ukcivilservant

Articles about the UK Civil Service and Regulation

Arnold Wesker and Centre 42

Centre 42 was a touring arts festival and the forerunner of The Roundhouse Arts Centre in Camden.  It was created by playwright and ‘angry young man’ Arnold Wesker

Wesker wanted culture, in all its forms, to be available beyond the elite, and he criticised the Labour movement for neglecting the arts.  In response, the Trades Unions Congress passed a resolution on agenda item 42 to conduct an enquiry into the arts. Wesker’s initiative took the name Centre 42.

Centre Forty-two will be a cultural hub, which, by its approach and work, will destroy the mystique and snobbery associated with the arts… where the artist is brought in closer contact with his audience, enabling the public to see that artistic activity is part of their daily lives.

(Centre 42 Annual Report 1961-62)

There appears to be no history of Centre 42 so I am glad to be able to post the following reminiscences of Peter Rogers, whose role in Centre 42 he will explain himself.

Martin Stanley
Richborne Publishing

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“This short essay summarises the history of Centre 42 as seen (literally) from the cab of a bus or other transport, as a spectator at all the festivals, and as a friend of most of the main protagonists.

Centre 42 was set up by a group of individuals led by Arnold Wesker. The name came from Resolution 42 at the 1960 TUC conference – which said, in effect, that as the workers get more leisure it was important that commercial interests did not exploit it, and that the best in arts and entertainment should be available to them.  Some saw this as noble and worthy objective, others saw it as ‘nanny knows best’ arrogance.  I suspect there was an element of truth in both points of view,

The festivals resulted from invitations from local Trades Councils who were supposed to supply labour to help load and unload gear at the events, and to provide accommodation for artistes and travelling crew. Accommodation was indeed generally made available, but the supply of voluntary labour was very variable.

I first came into contact with Centre 42 in the spring of 1962. I had no interest in their objectives and indeed had barely heard of them until I came into contact with a young woman called Anne McCrae. I had been living the life of a journeyman bum since completing my Air Force national service in 1957. I had failed to settle in any job, and was camping in various friends and acquaintances homes and repairing television sets for a living.

Anne McCrae and two other girls were looking for two other people to share a flat in Warwick road in Earls Court, and I another friend agreed to move in.  My motivation was largely Annie, we became as they say good friends, but Annie’s’ main interest was Michael Henshaw, the Secretary of Centre 42. She volunteered to work for them and clearly decided Michael was a better long-term bet than me.

Suffice to say Annie introduced me to Mike and mentioned that I had worked as a commercial vehicle salesman and consequently could drive large vehicles.

Henshaw said that he was acquiring two London transport buses to use as transports for upcoming festivals around the UK and needed drivers. I was not terribly keen but he was persuasive, telling me what fun I would have and what interesting people I would meet. He then went on to tell me that he could barely afford to pay me but, after going through my expenses, rent and so on, concluded that I could manage on £8 pounds per week and he would pay me that plus luncheon vouchers.

That was how a week or so later I came to be sitting on the fuse box, in the cab of a London transport TD single decker bus, whilst it was driven round the outer circle of Regents Park by a driver from Dalston bus garage who instructed me on the dark arts involved in driving such a beast.

The TD deserves a word of introduction; they were probably the last bus supplied to LT that had crash gearboxes. They entered service just after the war and over 150 were delivered. They were not popular with drivers because of the dreadful gearbox, and tended to be used on the more suburban routes. By 1962 most of them were taken out of service and a large number were exported to Ceylon.

The cabs were very similar to those found on London buses right up until the Routemaster. They had a rudimentary cab heater, no fuel gauge ,vacuum assisted servo brakes, and no powered steering. The driver’s seat was not designed for comfort. The engine was a 7.7 litre Leyland diesel and there were four forward gears,. The bodywork was standard London transport of the time with a front entrance. They seated 30 passengers and had a top speed on a good day of 48mph. The difficultly with them was gear changing which required a little skill and some practice.

The first festival was to be at Wellingborough. Henshaw had engaged the services of the actor Anthony (Tony) Valentine, when he was available, to drive the second bus for this festival. (He was Tony’s accountant at the time.)  So my first task was to sit him on the fuse box while I drove round the park showing him the gearbox ropes. Tony (pictured below) was a very charismatic sort of bloke and having him around was a bonus as his very glamorous girl friend of the time Gabriella Licudi, also pictured below, who tagged along on most of the trips.

The three main players at centre 42 were as follows:-

  • Arnold was the director and I suppose for most of people the guiding light.  He seemed to possess a quiet authority that I found almost mesmeric. Arnold was then at the height of his fame “Chips with everything” was still running on Broadway. 
  • Michael Henshaw was the Secretary. He ran all the admin and, although he tended to look like a tax inspector, which had been his previous occupation, he could be a very confrontational character and not beyond getting involved in the odd punch up. Mike was to become famous in his own right as an accountant to the arts and media communities, his fame culminating in the scandal surrounding John Birt’s financial arrangements when Birt was the BBC’s Director General.
  • The festival director was Clive Barker who was a graduate of Joan Littlewoods’s theatre workshop in Stratford. Clive looked fierce but  was  in all respects a lovely man and worked his socks off during the festivals. I can speak with a little more authority about Clive as I stayed in touch with him for many years and witnessed him turn from actor to an academic. Alas, like Mike Henshaw, Clive is no longer with us, but I will always fondly remember him.

