Delighted to have the opportunity to speak to this event. It is an honour to be the minister with day to day responsibility for the civil service.
I believe, and have often said, that the British system of a permanent civil service is one of the jewels in our constitution. Its values of political impartiality, recruitment and advancement on merit and the public service ethos, are as much to be cherished and nurtured today as ever.
The service is admired throughout the world for the way in which it serves the elected government of the day. A steady stream of visitors from other countries send their civil servants to find out how we do it. The work done by civil servants in the aftermath of the general election and the transition to the new coalition government exemplifies this excellence. It is a pleasure on returning to government in my case after eighteen years to discover that these virtues and values remain intact.
The Service has made significant progress in recent years in increasing its capability, for example through collaboration, investment in leadership development and assessment, the ground-breaking capability review programme and the professionalisation of key functions.
And the service continues to attract the best and the brightest, with the Civil Service Fast Stream recognised as one of the most prestigious graduate programmes in the country. The scheme is ranked 4th in the annual Times Top 100 Graduate Employers survey with 15,000 graduates applying in 2009 - with even more doing so this year.
However, in the current fiscal and economic climate, there are vast new challenges for the civil service. It must play a central part in deficit reduction, providing better value for money for the taxpayer and better delivery. It must build its skills and be agile to wrestle with complex challenges. It must modernise itself as an employer. It must be clear on the limits of its role and innovate to enable others to deliver. And it must be transparent and responsive.
All this means we have to go further and faster, building on the Service’s work thus far in increasing its capability to deliver a new chapter of reform. I would like to take this opportunity to set out our plans for this next chapter and give you an opportunity to ask questions.
First, it is important to re-state that reform must hold true and deepen the principle established by the Northcote-Trevelyan report of a permanent, unified and politically impartial civil service. Too often in recent years the service has been marginalised, either through the spread of special advisers or the over-use of expensive consultants. Complicated delivery arrangements, sometimes through a myriad of public bodies, have also impaired the flexibility and agility of the Service.
A second crucial principle which must be retained is that appointments to the service must be on merit, and I am delighted that this principle is now set in legislation. The Fulton Report in 1968 found that the service then was still too much based on ‘the philosophy of the amateur’ - the generalist or all-rounder civil servant. What specialists there were in the Service were not given the responsibilities, opportunities or authority they ought to have had. Nor were enough civil servants skilled managers.
There has of course been progress since then. The civil service has done much to improve its professionalism. Every department now has a qualified finance director and two-thirds of HR directors are similarly professionally qualified. Each department has a project and programme management centre, and a new head of profession for the property and asset management profession has been established.
But the challenge remains to ensure that the service has the professional skills it needs to perform today and in the future, particularly given the challenges we now face.
Looking back on more recent history, there are also valuable lessons to be learned from efforts to focus reform on efficiency and the introduction of business techniques such as corporate planning and objective-setting. The Rayner Reviews of the eighties brought a focus on operations and efficiency as well as policy advice and development, important though that remains. The Financial Management Initiative in the same era concentrated minds on value for money. The creation of Next Steps agencies, hiving off delivery activities into independent bodies with clear targets and personal accountability for performance, required civil servants to be more business-like in delivery of services. Competing for Quality, which I published myself in a former incarnation, brought discipline to the market-testing of central government services. And finally, in the last few years, the Capability Review programme brought sharper focus on key areas of capability to deliver services. So it’s timely to reflect on what the civil service needs to be in 10 years time, in 2020.
The civil service of 2020 must be more efficient and effective. It must be able to deliver - and enable others to deliver - better public services at best value for money. It will be:
- smaller and more strategic, focusing on the core activities the service needs to perform in order to deliver quality and value for money public services
- modern and flexible
- high performing, with the professional skills to drive efficiency and performance
- flatter, less hierarchical, and more encouraging of innovation
- able to deliver efficiently and effectively itself and through others
We will achieve this vision if we focus our reform efforts in 4 areas:
- an open and well managed service, driving performance and value for money
- a service with a modern employee offer
- a skilled and capable Service
- a streamlined Service
Let me now turn to some of these areas in turn. An open and well managed Service, driving performance and value for money.
The Whitehall capability review programme has demonstrated that civil servants have made progress in the effective management of the Service. However, we also know that in this fiscal crisis, more radical steps to increase efficiency and performance will be required. For anyone, working in any sector, this is a substantial challenge. So performance management - both of the business and of individuals - has further to go. I pick up some concern about the rigour of individual performance management. Are we satisfied that we properly pick out and reward the outstanding? Do we manage the poor performers with sufficient rigour? I sense some discomfort that the under-performing few are too often carried by the hard-working majority.
We need also to be really clear about what is to be done by the centre and what by departments. The centre of any big complex dispersed organisation has to control a few things, and only a few things. These are:
- strategy and strategic communications
- the big projects that carry financial, reputational and operational risk
- basic common ICT infrastructure
- broad HR operating standards
- commodity procurement
And that’s it. These functions don’t all have to be carried out in the centre; but they need to operate on a strong central mandate. Responsibility for everything else should be pushed away from the centre, as close to the front line as we can get.
But I sense that under the last administration this was not how it operated. There wasn’t central control over these few things; for example the government hasn’t before managed centrally the relationships with the biggest suppliers to government. We haven’t used the massive collective buying power of the government to drive down the cost of common goods and services. Yet there were many attempts to micro-manage delivery from the centre, through targets, PSAs, monitoring, auditing, endless guidance and regulation. This is both wrong and doomed to fail.
