ukcivilservant

Articles about the UK Civil Service and Regulation

Picking Winners – and State Aids

This is a response to a request from David Higham and other fomer colleagues for my views on the current debate about Dominic Cummings’ reported wish to be able to offer generous ‘state aid’ (i.e. subsidies) to chosen high tech (and potentially high growth) companies.

Background:  I led the Business Department’s industry/education team in the late 1980s and a number of industry ‘sponsorship’ teams in the mid 1980s and then again from 1992 to 1998, including working closely with Michael Heseltine during his time as President of the Board of Trade.

Sponsorship teams focus on specific industries or groups of industries, and undertake a number of activities. Officials are expected to get to know key figures across the industry and so gain a thorough understanding of its strengths, weaknesses, challenges, opportunities and needs. Its interests can then be communicated to all relevant government departments.

Most industries do not need any sort of hard intervention either by way of regulatory favours or subsidies. Indeed, it was obvious to most outside observers that many industries’ fundamental problems were self inflicted through weak management and chronic underinvestment exacerbated by over-strong and/or short-sighted unions. Any government intervention was likely to make things worse, not better.

But some interventions were well justified, During the periods mentioned above, I can think of four types of subsidy that represented good to exceptional value for money.

  • First, in the 1980s, we heavily subsidised the provision of the first computers in schools.  There were two suppliers, Acorn (who built the BBC-B microcomputer) and Research Machines who built higher spec and more expensive machines.  The scheme was a huge success.  It not only excited huge numbers of teachers and pupils but Acorn went on to develop RISC PCs, and one of its subsidiaries became ARM Holdings whose processors can be found in most mobile phones.  RM now employs around 1,700 people providing educational IT, although it ceased manufacturing during the 2008 financial crisis.
  • We subsidised inward investment, most obviously by vehicle manufacturers.  But we never invested more than 25% of total cost.  Our support was most often directed at ‘saving jobs’ or ensuring that we got jobs as a result of investment that would otherwise go to other countries.  But we sometimes supported R&D, including most recently into battery technology and autonomous (‘driverless’) vehicles – though we subsidised Jaguar’s investment in autonomous vehicles as long ago as 1989.  I remember experiencing it on a French motorway.
    • Note, though, that it can be difficult to know how to respond to other countries’ bids to win investment in new vehicle plants, for instance. Serious bidding wars usually end with a seriously expensive winner’s curse. Luckily, the UK has been able also to point to the benefits of excellent macroeconomic and regulatory policies – at least until Brexit – and so spend less than might otherwise have been necessary.
  • We rescued (i.e. saved jobs in) Leyland Daf’s UK operations following its 1993 receivership including by funding 25% of an otherwise private sector investment in Leyland Daf Vans (LDV) in the West Midlands.. Three of the four rescued subsidiaries are still trading successfully.  LDV continued to employ significant numbers but closed during the 2008 recession.
  • Finally, and probably least successfully, we ran schemes which funded typically 25% of smaller firms’ investments in research, development and new products.  Many of these were bound to lead nowhere but even a low hit rate followed by exceptional growth would have justified the expenditure.

And here is a bad example:

  • There was a fierce battle, in the UK in the 70s/80s, between big bad IBM with their closed propriety systems, and ICL, keen on open systems and a proud successor to the earlier giants of British computing including English Electric Leo Marconi. I inherited the sponsorship team and initially continued to pour as much money as possible into ICL technology, and to arm twist the public sector to continue to buy its mainframes. But I eventually realised that the company was uncompetitive to the extent that well over 90% of its sales were to the public sector. In other words, any business that had a choice bought IBM. I understand that colleagues subsequently did their best to continue to support the company, and it eventually had to be rescued from collapse in order to keep vital systems running, such as those in DVLA. ICL was eventually bought by Fujitsu.

Lessons, Conclusions, Comments

All the above expenditure was approved under the current state aid regime, though it sometimes took a few weeks or months to persuade the European Commission of the merits of our case.  It helped hugely that were not one of the member states who spent the most on state aid, nor one of those who came forward with the least deserving applications.

Equally, though, we probably could have pushed the state aid boundaries further than we did.  Other countries ‘ administrations seem to have more supportive lawyers and economists.  Also, countries such as France and Germany have well-funded public sector investment banks which pre-date the state aid regime.  I understand that our attempts to set up similar institutions have been thwarted by state aid considerations, much to the annoyance of both ministers and officials.

Two of our successful investments were brought down by the 2008 financial crisis, which underlines the importance of having appropriate macro-economic and regulatory backgrounds, including competition policy, without which state aid will inevitably be wasted.

Despite my experience, I have no faith in ministers’ or officials’ ability to ‘pick winners’ even when our decisions had to be approved by external advisory boards.   (See Note below) I was accordingly a great fan of the requirement that 75% of program cost had to be funded by the private sector.

Note, for instance, that my ‘best’ investment was almost certainly computers in schools.   However – if we had been forced to support only one of the two companies  – we might have gone for RM’s higher end machines which would certainly have met with the approval of a previous generation’s Dominic Cummings.  But it was the initially lower tech Acorn computer that eventually led to world-beating technology.

Equally, my worst investment (though I inherited the policy) was support for ICL. Unfortunately that company was then seen as the UK’s answer to an American giant. It is a cautionary tale for those now seeking to build British high-tech companies to rival the American and Chinese giants.

(And I am anyway not aware that Silicon Valley benefitted from government finance. Weak regulation and a vibrant venture capital industry were much more important.)

More generally, I have absolutely no faith in ministers’ ability to withstand pressure to spend unwisely for political and constituency reasons.  ‘Saving jobs’ and ‘attracting inward investment’ can make sense, as I have explained above.   But such powers need to be tightly controlled (such as via the state aids regime) if they are not to degenerate into hugely wasteful expenditure in uncompetitive companies and/or international auctions which end up in governments paying far too much per job gained.

Equally, I have little faith in minister’s ability to focus support narrowly enough.  As Giles Wilkes points out, no-one is ever against:

  • Investment
  • Innovation
  • R&D
  • Entrepreneurship
  • ‘Hubs’, ‘Catalysts’ and ‘Accelerators’
  • Exports, and
  • How Germany Does Things

And I would add small firms to that list. 

The underlying problem is that ministers find it very difficult to refuse to extend the borders of even the best, highly targeted schemes.  Surely, they will argue, butchers and restaurants can be innovative too.  And how can we justify excluding firms that employ less than 500 people, or 50, or 5 …?

The result can too easily be cash sprayed at a large number of targets in the hope that some of it will generate rapid returns.  But it is far from clear to me why the government is likely to be any better at this than venture capitalists and other investors.  

In short, therefore, I would generally advise against adopting any policies which go beyond those currently allowed by the current state aids rules.  

Martin Stanley

Editor – Understanding Government

Note:

My colleague Michael Coolican wrote this in his book No Tradesmen and No Women.

[Many ministers are very clever but they] tend to be ‘big picture’ people who simply can’t deal with detail. If such qualities are mixed with a fair amount of dogmatism, a large dose of self-confidence, special advisers with inadequate experience, and a civil service unable to make good the deficiencies, then the way is prepared for the sort of poor government that has been much in evidence during the past fifty or so years …

Harold Lever saw at first hand how such factors affected the ability of the Wilson government to achieve anything despite the undoubted talents of its members … ‘These governments … overestimated their ability to shape and manage the complex drivers of a modern economy. They assumed they understood all the reasons for its shortcomings and so, unsurprisingly, were all too ready to lay hands on superficial remedies for overcoming them.’

Will there be Further Whitehall Wars this autumn?

There was a startling but hardly noticed announcement, a couple of years ago, that ‘a ministerial policy decision cannot be sufficient justification alone for proceeding’.  Priti Patel, Matt Hancock and the rest can apparently announce whatever they like – but civil servants shouldn’t take any notice unless they are convinced that the plans are ‘feasible’.  Here is how we got here.

Ministers are frequently accused of being too ready to seek political advantage by announcing impossible or badly thought-through policy objectives, or by allocating insufficient time and resources to otherwise achievable policy objectives.  Jill Rutter’s half jest summarised the underlying issues rather well:

Civil Servants say to ministers that “We won’t tell you it can’t be done if you won’t sack us when it is not done”.  Maybe it is time we recognised that this constitutional pact has run out of road?

The story began in 2011 when the Institute for Government recommended that it should be made easier for senior civil servants to challenge ministers’ policy decisions in the same way as they had for many years been able to challenge a ministerial spending decision.  (Officials would ask for a formal written ‘Ministerial Direction’ if the spending appeared to be irregular, or improper, or to represent poor value for money.)  Permanent Secretaries would ask for a Policy Direction if they were not satisfied that ‘clear, well-reasoned timely and impartial advice’ had been provided, and that the decision was in line with the aims and objectives of their organisation. 

Not surprisingly, this particular idea did not find favour with ministers who were shortly afterwards faced with an equally threatening suggestion of Procedural Directions.  These were proposed by the Better Government Initiative and supported by the Public Administration and Constitutional Affairs Committee and The Constitution Society.  In short, ministers would be held to account if they were to deviate from the processes laid out in the Cabinet Manual. 