There were a number of other regulars at the time that could be found at the festivals or at headquarters at 20 Fitzroy Square W1. Among that number were Michael Kustow, who became a major figure in the arts world, and Geoffrey Reeves who was to become a theatre director. It was never clear to me what either of them did. Geoffrey Reeves seemed to have a great deal of self-confidence and was, I suppose, a bona fide intellectual, although he would let himself down sometimes by communicating in a language that could be understood by his fellow men.

The towns at which the festivals were to take place were Wellingborough, Leicester, Nottingham, Birmingham, Bristol, and Hayes/Southall in Middlesex. They were held at fortnightly intervals. I don’t remember the exact dates except Birmingham, which was the week of the October 1962 Cuban missile crisis.

The programme was the same at each venue.

A play by Bernard Kops called Enter Solly Gold. This was directed by the Canadian Ted Koetchev and the cast included Leonard Sachs, Harry Landis, Max Bacon a former dance Band Drummer from pre war times, and Stella Tanner who was one of the singing group the Tanner sisters.

There would be a folk song concert to open the festivals and the performers would include Ewan McColl and Peggy Seeger, Bert Lloyd, Francis Mc Peake,

Louis Killen and Bob Davenport. At that time the folk scene was very left wing so the programme was heavily influenced by song in praise of the gallant workers. Some of the folk singers would also appear each evening in various pubs around the town. Amongst those were the Ian Campbell group, and Anne Briggs.

The folk singing activities, were organised by a Scotsman called Bruce Dunnett

Bruce was at that time alleged to be a card -carrying member of the communist party. I believe in later life he became something of impresario in the folk world. So I don’t know how that worked. Bruce and Mike Henshaw did not get along and I remember, at the last festival at Southall, the two of them came to blows and had to be separated by us bemused onlookers.

There was a concert of poetry and jazz at each festival. The jazz was supplied by the wonderful Joe Harriot, Shake Keene, and the Michael Garrick trio.

The poets included Jeremy Robson who I believe was the organiser, Adrian Mitchell, and Christopher Logue. Poets would also give readings in works canteen at lunchtime. I not sure they were always appreciated.

There was a musical theatre production, which included a performance of Stravinsky’s Soldiers Tale with Julian Glover narrating and a work by Arnold called The Nottingham Captain, with two different scores – a classical version by Wilfred Joseph, and a jazz score by Dave Lee. The musicians who performed these works were magnificent and, if I remember rightly, expensive.

Once each week there would be a performance of a Folk Ballad called The Maker and the Tool, which was the work the BBC producer Charles Parker.

This was a highly regarded work in circles that were interested in such things, and included a vast amateur cast including lots of school children. Moving these people about was a logistic nightmare and involved driving hours that would land you in jail today.

There was also a weekly production of Hamlet by the National Youth Theatre. The main role was played by Simon Ward, later to find serious fame as an actor. Its founder Michael Croft ran the youth theatre in those days. The week would conclude with a dance with the music supplied by the Centre 42 big band.  This was a wonderful outfit put together by Tommy Watt, who was given funding to write a library for a big sixteen-piece band. The orchestrations were in the Basie, Ellington style and the personnel of the band were glittering array of top London session men.

The opener at Welingborough was the first time the musicians had seen the arrangements but the performance was staggering.   Tommy Watt led and played piano, Bob Burns led the saxophones and the great Stan Roderick the brass. Although the personnel tended to change from gig to gig the quality seldom varied. As you may gather I became a fan.

One of the things I discovered at Centre 42 were that musicians were generally easier to deal with and required less nursing than actors.

A bonus as far as I was concerned, of the band performances, would be the appearance of Benny Green who acted as compere at some of the venues, and also played between band sets using local musicians in his group. Benny, really was an amazingly erudite and amusing man who seemed to have great knowledge of many subjects.

All of the festivals had their own particular feel I particularly enjoyed the Birmingham and Bristol venues although it’s difficult to remember quite why.

As one might imagine a venture of this type brought with it all sorts of difficulties both foreseen and unforeseen. As I mentioned previously, we were dependent on local volunteer labour, organized by the trades council, when various loads of stage equipment turned up and had to be unloaded into venues on Sunday evenings. Frequently this labor was very sparse, particularly if the weather was not good. There was however always a hard core in every town that turned up. The generally held opinion was that these old reliables were card carry members of the communist party, and under instruction to attend.

Apart from their sponsorship of the operation, and the political content of some of the events, I was not aware of any great union or political activity on a day-to-day basis. The only exception was at the last festival in Hayes when there was a minor altercation between some of the volunteers and centre 42 staff who were setting up the lighting and sound for the big band event. In the midst of this commotion one of the volunteers said we ought to have a show of cards – cue embarrassed looks among the Centre 42 staff, including yours truly, as we did not possess a union card between us. However the moment passed and peace was restored.

It was during that final event that I was summoned with others to quell a dispute between Bruce Dunnett and Mike Henshaw. When I got there the two of them were grappling on the floor. I never did find out what it was about.

When the festivals were completed a series of inter festival activities were planned. I would from time to time be summoned to drive Clive Barker to various towns.  Clive had not taken up driving at that time, hence the need for my occasional services.

