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The Public Service: Select Committee Report

3.50 p.m.

Lord Slynn of Hadley rose to move, That this House take note of the report of the Select Committee on the Public Service (HL Paper 55, Session 1997-98).

The noble and learned Lord said: My Lords, some of your Lordships will recall a debate in this House on 8th March 1996, which was a Friday. On that occasion the noble Lord, Lord Bancroft, called for the abandonment by the Government of plans to privatise the Recruitment and Assessment Services. During the debate he stressed the fact that our Civil Service had three features. First, it was a career service whose members could give frank advice without fear that their contract would be ended or would not be renewed; secondly, it was a unified Civil Service, bound together by a common ethos by which the best talents in any department could be promoted and moved across departments. Thirdly, it was a service which was recruited through open competition by an independent body.

The noble Lord stressed that the first and second of those features had over the years been chipped away and that the third would disappear if RAS, as it became known, was privatised. He said:

He was supported by the noble Lord, Lord Callaghan of Cardiff, who criticised the breach of a long-standing tradition that changes in recruitment or structure and other reforms of the Civil Service should be made after consideration by Parliament as a whole or by an independent body, a tradition which ensured the neutrality, the independence and the integrity of the Civil Service. He called for a Select Committee to consider the proposals. That committee was set up by your Lordships' House in the following month to,

    "consider the present condition and future development of the public service in Great Britain with particular regard to the effectiveness of recent and continuing changes and their impact on standards of conduct and service in the public interest".

The Liaison Committee of your Lordships' House recommended that the Select Committee should begin by reporting as a matter of urgency on the Government's plans for the future of RAS. We were urged to report before the Summer Recess, which we did on 16th July, after being told in this House by the noble Baroness, Lady O'Cathain, that the committee had been driven at a ferocious pace. We concluded in a unanimous report that the case for privatisation was not made out and that there were positive reasons against it. We urged the Government to reconsider the matter.

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The debate on our report was remarkable for a number of reasons, outstanding among which was the speech of the noble Baroness, Lady Park of Monmouth, which is to be found in Hansard for 25th July 1996 (at col. 1551). The noble Baroness recognised that the Civil Service, like other large organisations, probably needs some reform, but she urged the committee to proceed with its work so that there could be a full debate in the next Session. The thrust of her speech was in the direction that we should keep the Civil Service in such shape that the young would still be able to choose the public service and its ethos, which is a noble one.

If your Lordships read literally our terms of reference, they were very wide. They were cut down by the exclusion of local government, the National Health Service and educational institutions. That still left all government departments, executive agencies, non-departmental public bodies and other agencies created by or working for the public service. To carry out such an investigation in depth would have taken a very long time and we were urged again and again to report as soon as was reasonably possible.

In those circumstances, we reached a compromise. We decided that we should begin by investigating a number of departments in depth, excluding the Foreign and Commonwealth Office, and then see more briefly whether our tentative conclusions could be taken as representative of the Civil Service as a whole. It was essential to do that because there are so many differences between the departments. We were satisfied that our detailed conclusions were broadly representative.

It was necessary and useful to investigate and record briefly the changes which had occurred since the Northcote-Trevelyan Report of 1853 laid down the criteria to which the noble Lord, Lord Bancroft, had referred in his speech. Some of these changes had occurred through reports such as the Fulton Report, the Priestley Royal Commission and the Pliatzky Report and others had developed in reaction to changes in thinking and practice in commerce and industry and against the background of extensive social and political changes.

The changes which we traced through in our report were extensive. We were satisfied that outside Parliament people were not aware of or discussed the changes taking place. We recommend for the future that proposals for structural change should be reported to Parliament and that such a report should be referred to a Select Committee of your Lordships' House, which would then say whether it was appropriate for the matter to be the subject of a debate by your Lordships.

