It’s such a pleasure to give this lecture in memory of Leonard Steinberg. Pleasure tinged with sadness that it’s in his memory rather than in his vigorous larger than life presence. I well remember my dinner with Leonard when he agreed to give generous support to the start-up that was then Policy Exchange. He was prominent among those who nurtured it from cottage industry stage to the full multinational scale and influence that it now boasts.
Introduction – setting the scene for reform
My topic tonight is the Civil Service – one of the great institutions of the British governmental scene. And Civil Service reform – one of our great traditions.
More than 150 years ago, the Northcote-Trevelyan report stated baldly that “admission into the Civil Service is indeed eagerly sought after - but it is for the unambitious and the indolent or incapable that it is chiefly desired”.
Northcote-Trevelyan ultimately led to the end of the patronage system and the introduction of a permanent, politically neutral civil service with open, competitive recruitment based on the ability to do the job.
But it was 15 years before it was implemented.
After the First World War the Haldane changes put in place the basic structure of separate departments and accounting officers that has been essentially unaltered since.
The Civil Service changed dramatically to meet the challenges of the Second World War. Outsiders from business, industry and academia were imported. It was highly organised and successful. And when the Attlee government took office there were real concerns whether the Civil Service without these imports was capable of implementing a radical programme. A Labour MP suggested a Parliamentary Select Committee to examine whether changes to the service’s “capability” were needed. He particularly wished to pursue “scientific methods of business organisation”.
This suggestion was effortlessly seen off. The Head of the Civil Service, Sir Edward Bridges, in a letter to his fellow Permanent Secretaries, said:
Such a committee could not get down to business without an immense amount of enquiry into government departments and evidence from highly-placed civil servants; and I expect that we shall all feel that we have no time to spare for this. Moreover, even if we were convinced that an enquiry was necessary, I imagine we should feel that a Select Committee was not the right kind of body to carry out the enquiry.
In 1968 the Fulton Commission made numerous recommendations – but can anyone remember anything actually changing?
In 2004 Tony Blair set out plans for a civil service with professional and specialist skills; a civil service open to the public; a more strategic and innovative approach to policy. The world had changed and the civil service must change with it.
That was nearly 10 years ago; but today the diagnosis remains pretty similar. When I was sent Blair’s 2004 speech some months after we had published our reform plan I was struck by the deja vu. I found I had been echoing his concerns, indeed his very phrases. The one specific change he announced – that senior officials would in future be appointed on fixed tenures – mysteriously never made it into action.
In short, civil service reform plans generally end up gathering dust on library shelves.
The Civil Service needs to ensure that this doesn’t turn out to be Groundhog Day. Britain is in a global race – and to compete we need a world-class, 21st century civil service, capable of delivering a more balanced economy, a fairer society and the best public services.
Support for reform is universal. It runs across the political spectrum. It’s supported by numerous think tanks, including the Institute for Government, Reform, IPPR and many others. Critically civil servants themselves want reform. Most importantly, the public deserve best public services and taxpayers best value for money.
Today it cannot be a question of whether we reform. It simply has to happen.
The Civil Service Reform Plan
Over the years it hasn’t made much difference whether reform plans are controversial. They rarely are. Ours is no exception. Bob Kerslake and I published the Civil Service Reform Plan last summer, nearly a year ago.
It set out a series of specific, practical actions to address long-standing weaknesses. Each was individually quite modest yet taken together, if fully implemented, they would lead to transformative impact.
The end product? A civil service which is smaller, flatter, faster, focused on outcome not process, more digital, more unified, more accountable for delivery, more capable, with modern terms and conditions, better managed with better performance management and, finally, more fun to work for.
No one has seriously argued that any material part of the plan is either wrong or unnecessary – with the possible exception of some trade unions opposing some of the reforms to archaic terms and conditions.
There is broad agreement between the major political parties, all three of which uniquely have either current or recent experience of government. It is especially commendable that the Labour Party have generally eschewed formulaic opposition. And the bulk of the criticisms from outside commentators have been not that we’re trying to do too much or the wrong things but that if anything we’re not going far enough.