The last event I took part in was a performance by the band at the Colston Hall in Bristol probably in 1963.  The band turned up and, with various hangers on, wives, girlfriends, one or two local drug dealers, myself and two other Centre 42 retirees, I am afraid that collectively we outnumbered the paying audience.  This was a great shame as the band was in fine fettle. To make matters worse the caretaker spent the evening telling us about the appearance a week or so before of the Beatles, and how the place had been besieged be fans.  As we looked at rows and rows of empty seats in the vast hall, one had the feeling that the game was up.

After that the need to make a living meant I had no further official contact with Centre 42.”

Peter Rogers

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Postscript:- The Roundhouse

Although the festivals had been very successful, the organisers had been left with massive debts, and their offices in Fitzroy Square proved inadequate, so they needed a permanent centre. Prime Minister Harold Wilson offered to host a tea party at Downing Street to raise money for the initiative which led to Wesker and colleagues taking a lease of The Roundhouse in Camden. 

The Roundhouse closed in 1970 before reopening open as a permanent arts centre in 2006.

Parliament v. the Executive

David Gauke made an interesting and entertaining presentation at a recent Constitution Society conference. The background was that many (and certainly many of those attending the conference) believed that the Executive has become over-mighty and that Parliament has been sidelined.

Here is a summary. You can listen to the full presentation here.

Mr Gauke began, as devil’s advocate, by listing a number of reasons why the Executive might make better decisions than Parliament:

  • Ministers are much better informed and supported than are other MPs.  Getting good/sensible policies (including sensible amendments to government Bills) through Parliament can be very difficult without civil service support.
  • MPs are more parochial.  If they had their way there would be at least 650 General Hospitals, and planning new housing and infrastructure would be near-impossible.
  • Parliament is a mixed ability class! The brighter MPs tend to end up on the front bench – ‘though less so recently.
  • The Executive is much better at taking difficult decisions.  Parliament failed to identify any ways forward on Brexit, assisted dying, and relocating Parliament.
  • The Executive can move more quickly:-  Covid.
  • Parliamentarians play games.  The Opposition is incentivised to vote against all government proposals, however sensible, and the addition of a few others can derail vital policies:-  The Syria vote in 2013 is a good example.
  • Accountability:- The Government is to a great extent entitled to implement the policies for which it was elected at the previous General Election.

But checks and balances are important:-

  • Parliamentary control is a price worth paying for democracy.
  • Parliament has an important role in challenging groupthink in the Executive.
  • There are some experts in Parliament – esp. in justice and defence. They should be listened to, and more are needed.

Martin Stanley
Editor – Understanding the Civil Service
Author – How to be a Civil Servant & Speaking Truth to Power

Why Are Petrol Prices Slow to Fall?

Ministers (though not their economists) seem surprised that petrol retailers did not quickly pass on the recent 5p reduction in fuel duties.

The problem is that the market is almost too competitive. The first retailer in town that cuts their price will immediately gain business from other nearby retailers, who will be forced to follow suit. The result? They all make less money without gaining any customers. So no-one goes first.

Economists call this ‘tacit collusion’. The retailers aren’t colluding by comparing notes. That would create an illegal cartel. But there is collusion nonetheless – tacit collusion.

The CMA are investigating the market but it will be very hard for governments or competition authorities to fix the problem. Retailers usually compete very hard with each other, and their prices are very transparent. And you can’t police the price charged by every petrol station.

When you know what to look for, there is quite a bit of tacit collusion around. Smaller shops (in a parade for instance) will seldom compete by cutting prices, and may not compete much at all. This is why the arrival of a Tesco Express or similar can be so disruptive.

Many of us thought that the gas/electricity market suffered from tacit collusion. Retail prices ‘rose like a rocket and fell like a feather’ in responses to changes in wholesale prices. But no-one was ever able to prove it.

Price matching can also lead to tacit collusion. John Lewis used to be proudly ‘never knowingly undersold’ which was not as kind as it sounded. One consequence was that it made it very hard for anyone else to compete with them.

Do please have a look around my Understanding Regulation website if you find this sort of stuff interesting.

Martin Stanley
Richborne Publishing

Civil Service Reform – Lord Maude Tries Again

There was an interesting report in the FT this morning that Lord (Francis) Maude is being lined up to lead a review into ‘how the civil operates as the government embarks on a controversial plan to shrink and reform Whitehall’.   This may be good news if – but only if – Lord Maude has learned from the failure of his first two reform programs.

His first program began in 2010 driven by an ambition to reduce civil service numbers from around 481,000 to around 375,000 over 5 years.  Lord Maude and his supporting officials said that they were seeking “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 there appeared to be no attempt to learn from previous failed attempts at civil service reform.

Even worse, there was no implementation plan, which must have been highly embarrassing for Chief Operating Officer (and ex-Accenture) Ian Watmore who was forced to tell a Parliamentary committee that he 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.  (This was perhaps one of the early examples of the increasing reluctance of senior officials to speak truth to power – or to Parliament.)   

Lord Maude tried again in 2012 but this time he did publish a Civil Service Reform Plan which:

  • suggested far reaching changes in the relationship between Parliament, Ministers and senior officials, and
  • announced some sensible plans which – if implemented – would significantly improve the effectiveness of the present civil service machine.

So What Happened?

