PART 5: SUMMARY OF GENERAL
EVIDENCE ON THE PUBLIC SERVICE AND THE COMMITTEE'S CONCLUSIONS
AND RECOMMENDATIONS (continued)
Accountability for Policy and Accountability
for Operations
(i) Introduction
311. We have described
in paragraph 299 above how, for each executive agency, the relevant
Minister remains accountable to Parliament for the policy while
the chief executive of the agency is responsible for operations.
Indeed, agency chief executives themselves answer Parliamentary
Questions about the work of their agencies. Yet the 1994 White
Paper The Civil Service-Continuity and Change referred
to "the constitutional principle that it is Ministers who
are accountable to Parliament for all that their departments (including
agencies) do".
312. Much of the debate
about accountability is focused on the assumption that each function
of the Civil Service can be described either as a policy matter,
or as an operational matter. Ministers are then held to be accountable
for policy matters while chief executives are held responsible
for operational matters. The first question which then arises
is whether the distinction between policy and operations is a
valid distinction, and whether it can be clearly made in all,
or even most, cases.
313. The Driver and
Vehicle Licensing Agency is often cited as an example of an agency
where it is easy to distinguish the operation of producing licences
from the policy surrounding the issue of those licences. However,
Sir Geoffrey Wardale, formerly Director General of Organisation
and Establishments in the Department of the Environment, (Special
Report, p 275) challenged even this view. He informed us that
when the new computerised arrangements began in the DVLC (as it
then was) there were unexpected failures in producing licences.
"Parliamentary pressure built up, Ministers were involved,
and action needed to be taken. It was not a question of a division
between policy and execution; execution had, by taking on a political
dimension, become policy. ... It would not have met the situation
to say that the head of the office was responsible for execution
and to visit the whole responsibility on him."
314. Sir William Reid
agreed that difficulties could arise even in relation to the Driver
and Vehicle Licensing Agency. Sir William said (Q 559), "I
remember one of the difficulties that I had to investigate with
the DVLA was their interpretation of some European Directive.
That, I assume, is regarded as policy rather than execution where
they got things entirely the wrong way round with the result that
certain heavy goods vehicle drivers were put out of work because
of a misinterpretation by the DVLA of how to draft a statutory
instrument. ...the DVLA is supposed to be doing simply executive
work, but involved in that executive work was interpreting policy
and because they got it wrong, they found themselves required
to give redress to the sum of about £1 million to someone".
315. Given the problems
which have arisen in the case of the DVLA, and given the fact
that the DVLA is often cited as a model example of an agency where
policy can be clearly distinguished from operations, the Committee
asked itself whether there were any cases where the split between
policy and operations was totally clear.
(ii) Where
the Split is Clear Cut
316. Dame Ann Bowtell
said (QQ 457 and 458) that in the DSS a very clear line was kept
between policy and operations. "Our system is governed by
legislation, so all the Benefits rules, all the Child Support
Agency rules, all the Contributions rules, are laid down in main
and very detailed secondary legislation. Therefore, for us that
makes it a relatively simple distinction. What is in the legislation,
on the whole, is the responsibility of policy. What the agencies
do is deliver what is in the legislation. Now there is a middle
ground which we call operational policy, which I think in some
places raises lots of complications, but ... it is how the agency
delivers services. On the whole, as long as we all work at it,
it does not cause problems. We have not really found serious problems
in drawing the line between the real policy; and, indeed, we encourage
the agencies to make inputs into policy formation and to bring
the benefit of their experience into it. But I think the existence
of the fact that our policy is in legislation makes an enormous
help in drawing those very clear distinctions for us".
317. Aside from this,
the Committee received very little evidence that the split between
policy and operations was ever completely clear.
