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Civil Service Reform

Volume 546: debated on Tuesday 19 June 2012

With permission, Mr Speaker, I would like to make a statement about the civil service.

The British civil service plays a crucial role in modern British life. It is there to implement the policies of the Government of the day, whatever their political complexion. Its permanence and political impartiality enable exceptionally rapid transitions between Governments. Most civil servants are dedicated and hard-working, with a deep-seated public service ethos. Like all organisations, the civil service needs continuous improvement, and I want today to set out the first stage in a programme of practical actions for reform.

In 2010 we inherited one of the largest budget deficits in the developed world, and despite success in improving Britain’s financial standing, we still face significant financial and economic challenges, as well as rapid social, technological and demographic changes. The Government have embarked upon a programme of radical reform of public services to improve quality and responsiveness for users and value for the taxpayer. We need a civil service that is faster, more flexible, more innovative and more accountable in order to succeed. Our civil service is smaller today than at any time since the second world war, and this has highlighted where there are weaknesses and strengthened the need to tackle the weaknesses.

We need to build capabilities and skills where they are missing. We need to embrace new ways of delivering services. We need to be digital by default. We need to tie policy and implementation seamlessly together. We need greater accountability, and to require much better data and management information to drive decisions more closely. We need to transform performance management and career development.

Today, Sir Bob Kerslake, the head of the civil service, and I are publishing a civil service reform plan that clearly sets out a series of specific, practical actions to address long-standing weaknesses and build on existing strengths. Taken together, and properly implemented, those actions will deliver real change. They should be seen as a first step in a programme of continuing reform for the civil service. This is not an attack on the civil service, and civil servants have not been rigidly resistant to change, but the demand for change does not come just from the public and from Ministers—it comes from civil servants themselves, many of whom are deeply frustrated by a culture that is overly bureaucratic, hierarchical and focused on process, rather than outcomes.

That was revealed in the responses to our “Tell Us How” website, aimed at getting fresh ideas from staff about how they could do their jobs better. Civil servants themselves bemoaned a risk-averse culture, rampant grade-ism, and poor performance management. The action plan is based heavily on feedback from civil servants themselves, drawing on what frustrates and motivates them, while many of the most substantive ideas in the paper have come out of work led by permanent secretaries. Reform of the civil service never works if it feels like it is being imposed on civil servants by Ministers, but neither would it succeed if the civil service were simply left to reform itself. Because we want this to be change that lasts, we have discussed the proposals widely, including with Ministers of the previous Government, to draw on their experiences and ideas.

The civil service of the future will be smaller, pacier, flatter, more digital, more accountable for effective implementation, more capable, with better data and management information, and more unified, consistent and corporate. It must also be more satisfying to work for. These actions must help to achieve that. Under published plans, the civil service will shrink from around 500,000 in 2010 to around 380,000 by 2015—it is already the smallest it has been since the second world war. Sharing services between Departments will become the norm. That has been discussed for years; it is now time to make it happen.

Productivity also needs to improve. For too long, public sector productivity was at best static, while in the private services sector it improved over the same period by nearly 30%. Consumer expectations are rising and, as we have been told, there is no money. The public increasingly expect to be able to access services quickly, conveniently and in ways that suit them. We are conducting a review with Departments to decide which transactional and operational services can be delivered through alternative models. Services that can be delivered online should be delivered only online. Digital by default will become a reality, not just a buzz phrase.

We should no longer be the prisoner of the old binary choice between monolithic in-house provision and full-scale privatisation. We are now pursuing new models: joint ventures, employee-owned mutuals and new partnerships with the private sector. MyCSP, which manages the civil service pension scheme, became the first joint-venture mutual to spin out of Government recently, and it provides a model for future reforms.

