that a period of stability would be welcome. Asked if he saw scope for further privatisation (Q 1602) he said, "We have had an extensive look at these matters in recent years. Michael Heseltine, before I came to the Department, was very keen to privatise wherever possible. My predecessor and my colleagues went through the Department's activities pretty rigorously at that time to look for areas to privatise. I should be surprised if they overlooked any areas."

  140.    Mr Andrew Turnbull, Permanent Secretary of the Department of the Environment, was asked (Q 2240) whether a period of consolidation would be good for morale. He said, "A period of consolidation after the reviews, yes. I think that this is a period we have to go through. We are not asking for a quiet life, that is certainly not what you would get in any other walk of life. We recognise that change is continuous, but there are ways and ways of going about this process".

  141.    The Civil Service has also undergone enormous human resource changes over the last 30 years. Ms Jenny Thurston of the Council of Civil Service Unions (CCSU) pointed out (QQ 1751 and 1752) that 30 years ago only about a quarter of Civil Servants were female, but that now just over 70 per cent were women. Thirty years ago half of all Civil Servants were employed in London compared with 20 per cent now.

The Manner of Change

  142.    Dr Rosamund M Thomas of the Centre for Business Studies and Public Sector Ethics (Special Report, p 272) wrote that there was a real danger that the extent of the change being carried out in respect of the Civil Service and the machinery of Government was proceeding without adequate public awareness, union consultation, or parliamentary findings and at speed. In the past such changes would have been the subject of a Royal Commission or an independent enquiry or legislation.

  143.    Sir Robin Butler challenged the view that there had been little awareness of the changes taking place in the Civil Service. He said (QQ 2106 to 2109) that the Treasury and Civil Service Committee of the House of Commons had taken a close interest and had received evidence from him and from Ministers among others: "there has been a very good degree of close scrutiny which became very expert scrutiny on the part of that Committee. We have always attached great importance to carrying the Committee with us". He said that the Treasury and Civil Service Committee set up a Sub-Committee on the Civil Service in 1988 when the Next Steps initiative was announced, to examine the proposals and to monitor their implementation, adding "the fact that the House of Commons Committee was accepted on a bi-partisan basis made it, of course, very much easier for us, as Civil Servants, to take a high profile in leading the Civil Service towards it, because we had some assurance that this was not a matter of political controversy and was supported by both parties". Asked (Q 2109) why there was little public awareness of the changes, Sir Robin replied "there could have been, but the fault was that people do not find these management questions very interesting rather than a reluctance on our part. You know, I have tried-and you may say I should have been more successful-to shout this from the rooftops. I would like to get very much more publicity for what is done in the Civil Service".

  144.    Mr Robin Mountfield, Permanent Secretary of the Office of Public Service, said (Q 1983) "a great deal of the so-called Next Steps movement, of course, stemmed from the report in the late 1980s which was pretty heavily discussed at the time. I think that it is absolutely fair to say that the establishment of individual agencies has not been debated, not typically anyway, but the general shift into agency form has been endlessly debated in the select committees of both Houses, in the academic world and so on, and I think that the pros and cons of that are pretty well understood".

  145.    The lack of awareness was, however, confirmed by Dr David Clark, Chancellor of the Duchy of Lancaster, who agreed that the changes which took place over the last 30 years took place without a great deal of public discussion (Q 1842). He confessed that even he had not realised the extent of the changes until he found himself running the Office of Public Service, at which point he was "really quite surprised at the extent of the changes".

  146.    Dr Martin Smith of Sheffield University (Q 399) said that while there had been radical change "and Ministers and senior officials admit there is a change, what they also say is that the constitution has not changed and does not need to change". Sir Christopher Foster said (Q 128) that the trouble was that executive agencies were established on a model taken from private management without much consideration of the likely constitutional consequences: "most previous reforms in the Civil Service had been preceded by very considerable thought and a Royal Commission, and that was not the case with the recent reforms; they were preceded by inquiries often by those already committed to the answers and there was not sufficient time or public debate before the reforms were implemented and that is why now, after the reforms have been implemented, we are discovering that there are serious problems involved with them".

Further Changes?

  147.    One result of the way in which the changes have been introduced is concern about the likely next developments in the process. The National Association of Citizens Advice Bureaux, for example, thought the introduction of executive agencies in the Department of Social Security was a prelude to privatisation. Mr Peter Adeane said (Q 745), "We have had an announcement from the Minister of a number of areas which are going to be put out to privatisation: the Child Benefit operation, the Benefits Agency Medical Services, providing payments of benefit and also the management of local offices will be transferred to the private sector through a long-term partnership. There is also a new idea which will be coming into operation later on this year of a provider/purchaser concept which will mean that it will be a contract between the Benefits Agency and some other organisation, which might be the Agency or might not, to provide particular services, assessing benefit and the like. I think we do have a concern that the ethos might change there because you will then have these organisations which might be private organisations or might be in-house but they will be under tight constraints to deliver a service. We wonder whose concerns will be pre-eminent. Will they be the concerns of the purchaser? To what extent will the concerns of the claimants be recognised?".