In brief:

  • Civil service numbers fell to 384,000 by 2016 but rebounded (in part because of Brexit) to 475,000 by 2021.
  • There have been a small number of interesting examples of improved relationships between officials and Ministers but …
  • the abolition of the National School for Government and changes to the Fast Stream do not seem to have been successes and …
  • it would be a brave commentator who argued that the government in general or the civil service in particular had performed at all well over recent years.

These failures were implicitly acknowledged by the need for McKinseys to be asked in May 2020 to help prepare ‘a reform prospectus document’, followed by Ministers’ June 2021 ‘Declaration on Government Reform’ and (now) the third Lord Maude initiative.

Why Did Maude Fail?

The civil service is part of a complex government system.  Rather like this apparently simple child’s toy, you can’t move (change) one part of the system without distorting and putting pressure on other elements.  Unless you carefully plan your change program – and are willing to look at all the key relationships in the system – your isolated improvements will disappear.  But there hasn‘t been a system-wide look at the relationship between Parliament, Ministers and the Civil Service since Lord Haldane reported in 1918.

Put another way, it can be useful to consider ‘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.

It follows, for instance, that a successful staff reduction program is likely to involve employing smaller numbers of better trained and better paid staff who are given greater responsibility. Ministers seldom agree to do this.

What Needs to Change?

There have been innumerable ‘civil service reform’ reports all of which reached similar conclusions.  They point to the following weaknesses in UK government performance:

  • 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”.

It follows that these are some of the questions that a serious review of the civil service within the wider government machine might consider:

  • 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 civil service would be responsible and accountable for providing advice, consultation, communication and execution.
  • As part of this, should civil servants be clearly accountable to Parliament for the delivery of major programs 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?

I will be very surprised if Lord Maude looks at many (if any) of these questions, so it follows that I will not be at all surprised if the next reform program fails to reduce the intensity of complaints about our civil service

If you find this subject interesting then much further detail may be found here.  

Martin Stanley
Editor – Understanding the Civil Service
Author – How to be a Civil Servant, Speaking Truth to Power and Civil Servants, Ministers and Parliament.

Communicating Policy Proposals

Newly appointed policy advisers soon learn that almost every policy prescription is going to have a wide range of effects – and those effects are going to be different for different people.   The big policy challenge, therefore, is to turn your policy proposal into a narrative that can influence those (including the media) who are not experts in the field and who are also likely to be uncomfortable with your conclusions.

American policy makers seem to take this challenge more seriously than their counterparts this side of the pond.  President Obama even signed into law The Plain Writing Act of 2010 whose purpose was to give the American people information they can understand in a effort to increase trust between the government and its citizenry.  “How can you trust a person or institution if you do not understand what they are saying?”

American policy makers and others have also had the benefit of advice from communications expert David Chrisinger who has now published the second edition of his book Public Policy Writing That Matters.  It is nicely written – it is more sensible and less self-reverential than much US training material – and it contains targeted advice all the way from “the three policy questions that analysts need to answer” through to the appropriate use of apostrophes.

Mr Chrisinger particularly stresses the need to identify readers’ goals – and what they already know and what they worry about – before introducing “the art of storytelling” and the importance of case studies, which he himself uses to good effect. 

His bonus tip? :-   Listen to George Orwell !

Public Policy Writing That Matters is priced at £20 but you can get it for £14 (+ p&p) if you ring or email its European distributor, John Wiley & Sons Ltd and quote HNAF. (Tel: +44 (0)1243 843291 Email: cs-books@wiley.co.uk )

Civil Service Salaries Have Not Risen in Real Terms since 1970

I recently contributed to a fun blog, mainly written by economist Tom Weiss, which noted that modern day James Bonds, on Grade 7 salaries, could no longer entertain and dine in 007’s favourite restaurants. This made me wonder how Grade 7 salaries have compared with those in the wider economy, and with inflation.

I haven’t been able to get reliable Principal/G7 or wider economy earnings figures before 1970, but the later trends are startling. If I have got it right, the salaries of those in this key civil service grade have fallen well behind those in the wider economy, haven’t kept up with inflation as measured by the RPI, and have only just kept up with with CPIH. The figures are summarised in this chart.

Senior Civil Service salaries have generally increased even less, whilst the salaries of more junior staff have not been so badly affected. Further information about civil service pay is here.

A small part of the relative increase in private sector salaries, compared with civil servants, may be due to reductions in private sector contributions to pension schemes which will have necessitated increases in gross salaries so that retirement pension funds and other savings can be built up by employees. Civil service pension schemes, too, became less generous, but probably to a smaller extent.

The long term pressure on G7 salaries also led to a certain amount of ‘grade drift/inflation’:- a reduction in the difficulty of the work done by many G7s, so allowing the employment of less effective and/or less experienced staff than in previous generations.

I would be delighted if those more expert than me could improve or correct my analysis which is in a spreadsheet which can be downloaded here. (And thanks to David Higham for pointing me in the direction of much of the data.)

Martin Stanley

Editor – Understanding the Civil Service
Richborne Publishing

Fixing Whitehall’s broken policy machine

I hugely enjoyed Jonathan Slater’s Policy Institute presentation, this lunchtime, of his reflections on central government policy-making. I hope this short summary does him justice. And I hope it encourages you to read his very thoughtful and entertaining paper.

Jonathan started by acknowledging that every paper on ‘civil service reform’ (from Fulton onwards) says that there is too much ‘churn’, too little accountability and too many ‘generalists’. He agrees, but sees a way of tackling these problems.