One example, had this mechanism already existed, might have been Tony Blair’s failure to circulate pre-Iraq War legal advice to Cabinet colleagues.  Others might have been some of the decision-making either side of the Brexit referendum. Sadly, this attempt to fetter Prime Ministerial discretion was no more welcome to the government than had been the Policy Directions. 

But there was progress on the policy front.  Treasury ministers quietly, in 2011, introduced Feasibility Directions.  These allowed officials to require ministers to direct them to proceed with projects even if officials doubted that the project’s objectives could be achieved either at all, or within the timescale and resources stipulated by the minister. Here is an extract from the guidance:

‘Feasibility often overlaps with value for money and/or propriety. The judgement to be made is whether government has the ability to carry out the proposed policy effectively and credibly. Precedents, market testing and pilot studies can give confidence that a new policy or proposal will be feasible. Conversely, warning signs include novelty, high administration costs, high error rates and significant compliance costs. Where there is doubt about the quality of administration, the proposed course may well also be inefficient or improper.’

Whitehall watchers awaited the first Feasibility Direction with great interest.  Would it be seen as evidence, yet again, of ministers’ unrealistic expectations, driven by short term political considerations? Or would it be evidence, yet again, of the need for ministers to be able to override their cautious, unimaginative and unambitious civil servants?

It was therefore quite telling that a National Audit Office report five years later asserted that Accounting Officers ‘appear to lack confidence to challenge ministers where they have concerns about the feasibility or value for money of new policies or decisions, not least because standing up to ministers is seen as damaging to a civil servant’s career prospects’. 

The first Feasibility Direction did not in fact appear until 2018 when a minister took responsibility for the risks associated with accelerated introduction of new ‘T Level’ exams.  This was a perfectly sensible and uncontentious use of the mechanism. 

The seven year wait for the first Direction was no doubt one reason why the retiring head of the National Audit Office, Sir Amyas Morse, announced in 2019 that he was concerned that the balance of power between ministers and senior civil servants had shifted, with officials increasingly unable to challenge bad decisions.

“I still don’t think we’ve sorted out the question of the interaction between the political agenda and delivering good results and value for money.  There’s pressure to do things too quickly or to announce very high-profile world-beating projects. Allowing ministers to have a say in the appointment of senior officials has led to a position where ministers have a great deal of power over their civil servants. That’s unfortunate. They’re intelligent people. They understand that the consequences of disagreeing with a minister are likely to be pretty ugly.”

A small number of further Feasibility Directions were issued by the Business Secretary as his officials rushed to support the private sector during the 2020 COVID-19 crisis. 

Senior Responsible Officers were another Whitehall innovation which is taking a long time to take off.  SROs were from 2013 to be personally accountable, including to Parliament, for the delivery of major projects such as the National Cyber Security Programme.  It was hoped that newly appointed SROs might be concerned to ensure – before accepting their appointment – that they were not suffering from appraisal optimism, and that their project was properly resourced and had sensible timescales and objectives.  This would reduce the chances of their having to account to their Permanent Secretary and Parliament when things went wrong.  And it would ensure that a senior official – the SRO – was forced to challenge ministers if a major project were being established without proper resources etc.

In practice, however, little at first appeared to have changed.   SRO appointment letters were little more than that.  They specified neither the programme’s objectives nor its resources or timescales.  And most departments at first decided to appoint very senior staff as part-time SROs, rather than nominate those officials who were truly responsible for key projects. The SRO for the National Cyber Security Programme was for instance told that he would need to devote only two days a month to the role!

But SROs were strengthened by the introduction of Accounting Office Assessments – see further below.  The Universal Credit SRO appointment letter, for instance, requires the SRO to prepare an Accounting Officer Assessment ‘if the programme might depart from the four standards (regularity, propriety, value for money and feasibility), or from the agreed plan – including any contingency – in terms of costs, benefits, timescales, or level of risk’. The letter is also firmly linked to the Business Case, so the SRO is personally accountable for delivering the intended economic and net present values. Indeed, some of the Universal Credit material suggests that the relevant SRO was able to renegotiate the programmes timescales and be clear to Parliament what the reasons were.  So this particular (if isolated?) Minister/official dynamic appears to be working well. 

Finally, Accounting Officer Assessments were introduced in 2017.  Following a Public Accounts Committee recommendation, the Treasury announced that ‘Accounting Officers should personally approve, in advance, all significant initiatives, policies, programmes and project’ and so be able to provide assurance to Parliament that those activities provide value for money and are feasible etc.  The guidance went on to say (emphasis added):

‘The analysis should consider the issue in the round. A ministerial policy decision cannot be sufficient justification alone for proceeding. The accounting officer’s job is to try to reconcile ministers’ policy objectives with the standards for use of public funds.

The full accounting officer assessment should provide a frank examination of the key issues including any sensitive issues. It should address the essence of the policy which is being delivered, its purposes and its prospect of successful delivery or implementation. It is therefore not usually published in full, but is shared with the Treasury.   A summary of the key points from an accounting officer assessment of a major project should however be prepared and published.’

Will AO Assessments Make a Difference?

Ministerial Directions were once regarded as nuclear weapons – more effective in the silo rather than launched.  But they have come to be seen as a grown-up way of allowing ministers to account for political decisions to override strict value for money criteria.  SROs’ ability to launch Accounting Officer Assessments are similarly unlikely to be used very often, but they should in theory discourage ministers from announcing badly thought through projects such as Prime Minister Cameron’s ‘Big Society’ or Prime Minister Theresa May’s social mobility agenda.  Boris Johnson’s ‘levelling up’ might meet a similar fate. All the aspirations were no doubt sincere but there was no organisation or institutional weight behind them. 

The signs so far are not promising, given the number of ill-thought-announcements during the initial response to the COVID-19.  Officials are clearly not obliged to prepare an AO Assessment immediately a minister indulges in some blue sky thinking.  But I suspect that they will nevertheless prevaricate far too long before offering serious challenge to ministers.  And the Treasury’s guidance allows a fair bit of wriggle room later on:

Often, big intricate decisions have long lead times. In such cases, it is good practice to make the accounting officer assessment in principle at an early point, firming it up at suitable strategic points as the policy or proposal is developed. This makes for orderly evaluation of the key features of the policy, with no surprises at the final decision point. Apart from providing time to redesign a policy or proposal, early assessment may flag up how the proposal can be better designed to meet both ministers’ and parliament’s requirements …

Also, unlike AO Assessments associated with major projects, AO Policy Assessments, will not automatically be shared with Parliament.  I fear that the result is that they will not differ in substance from the traditional Mandarin warnings that ministers’ policy proposals are ‘brave’ – ‘courageous’ even!  So it could all come down to the energy and inquisitiveness of MPs and Select Committees.  They could – perhaps supported by the National Audit Office and the media – start insisting on seeing AO Policy Assessments.  If so, we could see a significant improvement in the way this country is governed.

The test may well come in this year’s Spending Review.  Faced with yet further cuts, departmental ministers may fail either to cut existing programs or to prioritise their wish list.  Mistakes will be made.  Will Permanent Secretaries, on five year contracts, assert that ‘a ministerial policy decision cannot be sufficient justification alone for proceeding’ – or will they prioritise their careers?

[This is a shortened version of a more detailed history on the Understanding the Civil Service website.]

Subsequent Debate

The IfG’s Alex Thomas sparked an interesting exchange with Jill Rutter and others after reading this blog. (Jill was one of the authors of the IfG’s 2011 report recommending the introduction of Policy Directions.) The debate revolved around the difference between Policy Directions (which weren’t introduced) and AO (Feasibility) Assessments (which were).

Jill stressed that Policy Directions were not intended to impede the introduction of policies which civil servants thought to be bad ideas. They were solely intended to come into play when officials thought that the evidence did not support a particular intervention as a reasonable way of delivering the ministerial policy objective.

Alex could live with the feasibility test as a way of reconciling ministers’ policy intentions with the sensible use of public funds. But ministers are already required to consider civil service advice before taking significant decisions. Ministers therefore take responsibility for the decision, not least if the they choose an option other than the one recommended by officials on the basis of evidence and analysis.. A further challenge, by way of requiring a Policy Direction, would surely further damage minister/civil servant relationships. The publication of the Direction would certainly enhance accountability by exposing the debate to public view. But it would damage the collegiate nature of minister/official relationships within Whitehall.

In reply, Jill wondered whether the relationship was already so decayed there is no option but formalisation. Both sides would lose something important – but she was not sure the relationship was now salvageable.

Martin Wheatley and Jonathan Potts rounded off the discussion by suggesting that the problem that Policy Directions were intended to address would be better solved through strengthened parliamentary scrutiny – a noble aim but not one likely to be achieved in the near future?

Martin Stanley
Editor Understanding Government

How (not) to Sack a Permanent Secretary

This blog is a reprint of my web page which explains how and why Permanent Secretaries can be dismissed, and seeks in particular to explain the concerns arising from the loss this year of the Cabinet Secretary and five Permanent Secretaries.