(iii) Where
the Split is not Clear Cut: the Problem of Definition
318. One factor which
reduces clarity in the policy/operations split is the fact that
definitions change with changing circumstances. In his oral evidence
(Q 127) Professor Bogdanor said "I think that Derek Lewis,
the former [Director General] of the Prison Service, once said
that if it is difficult, it is operational, and there is some
truth in that quip because, after all, it can never be policy
that something goes wrong and, therefore, if something goes wrong,
it must be as a result of operational factors and the danger in
drawing the distinction in that way ... is that Ministers are
enabled to shuffle off responsibility onto officials." Similarly,
Dr Barry J O'Toole pointed out (Special Report, p 267) that since
it is Ministers who decide what policy is and it is Ministers
who decide what operations are, it is Ministers who decide what
they are going to be responsible for.
319. Similarly, Mr Churchyard
of the CPSA said (Q 868), "Without wishing to sound cynical,
I think to some extent we are in Yes, Minister territory
here, are we not, where if a decision is taken which has negative
consequences it is likely to be deemed by Ministers to be an administrative
decision, whereas if it is something which calls for praise and
applause no doubt it would be a policy decision".
320. Professor Bogdanor
drew attention to penal policy and to child support policy as
cases where operations could not be clearly separated from policy.
He wrote in his evidence to us (Special Report, p 36), "Penal
policy and child support policy are highly political services,
capable of losing votes for the governing party. It is unrealistic
to expect Ministers to take vows of passivity in relation to operational
matters in these services. It is impossible, therefore, to ring-fence
an area and declare that it is purely operational. Ministers answerable
to Parliament must have the ultimate right to intervene, if they
so wish, even on matters which might appear purely managerial.
It is no easier, then, to draw a dividing line between policy
and operations in the case of the agencies than it was in the
case of the nationalised industries. The result, therefore, is
a structure in which responsibility, far from being clarified,
is confused."
321. Mr Turnbull gave
as another example the Highways Agency (Q 2162). He told us that
while maintenance and management of roads was uncontroversial,
in relation to the "building of new roads what is operational
and what is policy is more intertwined, but again it is not something
that we find particularly difficult to handle".
322. Professor Bogdanor
in his oral evidence suggested that (Q 147) "the effect [of
introducing executive agencies] has been to confuse accountability
and make it more difficult for Parliament to find out who is to
blame when something goes wrong and that, I believe, is at the
core of accountability-that when something goes wrong in the public
service, who is actually to blame? Is it the Minister? in which
case there should be some sanction, the ultimate sanction being
resignation, or is it officials? and that is the question which
Parliament has to answer when something goes wrong in the public
service".
(iv) The
Impact of Policy on Operations
323. Many witnesses
drew attention to the fact that policy could not be separated
from operations because of the impact which each had on the other.
The Committee wishes first to address the impact of policy on
operations.
324. The impact of policy
on operations is obviously great. Each operation exists only because
a policy requires it: and when the policy changes, the operation
changes too. The Director General of the Prison Service Agency,
Mr Richard Tilt, drew attention to the problem (Q 1470). He said
"One of my roles is to act as the principal policy adviser
to the Home Secretary. ... My other main role is the day-to-day
management of the Prison Service which is operational but, clearly,
in carrying out that second task one runs up against the way in
which policy has been set. So there are occasions when one has
to say to the Home Secretary 'This particular policy is causing
this rather unsatisfactory effect', or 'You ought to know that
this is what is happening on the operational side, and it may
cause difficulties in relation to particular policies'. I do not
think you can separate [policy from operations] in the way that
has been suggested."
325. Another way in
which policy impinges on operations is in the case where an agency
is given an executive task to perform, but not sufficient time
or resources to carry it out properly. Professor Bogdanor (Q 131)
gave a hypothetical example: "suppose a policy is adopted
that there should be more custodial sentences but the money is
not provided to build the prisons needed so that there are, as
a result, prison riots. That may seem to be a failure of management,
an operational failure, but it is arguable that it has arisen
because the resources have not been provided to make the policy
effective".