First, he notes that over-rapid movement between jobs has been a problem for decades, so the root cause is not just the need to get higher pay through promotion.

Second, he acknowledges that Ministers love ‘Whitehall warriors’ who can dig them out of holes and win battles with the Treasury. But most Ministers want other skills as well – including subject knowledge and the ability to achieve useful objectives.

In principle, therefore, there is nothing to stop the civil service leading the necessary reforms. Permanent Secretaries could decide to own the problem and ensure that Ministers were supported only by senior officials who understand their subjects, are capable of achieving real world outcomes, and are also confident working within Whitehall.

The obvious problem, Jonathan acknowledged, is that the Cabinet Secretary and his colleagues would need to acknowledge that their successors should be different types of people – and it is very hard to admit that the skills that got them to the top are no longer appropriate or sufficient.

So how do we encourage this opening up to a wider talent pool? Greater accountability would certainly help. The policy-making system needs to be opened up to Parliament and the public, for instance through the publication and discussion of option appraisals. This would play to the strengths of those who knew more, and could do more than just fight Whitehall’s wars.

Two comments from me:-

I agree that the civil service could take ownership of the necessary reforms of appointment and promotion. I don’t think Ministers would object to being supported by rather different characters in future, as long as those characters remained capable of helping Ministers navigate political and other crises.

I am less sure that Ministers (or MPs) would welcome greater civil service accountability. They should welcome it, of course, but the invisibility of civil service policy advice helps Ministers who want to take bad decisions that are popular with ‘their base’. And it is a gift to the Opposition who can score political points by blaming Ministers for every departmental failing, even when it is officials who have blundered. These arguments are explored in greater depth in Chapter 6 of my explanation of, and commentary on, the Westminster Model of Government:- Civil Servants, Ministers and Parliament.

Martin Stanley
Editor – Understanding the Civil Service

Should Northern Ireland civil servants follow instructions to act unlawfully?

It has been reported (2 February 2022) that a Northern Ireland minister has instructed civil servants to end border checks required by international law in the form of the Northern Ireland Protocol.  Should they comply?

Let’s start by looking at the Civil Service Code which summarises civil servants’ ethical responsibilities and says that officials “must comply with the law”.  Under the Constitutional Reform and Governance (CRaG) Act the code forms part of civil servants’ terms and conditions of employment. 

Does this duty extend to international law and should civil servants therefore refuse to act in a way which is incompatible with international law?

I would defer to a well-reasoned legal opinion to the contrary, but I suggest that the answer is ‘Yes’ – they should refuse. They are required to “comply with the law” and that means every law, not just most of them. I fail to see how those employed to enforce international law but failing to do so can be said to be complying with the law.

In addition, of course, the Ministerial Codes (in both Westminster and Belfast) are very clear that ministers may not ask civil servants to do things which are illegal or improper.

Is International Law Different?

There are those who argue that the duty does not extend to international law but I think they are wrong. 

First, an interesting comparison may be drawn with  an amended Ministerial Code published in 2015.  This (still) required ministers to obey the law, but omitted previous versions’ references to the need to obey international law. The Cabinet Office itself did not draw attention to this potentially significant change, but responded, on being challenged, that the previous reference to international law had been unnecessary as it was subsumed within the definition of law.

Second, there was an interesting Twitter debate in October 2021 where one lawyer argued that international law is in some ways dissimilar to domestic law and (if I understood correctly) applies only to states (such as the UK) and not to individuals within those states. So the UK as a whole might breach international law, but its civil servants could not . I did not find the argument 100% persuasive and – more importantly – neither did those experienced international and constitutional lawyers who joined the debate. A deeper and longer analysis of the debate (though not dealing with the role of civil servants) may be found in David Allen Green’s ‘The Law and Policy Blog’ published on 12 October 2021.

The Role of the Northern Ireland Executive

It would seem unthinkable that the Northern Ireland Executive would wish to defy international law, or that the UK government would allow this to happen.

Section 26 of the Northern Ireland Act 1998 gives the UK government the power to ensure that the Northern Ireland Executive complies with international law.

Some refer to the Napier case in the Northern Ireland courts. Here is an extract: (The respondents are Unionist politicians.)

[81] It is no answer that the respondents wish to protest what they perceive as a
political injustice. For present purposes, the court is entirely unconcerned with the
merits of the respondents’ criticisms of the Northern Ireland Protocol. The de Brun
case established that, no matter how worthy one’s political goal, and even assuming
it relates to the full implementation of other aspects of the Belfast Agreement, a
Minister cannot act in clear violation of the ministerial obligations which they have
assumed.

[82] In recent months there have been – thankfully, sporadic – acts of violence
claimed by or attributed to those who, like the respondents, oppose the operation of
the Northern Ireland Protocol. These actions have been justly condemned by,
amongst others, the respondents’ party leader. The actions of those who choose to
flout the criminal law for political ends, particularly where the use or threat of
violence against person or property is concerned, are of course particularly extreme
and wholly unacceptable. However, it is incumbent upon those in political
leadership to reflect on the example set when they choose to wilfully ignore clear
legal obligations to which they are subject. It is not difficult to conceive that
condemnation of others’ law-breaking may be less influential when political leaders
are themselves content to publicly disregard the law in instances of their own
choosing.