I do not claim to have detailed knowledge of the individual dismissals, and so would welcome additional information and corrections, either as comments on this blog or by email.

It is a firm rule that ministers cannot dismiss civil servants that displease them or that offer unwelcome advice (but see the comment below).  If a minister cannot stand a particular official, the latter is usually moved to a different job. Much more detail is here. It follows that, if a Secretary of State falls out with their Permanent Secretary, there then needs to be a triangular discussion involving the Secretary of State, the Cabinet Secretary and the civil servant.   Where possible, this leads to two or more Permanent Secretaries swapping places.

Sometimes, though, this is impossible.  Other Secretaries of State may refuse to accept what they see as a tainted official, or there may be no available post which is senior enough within the Permanent Secretary pecking order.  But, if it is not addressed, the poor relationship at the top of a department can lead to serious damage both to the minister and the department, and hence to the wider government. The Permanent Secretary must then leave the civil service.

Such departures do not necessarily reflect badly on either the Secretary of State or the official.  Cabinet Ministers are entitled to work with someone that they find reasonably congenial.  And no-one gets to be a Permanent Secretary unless they have shown that they can work well, over a long career, with a large number and variety of Ministers of all political persuasions.   Former Cabinet Secretary Robin Butler noted (in a letter to the Times in September 2020) that “It is especially important in the case of the head of the civil service that the appointee should be endorsed as politically non-partisan. When I was head of the service, I was authorised by the prime minister of the day to confirm informally with the leader of the opposition that those chosen for important civil service appointments were acceptable also to his party.”

Indeed, Permanent Secretaries often work with several Secretaries of State before finding one that doesn’t like them.  Simon McDonald, who was eased out of the Foreign Office in 2020, noted that in his five years as Permanent Secretary he had worked for 22 junior ministers, 4 Foreign Secretaries, 3 Prime Ministers and 1 Queen.

The departure is therefore usually pretty amicable.  There can be financial compensation for the official in the form of an early retirement package (though these are modest compared with private sector equivalents).  And prestigious jobs can often be found in higher education or the charitable sector. 

It was therefore concerning that the Boris Johnson government oversaw the distinctly not amicable loss of several Permanent Secretaries in 2020.  There were several important factors in the background to this highly unusual development.

  • The senior ranks of the Civil Service were undoubtedly very concerned about the way in which Ministers were approaching the Brexit and post-Brexit negotiations following the 2016 referendum.  Their speaking truth to power will probably not have gone down at all well.
  • The Prime Minister’s principal adviser Dominic Cummings made it clear that he had no time for most senior civil servants.  He was also keen to centralise decision making in or near Number 10, which will have been unwelcome to most Permanent Secretaries on both practical and constitutional grounds.  The Times and others reported that he had told political aides that a “hard rain is coming” after detailing the shortcomings of an “incoherent” Cabinet Office.
  • The government mishandled the early (and some of the later) stages of the COVID-19 crisis, completely disregarding well established good practice in handling crises.  But it will have wanted to deflect criticism away from ministers.
  • More generally, Whitehall, as well as many public services, encountered Brexit and COVID-19 following years of staff cuts and lack of investment driven by austerity.  It had also maybe not fully recovered from the turmoil of the LibDem coalition years. (19 out of the 20 Perm Secs had either left or been moved between departments between the 2010 general election and 2013.) By 2020, therefore, the whole of the UK public sector lacked resilience and any spare capacity.  Its performance in some areas may very well have been poor, but Ministers were hardly likely to realise that they and their predecessors were to blame for this.
  • Permanent Secretaries had, since 2013, been appointed on five year fixed term contracts. By 2020, therefore, it had become much easier to ease Permanent Secretaries out of their offices, whilst simultaneously sending clear messages to the others that they had better behave – or else!

The first Permanent Secretary to go was Philip Rutnam at the Home Office who fell out so badly with Home Secretary Priti Patel that he refused compensation and instead claimed to have been unfairly and constructively dismissed because of her bullying.  He claimed that there had been a “vicious and orchestrated” campaign against him in the department.

Clare Moriarty left the civil service in March 2020 following the abolition of her department (The Department for Exiting the European Union). It is not known whether she was would have accepted another appointment if indeed one had been offered, as she was recovering from a serious illness But many wanted her to stay. Civil Service World commented as follows:

“This is sad news,” CSW columnist and former senior civil servant Andrew Greenway tweeted. “I’ve often been critical of leadership in the CS. Clare was a perm sec who espoused the best of the service’s traditional strengths while pushing it towards the internet era. Her empathy and ability will be much missed.”  As this tribute implies, Moriarty developed a leadership style that felt refreshingly open and modern in a civil service that talks the inclusivity talk, but doesn’t always walk the walk. Many wanted to see her take her this model of stewardship to the very top of the organisation. It was a surprise then when news emerged a few weeks ago that – after seven departments and 35 years – she would be leaving the civil service at the end of March.  

Richard Heaton left the Ministry of justice in the summer, at the end of his initial five year appointment period.  I understand that the Justice Secretary wanted him to stay, but the application had to be considered by the Prime Minister (or more likely Dominic Cummings) and Mr Heaton only learned of his departure as it was tagged on to the statement by No 10 announcing the departure of Mark Sedwill – see further below. This was a pretty shabby way to treat anyone, let alone such a distinguished public servant.

Simon McDonald left the Foreign Office in the late summer, having originally said that he would stay on until 2021 to oversee the merger of the FCO and DfID – see further below.  He had worked for Boris Johnson as Foreign Secretary and then for Dominic Raab, neither of whom were regarded as strong or effective in the role, so there may have been tensions in their relationships. .  He had then, according to the media:- been forced to make U-turn on his claim to MPs that the UK made a “political decision” not to join an EU scheme to source ventilators to treat coronavirus patients. He later declared he had been “incorrect” in his comments to the Foreign Affairs Committee, prompting speculation he had been ordered to recant by Downing Street.  He had also undoubtedly opposed the speed of the merger that autumn of the Foreign Office and Department for international Development.  This was being planned for 2021so as to allow time to tackle a number of complexities, including the need to knit together two quite different cultures, pay systems etc . 

The manner of Jonathan Slater’s dismissal caused little short of outrage amongst many observers.  He was evicted from the Education Department in August 2020 with only five days notice.  Although this followed the department’s very poor handling of the education aspects of the COVID-19 crisis, including some impressive u-turns over the grading of pupils who had been unable to sit A-level and GCSE exams, very few thought that the errors should be attributed to Mr Slater alone, if indeed at all.   It was widely assumed that the Prime Minister had required someone to fall on their sword but ordained that that someone was not to be the Cabinet Minister Gavin Williamson. – a reversal of the normal acceptance of responsibility in these circumstances.

It was noticeable that, although the Head of Ofqual (the exams regulator) also resigned, she remained a civil servant and returned to her home department, the Cabinet Office.

Last, but not least, Cabinet Secretary Mark Sedwill left in September following acres of press reports that he was to be sacked.  The Telegraph said that Downing Street regarded Sir Mark as “too much of a Europhile and establishment figure” to be in post through planned Whitehall reforms. It is worth noting, too that Sir Mark’s previous career (mainly in defence and national security) was probably not ideal preparation for his new role, especially given the pressure of the Brexit negotiations and preparations, and the CIVID-19 pandemic. There will have been tensions, too, resulting from Dominic Cummings’ determination to centralise decision making in Number 10.  These issues are explored at greater length in a separate blog.

Comment

The departures of Richard Heaton and Jonathan Slater were so clearly ordered by the Prime Minister as to call into question my assertion, above, that ‘ministers cannot dismiss civil servants’. The sackings may have been designed to show Permanent Secretaries that they have no job security and they should watch their step, though – as in all the best authoritarian systems – watching their step may well not save them. It does not appear that Prime Minister Johnson has any interest in or loyalty towards the civil service as an institution of which he is, of course, supposed to be the custodian as Minister for the Civil Service.

It was, of course, also the case that the Cabinet Secretary was in no position to object to the two dismissals, as he was himself serving his notice period. It remains to be seen whether Simon Case (Sir Mark’s successor) will be able to withstand pressure from the Prime Minister and his aides, or whether he was chosen for his willingness to bend to Prime Ministerial will.

Let’s not forget, though, that this is not the first time that Whitehall has got excited about minister/Permanent Secretary relations. One persistent theme, as the 2010- LibDem coalition passed the mid-point of its term in office, was ministers’ dissatisfaction with Permanent Secretaries.  There were several ‘fallings-out’ and Perm Sec resignations, which at least went to show that Minsters did weald considerable power in this area if they chose to use it.  Indeed, there was by 2013 only one Perm Sec in post who had been in post in 2007, and 19 out of the 20 Perm Secs had either left or been moved between departments since the 2010 general election.  The downside, of course, was that the 19 were often inexperienced and/or working in departments whose issues, strengths, weaknesses and organisation they did not understand at all well – a fact which was all too apparent to their staff.  It was probably also a significant contributory factor in the poor performance of the coalition and subsequent governments.