The first significant point which struck one throughout the inquiry was that many of the traditional functions of the departments of state on the surface appeared to have been taken away from those departments. Some functions were sold off--privatised. We did not receive evidence to suggest that where that had been done it should be reversed, although we said in regard to RAS--what in my opinion should apply to other forms of privatisation--that the operations which had been sold off should be reviewed before any agreement for renewal was made.

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Other functions were attributed to non-departmental public bodies, of which there are many kinds, which are more independent than the departments and, on the whole, are not staffed by civil servants but by staff employed on short-term contracts. Others were attributed to what are called executive agencies. The phrase is misleading, perhaps if only to a lawyer, since it suggests that the agencies are separate bodies acting on behalf of departments, whereas it emerged quite clearly that the agencies are not separate bodies but are units with functions inside the departments themselves. It was suggested to us that the core department should be concerned with policy. The agency was concerned with detailed administration. That distinction is not clear-cut and is unworkable. The two aspects--operations and policy--clearly overlap. Each influences the other.

We came to the conclusion that there did not appear to have been at any time a clearly defined policy as to which of these three structural changes should be adopted in any particular case. If further changes are to be made, we recommend that it should be explained fully why they are being dealt with in the particular way adopted.

It is obvious from even what I have said so far that we have moved far away from a unified service. The question was whether, as some witnesses suggested, that change had caused a harmful fragmentation of the civil service. In the end, we did not think, despite the division of functions, that that had occurred. However, we recommend that the operation of those bodies should be observed before further changes are made. In particular, we consider it essential that policy decisions should remain with the core Civil Service.

The question was whether the executive agencies had assisted the Civil Service or produced results that were disadvantageous. It seemed to us on the evidence that overall the executive agencies had performed well. That was shown to be so particularly by the Contributions and Benefit Agencies of the Department of Social Security. It is clear that there had been both for the customer and the Civil Service advantages in that change. It is important that the chief executives of agencies should be answerable to Ministers and that Ministers should ultimately be answerable to Parliament for the activities of executive agencies as well as for the core department.

Almost all witnesses attached great importance to the Civil Service ethos, integrity, loyalty to the Crown, commitment to the task and frankness--a "No, Minister" approach that everyone thought ought to be encouraged. Although employees in the private sector no doubt have those qualities, they are of particular significance in the Civil Service, where the job involves genuinely a form of service to the public. We attach the greatest importance to maintaining that ethos. A high quality Civil Service is crucial for the well-being of the state. It is no less crucial a factor in producing high-quality candidates for appointments. That depends in large part on nurturing, not merely leaving on one side or controlling, the ethos of the Civil Service.

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Maintaining that ethos depends to a substantial degree on the morale of the Civil Service, which we were told by some witnesses is low. Perhaps that is due to pay being lower than in the private sector, the substantial reduction in the number of civil servants or recognition that appointment to the Civil Service no longer necessarily means a career for life. I confess, to my surprise that the evidence indicated that morale was not affected adversely by the recruitment of outsiders to higher appointments in the Civil Service but in our view, that practice needs to be watched and changes made in light of further experience.

There seems little doubt that recently many in the Civil Service have felt unsettled, which has an effect on morale and, in the long term, on efficiency. We believe that feeling is likely to have been encouraged by the frequency of change in the past 30 or 40 years. In the interests of restoring or maintaining morale, the effect of recent changes should be reflected upon and fine tuned, rather than introducing major changes without proper consultation.

We were concerned to see whether the use over 20 years of a new type of political adviser, paid from public funds, had been harmful. We have no evidence that it had been harmful or that members of the Civil Service resented such appointments. However, we believe that it is essential to monitor that aspect to avoid Civil Service independence or areas of legitimate activity being blurred by such appointments.

We recommend on balance, for the reasons set out in the report, the introduction of a Civil Service Act to take care of some of the concerns that we have expressed. Overall, we conclude that the country can be proud and should be proud of a Civil Service based on the ethos to which we have referred.