Most of all civil servants themselves are impatient for change. I recently spoke at a gathering of newly-entered members of the Senior Civil Service. They were fabulous. Able, bright, energetic, ambitious to change the world. But to a man and woman – frustrated. Frustrated by a culture that weighs them down. A culture that is overly bureaucratic, risk averse, hierarchical and focused on process rather than outcomes. That makes the whole somehow less than the sum of the parts.
So this plan draws on the frustrations of civil servants as much as those of Ministers and the public. And many of the most substantive ideas in this paper have come out of work led by Permanent Secretaries themselves.
So the public wants change, Ministers want change, civil servants want change. So why isn’t it happening as fast as we’d like?
Nearly one year on from the publication of the reform plan and the record of successful implementation is mixed.
I will be updating Parliament with a detailed one-year-on report in just a few weeks - but I don’t think anyone’s going to be surprised to hear that while we’ve definitely made some progress, too little of what we set out nearly 12 months ago has been fully executed.
It’s not that nothing has been changed. Far from it – a lot of hard work has taken place and you can see real progress:
More public services are being delivered digitally and we will see still more switched online. We estimate that by shifting the transactional services offered by central government departments from offline to digital channels we can make £1.2 billion of potential savings from now until 2015 and up to £1.7 billion a year beyond 2015.
Sharing services will become the norm for all departments – starting with HR, procurement and payroll; and we are making progress with some policy, legal and internal audit. Sir Peter Gershon first proposed shared services back in 2004; and in the last 8 months we’ve made significantly more progress than in the whole of the previous 8 years.
Changes to terms and conditions have begun to be introduced, albeit gradually, to remove the archaic outlying conditions that are simply an embarrassment to civil servants when picked up and lampooned by the press.
A 5-year Capabilities Plan for the Civil Service to rectify serious capability gaps was published in April, albeit 6 months later than we had said. A Civil Service Talent Strategy – absent for far too long - will be launched this year to identify and track talent from apprentices to Permanent Secretaries. Again, however, this schedule is behind.
We’ve promulgated a Civil Service-wide Competency Framework, a tough and edgy document, which if used rigorously in every appraisal, every recruitment, and every promotion assessment, will really introduce some culture change and drive up standards.
And that’s the point really. It’s one thing to publish the document. The difficult part is to implement the action. And that’s what needs to change.
Problems with reform
The fact remains that too many things that should have been done haven’t happened. Other projects have been delayed or are only just getting underway.
Ask any civil servant - has the Civil Service really reformed in the last year? I doubt many would say they’ve seen that much evidence of it.
Why? Well one issue was that it took far too long to get in place a serious team working on civil service reform. I’m happy to say that we’ve now done that – some of them are in the room and they’re stars. But a serious problem with the Civil Service is getting the right people with the right skills in place quickly. But another part of the reason is classic Catch 22: the things that need reform are exactly the things that make reform difficult.
Such as the capability gap. The excessive bureaucracy. The lack of responsiveness to government priorities. Poor accountability. Policy being designed without reference to its implementation. And civil servants find this even more frustrating than we do.
These are all ingrained, cultural problems that are hard to root out.
Some departments will of course point to the transformative work they are doing on the Government’s radical programme of economic and public service reform.
Take the Department for Education, for example. It is delivering radical change with a real impact on children and young people, and yet by 2015 it will have halved its administrative budget and halved its headcount.
Or the Ministry of Justice’s new Rehabilitation Programme - radical, challenging, innovative. Driven by a minister with a mission and being executed by professional and effective civil servants.
Other departments have seen significant reductions in headcount, and a corresponding rise in productivity.
And there was much to do. Over the last few years the productivity of the private services sector had risen by 30% - in contrast between 1997 and 2010 public sector productivity was flat.
If productivity in the public sector had risen by a comparable amount, our economic and fiscal position would have been radically different. The structural deficit would have been half what we inherited.
Today the Civil Service is smaller than at any time since the Second World War – 15% smaller since 2010 – and departments have already committed publicly to further reductions. Most departments have cut their central overheads by 30%, and some by much more. There are no hiding places anymore – we need to do things better.
So what’s the answer? Is it to launch a massive once in two generations study of the Civil Service and everything around it – potentially putting everything on hold when there are immediate demands for the Civil Service to function better?