Ivan Rogers resignation in 2017 was an example of a less-than-amicable but nevertheless necessary departure. His disagreement with the government’s Brexit negotiation strategy was so profound that he resigned before he was dismissed.

Martin Stanley

Editor – Understanding Government

Algorithms, Ofqual and Regulatory Independence

The A Level drama exposes an uncomfortable issue:-  the balance between regulators’ operational independence and decision making, and political accountability.

It is a tricky issue that has been around for decades. Most regulators would want decisions that impose significant distributional effects between classes or types of the public to be subject to greater political accountability.  Politicians, of course, would prefer the opposite.  This blog seeks to illuminate the debate.

Let’s begin by summarising regulatory best practice.

Some regulators are more independent than others

It is in everyone’s interest that regulators who make significant economic decisions (such as whether to permit a company merger or to allow gas prices to rise) do so without any political interference.   But it is clearly not possible for politicians to wash their hands of responsibility for the quality of education and health services, so the regulators of those services tend to operate in a more overtly political environment.  

All regulators need to communicate effectively with both the public and the main political parties.

Regulators take many decisions which deeply affect the lives and finances of millions of people.  They should not be swayed by party political considerations, but they do need to anticipate criticism and explain their decisions in clear uncomplicated language.  They should have clear and honest channels of communication with interested journalists.  And they should brief the relevant government departments –  and offer to brief Opposition spokespersons – whenever they announce particularly interesting regulatory decisions.

  • Early/mid-morning press-conferences, meetings and conversations will ensure that the regulator’s reasoning is widely understood whilst opinions are being formed, even if their judgment is not fully accepted.

Models, Spreadsheets, Algorithms

Regulators are often required to forecast the result of their decisions, and deploy various types of model to help them do so.  But models are guides and simplifications of real life – they are not real life. Decision makers need to be careful not to over-rely on them and fall into the seductive trap of relying on model outputs as “truth” when judgment and pragmatism would frankly give better and more legitimate results.

Numerical outputs are best seen as approximations and can be rough and ready in their predictive power. Most analysts who develop models will tell you that 80 per cent accuracy is about as good as you will ever get for a complex social science question. It’s not physics and exact science we are talking about here.

Let’s also remember – to quote Timandra Harkness – that algorithms are ‘prejudice machines’ – which is another big subject in itself.

Consultation

High quality decision-making must be underpinned by effective, open and transparent consultation.  It should seldom be necessary to depart from this process:-

  1. Ask questions, seek information and seek views from any interested party.
  2. Debate the issues with experts and representatives of key organisations as well as with others who offer interesting and/or challenging views.
  3. Announce a provisional (’minded to’) decision and seek comments on it.
  4. Make a final decision in the light of stage 3 representations.

This process can take several months if the subject is important enough.  Equally, it can be carried out in a matter of days if there is a need for urgency.

It is particularly important that the process should not be distorted by the volume of similar consultation responses, often encouraged by lobby and pressure groups.  Indeed, it is perfectly possible that just one isolated submission, making a vital and otherwise overlooked point, can help steer the regulator away from a faulty conclusion.

It is also vital that regulators should not be upset by vitriolic criticism but should remain willing to listen to that criticism in case it contains an essential truth that had been overlooked.   This is gf course much easier to say than to do, especially in today’s world so dominated by social media.  But it helps greatly if there is a mature, mutually respectful relationship between the department and regulator.

Ofqual’s Consultations  – and the Algorithm

It is not yet possible for anyone outside the government and Ofqual to understand whether they followed the above best practice, but here are some provisional observations. 

First, let’s not forget that Ofqual were tasked with solving a fundamentally impossible problem in awarding grades to students who had completed neither course work nor formal exams.  Its decisions would be very closely scrutinised, especially if they had distributional effects.  There would need to be close collaboration with ministers and their officials.

It is often the case that regulators are faced with a choice between options which have different distributional effects:  trade-offs where one group of the population benefits at the expense of another. Should gas/electricity standing charges be increased more than unit prices?  Should regional pricing be allowed?  Will increased competition benefit the affluent and IT-savvy, to the detriment of those who find it difficult to shop around?

It is an article of faith amongst regulators that politicians and not regulators must own such distributional effects.  Regulators can advise but such effects are by their nature political and require an element of democratic legitimacy. Increasingly, though, politicians have started asking regulators to take essentially political decisions, most obviously in energy regulation where Ofgem has been forced to accept a substantial proliferation in the number of general duties. Since the 1986 Gas Act, the number of duties has risen from eight to twenty-one.  And the position is broadly similar for electricity.  The prioritisation of these often conflicting duties should not in principle be left to the unelected regulator.

Part of the impossibility of the task facing Ofqual was that, as noted above, models are fine when all the decision maker needs is an 80% approximation. But, when you are talking about exam grades, every individual matters – you can’t simply say 80% is good enough. It leads to too much rough justice and unfairness, exacerbated in this case by teachers being forced to rank students who were in reality indistinguishable.  Ofqual’s board and DfE might therefore have been expected to ask (and might well have asked) whether alternatives to the model would have been acceptable and less prone to rough justice. Could teacher assessed grades be used subject to Ofqual checks – or even peer review from teachers in other schools using whatever evidence was available?  

It is hard to understand why the model and its assumptions were not shared transparently before the results.  Ofqual published a 319-page document explaining its methodology only after the A-level results had been published.   It is not clear why this could not have been published much earlier.  This would always be good regulatory practice, and was even more vital given the novel and political contentious nature of the task. It would have helped draw out the sharp edges earlier and hopefully driven different decision making.

The fact that Ofqual could not find a way to take up the offer by the Royal Statistical Society to review the model was particularly odd.  I have never heard of a regulator requiring its advisers to sign Non-Disclosure Agreements.

And yet … there was clearly enough information in the public domain to cause concern amongst those that tried to understand it.  So did Ofqual find it difficult to accept that non-expert criticism might be well-founded?  This is often the case with experts, of course, who feel that their professional honour is impugned whenever an amateur or outsider seeks to contribute to a debate.[1] [2]  But it does appear that input from former DfE official Jon Coles, IT consultant Huy Duong, and his statistician sister, as well as the Education Select Committee amongst others, should have given the regulator pause for thought.

On the other hand, there was an 11-person external advisory group (including Tim Leunig, a reportedly somewhat maverick Treasury Economic Adviser) whose discussions have been reported as ‘robust’ but leading to consensus.

If there were no apparently acceptable alternative, it follows that the key question is whether Ofqual and the DoE really understood and then fully discussed ahead of time and co-owned:

  • the way the algorithm locked in the school’s previous history,
  • the implicit skew in the model that favoured small tuition groups (most often found in the private sector),and
  • the forcing of lower grades (including ‘U’s) on those at the bottom of teachers’ ranking.

And, then, most crucially of all, had the Secretary of State been made fully aware of this model output well before results day?  It was pretty clear that this was a political nightmare waiting to unfold. 

Department-Regulator communications certainly seem to have broken down once the Secretary of State decided that he would no longer rely on the algorithm.  I can only imagine the near-panic in both organisations at that time, possible worsened by interference from No.10.  But it didn’t look good, and the supposed decision to use mock A-level results was clearly rushed and ill thought through

Two Lessons?

The FDA’s Dave Penman was surely correct when he said that ‘I don’t think it’s fair that civil servants are attacked … but I don’t think ministers should be either. The government needs to find out what went wrong [and learn from it] not make a knee-jerk decision to abandon officials’.  But I have two broader suggestions.

First, I suggest that it would be sensible for all departments and their regulators to sit down together to ensure that they have a shared view of which sort of decisions should be taken by the regulator, and which by Ministers.  They should also agree on how they would jointly handle criticism of contentious decisions, bearing in mind that agreed division of responsibility.

Second, this episode contains clear lessons for the whole of the public sector.  As Stephen Bush has commented:  “As politics becomes increasingly dominated by algorithms, what will matter ever more is transparency – about who is writing them, what goes into them, and what they mean for us all.”

Martin Stanley

Editor – Understanding Government


[1] A classic example was the Navy’s wartime resistance to the suggesting that convoys might reduce the losses being experienced by merchant ships crossing the Atlantic.  (War memoirs of David Lloyd George p1149) 

[2] One wonders whether something similar happened in the UK in the early stages of the current COVID-19 pandemic.

Dominic Cummings Should Read the Research

Whitehall is to have ‘a NASA-style mission control centre … with the aim of imposing the government’s will on the officials with whom it has often clashed [and featuring] television screens displaying ‘real time performance data’’[1].  

This is all consistent with Dominic Cummings’ thesis that the government needs much better policy and project support, informed by input from those with an ‘Odyssean education[2]’, assorted ‘weirdos’ and data scientists[3], supported by a rather different civil service.  It is also consistent with his determination to establish a strong strategic centre that can overrule both a weak Cabinet and a compliant Parliament – and if possible a weakened judiciary.