We were greatly helped in our work by our special advisers, Professor Richard Chapman of the University of Durham and Ms Janet Lewis-Jones, who brought considerable expertise to our deliberations. I pay particular tribute to our Clerk, Mrs. Mary Bloor. Her considerable ability, dedication to the task and doggedly independent advice to the chairman were in keeping with the highest traditions of the Civil Service to which I have referred.

I am most grateful to my colleagues on the committee who read voluminous evidence and met on many occasions--often at inconvenient times--to finish as soon as we possibly could. We took evidence from two Ministers, eight departments of state, three agencies, a number of retired civil servants, academics, unions, expert charities and so on. That evidence was of the greatest possible help. I hope that they will not think it impertinent when I say that I cannot envisage any other parliamentary institution where such experience and commitment can be brought together without remuneration for such an important task.

It was probably unlikely from the beginning that our report would be a show stopper but there were serious matters to be considered. It is something of a relief that, after detailed examination, the report was not a show stopper. It did not appear that the whole structure of the administration was falling apart, even if there were some things to be remedied.

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Despite that, there are serious caveats that we urge governments now and in future to bear in mind for the detailed reasons set out in the report of the committee. I beg to move.

4.7 p.m.

Lord Newby: My Lords, it is with more than usual trepidation that I rise to speak in this debate. Having left the Civil Service in the lowly position of Principal, I find myself speaking in a debate with a bevy of former permanent secretaries and a number of senior judges, which is a particularly daunting task.

We are debating an important report, and some of its findings are relatively reassuring--the high standards of impartiality, integrity and intellectual rigour that cover and characterise the Civil Service remain. Other findings are quite worrying. The report refers to the lack of rationale for recent changes in the organisation of the Civil Service. It refers also to an absence of debate on the proper sphere of government and it mentions low morale.

There are clearly a number of components to low morale in the civil service. Two are particularly important. The first relates to the lack of esteem in which Civil Servants are held, which in my view depends crucially on the lead given by government. In my final years in the Civil Service the then Prime Minister, now Lady Thatcher, made it perfectly clear that she had a poor opinion of the ability of the Civil Service to deal with the tasks it was given. Although I do not believe that view was shared by the noble Baroness's successor, a significant amount of damage was done in the early 1980s in the sense that people who were working extremely hard at difficult tasks were not appreciated at the highest levels of government.

The present Government, particularly the Treasury, have made some of the same mistakes and sometimes behave as though civil servants are a pathetic lot who have not caught up with modern reality and that only Ministers and, in some cases, special advisers are capable of getting to grips with issues.

Again, I think this is a damaging attitude of mind. I know that it does not prevail across the whole of government and I hope that it diminishes rapidly as Ministers gain more experience of office.

The second issue which has led to a lack of morale in the Civil Service is inevitably the question of pay, on which this report is almost totally silent. As the Institute of Fiscal Studies revealed in its recent report on public sector pay, the differential between the public and private sectors has diminished over time. For women the public/private sector pay differential has halved from about 16 per cent. in the early 1980s to about 8 per cent. in the early 1990s. For men the differential, when corrected for occupational composition, has declined from about 8 per cent. to nothing in the same period. These are substantial declines. The figures relate to a period a couple of years ago. I think that when they are updated they will reveal that that decline has probably

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continued. This relative decline is felt both at the top end of the Civil Service as regards policy makers, and lower down.

The Government's response to the proposal for incentive payments for teachers--about which we shall hear this afternoon--is only a partial answer. It is crucially important that all public servants, whether they are at the top of the tree or at the bottom doing rather more mundane jobs, feel that they are getting a fair rate for the job. This simply has not been the case in recent years to an increasing extent. These issues affect not just existing civil servants but also potential recruits. We hear much about problems of recruitment of teachers and nurses. However, when talking to those with politics degrees at some of our best universities, I was amazed to discover that virtually no one even considers a Civil Service career, whereas certainly when I attended university a considerable time ago it was among the most highly valued of careers and one of the most sought after. That is a major change and reflects the change of esteem in which the Civil Service is held and the low pay of civil servants. Those are two major issues and both of them need to be addressed in the longer term.