The civil service culture can be slow moving, hierarchical and focused on process rather than outcomes. Changing that would be really hard in any organisation. We can make a start by cutting the number of management layers. There should only exceptionally be more than eight layers between the top and the front line, and frequently many fewer. That will help to speed up decisions and empower those at more junior levels. Better performance management needs to change the emphasis in appraisals emphatically towards delivery outcomes and reward sensible initiative and innovation.

We also need to sharpen accountability, which is closely linked to more effective delivery. Management information in Government is poor, as the National Audit Office, the Public Accounts Committee, the Institute for Government and departmental non-executive board members have vigorously and repeatedly pointed out. Therefore, by October this year we will put in place a robust and consistent cross-Government management information system that will enable Departments to be held to account by their boards, Parliament, the public and the centre of Government.

We will also make clearer the responsibilities of accounting officers for delivering major projects and programmes, including the expectation that former accounting officers can be called back to give evidence to the PAC. The current arrangements whereby Ministers answer to Parliament for the performance of their Departments and the implementation of their policy priorities will not change but, given their direct accountability to Parliament, we believe that they should have a stronger role in the recruitment of permanent secretaries.

We will therefore consult the Civil Service Commission on how to strengthen the role of the Secretary of State in the recruitment process for permanent secretaries. The current system allows the selection panel to submit only a single name to the Secretary of State. At other levels, appointments will normally be made from within the permanent civil service or by open recruitment but, where the expertise does not exist in the Department and it is not practicable to run a full open competition, we are making it clear that, as now, Ministers can ask their permanent secretaries to appoint a limited number of senior officials for specified and time-limited executive/management roles.

By common agreement, both inside and outside the civil service, there are some serious deficiencies in capability. Staff consistently say in surveys that their managers are not strong enough in leading and managing change. In future, many more civil servants will need commercial and contracting skills as services move further towards the commissioning model. While finance departments have significantly improved their capabilities, many more civil servants need a higher level of financial knowledge. As set out elsewhere in the plan, the civil service needs to improve its policy skills and fill the serious gaps in digital and project management capability.

By autumn we will have for the first time ever a cross-civil service capabilities plan that identifies which skills are missing and sets out how those gaps will be filled. Staff consistently say in surveys that their managers are not strong enough in leading and managing change, so, for the first time, leadership and potential leadership talent will be developed and deployed corporately.

As long ago as 1968, the Fulton commission identified that policy skills in the civil service were consistently rated more highly than operational delivery. That is still the case today. We will establish, therefore, the expectation that permanent secretaries appointed to the main delivery Departments will have had at least two years’ experience in a commercial or operational role, and we will move over time towards a position in which there is a more equal balance between those departmental permanent secretaries who have had a career primarily in operational management and those whose career has primarily been in policy advice and development.

A frequent complaint of civil servants themselves concerns performance management. They feel that exceptional performance is too often ignored and poor performance is not rigorously addressed. In future, performance management will be strengthened by a senior civil service appraisal system that identifies the top 25%, and the bottom 10%, who will need to show real improvement if they are to remain in the service. Departments are already introducing similar appraisal systems for grades below the senior civil service.

The Government are committed to ensuring that the civil service will be a good, modern employer and continue to be among the best employers in the country. Departments will undertake a review of terms and conditions to identify those that go beyond what a good, modern employer would provide. We will also ensure—again, meeting a consistent concern of civil servants—that staff get the IT and security arrangements that they have been asking for, so that they can do their jobs properly. That is a part of doing what is necessary to make civil service jobs more satisfying.

Another key goal is to improve and open up policy making so that there is a clear focus on designing policies that can be implemented in practice. Too often in the past policy has come from a narrow range of views, but Whitehall does not have a monopoly on policy-making expertise, and in future open policy making will become the default and we will create a small central fund to pilot policy development commissioned from outside Whitehall.

I repeat that this plan is just the first stage in a programme of reform and continuous improvement. It responds to concerns expressed by Parliament, by Ministers and former Ministers and, most importantly, by civil servants themselves. None of the actions in the plan is in itself dramatic, and none will matter unless it is properly implemented, but together, when implemented, they will represent real change.