I must admit that I rather like mavericks, and I welcome many of Dominic Cummings’ innovations, as well as sharing his concern at ‘the elevation of the courtier-fixer at the expense of the thinker and manager’[4].  But if he really wants to reform British policy-making then he should follow his own advice and start by reading the wealth of data and analysis provided by those who have studied UK government over many decades.  It would point him in a quite different direction.

I’ll turn to the research in a moment but let me first point out that better data or analysis would not have helped successive governments tackle the many ‘wicked issues’ such as how best to fund Social Care.  As Richard Johnstone has commented, we keep repeating this question rather than engaging with the answer[5]

Nor would it have helped various Chancellors withstand pressure to abandon the Fuel Duty Escalator (despite concerns about Climate Change) and overdue property revaluations (which have led to much unfair local taxation).  And I cannot imagine that a mission control centre could have stopped the ministerial panic that has characterised much of their response to Covid-19[6] – not to mention their handing of this years A Levels.

The reasons why ministers make so many poor decisions lie much deeper than  lack of data and out-of-touch officials.  Report after report (summarised in the annex to this blog) reach similar conclusions.  They point to:

  • Poor pre-legislative consultation.
  • Weak parliamentary oversight including weak scrutiny of legislation.
  • Ineffective checks and balances within the executive (including the Cabinet) which allow mistakes to be made and encourage groupthink.
  • Political hyperactivism – when politicians individually and collectively gain ‘points’ from making new initiatives almost for their own sakes.
  • Whitehall arrogance, including serious weaknesses in the senior civil service.
  • High turnover of both ministers and senior officials.
  • A culture of haste and determination to ‘deliver’.
  • Over-willingness to recreate policies and organisations rather than seek continuous improvement …
  • all exacerbated by failure to learn from past mistakes.

In short:

  • “successive UK governments have attempted to do too much, far too quickly and without paying sufficient attention to the ‘do-ability’ of their policies”.

Sadly, therefore, much of this analysis suggests that the Johnson/Cummings partnership is making a terrible mistake as it strengthens the centre, emasculates the Cabinet, and ignores Parliament.  This will lead to less scrutiny, less debate, more groupthink and more mistakes.

I’ll leave the last word to Giles Wilkes who commented as follows on Dominic Cummings‘ thinking[7]:

“Alas, the world is both much simpler and more intractable. Few leave government really dumbfounded by the lack of a policy answer to a problem—most are instead worn down by the sheer political impossibility of doing it.

To quote a Twitter Guru[8]  “‘Difficult’ problems are ‘difficult’ because their small number (usually very obvious) solutions are all unpleasant to someone.”

Or in the words of Jean-Claude Juncker, “We all know what to do, we just don’t know how to get re-elected after we’ve done it.”

Martin Stanley – Editor – Understanding Government

ANNEX

Here are summaries of the most accessible commentaries on significant UK policy failures.

The theme of Patrick Dunleavy’s 1995  Policy Disasters: Explaining the UK’s Record  is that the UK is a state unusually prone to make large-scale, avoidable policy mistakes[9], which he defines as mistakes made when decision-makers systematically choose to ignore an abundance of critical or warning voices in order to persevere with their chosen policy.  Contributory factors include:

  • Weak regional government and highly centralised social security and health systems.
  • Weak parliamentary scrutiny of legislation.
  • Political hyperactivism – when politicians individually and collectively gain ‘points’ from making new initiatives almost for their own sakes.
  • Whitehall arrogance, including serious weaknesses in the senior civil service.
  • Ineffective checks and balances within the executive which allow mistakes to be made and encourage groupthink.

Michael Moran’s The British Regulatory State, published in 2003,  analysed six high-profile fiascos[10] and concluded that they were caused by (amongst other things) ‘club government, evidenced by a devaluation of formally acquired skills and explicit knowledge at the top of government and the craze for downsizing’.

Anthony King and Ivor Crewe’s 2013 The Blunders of Our Governments summarises 12 highly readable policy (and implementation) horror stories.  They point to failures of deliberation, accountability and restraint in UK policy-making.  Their examples of deficient deliberation include lack of pre-legislative consultation, and inadequate parliamentary involvement.  Other problems include the high turnover of both ministers and senior officials and a culture of haste and determination to ‘deliver’, all exacerbated by failure to learn from past mistakes.

“It’s a series of lessons with one overarching theme – that successive UK governments have attempted to do too much, far too quickly and without paying sufficient attention to the ‘do-ability’ of their policies”.

Undeservedly receiving much less attention, Richard Bacon and Christopher Hope’s  Conundrum: Why Every Government Gets Things Wrong – And What We Can Do About It  was also published in 2013.  They identify similar problems to other commentators but are less critical of politicians:- “If we are to have a democracy, then we need to take it warts and all …  By all means let us have [more expertise] but let us not suppose that this will yield a clear answer to every question.  

And they are more ready to ask: “Are Civil Servants Up To The Job?”.  Their answer to this question is that …

Ministers have a nearly impossible job.  And for civil servants the outlook might seem just as unpromising.  Civil servants need to be god managers to do their job properly but for 150 years they have been recruited on their … analytical abilities … not for their ability to make things happen. … most top civil servants don’t want to be managers – they have culturally disdained ‘management’ – and they also know that becoming a top manger will not guarantee their promotion to the top.  

The Institute for Government’s Report  All Change Report[11]  draws attention to Ministers preference for reinvention rather than continuous improvement.

“Government has a tendency to recreate policies and organisations on an alarmingly regular basis. New organisations replace old ones; one policy is ended while a remarkably similar one is launched. In this report, we demonstrate this through an in-depth examination of three policy areas where change has been especially acute: further education (FE), regional governance and industrial policy.

In the FE sector, since the 1980s there have been 28 major pieces of legislation, 48 secretaries of state with relevant responsibilities, and no organisation has survived longer than a decade. In the industrial strategy space, there have been at least two industrial strategies in the last decade alone – and we are now moving onto a third.”

As recently as 2019, Bob Hudson has argued that “We need to talk about policy failure – and how to avoid it[12], listing four broad factors leading to policy failure:

  • Overly optimistic expectations
  • Dispersed governance
  • Inadequate collaboration &
  • Vagaries of the political cycle.

Ministerial propensity for delay was rather nicely highlighted by David Lammy’s reaction to Boris Johnson’s recently announced Racial Inequality Review:

  • “There are 35 recommendations in the Lammy Review.  Implement them.
  • There are 110 recommendations in the Angiolini Review. Implement them.
  • There are 30 recommendations in the Windrush Lessons Learned review.  Implement them.
  • There are 26 recommendations in Baroness McGregor-Smith’s Review:  Implement them.”

Last, but not least, I strongly recommend Geoff Mulgan’s February 2020 “Bluff, Bluster” blog[13].  In short:

“There are four missing parts of the Cummings diagnosis and prescription.  Politics, systems, practicality and failure to learn.” 


[1] The Times 13 August 2020

[2] https://www.theguardian.com/politics/2020/feb/06/inside-the-mind-of-dominic-cummings-brexit-boris-johnson-conservatives

[3] https://dominiccummings.com/category/economics-finance/game-theory/

[4] https://dominiccummings.com/tag/heywood/

[5] https://twitter.com/RichRJohnstone/status/1282995840055992326

[6] https://www.civilservant.org.uk/skills-crises.html

[7] https://www.prospectmagazine.co.uk/politics/dominic-cummingss-naive-faith-in-the-power-of-the-state-whitehall-number-10-civil-service-spads

[8] https://twitter.com/dsquareddigest/status/1212855352783491077

[9] https://www.civilservant.org.uk/library/1995-Patrick_Dunleavy-Policy_Disasters-Explaining_the_UKs_Record.pdf Professor Dunleavy’s list included the Poll Tax, social security reforms 1985-8, the Child Support Agency, botched entry into, and forced exit from the Exchange Rate Mechanism, the 1987-9 recession and the Trident nuclear missile program.

[10] The Millennium Dome, Rail Privatisation, The Community Charge (aka Poll Tax), The Barings Bank collapse, BSE (aka Mad Cow Disease), and various IT Fiascos.

[11] https://www.instituteforgovernment.org.uk/publications/all-change

[12] https://blogs.lse.ac.uk/politicsandpolicy/policy-failure-and-how-to-avoid-it/

[13] https://www.geoffmulgan.com/post/bluff-bluster-brilliance-and-brains

Strategic Centre to Replace Cabinet Government?

Here’s the problem:-  Prime Minister Johnson is said to have asked the Cabinet Secretary, Mark Sedwill, to say who was in charge of implementing a COVID-19 delivery plan? One observer recalled: “There was just silence.  He looked over at Sedwill and said, ‘Is it you?’  Sedwill said, ‘No, I think it’s you, Prime Minister.’”

This exchange must seem extraordinary to anyone outside Whitehall, but it reflects the reality of Cabinet government.  Government in the UK is a system, not a command structure.  The Cabinet are meant to be a team of equals.  Each team member takes responsibility when the ball, so to speak, is passed to them.  But there is no organising mind, least of all in the Cabinet Office.  Its main function is to resolve disputes between the players. 