Other Points

A Northern Ireland judge quickly ruled (4 February) that “There shouldn’t be any doubt or confusion hanging over those civil servants who have to comply with the law. I propose to make an order, suspending the order or instruction given by the Minister for Agriculture until further order of this court or completion of these proceedings.”

Manufacturing NI said that traders should continue to meet their reporting obligations whether or not there’s a guy with a hi-vis to greet them at the Port.

Civil servants may (but are not obliged to) complain to the Civil Service Commission if they feel that they are being required to act in a way which conflicts with the code. The Commission may then make recommendations about how the matter should be resolved, but the government is not required to comply with the Commission’s advice.

As an aside, I can imagine legislation which might force officials to break international law. “[Designated civil servants] may be required by their Secretary of State to [ignore specified regulations] and [the Civil Service Code] shall not apply to this instruction”. That’s not legal drafting but you get the idea.

Martin Stanley
Author – Speaking Truth to Power
Editor – Understanding the Civil Service

The Crazy, Dangerous World of Modern Banking

  • Lending to firms and individuals engaged in the production of goods and services amounts to only 10% of British banks’ total assets.
  • The annual volume of foreign exchange payments processed in Britain is £75 trillion, about forty times Britain’s national income
  • The value of derivative contracts (whose values are dependent on the values of other derivative securities) is three times the value of all the physical assets in the world

How It Began

[Most of the following text is taken from John Kay’s paper Robust and Resilient Finance.]

When the Piper Alpha oil rig went on fire in 1987, killing 200 people and triggering what was then the world’s largest marine insurance claim, underwriting names who had never heard of Piper Alpha discovered they had reinsured it over and over again.  The total value of claims at Lloyds turned out to be ten times the value of the underlying loss.

A Lloyd’s underwriter denounced in extravagant language the ignorance and incompetence of the agents who had promoted these structures and brought Lloyd’s close to collapse.  When asked why he had not blown the whistle on the individuals concerned he simply said: it was because they were willing to buy risks at a price at which he was delighted to sell them.  This would be a forerunner for the development of modern financial markets more generally.

Modern banks trade in securities, and the growth of such trade is the main explanation of the growth of the finance sector.   Lending to firms and individuals engaged in the production of goods and services – which most people would imagine was the principal business of a bank – is literally an insignificant part of their balance sheets. For British banks today, it amounts to about 10% of their total assets.

World trade has grown rapidly, but trading in foreign exchange has grown much faster.  The value of daily foreign exchange transactions is almost a hundred times the value of daily international trade in goods and services.[4]  The annual volume of payments processed in Britain is £75 trillion, about forty times Britain’s national income.

Once you have created derivative securities, you can create further layers of derivative securities whose values are dependent on the values of other derivative securities – and so on.  The value of such derivative contracts outstanding is three times the value of all the physical assets in the world.

These developments are so obviously crazy that it seems remarkable that no-one appears to be worried.  But …

The Danger has long been Obvious to Some

In 2005 the Federal Reserve Bank of Kansas held a symposium at the agreeable Wyoming resort of Jackson Hole.  The purpose was to honour Alan Greenspan, who would soon retire from his position as chairman of the Federal Reserve Board.  Raghuram Rajan, then chief economist at the International Monetary Fund, queried the value of recent innovation in financial markets and warned of troubles ahead.

Rajan’s paper was not well received.  …  Don Kohn treated the speech as an attack on what he called ‘the Greenspan doctrine’, which proclaimed the virtues of the financial innovations which Rajan had queried.  … Larry Summers described Rajan’s views as ‘Luddite’, and likened his thinking to those who would substitute runners and horses for cars and aeroplanes. … The keynote address at Jackson Hole was delivered by Robert Rubin [who was an] enthusiastic supporter of financialisation and had groomed Larry Summers to be his successor.  Timothy Geithner subsequently told his audience:  ‘Financial institutions [risk managers] are able to measure and manage risk much more effectively’.

The breathtaking scale of these misapprehensions proved no obstacle to the subsequent advancement of those who embraced them.  Rajan left the International Monetary Fund at the end of 2006 and returned to India where he became Governor of the Reserve Bank.  But talking truth to power proved no more welcome in India than in Wyoming and Rajan’s contract was not renewed.

The Result

Three years after Wyoming, Lehman’s failure turned the instability of 2008 into a crisis that jeopardised the functioning of the global financial system. But Lehman was not, in any ordinary sense of the phrase, a business of economic importance.  If it was a systemically important financial institution, it was not an important financial institution.  The business provided no services to the real economy which were not available elsewhere, and few services to the real economy at all.  The company was badly run and operated primarily for the benefit of its own staff, especially its most senior executives.  But Lehman was massively interconnected.  At the time of its bankruptcy, the company had over 200 subsidiaries around the world and approaching one million outstanding transactions, almost entirely with other financial institutions.  

Here in the UK, Alistair Darling, Chancellor of the Exchequer during the 2008 financial crisis, was taken aside by the chairman of one of Britain’s biggest banks and offered the reassurance that ‘they had had a meeting last night and decided that, from now on, we will only take on risks that we understand‘.

But Nothing Much has Changed since 2008

Philip Stephens appears to have been pretty well spot-on when he wrote the following in the FT in January 2014:  ‘The organising purpose of banking – to provide essential lubrication for the real economy – remains entangled with dangerous and socially useless speculation.’