I will oversee the implementation of the plan, and, as the paper sets out, Sir Bob Kerslake, as head of the civil service, and Sir Jeremy Heywood, the Cabinet Secretary, will be accountable for its delivery through the cadre of permanent secretaries.

Change is essential if the civil service is to meet the challenges of a fast-changing world. I commend the plan to the House.

I thank the Minister for his courtesy in providing me with an advance copy of the plan, and for taking some time to explain his thinking.

The British civil service is widely admired, and rightly so, for its core values of honesty, impartiality and professionalism, and that is why it is so worrying that in the past two years the Minister has presided over chaotic change, which has seen a collapse in morale and more than one in three of the most senior civil servants leaving voluntarily. We, in contrast, sought radical but incremental change in the service.

On accountability, management culture and increased flexibility, there is always more to do, and we will support and, indeed, welcome sensible reforms such as improving management culture, information systems and skills development. We especially welcome the drive to digitise. It is essential to promote this process so that we obtain the highest possible levels of productivity from all staff. How does the Minister see digitisation proceeding?

In an era of flexible networks, the civil service can be seen as over-hierarchical and bureaucratic, as well as operating within self-contained departmental silos. Will the Minister indicate his intentions in reducing hierarchy and bureaucracy? The civil service has often been criticised in relation to procurement, IT, the management of change, and project management. What plans does he have to improve performance in all those areas?

I note the Minister’s suggestion that there should be interaction between the civil service and the private sector, but will he confirm that he is not making a presumption that private sector experience is somehow superior to the service of the public within the public sector ethos? We welcome the increased accountability of the civil service to Parliament and his comments on the Public Accounts Committee. On public sector mutuals, will he ensure that more information is placed before the House on this matter in due course?

The Minister has proposed that the performance of the worst 10% of civil servants be addressed. What consultation has he had on that proposal, and when does he intend it to be introduced? Of course, we welcome the drive to improve the standards of management in the public service, but is there not a danger that he and his colleagues may indulge in a blame game? After all, the problems that his Government face result from the failure of Ministers, not of the civil service. In identifying the worst-performing public servants, perhaps he might consider the proposal that he name and shame the poorest Ministers; I can see one of them talking to him on the Front Bench now. Perhaps he does not need to, though, because the court of public opinion has already rendered its verdict, at least in relation to the Secretary of State for Health. Given the double-dip recession, does he agree that at least the Chancellor of the Exchequer should now be placed in special measures?

Has the Minister done any U-turn on regional pay? Will he confirm that while there is nothing wrong with sensible local bargaining of the kind that we did when we were in office, we live in a single United Kingdom and the suggestion of large-scale regionalising of pay is divisive and should now be dropped?

The Minister has said that he intends further to reduce the size of the civil service and that the Government would cut back-office staff and not front-line services. Staff reductions on the scale that he has announced cannot possibly be easily developed. We are not talking about simple numbers on a page but real human beings facing redundancy at a time of high unemployment. These people have chosen to serve the public. How does he intend to deal with the human consequences of his decisions, and will he be engaging with the trade unions and other staff representatives in this process? His staffing estimates must be based on detailed risk impact assessments. For example, will the country be left vulnerable as a result of further cuts at the UK Border Agency, in the police service, or elsewhere? Will he agree to place in the Library copies of all departmental risk impact assessments of staff reductions?

On the sensitive area of the relationship between Ministers and civil servants, I have two concerns. The Minister proposes to formalise the process of seeking policy advice from outside agencies, and he intends that Ministers play a larger role in appointing permanent secretaries. We welcome careful progress on both those suggestions, but equally, is there not a danger that they might lead to cronyism and a dangerous politicisation of the civil service? What assurances will he give to the House that in engaging in the appointment of civil servants and in selecting external agencies providing policy advice, neither of those matters will fall into disrepute because of ideological, or even personal, favouritism by particular Ministers?