326. Professor Bogdanor
also drew attention both to the Prison Service and the Child Support
Agency, noting that "in recent times the chief executives
have resigned after public controversy and in both cases it is
arguable that the problems are those of Government, or Government's
organisation of the service and not problems of failure of management."
327. The point is made
in a more general way by Sir William Reid in a report on the Child
Support Agency (Special Report, p 135): "Maladministration
leading to injustice is likely to arise when a new administrative
task is not tested first by a pilot project; where procedures
and technology supporting them are untried; and where quality
of service is subordinated to sheer throughput". In relation
to problems which the Benefits Agency had in introducing the disability
living allowance, Sir William said (Special Report, p 134), "I
found during my investigation that there had been plans to set
up a model office to test the new procedures and systems envisaged
but that those plans had foundered because of pressures of time.
That was particularly unfortunate because it might have helped
the Agency to detect somewhat earlier (and put in hand the appropriate
remedy for) the over-optimistic estimation of initial clearance
rates and the mistake in estimating the volume of renewals".
328. The Committee asked
Ms Ann Chant (Q 527) whether this sort of operational problem
could arise in the Child Support Agency as a result of a policy
decision (such as a decision to cut funding). In response, she
described the procedures which exist to prevent such a problem
arising in the DSS: "there is a sort of iterative process
within the Department-assuming of course the Department has done
its business with the Treasury so we know the slice of cake we
all have to divide amongst us. Then you do your discussions in
a corporate way, and ... of course we do have to take the corporate
good of the whole DSS into account. It would in fact, conversely,
be no good at all to the Department of Social Security if I could
use such incredible eloquence and such wonderful statistics to
get me a much larger set of resources than I actually needed which
made me feel very comfortable as a chief executive, but say the
Contributions Agency were to be denuded and not to operate properly.
So this iterative process includes being a corporate manager as
well as a specific chief executive. But there are two halves to
a budget ... [and] they come together in the business plan. Again
it does not always happen like this, but I could say to my Permanent
Secretary and Ministers, 'If this is what you would wish to give
me, then I could explain to you now very clearly because of the
management information system I have, what I can give you for
that, but I cannot give you all you want'. If I have done my own
professional managerial work properly with appropriate information
systems to back up my argument and I am credible, the judgement
for them will be, 'You have a choice: you can either give me more
resource and get more, or we can negotiate about what you can
get with that resource'. Once I have signed up to that business
plan and done the deal on it, I have agreed, as an agency accounting
officer and on behalf of my staff, that that is a plan I believe
we can realistically deliver".
329. The Committee discussed
this issue at some length with its witnesses from the CPSA. Commenting
(Q 874) on the example of an agency which had had to reduce its
services in a rural area because the Minister had reduced the
funding of the agency, Mr Churchyard said, "if someone in
a rural part of the country is upset and writes in to his MP and
the MP asks a question, the Minister is likely to say, 'I am referring
you to the area director of whatever agency it is and he will
respond'. What he is not going to say is, 'Well, it is a Ministerial
policy decision'. That is not likely to be the outcome. We are
in a very grey area here where it is difficult to precisely pin
down who has got the responsibility. That is one of the consequences
of moving to executive agencies, there is no doubt about that".
(v) The Impact
of Operations on Policy
330. The obverse of
the impact of policy on operations is the impact of operations
on policy. Sir Brian Barder (Special Report, p 218) put it thus:
"policy is often little more than a distillation from the
aggregate of operational decisions."
331. Sir William Reid
gave an example of this phenomenon when speaking about the Child
Support Agency (Q 561). He said that "some of the ways in
which that policy became implemented threw up new areas that required
new policies to be devised and there has been quite a lot of new
legislation on Child Support Agency work thrown up not just by
the execution of the executive work but by the implications for
policy of how that came to pass."
332. It appears to the
Committee that this process of ensuring that operational considerations
are taken into account when formulating policy is very important.