It is argued that there has been no such study since Fulton, nearly 50 years ago. But what did Fulton actually change? Nothing fundamental.
And do we want fundamental change? Do we want to uproot the Northcote-Trevelyan model that has lasted 150 years: a permanent, politically impartial Civil Service where appointments are made on merit? I’m not persuaded.
Most of us really value the best of what the Civil Service in its current form does – when given the opportunity.
Since I’ve come back into government I’ve often been asked if the Civil Service is as good as it was. My answer? The best are absolutely as good as they’ve ever been. The specialist functions - finance, HR, commercial - which used to be done by generalists, are better. If there’s a criticism it’s that the Civil Service today less easily accommodates the quirky, the maverick, the original lateral thinker, who innovates and provides challenge.
The problem is that really good people feel weighed down by a system which inhibits them from giving their best. That’s why the Civil Service ends up as less than the sum of its parts, brilliant though so many of the parts are.
But that doesn’t mean there aren’t examples of great work.
The Cabinet Office’s Efficiency and Reform Group - chaired jointly by myself and the Chief Secretary to the Treasury – was set up in the first days of this government. This group pulls together under one roof all cross-government operational functions including procurement, ICT, communications, property.
And this new group has transformed the way government works – acting as an effective operations centre at the heart of government, driving efficiency and clamping down on waste.
This is a complete turnaround from the way we worked before. These amazing civil servants, some brought in from the private sector but many more who are not, delivered £3.75 billion of savings in our first 10 months of government and £5.5 billion in our second. And yesterday I announced that we had beaten our own target and saved another £10 billion last year – these figures are not smoke and mirrors or sleight of hand. They have made these savings hand-in-hand with their colleagues in the Treasury and across Whitehall to transform working practices and drive reform.
The transparency team is another example. Governments have been hoarding their data for decades – we have overturned that age-old tradition and become a world leader in releasing data.
The new Government Digital Service built GOV.UK - a new online home for government services and information. This website is faster, easier to use – designed around what users need to get done, not around the ways government want them to do it. It’s saving tens of millions a year.
And it won the overall category in the recent Design Museum’s Design of the Year Awards – beating the Shard and the Olympic Torch.
So I don’t find that civil servants oppose change. In fact I find that when we talk about reform, people get energised, they get on board, and they grasp the opportunity.
I am loath to believe that fundamental change is needed; that the system is incapable of adapting and evolving into what Britain needs. All of this convinces me that we can through incremental change create a transformed modern 21st century service able to sustain Britain in the global race.
Inertia and challenge
What else needs to change? There is too often a bias to inertia. There is little incentive to try new things. Any change is endlessly scrutinised and analysed for risk and benefit, while there’s little downside to presiding over an inefficient status quo. Too often people feel ‘if I try and change it, and it goes wrong, it can wreck my career’.
This bias to inertia, against innovation, is hugely frustrating for those who do want change. They can become hugely disillusioned. We need to learn from Silicon Valley and from the hi-tech companies I visited in Israel last week. Their mantra is to try new things, even if some fail. But if you do fail, fail fast. And learn from it. If you never do anything new, you’ll never know what works.
There have been occasions, happily rare, when ministers in both the current and previous governments have found that decisions they have made don’t get implemented.
For example a Cabinet Committee decided that all common goods and services should be bought in aggregate – so we can leverage the scale of the government as a customer to reduce cost and price. Some parts of government simply thought they could ignore that decision. Not acceptable, as the leaders of the Civil Service immediately agreed.
When ministers complain about failure to implement decisions, they are sometimes caricatured as disliking challenge and wanting nothing but yes men around them. Of course the precise reverse is the case.
Good ministers want bright knowledgeable officials who will give the most brutally candid advice. Who will in that slightly annoying phrase “speak truth unto power”.
No sane minister wants to hear about the effects of a decision after it has been made. You want to have the best evidence, the best advice, the best information, before you decide. You want to have a serious crunchy private discussion, with plenty of encouragement of and opportunity for challenge and debate.
Ministers are not risk averse – far from it. Ministers belong to one of the most risky occupations there is. We have no tenure. We are exposed daily to public scrutiny of the most uninhibited kind.
What ministers are is surprise averse. Any government that embarks on radical, transformative reform needs to understand the risks and be prepared for them.