This generally works well.  Most important decisions can be taken following discussions between Cabinet Ministers, refereed as necessary by the Prime Minister or in Cabinet Committee.  And it is usually obvious which department needs to be responsible for which delivery programs.

And it has sometimes worked OK during the COVID-19 crisis.  Neither the Prime Minister nor the Cabinet Secretary needed to tell the Chancellor and his officials how to (or indeed whether to) organise a furlough scheme.  Nor did they need to tell Matt Hancock and his officials how to manage the NHS so as to cope with the first spike in COVID deaths.

But it all clearly fell apart when it came to lockdown and related policies.  Here, the Health Secretary, the Home Secretary (police, civil liberties), the Transport Secretary, the Business Secretary, and the Chancellor all needed to work together.   One of them needed to take charge, but no-one did so.  Mark Sedwill appears to have thought that the Prime Minster should have taken charge, but that is hardly Mr Johnson’s style.  Mr Johnson appears to have thought that officials should resolve all the inter-departmental tensions for him.  But he forgot that, while officials could certainly provide information analysis and advice, they couldn’t make what were bound to be highly controversial decisions.  If the delivery plan was so complex that it could not be led by a single Secretary of State, then there was no alternative but for it to be led by the Prime Minister himself, in effect managing his Cabinet colleagues.  He will have looked in vain for robust structures and levers to pull.  They aren’t normally needed, and they couldn’t be magicked out of thin air in a hurry.  Put simply, the UK government does not have anything approaching a strategic centre.

Should we therefore switch to a more Presidential system?  Or at least a more strategic centre as was recommended by the Institute for Government in its ‘Shaping Up’ report  ten years ago?

It would certainly speed decision making.  Ministers and officials can move very swiftly if they don’t need to consult other departments.  But it can take an age to get others to agree to even innocuous suggestions.  They have priorities of their own, and their own stakeholders to worry about.  Even worse, one Minister can be very unwilling to support another Minister’s great initiative, as they are probably both vying for the next promotion.

A strategic centre would also probably help to ensure that resources could be swiftly moved from one department to another where they are more urgently needed.  This is currently a very slow process, given Ministers’ and Permanent Secretaries’ natural reluctance to lose staff.  Even worse, they will if pressed eventually offer to lose staff that they don’t want to keep.

More generally, a strategic centre would weaken the sometimes excessive loyalty of senior civil servants to their particular political boss. 

Above all, though, isn’t it crazy that the Prime Minister doesn’t have a powerful team to help him monitor progress on his key priorities, to intervene when progress has stalled, and make those all-important trade-offs which will, if unaddressed, lead to endless and fruitless debate?  (Social care, for instance.)

Keen Whitehall observers will be aware that Dominic Cummings is prominent in supporting what is pejoratively called ‘centralisation’, including ‘COBRA style committees’ where Ministers and officials would work together on projects.  I can do no better than quote Jill Rutter’s reaction:

“He’s going to hate this from an ex civil servant – but I think it’s a pretty good idea..  Cabinet committees are pretty useless by and large with bored Ministers reading out departmental speaking notes usually written by junior, quite bored civil servants desperately trying to dig up a departmental angle on an issue of which they know little – or conversely fuming at a last minute ‘bounce’ on an issue in which their department has a big interest.  Ministers are expected to pay departmental roles in such committees and leave their broader political judgement at home.  This is the system that nodded through the Lansley health reforms.”

The problem is that strategic centres and COBRA-style committees would inevitably and intentionally reduce the power and influence of individual members of the Cabinet.  Much the same can be said for already announced decisions to have Downing Street control all government data, and to have all Special Advisers report to Dominic Cummings.  George Yarrow has pointed out that Adam Smith would not have approved of making a significant change to Ministers’ responsibilities, nor would it have been welcomed by previous administrations’ ‘big beasts’.  Former Chancellor Sajid Javid objected, of course, and was summarily dismissed. 

So we are left with a Cabinet which is entirely subservient to the Prime Minister, and presumably perfectly content to work within a command structure rather than within a Cabinet of equals.  It will be interesting to see if ‘centralisation’ continues and if so whether we then experience significantly better government, though some would say that we could hardly have a worse experience than recent years.

Martin Stanley

Editor – Understanding Government

Politicisation and The Civil Service

The appointment of David Frost as National Security Adviser has raised – yet again – the question of whether the UK is still best served by a politically impartial civil service.

This blog contains extracts from an internal Cabinet Office note which discussed the question nearly 20 years ago.  It points out that political appointees tend to become political figures in their own right, and this dilutes Ministers’ own accountability.  Some Ministers like this.  Some don’t.  But Parliamentarians and the media generally deplore their reduced ability to hold Government Ministers to account.

Read on for more detail …

_________________________________________________________________________

Extracts from a note prepared in 2002 by Robin Mountfield, Cabinet Office Permanent Secretary

The case for Political Neutrality

“The major risk in changing the career basis of the Civil Service is to the existing accountability structure. The pressures to increase the external accountability of civil servants to Parliament and the media are increasing generally; but if appointments continue to be made on the basis of political neutrality, these pressures should be manageable. If appointments come to be appointed on political or personal grounds, however, it would be hard to avoid a more public form of accountability going beyond the present convention of accountability through Ministers.

The American system, with confirmation hearings and answerability to congressional committees, is one illustration of this; but even in ‘Westminster model’ administrations where top appointments are now personal or political ones, the tendency is for individuals to become in effect political figures in their own right, for their views to be known, and for the Minister’s own accountability to be diluted accordingly*.

Now, many would regard a development on these lines as good for the UK, good for open government, and good for the robustness and rigour of the advice process. Maybe: but no one should under-estimate the extent and significance of the changes that would flow from it in the constitutional relationships of Ministers, civil servants, Parliament and the media. Changes of that kind should not be allowed to creep up by degrees; they should be made consciously after careful thought and public debate.”

Also …

“The career basis of the Civil Service has been its central feature since Northcote- Trevelyan (justified in their 1857 Report on the principle of “get them in young and they won’t notice they’re being under-paid for the rest of their lives” – a principle which has survived to the present day). The political neutrality in a sense follows from the career basis rather than preceding it – if you join for life, you must serve successive Administrations; and if you must do that, you had best not be aligned too closely with any political party.

The case for political neutrality is thus closely linked to the career cadre: continuity of experience, not just of a particular policy area (often fairly specific, like tax policy or the social welfare system) but of the working of the Government and the Parliamentary machines – these are a professional specialism in their own right, and the Service does itself no favours by describing the mandarins as generalists.”

Civil Service Strengths and Weaknesses

“But the career-based political neutrality also carries with it an intellectual bias towards analysis, comparison of alternatives and the instinctive subjection of ideas to rigorous and sceptical questioning. These qualities must not be carried into excessively academic detachment, an over-literary method of communicating or a negative approach to new ideas (and these are all dangers to which the Service sometimes succumbs, as its critics outside, inside and in between commonly accuse). But they are qualities necessary somewhere in the decision process.

The Service has devoted a great deal of effort in the last 15 or 20 years to developing its management skills – with far greater success than is generally recognised. It is not generally appreciated, in all the chatter about failure to ‘deliver’, that in the areas of public services delivery directly in civil servants’ hands – the 80% of the Service in Agencies etc – productivity rose by about 3% per annum in the 90s, much faster than in the private service sector; and that most aspects of service quality also recorded substantial and measurable improvements.

Other areas of public service ‘delivery failure’ for which Ministers tend to blame the Civil Service are no more in the gift of civil servants than they are of Ministers themselves – transport, education, health, local government: the contribution of civil servants in these areas is an aspect of their advice to Ministers rather than their own ‘delivery’.

In the area of advice, however, there is more room to question how far the Civil Service has performed well. Many civil servants have felt uneasily for some time that their policy-analysis and policy advice skills, though generally impressively strong by external standards, have not developed in parallel, and indeed have not always responded adequately to the growth of academic, think – tank and pressure-group influences on policy. The Civil Service is no longer the monopoly provider of policy advice to Ministers; we live in an altogether more plural world. Recent developments like the re-launch of the Civil Service College in the new Centre for Policy and Management Studies** reflect the determination of the Permanent Secretaries to sharpen these skills for a new environment, and especially to develop a new receptiveness to new ideas and influences, alongside the infusion of new people into the Service at all levels of the policy process.”

Government Communications

As the main issue 20 years ago was the appointment and dismissal of press officers, Robin’s paper points out that effective communication and explanation of policy and decisions should not be an after-thought, but an integral part of a democratic Government’s duty to govern with consent.  Tight co-ordination of the Government’s information activities is not in itself a bad thing – indeed it is really common-sense, if “inconvenient for journalists trying to make a story from inconsistent reports from different sources”.

He went on stress the need for information officers to be kept much better ‘in the loop’. 

“In some Departments, Special Advisers had been seen by journalists as a more reliable source of information on their Ministers’ views than the Departmental press office. This was not new – it had become a recognised role of Special Advisers under the previous Government too – but in some cases … it had become a serious problem. … [It is the responsibility of] the Permanent Secretary, with the Minister, to monitor it closely and take steps to correct any tendency to diverge.”***

Can Ministers ‘Sack’ Officials?