A similar conclusion was reached by Joris Luyendijk writing in The Guardian in September 2015. He quotes a City veteran:  “Seven years after the collapse of Lehman Brothers, it is often said that nothing was learned from the crash. This is too optimistic. The big banks have surely drawn a lesson from the crash and its aftermath: that in the end there is very little they will not get away with.

And Paul Volcker, former Federal Reserve chairman, saw the 2008 financial crisis as a missed opportunity to “put a spear through the heart of all these guys in Wall Street”

Indeed, it is striking that many aspects of the modern financial system are designed to give an impression of overwhelming urgency – the endless ‘news’ feeds, the constantly changing screens of traders, the office lights blazing late into the night, the young analysts who find themselves required to work 30 hours at a stretch.  But very little that happens in the finance sector has genuine need for this constant appearance of excitement and activity.  Only its most boring part – the payments system – is an essential utility on whose continuous functioning the modern economy depends.  

No terrible consequence would follow if the stock market closed for a week (as it did in the wake of 9/11) – or longer; if a merger were delayed, or large investment project postponed for a few weeks; if an initial public offering happened next month rather than this.  A millisecond improvement in data transmission between New York and Chicago has no significance whatever outside the absurd world of computers trading with each other.

The tight coupling is simply unnecessary, the perpetual flow of ‘information’ part of a game traders play that has no wider relevance, the excessive hours worked by many employees a tournament in which individuals compete to display their alpha qualities in return for large prizes.  The traditional bank manager’s culture of long lunches and afternoons on the golf course may have yielded more useful information about business than the Bloomberg terminal.

Analysis & Conclusions

Lehman – an ill-managed purveyor of unneeded products – represented exactly the kind of business that should fail in a well-functioning market economy.  The view that it was a mistake for the US government to permit Lehman to collapse is expressed, not by people who miss the services that Lehman provided, but by people who regret the consequences of its failure.  

The lesson is – on the one hand – to eschew unnecessary complexity, and – on the other – to give close attention to the management of such complexity as is unavoidable.  None of these features – simplification, modularity, redundancy – were characteristic of the financial system as it had developed in 2008.  On the contrary.  Financialisation had greatly increased complexity, interaction and interdependence.  Redundancy – as, for example, in holding capital above the regulatory minimum – was everywhere regarded as an indicator of inefficiency, not of strength.  

The lesson is not that policymakers should try to prevent such failures but that public processes should ensure that similar failures are more easily contained.  This requires reintroducing to the financial sector the modularity and redundancy which characterise robust and resilient engineering systems and which recent decades have foolishly sought to characterise as inefficiency.

Don’t hold your breath!

Notes

This blog is essentially a precis of John Kay’s paper Robust and Resilient Finance, first published in July 2021.  I strongly recommend that you read the whole paper, and apologise to Professor Kay if I have not done it justice.

Readers with long memories will recall that Lord (Adair) Turner, chairman of the Financial Services Authority, in 2009 described much of the City’s activities as “socially useless” and questioned whether it had grown too large.

Martin Stanley
Editor – Understanding Regulation

Grenfell Tower, Catastrophe and Systemic Change

This blog summarises a fascinating and important book by Gill Kernick.

Gill lived on the 21st floor of Grenfell Tower until 2014.  Three years later, seven of her immediate neighbours died in the catastrophic fire. 

Gill works with high-hazard industries to build their leadership capabilities and culture in order to prevent catastrophic events.  She therefore imagined that a residential fire that killed 72 people would engender a desire to learn and change.  She was wrong.  Her book and accompanying podcasts explore the reasons why.

Leadership

Catastrophic events are by nature low probability  – but they have extremely high consequences.  They don’t just happen.  We create them.  Their frequency and/or intensity can be reduced, but we have to do this in a quite different way from which we reduce the impact of slips, trips and falls.

Excellent leaders avoid catastrophes by deploying chronic unease – constantly searching for dangers and vulnerabilities.  They are aware that the difference between a near miss and a catastrophic event is often a matter of chance. So it is vital to be on the look out for weak signals that something is not right, that something could go wrong.  These can always be found (in hindsight) after major disasters.

Chronic unease also means guarding against natural reaction of ceasing to listen if deluged by complaints.  The opposite reaction is the better one.

Effective leaders are empathetic.  They demonstrate that they care, and can imagine what could happen if a ‘fix’ doesn’t work.  They explicitly or implicitly wonder whether they would be happy if they or their child were asked to work or live in the environment under their control, knowing the risks that they do.

It is not difficult to find examples of leaders failing to respond properly to danger signals.  There were, before the fire, many well documented expressions of Grenfell residents’ concerns about then performance of their Tenant Management Organisation, including concern about fire risk. 

And the Lakanal House fire coroner (2009, six deaths) had recommended that buildings such as Grenfell should be fitted with sprinklers, and that ‘stay put’ advice should be reviewed.  Neither had happened by the time of the Grenfell fire, eight years later.  Here is a minister’s response to fellow MPs’ concerns about the delay:

‘I have neither seen nor heard anything that would suggest consideration of any of [the recommendations of the Lakanal House coroner) is urgent and I’m not willing to disrupt the work of my department by asking that these matters are brought forward.’

Here are two other examples.

Before the Ladbroke Grove rail crash, seven drivers had failed to see and stop at the red light missed by one of the two drivers who died, along with 29 others, at Ladbroke Grove.  The train operator had asked Railtrack ‘as a matter of urgency what [they] intended to do about this high-risk issue’ – but reply came there none.