We welcome the positive proposals in the plan, but it will do little to correct the chaos that now exists in many Departments. After all, the point of reform is to make things better than they were before.

I am grateful for the shadow Minister’s welcome for much of what we have said, although I regret the tone of some of his contribution.

On the hon. Gentleman’s last point about potential politicisation, we are very concerned that that should not happen. Any proposals about the involvement of Ministers in appointments, which has operated in various ways for a long time, must be regulated properly by the Civil Service Commission, whose task it is to ensure that there is no taint of cronyism or favouritism. There have been many suggestions, particularly in the time of the previous Government, that cronyism has been a feature of the way in which Governments operate. Because of that, the Civil Service Commission is particularly concerned to ensure that any changes are made extremely carefully. I and my colleagues strongly support that.

I have not announced any further reductions in the size of the civil service. The figure of 380,000, which is the consequence of the plans that Departments already have, is already out there. The reductions are obviously taking place in a planned and considered way by Departments, and they are alert to the need for front-line services to be protected wherever possible.

The hon. Gentleman mentioned issues of morale in the civil service. However, the people survey, which is a consistent survey across the whole civil service that is done every year—a welcome innovation by Lord O’Donnell under the previous Government—suggests that morale has remained remarkably stable at a time of uncertainty, a pay freeze, the reform of pension schemes and significant downsizing. Turnover, as measured by resignations from the civil service, has also remained stable. There is obviously a reduction in the size of the senior civil service, but that is simply a consequence of the overall reductions in size across the civil service.

I am grateful for the hon. Gentleman’s support for our plans for digitisation. That will not always be without controversy, but it is important. The Government lag behind most providers in making services available to consumers online. Too many online Government services fail, meaning that the non-digital delivery of transactions by post, phone or physical contact has to be retained. That is much more expensive and a lot less convenient for the user. It is important to tackle that problem. He will be aware of the invaluable review that was done by Martha Lane Fox 18 months ago, on which we are drawing heavily to drive our plans forward with urgency.

I accept the hon. Gentleman’s point about interaction with the private sector. I do not make the assumption that the answer to every problem in the civil service is to bring in people from the private sector. In fact, much more needs to be done to equip existing civil servants with skills. That is where interaction is so important. The culture in the civil service needs to feel much more recognisable to people from the private sector, so that when there is interaction, they do not feel like they have stepped on to a different planet. We believe that enhanced interaction will contribute to that.

The only moves that there have been towards regional pay were made under the previous Government, when the Ministry of Justice introduced a degree of regional pay. No final decisions have been made on the matter and we will not proceed without good evidence and a strong rationale for doing so.

Finally, the hon. Gentleman’s response reflected the widespread consensus that there is a need for change. Our proposing change which responds very much to concerns within the civil service does not mean that we think that the fundamental model is wrong. Arguments are made for a more American approach, but one would lose many important benefits such as the institutional knowledge, continuity and ease of transition through that approach. We have therefore worked within the constraints of the model as it is, but much can be done within those constraints. None of the changes need be massively controversial or dramatic, but together they will make a real difference to the way in which the country is governed.

I thank my right hon. Friend for publishing a civil service reform plan, which will prove to be the comprehensive cross-departmental change programme that the Public Administration Committee has long been calling for. Will he engage all his fellow Ministers to ensure that they lead the programme alongside permanent secretaries? Without effective leadership, no change programme will succeed. Finally, will he reaffirm that the civil service must remain one of our great institutions and a force for the stability of government, our constitution and our nation?

I am grateful to my hon. Friend, who has been urging me to publish a civil service reform plan for some time. I have said many times that I am keener on civil service reform than I am on civil service reform plans, but we have set out the plan and what we aim to achieve. It will require concerted political leadership, and there must be no hiding place. The political leadership of the Government and wide consensus across the party divide, which I think there is, together with the leadership of the civil service, will provide the best chance of implementing the plan successfully. I completely accept his point that the civil service is an important component of our stability, but we need to ensure that stability does not equate to a lack of any movement.