The hot (or at least warm) issue c.20 years ago was the power of Ministers to dismiss, or squeeze out by one means or another, a press officer whose face did not fit.

“This is not an easy problem, for two reasons. First, it has always, and sensibly, been understood that in a case of genuine and protracted personal incompatibility, one or other of the incompatibles has to go (this is the ‘personal chemistry’ point …)  But this is clearly inconsistent with a non-political Civil Service if it is used systematically to allow Ministers to surround themselves with personal courts.” ****

How Ministers Can Choose Officials

Finally, Robin noted that there were two politics-free processes through which Ministers could choose between those seeking appointment to senior positions.

  • First, he/she could interview a shortlist of candidates chosen by his/her department, and make a free choice between them.
  • The second, and only other, route is via open external competition, supervised directly by the Civil Service Commissioners. A Minister could then only accept the recommended candidate, or the first recommendation if more than one were judged acceptable. He could not (since the Commissioners’ rules were changed following Ken Clarke’s preference for Derek Lewis over other ‘acceptable’ candidates as head of the Prison Service) choose between ‘acceptable’ candidates: if he was unwilling to accept the first name, the only course would be to re-run the competition from scratch.

These arrangements leave no room for Ministers to parachute in their own candidates.

Notes

The full Mountfield paper can be found here.

* Much the same problem can be seen in the media interest in Dominic Cummings and David Frost, including allegations that the former has become the real Prime Minister and that Boris Johnson cannot manage without him.

**Both were subsequently closed, and training privatised.

*** One can only imagine Dominic Cummings’ reaction to Mark Sedwill asking him to ensure that his media briefings were consistent with those of Cabinet Ministers and their press teams.

**** This particularly applies to Permanent Secretaries (and the Cabinet Secretary) who need to have the full confidence of their Ministers. Ministers cannot ‘fire’ such senior officials but, like so much in the UK constitution, this is a theoretical rather than actual constraint.

Martin Stanley

Editor – Understanding Government

We Need Properly Planned Civil Service Reform

For those taking a new interest in Civil Service Reform, and the possible politicisation of the senior civil service, here are some introductory facts and analysis.  Much further detail may be found here.   

First, let’s agree that …

Whitehall is well overdue for reform. 

There hasn‘t been a proper look at the relationship between Parliament, Ministers and the Civil Service since Lord Haldane reported in 1918.  There have been many successful management and efficiency reforms, including under Francis Maude.  Longer ago, ‘Fulton’ and ‘Next Steps’ were very positive developments but they didn’t touch fundamental questions such as these:. 

  • Should Ministers continue to be held to account for the wide range of expertise-based decisions which are now taken by government? Instead, there might be explicit recognition that Ministers are responsible and accountable only for establishing the Government’s strategy (with some support from a small ‘cabinet’ including relevant experts, a few civil servants and others with relevant skills) whilst the would be responsible and accountable for providing advice, consultation, communication and execution.
  • As part of this, should civil servants be accountable to Parliament for the delivery of major programms such the COVID response, Brexit implementation and Universal credit.  But would this would require officials to be able to refuse to implement Ministers’ decisions if they felt that they were being given unreasonable objectives and/or unreasonable timescales and/or inadequate resources.
  • What is the right balance between cost and service quality – in terms of both the service provided by ‘Whitehall’ to Ministers and the service provided by the wider (and much larger) Civil Service to the public?
  • Are senior officials now spending too much time defending their Ministers, and not enough time speaking truth to power?
  • Is there no way of allowing officials to demonstrate promotability other than by moving from job to job every couple of years?
  • How much freedom should officials have to innovate and respond to local needs?
  • Do we still need a single ‘Civil Service’ as distinct from a number of grouped departmental administrations?
  • Or, looking the other way, do we still need a single Civil Service comprising only 8% of, and quite separate from, the rest of the public service?
  • Is the Cabinet Secretariat (created in 1916) still fit for purpose nearly 100 years later?
  • Have we nothing to learn from overseas administrations?
  • Should Ministers be constrained from operating in contravention of the Cabinet Manual, perhaps by requiring senior officials to ask for a Procedural Direction’ in such circumstances?

Francis Maude’s Reform Program

It’s a great pity that Francis Maude did not allow these questions to be asked when he had the chance in 2012, and so missed a golden opportunity to undertake a thorough reform of Whitehall – despite describing his objectives (to the Public Administration Committee) as “intense change” and a “dramatic change in culture”. “The civil service will inevitably become much smaller, flatter and less hierarchical, as it should do.” But he reckoned that he could achieve such changes without any sort of plan. The Minister and his officials, including Gus O’Donnell, Head of the Civil Service, said that there was “no blueprint” and proposed to implement the changes “for the first time without a White Paper”. “A lot of this is just common sense – not revolution”.

To their credit, Committee Chair, Bernard Jenkin, and other committee members were openly sceptical. Surely every successful change programme needed to be planned? “Having a plan is an act of leadership.” In response, ex-Accenture and loyal official Ian Watmore declared that he was a change expert, recruited from the private sector, and saw no need for a plan – a statement so ridiculous that it would undoubtedly have led to failure in any appointment or promotion interview whether within the civil service or with his previous employer.

Reporting in 2013 Sir Bernard’s committee said that “The Government has not … identified any fundamental problem with the Civil Service and the Minister, Francis Maude, says he does not believe that fundamental change is necessary. We conclude that “incremental change” will not achieve the change required. Unless change is clearly heralded and given high profile leadership by a united team of ministers and senior officials, it is bound to fail.”

Does the Civil Service Resist Change?

I do not believe that there is any organised resistance to change. None of the so-called reform programs since ‘Haldane’ threaten the fundamental nature of the civil service.

Lord Bancroft offered an interesting take on the question in his 1984 lecture Whitehall and Management: A Retrospect:

“During my time the Service was not always as well managed as it could have been … But it wasn’t the result of a dogged resistance to change; precisely the reverse.

We were a bit too nervous and defensive.  As a result we tended to pick up every management nostrum, normally a few years too late just when it was going out of fashion … We planned, we programmed, we budgeted; we managed by objectives; we analysed programmatically; we policy planned by units.  We mucked about.  What we should have done was to stick solidly to basic principles …

We were stunningly good at reinventing the wheel … We should have devoted more of out efforts to collecting, recording, and disseminating good and bad lessons learned by individual Departments …  But the climate of the times would not have tolerated this prescription.  How woeful a response to the Fulton report it would have seemed .”

It is of course genuinely difficult to manage serious change in any organisation, let alone one so large, complex and federal as the Civil Service.  One major problem is that no-one can be put in charge of a service-wide change program:- The Head of the Civil Service has too much else to do, but none of his Permanent Secretary colleagues are likely to take much notice of anyone else.

The other big problem is that – as every business school will tell you – you cannot change just one element of an organisation at a time. One expert defined ‘the 5 Cs’:- the five fundamental elements of any organisation, none of which can be changed without simultaneously causing change in the others:

  1. Capacity, i.e. resources, and in particular staff numbers;
  2. Capability (or Competence), i.e. staff skills, training, experience and motivation;
  3. Communications, including not only communications whilst the change program is being implemented, but also new ways of communicating once the changes have been implemented;
  4. Culture, new relationships, attitudes to innovation, reward structures etc.;
  5. Constitution, i.e. organisational structure, reporting lines etc.

The civil service tries its best, and you can see various attempts, over the years, to bring about change in most of the above areas. But the attempts are essentially uncoordinated so that, for instance, Gershon’s drive to refocus effort into the front line happens at the same time as tight pay settlements and a decision that senior civil servants should move even more frequently between jobs. There is no doubt that today’s civil service is better, in many ways, than its predecessors. But it could be so much better still – especially when it comes to policy-making, where it arguably performs less well than in previous generations.

Sir Michael Bichard makes the same point:

“To improve efficiency levels in the service, the government needs to look at how civil servants’ work should be done and how the service as a whole is structured. Different departments develop initiatives in isolation. There have been too many false starts, too many initiatives that don’t come together as a coherent change program. And it is this incoherent approach that leaves civil servants demoralised and confused.”

Three Possible Approaches

Let’s assume that serious reform of the government machine might be necessary. There are, broadly, three possible approaches.

The first approach – the politicisation of the upper reaches of the civil service – would ensure that Ministers are supported by officials who share their political agenda and are energetic in taking it forward.

The British Civil Service is now the only major Civil Service in the developed world to remain wholly unpoliticised in its upper reaches. Others sometimes claim to be, but no longer are. New appointments in these countries do not always clearly follow from party allegiance, but they reflect Ministerial preference and thus personal and political rather than constitutional and institutional loyalty. The Canadian system is probably the nearest to that of the UK, but the Canadian equivalents of British Permanent Secretaries are appointed by their Ministers, although appointments seem to be made on merit and incumbents are often reappointed when Governments change following election defeats. In Australia, the equivalent appointments are clearly political. And in the American system, most of its top three layers change every four or eight years to make way for new Presidential appointments.