Jill Rutter tells how senior BP managers knew that their Texas City refinery was a disaster area.  But its problems could only addressed by closing it down for a long periods, and that would have harmed BP’s bottom line at a time when it was a stock exchange darling reporting increasing profits each quarter.  15 died in the subsequent explosion.

Learning from Disasters

The second way to avoid catastrophes is to ensure that responses to disasters involve systemic change. 

Most inquiries lead only to piecemeal change.  They assume a controllable, predictable world in which an error can be prevented through technical solutions or new bureaucratic, command and control rules designed by experts.  The Mid-Staffs inquiry, for instance, led to 270 recommendations which undoubtedly became a tick box exercise for NHS trusts around the country. 

Rules and regulations are never a perfect answer.  They are by their nature reactive and so cannot displace the need to continually search for vulnerabilities.  Compliance is never 100% and compliance falls sharply, and enforcement becomes very difficult, if the regulations are complex, which is too often the case.  (Examples might be the pre-Grenfell building regulations and the Covid guidance and legislation.) Some organisations and individuals actively seek to circumvent regulation.

Systemic change assumes a complex and changing world in which disruption and experimentation are likely routes to improvement.  Those leading systemic change have strong values and draw on the expertise of all stakeholders. They understand and focus on the true purpose of the system – hospital staff caring about (not just ‘for’) their patients, in the case of Mid-Staffs. 

Tick-box and regulatory activity is attractive because they are outputs – they can easily be measured.  But they are not outcomes, valuable in themselves.  So how do we know that systemic change is happening? The answer is to look out for leading indicators.  Do people feel that they are encouraged to report dangers?  Are there plenty of near-miss reports?  Do patients feel well cared for?

Will Grenfell lead to systemic change?  The signs are not good.  Political and media attention has moved on and, four years later, there has been relatively little progress in addressing even the most urgent issues such as the cladding on other buildings.  There has also been little or no sign of the construction industry accepting responsibility for contributing to the disaster in any way – a necessary precursor to avoiding future problems.

Other Lessons

Gill draws a number of other lessons, for regulators, decision makers and others. In brief …

Regulators need to be adaptable to cope with new dangers and technologies, and should not lose sight of their core purpose, such as ensuring safety. Resource constrained enforcement can (but should not) lead to regulatory obligations becoming seen as a maximum target which might be attained of you are lucky, rather than a minimum which must be achieved without fail. 

Decision makers should avoid number-counting and tick-box consultations.  Many other more effective mechanisms are available. 

Decision makers should in particular challenge their assumptions about whose knowledge counts.  It can be experts (e.g. during Covid crisis) but it might well also be those on the front line – including junior staff and local residents.  There was little sign, for instance, that emergency managers were involved in designing the UK’s response to Covid-19.  And the government looked far too ‘blokey’.  The involvement of women, minorities and SMEs in planning would likely have led to better decisions.

Bureaucracies (and companies run like bureaucracies) compile excellent risk registers but should avoid regarding this as ‘job done’ and then failing to take the necessary action to reduce the key risks   The UK’s national risk register, for instance, gave prominence to a possible pandemic whose impact was given the highest possible rating – and yet the 120,000 Covid-19 deaths suggests that the country remained woefully under-prepared. 

Resilience is often seen as paying a big insurance premium for cover for a disaster that you hope won’t happen, or won’t happen on your watch.  But resilience can often be bought in inexpensive ways.  The UK’s pandemic preparations, for instance, did not necessarily need expensive stockpiles.  There could most likely have been plans to requisition manufacturing capacity.

Last, and certainly not least, Gill asks …

Why do we find it so difficult to learn?

One problem is our obsession with blame which doesn’t fix anything, least of all the systemic issues. Blame can be helpful if it sharpens debate, exposes issues.  But it is too often unhelpful because everyone naturally tries to avoid being blamed, so it too often inhibits debate.

For a start, behaviour is context dependent.  There is little point in identifying someone who has made a mistake if you then replace them with someone else who will in future make similar mistakes because they remain subject to the same pressures and constraints.

This is particularly true in government. We all – and journalists in particular – like to ascribe blame to one person.  In government, we like to assume that everything is about, and caused by, Presidents, Prime Ministers and other political leaders.  But the truth is much more complex.  Political leaders work within a system and most decisions are taken at much lower and/or more local levels.  There is seldom if ever any serious political will to bring about systemic change following a catastrophe, especially once the media spotlight has moved elsewhere.  The key political imperative is to avoid blame. 

This absence of political will is exacerbated by weaknesses in parliamentary governance and accountability.  There is in particular no process that ensures that recommendations from public inquiries are implemented, or assessed for effectiveness.

It is therefore devoutly to be hoped that Gill’s book will help bring about genuine change in the UK’s political system, including both the media and senior officials.  If there is no change then we are surely not honouring the 72 who died.

Further Reading and Listening

This blog can only summarise a well sourced and well argued book.  If you would like more detail and analysis then I suggest you begin by watching Gill’s fascinating conversation with Diane Coyle and Jill Rutter on the Bennett Institute website

You can also listen to Gill’s podcast series, Catastrophe

And then Gill’s book can be bought here:-

https://londonpublishingpartnership.co.uk/catastrophe-and-systemic-change/ 

… or on Amazon.

Martin Stanley

Editor – Understanding Regulation

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