What that means is civil servants have to be honest – to speak their mind, set out credible reasons for not doing something if they don’t think it’ll work.
And we shouldn’t tamper with that. Indeed we should reinforce it. Too often Ministers are not told everything, or are told things which turn out not to be right. So we should be meticulous about the evidence and data on which we base decisions and the default setting should be that we publish it, while vigorously protecting the safe, private space for policy advice and discussion.
But once a decision has been made – it must be implemented swiftly and fully. It’s really as simple as that. Sometimes a Permanent Secretary may conclude that what a minister wants to do is not consistent with value for taxpayers’ money. In which case there is a solemn obligation to ask the minister to issue a written direction. That’s fine. Any minister should be confident enough in the judgement he or she has made to be willing to justify it in public.
So speaking truth unto power: that’s the proper deal.
The future of the Civil Service – next steps
So – how can we empower the best to shine, recognise the people who are delivering for the country, and remove that bias to inertia?
Implementing the Civil Service Reform Plan actions are necessary. Not sufficient, but certainly necessary.
But what next?
First, the overall operating model. Is the model where each department is a free-standing entity still sustainable?
Or do we need a unified operating system? One set of high standards?
We have found from polling that civil servants want a more unified system – that they see themselves as working for the Crown rather than just their individual department.
And this is not just about sharing services – but about embracing a more corporate approach to talent management, capacity building and leadership of expert services.
Secondly – accountability. Nearly 10 years ago Blair claimed the government would radically extend one of the central principles of Northcote-Trevelyan - that of merit - by applying it to existing posts as well as new ones.
This would mean establishing a new norm that all senior Civil Service jobs would be four-year placements, with no presumption of permanence in post.
Why didn’t this happen? Why do we still have the same hierarchal system where some senior people seem to have a job for life regardless of their performance? We need a Civil Service where promotion is faster – and rewards delivering results on the ground.
There is also the question of who appoints Permanent Secretaries.
We said in the Civil Service reform plan that we wanted to strengthen the role of ministers in the appointment of Permanent Secretaries. There have been modest changes in that direction made by the Civil Service Commission. But we would like to go further – so the selection panel would submit to the Secretary of State a choice of candidates and leave the final choice to the Secretary of State. It is interesting to see that the Institute for Government is endorsing that suggestion.
Finally there is the question of how well supported ministers are. In fact in this country we are less well supported than any comparable country. At one extreme is America which gives the administration enormous personal support. Closer to home is France which allows its ministers wide powers of appointment. Even when we look at Westminster-style systems like Canada and Australia we see that ministers there have far more direct support.
This matters when ministers have only small teams chasing progress and pulling the levers on policy. Many of the Labour former ministers who have spoken out on Civil Service reform have called for greater direct support for ministers. This is not about more political advisers. But it could be about being able to bring in from outside people of experience and ability. These may be found beyond Whitehall but they can just as easily be career civil servants. What they must be is personally responsible to and chosen by the minister – that’s the key to sharpening accountability.
Northcote-Trevelyan’s model for the Civil Service has lasted 150 years and this is the model I want to keep. But we also need to get better.
The Civil Service Code, and now the statute, sets out the core values of the Civil Service: impartiality, honesty, objectivity, integrity.
No one argues with these. They’re really important. But equally they’re static, passive values. And 2 are essentially mirrors of the others.
Gus O’Donnell as Head of the Civil Service coined four Ps: pace, professionalism, passion, pride. These are great virtues. They’re warm, dynamic, human.
It’s time we created the modern, 21st century civil service we need. A service that retains its impartiality and its ability to serve a government of any hue, but that champions above all else excellence: excellence in the policy advice it gives to ministers and excellence in its ability to implement the agreed agenda of the government of the day.
The path to excellence starts but doesn’t end with the Civil Service Reform Plan. The plan includes some necessary first steps but it’s certainly not sufficient. To achieve real excellence and to stay ahead of the game, an organisation the size and complexity of the Civil Service must constantly evolve and keep striving to better itself. We may not be where we need to be today – but we can get there – we have the opportunity to set new standards, to raise our game and become a world-class organisation that other countries aspire to emulate. And that is the opportunity we must grasp.