But any move in the direction of politicisation meets determined opposition in the UK, and is not helped by the fact that politicians are currently so unpopular. Serious politicisation therefore appears to be a non-starter, for the time being at least. But those interested in this subject might like to read:-

The second approach would be a new constitutional settlement. Ministers would no longer be held to account for the wide range of expertise-based decisions which are now taken by government. Instead, there would be explicit recognition that Ministers are responsible and accountable only for establishing the Government’s strategy (with some support from a small ‘cabinet’ including relevant experts, a few civil servants and others with relevant skills) whilst the civil service would be responsible and accountable for providing advice, consultation, communication and execution.

The third approach would be more incremental –addressing, one or two at a time, the questions listed at the beginning of this note. 

So What Stops these Reforms from Happening?

The first approach (politicisation) has very few strong supporters. UK politicians seem to need more robust advisers, not more committed political soul mates. Indeed, even the current tiny number of Special Advisers is regarded with considerable suspicion by many commentators.

Ministers, too, sometimes hesitate when they look at overseas administrations where the tendency is for politically aligned appointees to become in effect political figures in their own right, for their views to be known, and for the Ministers’ own accountability to be diluted accordingly.

(Much the same problem can be seen in the media interest in Dominic Cummings and David Frost, including allegations that the former has become the real Prime Minister and that Boris Johnson cannot manage without him.)

The second approach (a new constitutional settlement) has significant support, not least from the Public Accounts Committee and the Liaison Committee, but powerful opposition from the following groups within the Whitehall establishment.

• Opposition politicians want to retain the ability to gain political advantage by criticising Government Ministers rather than unelected officials.
• Government Ministers are unwilling to admit that they are not solely responsible for important decisions.
• MPs want to be able to continue to write to fellow MPs (currently serving as Ministers) about all aspects of a department’s performance. (A small number refuse even to correspond with Agency Chief Executives, for instance about the Driver and Vehicle Licensing decisions.)
• Last, but not least, many senior officials would not like to be publicly accountability for the effectiveness of their departments, knowing that this would open up areas of conflict with their political masters.

The third, incremental, approach suffers from lack of profile. Nobody has the time or energy to investigate the questions listed above, nor the inclination to stir the nest full of hornets that would be devoted to maintaining the status quo. … A pity, really.

Martin Stanley

Editor – Understanding Government

Responding to Crises

This blog is now on my Understanding the Civil Service website.

Martin Stanley

Editor – Understanding Government

Failure to Learn:- The Role of Politicians

Grenfell Tower, COVID-19 and numerous other examples have in their different ways demonstrated that governments, as well as many other organisations, find it very difficult to learn from previous experience.  This article focusses on how government ministers learn, or too often fail to learn, from catastrophic events.

Ministers’ first reaction to a tragedy will inevitably be defensive.  “We couldn’t have foreseen it, and our preparations were anyway sensible and proportionate to the risk.”  After a while, though, they will recognise the need to learn from the experience.   But then … progress slow or stops   This is sometimes for good reasons, but it is also often because of politicians’ incentives and personalities.

Good Reasons for Delay – Probably

It is generally a mistake to rush to legislate, whatever the reason.  The causes of catastrophe are usually many and complex, and need to be addressed following sensible consultation and analysis.  Here are some of the issues that need to be considered:-

  • It is often necessary to ‘think small, first’. There is no point in introducing new regulations which are incomprehensible to the public or SMEs.
  • If regulation is necessary, might it be sensible to put the onus on employers, or an industry, to decide the best way to meet regulatory objectives? Or does the nature of the risk mean that detailed regulations are required, and if so how soon can we build and fund an Inspectorate to enforce them?
  • Should any new/expanded regulator be funded by industry? Will that incentivise efficient, targeted regulation?  Or will we end up with a tame mouse of a regulator, far too scared to upset its paymasters?

More generally, there is a balance to be struck between under- and over-regulation.  The current government requires the cost to business of many (not all) new regulations to be calculated and then regulations costing three times as much to be repealed. Crucially, the benefits of the new regulation are not to be taken into account in calculating the net cost.  This is a major disincentive to the introduction of worthwhile new regulation, and may have led to delay in improving the building regulations before the Grenfell disaster.

More generally still, Ministers are never free from pressure to introduce new policies or improve old ones.  They can get pretty punch drunk from incessant lobbying, and they would hardly be human if they didn’t occasionally get quite sick of their more persistent critics, even if those critics are making very valid points.  Sadly, therefore, even the best proposals can come to be regarded as yet another element in a long wish list.

So … designing and introducing new laws and regulations need not take many years, but it can’t be done in months.  Unfortunately, even a few months delay can cause the issue to slip a long way down any government’s priority list.  This has been a particular problem as the UK spotlight has swung from Grenfell Tower to Brexit and Covid-19.

Incentives

None of us are entirely free always to do what we regard as the right thing.  We all have to bear in mind the views of our bosses, Boards and/or shareholders.  Quite properly, by analogy, Ministers cannot totally or for ever ignore the views of the electorate that appointed them.

And many voters are loss-averse.  They are generally reluctant to face immediate loss (more taxation), or regulatory constraints on their behaviour even if these will lead to intangible benefits such as safety or a healthier environment.

Voters will also punish Ministers whom they suspect of over-reaction to real or perceived threats.  Lives would have been saved at Grenfell if there had been fierce enforcement of the rule that doors should slam closed once they were not being used.  But who is going to support such intrusive regulation?

One example of more current relevance was the lampooning of French Health Minister Roselyne Bachelot.  She was portrayed in cartoons as a fat idiot and accused of waste and scaremongering, and of exaggerating a problem so as to give money to big business.  Her crime? Ordering large quantities of (ultimately unused) vaccines and masks in advance of the feared H1N1 pandemic.

Finally, in this section, Minsters are all too aware that they are likely to move to a new job – or be sacked – quite soon, and their performance is anyway assessed by voters at least every five years.  They therefore have no incentive to consider the long-term costs or benefits of their policies, and their planning is almost inevitably short term and not strategic.  Put more sharply, any deaths arising from their inaction will most likely occur on someone else’s watch.

Ministers Characters

Last, but not least, we need to remember that our highly adversarial system creates politicians who are not at all like the rest of us, and this has consequences for their behaviour in office.

It makes no sense, for instance, for one Minister to help a rival Minister achieve that Minister’s objective.  All Ministers are fierce rivals, whatever they may say.  The most immediate victim is the cross-department cooperation that should be tackling the most complex problems.

More insidiously, politicians’ precarious career path means that most of them are, deep down, true risk takers.  Also, once in office, they are inevitably forced to take some unpopular decisions.  So they develop a fairly thick skin and are not predisposed to display imagination or ‘chronic unease’.  This in turn means that they seldom react like the rest of us if asked to imagine a disaster that has yet to take place.  Many terrible railway accidents, for instance, all too often followed debates in which the industry and Ministers pointed out that “no-one has died from that yet”.  Similarly, the authorities seemed unconcerned by the numerous pre-Grenfell cladding fires which had failed to make the headlines.

And then, rightly or wrongly, most politicians hold the following to be true:

  • Voters like optimism, positivity and good news. Ministers thus become predisposed to clutch at straws and to suggest that all is going swimmingly when it isn’t.  Much the same happens to officials who, in a crisis (and without any explicit pressure from above), will quickly report anything that looks promising even if the information or analysis is highly uncertain.  But these rose-coloured spectacles reduce the pressure to take action to avoid future calamity.
  • Most (not all) voters hate complexity. Black and white is good.  This drives even clever Ministers to take little interest in complex issues.  There is no reward for putting in the time and effort necessary to fully understand expert advice. It is much easier to speak in clichés and soundbites.  In the regulatory sphere, this results in Minister  preoccupation with cutting – or making bonfires of – red tape.
  • Voters punish mistakes, and mistakes will be loudly trumpeted by the media and the Opposition. Ministers must therefore spend much of their time in defensive mode and certainly cannot publicly entertain the possibility that their preparation for any crisis might have been inadequate, or their previous decisions might have been inadvisable.  This impacts the speed at which politicians learn from disasters, for why should anything change if we already live in the most perfect or worlds? And if they are honest (and foolish) enough to admit error, the media will move on to pursuing their resignation whilst  lawyers will start looking for compensation and prosecutions.

Finally, most Ministers are nowadays career politicians who have never worked within a large organisation.  They can’t understand why their policy statements do not immediately translate into action on the ground, nor why cuts to the resources of regulatory bodies cannot follow several previous sets of cuts without serious consequences.  The resultant light touch regulation or limited inspections might well lead to another serious regulatory failure (and perhaps many deaths) but no-one is likely to blame a Minister for the later performance of what was, after all, an ‘independent’ regulator.

Unless, of course, Sir Martin Moore-Bick does just that.

Martin Stanley
Editor  Understanding Government

Notes

This article first appeared as my contribution to the recent Bennett Institute report  Policy Lessons from Catastrophic Events.

Some further thoughts on ‘failure to learn’ are here.

And I recommend the IfG’s report  How Public Inquiries Can lead to Change

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