I welcome the substance of what the Minister said and the bipartisan tone in which he put it. In particular, may I welcome his proposals for greater involvement by Secretaries of State in the appointment of their permanent secretaries? I say by way of confession that, although I am not sure what the rules were at the time, in each of the three permanent secretary appointments that I made—in the Home Office, the Foreign Office and the Ministry of Justice—I insisted that there was a shortlist of at least three candidates from which I should choose. There was not the least allegation that I had acted in a partisan or cronyist way. The point that I made to those Departments was that if I was to take responsibility for the whole Department and for the work of that permanent secretary, I needed to have some confidence in the individual at the official top of the organisation.

I am extremely grateful to the right hon. Gentleman for his point of view, which I think most people who have been Ministers would recognise and respect. As Ministers we come to the House of Commons and, more or less cheerfully, take responsibility and are held accountable, sometimes in very robust terms, for what our Departments deliver and how they perform. The relationship between a permanent secretary and a Secretary of State is the most important one in a Department, and it is not reasonable for a Secretary of State to feel that he or she has no real choice in the appointment of that permanent secretary.

Will the Minister reiterate that one of the great strengths of the reform agenda that he has put forward today is that it responds to the demands of ordinary civil servants themselves? History shows that if the Cabinet Office acts in isolation, the project is doomed to failure. We require much wider leadership of the reform agenda, right across the civil service.

My hon. Friend makes the point very well that it would not work if we tried to impose reform that went against the grain of the hard-working majority of civil servants, who come to work to do a good job and serve their fellow citizens, and who want to go home at the end of the day feeling that they have been able to make a difference. The plan would not have a chance of being successfully implemented. We need to call on the leadership of the civil service, but also on those throughout the civil service who see a need for change and want to be part of it.

It is opportune that the Public and Commercial Services Union parliamentary reception is taking place at the moment, to which all Members, including the Minister, are invited. That union represents staff who have had job cuts, privatisation, pay cuts and pay freezes and who have had their pensions undermined. They have even had their redundancy payments cut. Will he call in and explain to those staff what is meant by “Departments will undertake a review of terms and conditions to identify those that go beyond what a good…employer would provide”? Does that mean that there will be more cuts to job security, maternity cover, paternity leave or sick pay? Will he explain precisely what it means?

Depending on how long this statement goes on, I would be delighted to call in to the PCS reception and renew old acquaintances and friendships.

To which terms and conditions does the statement refer? Civil servants hate it when outlandish and archaic terms and conditions, many of which they will not have known exist, get picked up by the media and lampooned. Such terms and conditions enable the media to project civil servants—quite unfairly—as feather-bedded and pampered, which is demoralising for them. We want the civil service to be a good, modern employer, and among the best employers, but that means that such outlying terms and conditions, which are hard to defend in the modern world, must be addressed. They include, for example, the fact that as soon as people become civil servants, they are entitled to six months’ full sick pay. That is out of kilter with anything that exists in the wider public sector or the private sector. That sort of thing will need, over time, to be addressed.

Order. I cannot at this point say how long the statement and exchanges will last, but the reception might conceivably—I know not—even be extended if its organisers anticipate that they are to be blessed with a visit from a ministerial celebrity.

I welcome the Minister’s talk of sharpening accountability and of better accountability upwards to departmental boards. He even talks of giving Secretaries of State more of a say on appointments. Why has he not considered enhancing accountability to the Select Committees of the House? Surely without that change, the mandarin is not truly outwardly accountable to the public.

I completely understand my hon. Friend’s point. He will know that the right hon. Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee, who is away on Committee business at the moment, strongly takes that view. The Government have not opined on that suggestion at this stage, because the House of Lords Constitution Committee is conducting an inquiry into exactly that issue and we do not want to pre-empt its deliberations. My hon. Friend’s point, however, is a powerful one.