The other issue I wish to mention relates to the other points I made on the lack of rationale for recent changes and on the role of government. These are big issues and I do not intend to discuss them comprehensively this afternoon. However, I wish to mention a crucial development in this area; namely, the Government's commitment to introduce public service agreements. As the Comprehensive Spending Review explained, these agreements, which will be drawn up between the Treasury and other departments, will include the objectives of the departments and measurable efficiency and effectiveness targets. Such agreements, particularly if they are concluded after a full public debate on their content, could give a degree of clarity as to the objectives of government in individual policy areas, and clarity as to where responsibility really rests for achieving them. They would require Ministers to justify changes in policy on a much more systematic basis than at present. They would logically require payment of bonuses to civil servants and to Ministers for performance, and penalties for failure. Again this is rather in line with the Government's proposals for the teaching profession but which at the moment they do not intend to apply more widely.

While I accept that such agreements cannot easily cover some of the intangible tasks and features of the public service, which by their definition cannot be easily measured, they could nonetheless in my view benefit both civil servants and government alike. I understand that there will be a signing ceremony across a range of these public service agreements next week. Given that one of their purposes should be to increase transparency in decision-making, it seems extremely strange that there has been no consultation on them. There are understandable fears in some quarters at least among suspicious minds that they are largely an attempt by the Chancellor to impose even greater Treasury control on all aspects of government.

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Given the potential significance of these agreements, I have a number of questions to put to the Minister on them. First, what consultations have taken place on the public service agreements between the Government and the Civil Service unions? Secondly, what other consultations, if any, have there been? Thirdly, will the agreements include incentives and penalties? Fourthly, what plans do the Government have as regards how the agreements will be audited? Finally, what plans do the Government have for the systematic scrutiny of such agreements, either in this House or in another place?

The British Civil Service rightly remains the envy of much of the rest of the world. However, to use the term that the noble and learned Lord, Lord Slynn, employed, it needs nurturing. The Government in their response to the report have responded to some of the concerns expressed. However, in my view great care will still be needed to ensure that we have a Civil Service in the next century which matches the qualities of the British Civil Service of the present century.

4.15 p.m.

Lord Simon of Glaisdale: My Lords, my first utterance must be to express appreciation and gratitude to my noble and learned friend for his introduction to this report, and to him and his committee for what is a masterly state paper. My noble and learned friend brings experience as a much admired jurist. But also as a former Treasury devil he will have had an intimate knowledge and experience of the working of government in every respect. I hope I may say how glad I am that the noble and learned Lord, Lord Falconer, is to reply to this debate. He is now in the Cabinet Office; crucially, and as a former Law Officer he, too, will have had a wide conspectus of Whitehall.

My second duty must be to apologise for my intervention, as it is 40 years since I had responsibility in this sphere when the Civil Service was administered by the Establishment Division of the Treasury. It is, however, apt that we are debating the public service at this time in the context of the general discussion that there has been--and which is going on--on the constitution generally. That discussion has often seemed to proceed as though the only political legitimacy was that conferred by election. Of course the Civil Service, like your Lordships' House, has whatever political legitimacy it has quite otherwise than that. One must remember that there are some 2 million in the electorate who do not register a vote and who have no allegiance to any political party. Quite obviously, they are not directly represented in the other place, although any Member of Parliament considers that he has a duty to all his electorate. However, the views and positions of those who have no party allegiance are reflected only on the Cross Benches of your Lordships' House and will, I think, appear in the Civil Service.

The report poses the question of whether the Civil Service should not be regarded in some respects as a separate organ of the constitution, distinct from the Ministers of the Government. That question seems to me to be very important, and not only academically. As a matter of practical politics, the Civil Service stands

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apart from Ministers. Its duty is to give them frank, impartial, informed and unpartisan advice, as the noble Lord, Lord Newby, indicated.