The Committee therefore raised the question whether the introduction
of agencies (and the necessary consequence of attempting to classify
all activities as either "policy" or "operations")
had interfered with that process. On balance, witnesses thought
not. Officials working within agencies felt that they were given
ample opportunity to inform the policy-making process. Mr Richard
Tilt described agency status (Q 1447) as "a helpful management
arrangement". He said (Q 1449) that it was his function to
provide the Home Secretary with policy advice on issues to do
with prisons and (Q 1508) pointed out that there was no residual
part of the Home Office that dealt with prison policy. His colleague
Mr Hugh Taylor reminded the Committee (Q 1516) "that what
was brought into the agency was, in effect, the old set of Home
Office policy divisions which always formed part of the Prison
Department, so there is still that policy input within the Prison
Service. ...we still have relations with other parts of the Home
Office obviously on personnel and finance issues, but also on
what you might call macro-penal policy issues. For example, sentencing
policy as a whole is determined in the Home Office, and at the
moment we are reflecting on that in consultation with Ministers.
We will be in frequent contact with officials in other parts of
the Home Office dealing with sentencing policy on a wider front."
333. Lord Mackay of
Ardbrecknish said (Q 900) that he saw an agency chief executive
as "almost an alternative source of information, of advice
to Ministers, other than the policy section. So this aspect is
quite important. I will not call them competing sources but certainly
they are looking at the issue from a slightly different point
of view. One is looking at how well you actually run the system
and the other policy makers are looking at how you fine-tune the
policy or change the policy, or whatever it might be". He
added (Q 901) that if a policy was going to be difficult to administer,
the sooner Ministers knew about that, the better.
334. This was echoed
by Ms Ann Chant. She explained (QQ 519 and 520) that she was the
Permanent Secretary's and the Secretary of State's principal adviser
on the day-to-day operations of her part of the Department, and
that she monitored policy and evaluated it. It was not her responsibility
to formulate policy but "where applicable, to make suggestions
or comments about how the intention of policy does not seem to
be working out quite that way in practice. Or, knowing the intention,
we may suggest a way that operationally we could achieve the same
thing better". She added (Q 524) "What I do not have
is any responsibility at all for the construction of policy and
the development of policy, but there is indeed a very strong and
very practical and, I think, a now well-developed link certainly
in the DSS, and in other agencies and other departments as well
from my contacts in the chief executive network, that you can
feed in ... and say, 'This would be practical. This would not.
We would suggest this.'"
335. In relation to
his own Department, Mr Michael Scholar described (Q 1572) the
working arrangements between the Department of Trade and Industry
and one of its executive agencies, the Radiocommunications Agency:
"the work of the agency is largely executive in nature: granting
licences for the radio spectrum, policing those licences, monitoring,
and so on. That is its job. It always advises Ministers on the
policy in relation to the radio spectrum, so it is that agency
which took the lead on the recent White Paper on Spectrum Management.
It is that agency which is taking the lead on the Bill going through
Parliament on the auctioning of radio spectrum. Now, those in
the agency who deal with those policy matters work very closely
with those in the core department, for example in our Communication
Industries Directorate, who deal with very closely related topics,
telecommunications and so on. There is very close working and
it is as though, in this respect, the body were not an agency
when it is doing that kind of policy work".
336. Mr Scholar also
said (Q 1632), "An agency can cope perfectly well with giving
policy advice. An agency can cope perfectly well with representing
the British Government at international meetings, which a number
of our agencies do with no problem at all. They function in those
ways as though they were part of the core department". But
he added that if a body was heavily or largely engaged in giving
policy advice on politically sensitive issues, "one does
ask the question, why are they an agency?"
337. The Committee notes
that this great flow of policy advice coming from agencies into
core departments seems to controvert one justification put forward
for the very existence of agencies-that policy and operations
are separable, and that it is better to separate them. It seems
inevitable that agencies should advise on the basis of their experience
of operations and managing, but at the interface of advice from
agencies and advice from core departments it is necessary to ensure
a working relationship, or friction will result. If there is really
so much policy advice coming in from the agencies, it is not clear
how the division of functions between agencies and core departments
is made.