We believe that departments should be more autonomous, have more responsibility and be more accountable for delivery. So we will enhance departmental boards, recruiting a strengthened network of non-executives, mostly from the private sector, led by Lord Browne as lead non-executive for government. These enhanced boards, bringing together the political and official leadership of the department, will be responsible for ensure that Whitehall has an absolute focus on driving performance, value for money and eliminating waste.
We will produce and publish regular progress reports on departments’ progress on these measures and ensure that this is reflected in appraisals for Whitehall leaders.
A service with a modern employee offer
To play its part in deficit reduction, the civil service must reform its terms and conditions for pay, pensions and compensation in the event of redundancy in a way which is modern, flexible and appropriate to the times. Most importantly, we must create for the civil service an affordable reward package with a sustainable balance between pay and pension and see through the reforms of the compensation scheme.
On pensions, the independent Hutton review will be considering the civil service pension scheme, as well as pensions in the wider public sector, and I look forward to his interim report due in September this year.
On compensation, the existing scheme is simply untenable. Under the current scheme a longstanding employee may be entitled to compensation which is hugely out of kilter with the statutory redundancy scheme and comparable arrangements in the wider public and private sectors. The last government put in place a reformed scheme with the agreement of 5 out of the 6 civil service unions. The sixth, PCS, sought judicial review and succeeded in having the scheme struck down.
As a result of that action, I announced this morning to Parliament that we will introduce a Bill to put this right. This Bill will introduce a cap of 12 months pay for compulsory redundancy and 15 months for voluntary schemes. We still hope to negotiate a permanent new scheme, and I have today written to the Council of Civil Service Unions to invite them to discuss this. The two big issues will be: how to provide better protection for the less well paid and how to cap the total amount paid out to any one individual. We want to explore how to give additional protection to the lowest paid; there are numerous ways to accomplish this and we want to explore these quickly. In the interest of fairness we will also want to discuss an absolute cap on the amount that can be paid out to any individual. We will also want to discuss a cap on the amount that can be paid out under any voluntary redundancy scheme.
Finally, on arrangements for sick pay in the civil service we propose to consult on reforms that bring these arrangements into line with good practice elsewhere in the private sector and the wider public sector.
A skilled and capable service
I appreciate that not all of this makes comfortable listening. Alongside these reforms we must also commit to giving you the skills to do your jobs effectively and the opportunities to stretch and develop you.
One way we can do this is by opening up to civil servants opportunities denied to them by the recent over-use of consultants in central government and public bodies. We have already established strict constraints on the use of consultants and I can tell you that all current consulting assignments will also be reviewed. This will not only save resources but also give civil servants the opportunity to undertake new roles and deepen their skills.
We must also do all that we can to get best value from money spent on recruitment, training and development. My main focus will be on the training in core civil service skills, which seem to me have to be provided on a common basis. This way we will do better in creating a single united, professional civil service culture and ethos.
Changes such as these require strong leadership so we must also continue with a leadership development programme which gives us the exemplary leaders we need.
Key in securing the long term future of the Service will be ensuring that we have the next generation of leaders, with the right mix of skills and experience, coming through. As I said at the beginning, the continued success of the civil service Fast Stream is a testament to the attractiveness of the service as an employer offering stimulating challenge and leadership opportunities to the brightest and most talented graduates in our nation. But to face the challenges ahead we need to ensure that we recognise and value operational and management excellence as well. I still feel that these essential qualities tend to be accorded less prestige and recognition than the equally - but not more - important skills in policy development. I have therefore asked the Head of the Civil Service to work up a plan for the fast stream programme which ensures that in the service of the future operational delivery is regarded as at least as valuable as is policy development.
A streamlined service
And finally, we must make sure that the civil service has a flatter structure which will allow it to be more flexible and innovative and to take sensible risks in the pursuit of greater value for money and better delivery.
I have asked the Efficiency and Reform Group in the Cabinet Office to assist central government organisations to delayer their structures. This will include assisting departments to define their core role and functions and how the wider public, private and third sectors can play an optimal role in the delivery of services; to remove unnecessary layers of bureaucracy, complex decision making and unnecessary regulation; to delegate decision making so that decisions are taken at the right levels and to improve processes and procedures by using private sector techniques such as LEAN. This has happened in some parts of central government but there is much further to go.
We are also determined to pursue the coalition’s commitment to create a right for groups of public sector workers to form mutuals or co-ops to bid to deliver their services. This could be alone or in partnership with another provider. We are looking for a number of pathfinder projects that we can actively support through to success. So if any of you are interested in forming one of these let us know.
This is a daunting agenda for the civil service but it is one that is achievable. I’ve already been impressed by the way in which civil servants are rising to the challenge with ideas of their own and a willingness to deliver. The spending challenge we issued to public sector workers only 2 weeks ago has already yielded more than 30,000 ideas for making savings and spending money better. We’re combing through them now, and will be acting on loads of them.
But you might well be asking yourself – what is in all this reform for me? I believe these changes will offer:
- more interesting and challenging jobs
- a better career structure
- a clearer offer on training and development which reflect the skills we most need
- easier, quicker decision making to remove frustration and delay
- empowerment of those who know to innovate and take appropriate risks
- an engaged and consulted civil service actively contributing to its own future direction and purpose
All of which are prizes worth having.
Reform is going to mean making some hard choices ahead and showing courage and determination to see them through. But the civil service has shown that it can rise to such challenges and I am confident you will do so once more.