In his statement, the Minister said that the “demand for change…comes from civil servants themselves”, and yet went on to say that changing the civil service culture would be “really hard”. There seems to be a contradiction in that. Can we be sure that the reorganisation of the civil service is in the interests of service to the community, and not simply a cost-saving exercise?

We need to save costs—that almost goes without saying—and every Department is working under a severe financial constraint, one consequence of which is the significant reduction in the size of the civil service, to which I have referred. The proposals are about ensuring that, in such circumstances, when there is a smaller civil service and less money around, citizens can be served and receive public services of a good standard, and in many cases we hope a better standard than they currently receive.

Order. The hon. Member for Sevenoaks (Michael Fallon) has an intriguing approach to indicating his desire to be called—he raises his eyebrows in a very pointed fashion—but I can assure him that I was going to call him anyway.

Is it fair that businesses outside London and the south-east must compete for staff against public offices whose pay and conditions are set nationally? If local pay works so well and flexibly for the Courts Service, why would we be squeamish about extending it?

At the risk of my hon. Friend’s eyebrows going into overdrive, may I say that no final decisions have been made? He makes the argument. We have invited the pay review bodies to look at that proposal but no decision will be made until the evidence has been properly examined and the existence or otherwise of a strong rationale has been established.

I would like to return to the issue of accounting officers being recalled to Select Committees. In his statement, the Minister referred only to the Public Accounts Committee. May I urge him to consider other Committees, such as the Defence Committee, given that procurement decisions can cover 10, 15 or 20 years? Will he consider not only making that clearer, as he said in his statement, but making it a duty?

For the PAC, it is becoming the practice that, in the right circumstances, former accounting officers can be called back. I hear what the hon. Lady says; it is a powerful case. Actually, I would not find it objectionable if former Ministers were called back to Select Committees to talk about decisions they were involved with in a previous life. I see the right hon. Member for Blackburn (Mr Straw), the former Lord Chancellor, nodding assent, which is courageous of him.

As my right hon. Friend said, as long ago as 1968 the Fulton commission identified that policy skills were consistently rated more highly than operational delivery. Forty years later, during my time on the PAC, we found out that not a single permanent secretary had ever run a project. After all these reviews, will he really achieve where everybody else has failed, and get fewer permanent secretaries who have an Oxbridge degree in Latin, can write a beautiful minute and are charming, and actually get people who can run a project and be on the right pay scale for it?

I hope that my hon. Friend, who stewarded the PAC with such distinction and speaks with great authority on this subject, would recognise that the appointment as head of the civil service of Sir Bob Kerslake, who has a formidable history of operational delivery in local government and running big local authorities, is a step in the right direction. If my hon. Friend looks across the piece, he will see that there are more, but not yet nearly enough, permanent secretaries with a background in operational delivery. We need to go further, however.

On 23 May, in answer to my question about bonuses, the Prime Minister told the House that there was

“no place in the modern civil service for a presumption of good performance.”—[Official Report, 23 May 2012; Vol. 545, c. 1130.]

Why has the Minister not taken the opportunity, in his excellent paper, to outlaw the culture of bonuses for senior civil servants, especially in failing organisations, such as the UK Border Agency? Giving senior civil servants bonuses of £3.5 million cannot be right.

Performance pay is always controversial, whether in the public or private sector. The paper suggests that a voluntary earn-back scheme, such as that suggested by Will Hutton in his report on fair pay, might be worth considering. We will invite the Senior Salaries Review Body to consider such a scheme for the senior civil service. Civil servants would be invited to put, say, 5% of their basic pay at risk, so that they have to earn it back, with the possibility of exceeding it with exceptional performance. That would not feel like a one-way bet.

How will these reforms enable the civil service to deliver much higher quality and with greater accuracy, given the high error rates typical in areas such as benefit distribution?