338. Sir Christopher
Foster answered that question in relation to the prison service
(Q 119). "One of the objections about the state of the Prison
Service ... is that there were no Civil Servants left within that
department of the Home Office who had any locus whatsoever
to advise the Home Secretary on the Prison Service, it had all
been hived off to the Prison Service, so that the Prison Service
became in a sense the judge and jury in its own interest. That
was bad. You need a group of Civil Servants at the centre in relation
to all these agencies and quangos whose job it is to balance the
advice and views coming from quangos and executive agencies against
all sources of advice."
339. Sir William Reid
echoed these reservations, saying (Q 555) "I am slightly
concerned about the residue of a large department that has most
of its business hived off into agencies because I do not think
that you can very easily divorce policy aspects from the executive
functions of some of the agencies."
340. It appears to the
Committee that, given the propensity of operational matters to
turn into political matters, and given the very close symbiotic
relationship between policy and operations, there will always
be many cases where it is difficult or impossible to draw a clear
line between policy and operations. In those cases, the question
arises whether agency status is appropriate. Sir Robin Butler
said (Q 2080) "I am very suspicious of this distinction between
policy and management. I have never seen the borderline between
what is put into an agency and what is not as being a borderline
between policy and operations. Even the most mundane operation
has an element of policy about it". The Committee acknowledges
that other factors such as standards of service and staff morale
need to be considered when deciding whether to transfer a function
to an agency. Nevertheless, accountability remains a vitally important
component of agency status, and it is arguable that where agency
status makes accountability more difficult, it is an inappropriate
structure to use.
(vi) Agency
Status?
341. Much of the attention
in this debate is focused on the Prison Service. Lord Armstrong
of Ilminster, for example, (QQ 2 and 3) suggested that the Prison
Service "perhaps was an area in which it might have been
better not to move to an executive agency because it seems to
me that in that service some of the operational issues or some
of the day-to-day issues that arise are highly political and raise
highly political issues such that the Home Secretary and his Ministerial
colleagues simply cannot detach themselves from it in terms of
answerability." He went on to say that "in the Prison
Service at least the former relationship, whereby the Prison Service
was part of the Home Office and the members of the Prison Service
were Civil Servants answerable directly to the Minister, was a
better arrangement." Sir Christopher Foster took the same
view, saying (Q 83) that if a body is like the Prison Service
where it is impossible for Ministers to let well alone, "then
an executive agency or quango is not a sensible way of proceeding".
342. Mr Derek Lewis,
former Director-General of the Prison Service, agreed (Special
Report, pp 260 to 261) that there was difficulty in defining precisely
who takes what decisions or when the Home Secretary should be
involved. "When the Prison Service framework document was
originally written, it was decided that it was too large and complex
a task to define precisely what was policy and what was operational
in all possible circumstances. It was therefore decided to set
out only general principles without providing any rules on interpretation.
This will only ever work with difficulty and even that requires
a close working relationship between the Home Secretary and the
Director-General of the Prison Service. It is an unsatisfactory
situation, which leaves Ministers, Members of Parliament, management,
employees, prisoners, solicitors and many other groups uncertain
and subject to unpredictable changes in interpretation."
343. On the other hand,
the Prison Reform Trust (Evidence volume, p 222) wrote that "The
Prison Service has probably been the most controversial of all
the agencies with the former Home Secretary's assertion of a difference
in responsibility for policy and operations, the sacking of Mr
Derek Lewis as Director General ..." but "for all that,
our strong feeling is that agency status does offer a more appropriate
management structure for the Prison Service than any alternative
model. Indeed, the Prison Service can, overall, be proud of its
achievements as an agency".