  148.    Sir Robin Butler was asked whether, against the background of functions being transferred to agencies and quangos and various other privatised bodies, there would remain a core of the public service resembling the existing Civil Service. He said (Q 2075) "The Civil Service, of course, has been greatly reduced in size. It is now down to 475,000. That is down 125,000 during my period as Head of the Civil Service in ten years. But it is still a very formidable size. It is 475,000 people. Although I expect it will go down further, it will remain a substantial body, so I do not think there is any great danger that there will not be a substantial Civil Service remaining".

  149.    Mr Robin Mountfield said (Q 2028) "I think we are very near to the end of the establishment of agencies of the kind we have had so far. We have got, I think it is 76 per cent, 77 per cent, of the Civil Service in agency form. There are a small number of agencies which the Northern Ireland Office and the Ministry of Defence particularly want to establish. I think that will probably take it up to about 80 per cent maximum". As to future developments, Mr Mountfield thought (Q 2029) the emphasis would increasingly be on improving the links between agencies and making them more sophisticated, using new technologies to co-ordinate the delivery of services from more than one agency to the individual citizen.

  150.    Mr Turnbull described the creation of agencies as more or less finished (Q 2171). He said "this is basically a mature initiative and there are no other plans to create new agencies".

  151.    Dr Clark said to the Committee (Q 1843), "I think we are going to face many changes in public service over the next ten years". When asked as to what those changes might be, it became clear that the Government's concerns about the Civil Service relate mainly to the provision of services to the public. Dr Clark spoke about the Government's plans to further the use of information technology, to centralise the provision of services and to pursue the ideals of the citizen's charter to improve the quality of the service provided (QQ 1852-1854). The Committee notes the Government's intention to publish a White Paper on the Civil Service early in 1998.

The Committee's Conclusions

  152.    The changes in the Civil Service over the last thirty years, and particularly in the latter half of that period, have had the cumulative effect of substantially altering both the nature and the extent of the public sector. The Committee agrees with those witnesses who described the changes as radical and as a fundamental revolution in public administration. In later sections of this Report, we consider the effects of these changes on particular aspects of public administration and on the public service ethos. We address here our concerns about the approach which has been adopted towards changing the public service as a whole.

  153.    The question of what is the proper sphere of Government is one of fundamental importance which should be a matter of wide public debate. We accept the evidence given to us that in the last three decades there was little open or public debate about the extent of the structural changes being made to the Civil Service. The desirability of cross-party consensus in this area was stressed by Lord Callaghan of Cardiff during the debate in the House of Lords on the privatisation of Recruitment and Assessment Services (HL Deb, 8.3.96 col. 546). The result is that, while justifications might be provided for each individual change, no overall strategy or set of guiding principles was worked out in advance. The absence of debate has led to some measure of confusion and doubt, and the Committee is not satisfied that the constitutional implications of the changes were fully thought through before the changes were introduced.

  154.    The Civil Service in the United Kingdom has been described as the envy of the world. We draw attention elsewhere in this Report to its special characteristics: lack of political bias, integrity, impartiality, objectivity, loyalty and freedom from corruption. There has in the last thirty years been a substantial reduction in the extent of operations which are carried out under the auspices of the Civil Service and in accordance with its ethos. Some of those operations are now carried out in whole or in part by companies in the private sector whose primary responsibility is to their shareholders. It may well be that they can provide a better service at lower cost, but the question whether a service should be provided by the traditional Civil Service only, or by public bodies to which powers are delegated or assigned, or by the private sector is not simply a matter of management and efficiency, it is a matter of public policy.

  155.    Dr Clark's proposals for the future seemed to be directed to greater efficiency. They were not, it seemed, related to the clarification of accountability, the preservation of the Civil Service ethos, or the protection of the unity of the Civil Service following the introduction of agencies or the devolution of arrangements for pay and conditions of service. It remains to be seen whether these issues are dealt with the forthcoming White Paper.

  156.    The issue of who should or should not be allowed to provide services in the public interest (and otherwise carry out the functions of Government) has become a matter of political debate. This is partly because the Government, when transferring functions from the public to the private sector, did not make clear which functions of Government they were seeking to relinquish and which to secure; nor did they offer any consistent rationale for the many ways in which Government responsibilities were being devolved and dispersed. Justifications for changes in the Civil Service were often couched in the language of efficiency, effectiveness, service and value for money. The concerns expressed about them tended to focus on responsibility and accountability. We therefore recommend that any significant change in the way in which public services are delivered should be subject to open debate, and that Governments should seek Parliament's views on prospective changes, even those changes which can be implemented using the Royal Prerogative, and without legislation, with a view to obtaining cross-party support.

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