What then is the position of the Civil Service vis-a-vis the ministerial part of the Executive? Your Lordships will recollect Arthur Balfour's notable introduction to the World Classics edition of Bagehot. He was concerned about a two-party system, in which one party is bent on undoing the work of its opponent. "Why", he speculated, "does that not lead to some sort of political schizophrenia? Why is not democratic government torn apart?" He had two answers. The first was the Monarchy and the second was the Civil Service: the Civil Service, in its magnetism, preventing a tack to either starboard or port going too far. The Civil Service, as a whole, would say to the Minister, "You have gone far enough on your starboard or your port tack; you are now going into dangerous areas. There be dragons. There be leviathans. It is time that you pulled over the helm". That is the task of the Civil Service. Even with all the tacking, we can make reasonable progression.

I think that that insight throws some light on a number of the particular problems identified by the committee. One has been mentioned already. I refer to the special advisers. I find it difficult to identify their exact task. They seem to extend not only within 10 Downing Street, but right across Whitehall. How many are there in all? Do all departments have them? It seems that they have a dual function, partly presentational, which means so much to this Government, and partly relating to party policy. They originally came about in the 1960s because at that time the Labour Party doubted the real impartiality of the Civil Service. It thought that the Civil Service was middle class and middle policy, whereas it wanted to pursue a radical policy.

How does that fit in with Balfour's vision? In my respectful submission, not at all. The government response to the report states that the special advisers complement the Civil Service and the advice that it gives, which is agreed to be impartial, unpartisan and honest. How is that complementary? How do you complement impartial advice, except by partial advice, advanced from a party political angle? Does not that mean that the advice given to Ministers is not balanced. The government response claims that the Government receive advice from all sources and implies that the special advisers are merely another source. That is not so. If the TUC or the CBI makes a representation to the Government, that is quite different from a representation from a special adviser, who is sitting in the office next to the Minister and who has recourse--as I think the Minister will confirm--to all the government papers, except possibly those of high confidentiality.

That matter was raised at the end of the last Session of the previous government in a debate initiated by the noble Baroness, Lady Symons, in which the noble Baroness, Lady Ramsay of Cartvale, also spoke. I am glad to see her in her place on the Front Bench. They protested against the special advisers having recourse to Civil Service material. I ventured to think that that was exaggerated and rather partisan under the circumstances. If special advisers do not have recourse

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to government material, their advice can be only partially valuable. If they do have such recourse, the quality of their advice is quite different from that given by, for example, the CBI or the TUC.

In my respectful submission, the whole institution of special advisers is potentially dangerous--dangerous to the balance of the constitution--and should be closely watched. If the report has done nothing else--and it has done a great deal else--it has valuably drawn attention to that matter.

I should like to refer to one other matter within the general context of the Balfour view of the Civil Service. That is recruitment and seconding, which is referred to at a number of points in the report. The committee reports a view that recruitment from outside is liable to disappoint the civil servant who hopes for promotion. But is that so, provided that, as is recognised in the report, these days the Civil Service is rarely a whole life career? Is it so if the civil servant can himself secure advancement in the kind of area from where the recruitment has come?

I am thinking in particular of the Government Legal Service. In America there is free movement between private practice, the government legal service, academic life and the judiciary. The present chief justice of California was formerly a professor of law at the university there.

I therefore suggest that we need not be afraid of recruiting from outside provided it does not upset the whole structure and ethos of the Civil Service, and provided that we can ensure that the civil servant equally has an opportunity of service towards the end of his career outside the Civil Service itself. I know that there are difficulties in the way of a civil servant taking employment with someone who has been in a contractual relationship with his department. But that is a special case which could be dealt with on its merits.

Finally, perhaps I may take up a word that I have used, as have preceding speakers, and which occurs frequently in the report; namely, "ethos". It is most important. But as the report and the Government accept, high esprit de corps depends very much on the esteem in which the Civil Service is held. I suggest that esteem is likely to be eroded in the event of "over-government". The more sparing the government and the more restricted the decisions of the civil servant concerned, the higher they will be held in esteem.

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