344. Sir Richard Wilson
(Q 941) approached the question of agency status by explaining
why the Prison Service had been made an agency, while the Immigration
Service had not. He said that the Prison Service was an operation
which was a very difficult blend of management and political sensitivity,
but "In the case of the Immigration Service, I would argue
that the blend of political sensitivity and management is even
sharper, and where you get to a point where so many decisions
have necessarily and rightly to be taken by Ministers because
they are difficult and because they are ones which Parliament
would expect Ministers to account for in Parliament, then I do
not think you can reasonably achieve the kind of autonomy that
is necessary in order to make an agency really successful".
345. Sir Christopher
Foster and Mr Francis Plowden argued (Special Report, pp 23-24)
that the scope for conflict between policy and operations needed
to be resolved by breaking down the functions of executive agency
operations, often in detail, so that exactly what needed to be
reserved to Ministers and what delegated to the chief executive
was well defined and enshrined. "Where responsibilities cannot
be set down precisely enough for them to be clearly apportioned
between Minister and agencies or boards, or where frequent policy
changes are expected, then there is a strong case for keeping
such activities within departments under the old doctrine of Ministerial
responsibility whereby the departmental Minister is wholly responsible
to Parliament. Otherwise, whatever break it may seem with the
old doctrine of Ministerial responsibility, it is surely not tolerable
that Ministers can disclaim responsibility for large areas of
business and yet resume it over any part of that business whenever
they choose. It plays fast and loose with Ministerial responsibility
to Parliament."
The Committee's
Conclusions
346. It appears
to the Committee that within the agency structure there will always
be cases where the dividing line between policy and operations
is blurred. An operation may fail because the policy behind it
was bad: yet as Professor Bogdanor told us (see paragraph 318
above) "it can never be policy that something goes wrong".
Operational matters enter the political domain when they go wrong.
347. The Committee
has heard that matters which have a high operational content are
suitable to be dealt with by agencies, whilst matters with a high
policy content should remain in the core. However, the Committee
has seen no guidelines specifying which activities are considered
to be matters of policy, and which operational. Nor is the Committee
convinced that precise guidance as to this distinction could be
produced. Any operation can involve a question of policy-even
the issue of driving licences-if circumstances are right. It is
therefore not surprising that such precise guidance does not exist.
Decisions as to whether an activity should be undertaken by an
agency or by the core department appear to have been taken on
an ad hoc basis within departments. In general this is
unobjectionable but, even though allocation of activities to core
departments or to agencies cannot be made simply on a clear-cut
policy/operations distinction, general criteria should be defined
to indicate what should or what should not be transferred to an
executive agency and what should be retained within a core department.
In any event, when a decision has been made to transfer a given
set of activities to an agency, it should be standard practice
to carry out a pilot test before the decision is implemented fully.
In this way the problems which beset the Child Support Agency
and the Benefits Agency at the outset might have been avoided.
348. The Committee
also questions the opinion that it is desirable to separate policy
from operations. The focus on operations in agencies may have
raised standards of service (see paragraph 368ff below); but those
who point out the benefits of isolating operations from policy
equally protest that agency staff are deeply involved in policy
decisions. An acknowledgement that policy and operations must
inform each other in a continuous loop can not be accompanied
by a dogmatic assertion that it is best to separate them. The
Committee has heard no serious argument for the separation of
policy from operations other than the opportunity it affords to
improve standards of service. The Committee considers that standards
might have been improved within the existing, unaltered Civil
Service. The Committee does not accept the view that it is possible
effectively to separate policy from operations, or the view that
such a separation is desirable.
349. By devolving
some activities of a Government department to an executive agency,
there is a risk-and perhaps it is inevitable-that no-one will
remain in the core department who is able to brief and advise
the Minister on those aspects of the department's work which have
been devolved to the agency. It is obviously important that a
Minister should be able to obtain such briefing, which formerly
would have been given by an official working in a core department.
It is essential therefore to ensure that Ministers are and continue
to be able to obtain the necessary briefing and policy advice
from senior officials in the executive agencies if it is not available
in the core departments.
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