For a start, there needs to be better performance management and much better management information. It is a constant complaint that the quality of data is poor and inconsistent. It is hard to hold Departments and parts of Departments to account when we do not know how well they are performing. I point out to my right hon. Friend that when we turned MyCSP, the organisation that delivers the civil service pension scheme, into a joint venture mutual, its levels of productivity and accuracy, doing difficult processing work, improved markedly as it moved towards the vesting date.

I hope I am not alone in having a great sense of unease about the greater involvement of Ministers in selecting permanent secretaries. When permanent secretaries have to succumb to ministerial favour, is there not a danger of moving towards a presidential system, with more politicisation, less impartiality and civil servants fearing to speak truth unto power lest their careers not advance? I hope that I am not alone in saying that, and I hope that the Minister has a good answer.

The answer is that we are absolutely not moving to the presidential-type system. I recommend that the hon. Gentleman talk to his right hon. Friend the Member for Blackburn, who has experience of this. The simple truth is that if a Minister is to be accountable for what their Department does, it is not that unreasonable to suppose that they should have a better degree of choice in selecting the principal instrument for the performance of their Department.

If local residents in the borough of Kettering phone Kettering borough council, of which I have the honour and privilege of being a member, they speak to a human being who answers the phone within 10 seconds. We ran the British empire with fewer civil servants than we have now, and if Kettering borough council can do that, should not organisations such as the Inland Revenue helpline be told that they have to do the same?

My hon. Friend makes a powerful case, not just for the merits of Kettering borough council, but for what central Government and the civil service can learn from the best in local government. We make that point in the plan. There is, for example, good experience in local government of local authorities sharing services to a much greater degree than in the past—including, in many cases, sharing chief executives. We have suggested that this is also something that central Government could learn from.

I listened with great interest to what the Minister said about opening up policy development work. I note what he said about the Civil Service Commission, but I wonder whether he will expand on it. I am not making a partisan point, but he will recall answering questions recently about suggestions—allegations and so on—that, for example, Mr Peter Cruddas had influence over the No. 10 policy making machinery. If policy making is outsourced to think-tanks, there are bound to be occasions when suggestions are made that outside bodies—donors and so on—have undue influence over those think-tanks, so is the Minister anticipating some sort of regulatory framework? Will he expand a little further on that for us?

The first thing to say is that this proposal is only a modest move. It will be piloted and reviewed to see what works and what does not. I completely concede the hon. Gentleman’s point that the work needs to be done carefully. It is not, I hasten to add, a recipe for giving more business to consultants—we have massively cut the business that central Government give to consultants—but we think there is scope for commissioning policy development work from academics, for example, which seems to be a fruitful idea that is worth pursuing to see what the benefits are.

It is important that those who choose the civil service as a career path should still have a wide experience and keep up to date with the knowledge, skills and experience that will be useful. Has the Minister considered whether the parliamentary term and timetable—our cycle—might offer time for development and training opportunities for those staff, or time for fast-track staff in particular to take paid sabbaticals in industry, commerce and the voluntary and philanthropic sectors, which are at the cutting edge of personnel development?

That is a valuable point, which we address. Such development is available and possible, but it happens to a much lesser extent than is desirable. Exposure to different worlds and different experiences can enrich the ability of senior civil servants to deliver effectively for citizens.

The Minister referred to a central fund. How much will be in it, and will it come from separate Departments? Will he be using a tendering process, or will he just be appointing one particular person?

It is a modest fund of £500,000 from the Cabinet Office, to be matched by Departments, if they want to bid to use it. I would not generally expect there to be a single appointment. Under the circumstances, we would want to get different groups in to pitch their ideas for how they would develop the work and so on. However, these are early stages. We want to explore how to do the work effectively, but we think it is worth pursuing.

Will my right hon. Friend clarify whether he will be publishing the personal objectives of permanent secretaries and the interim project milestones of senior responsible owners? Further to the question that my hon. Friend the Member for Gainsborough (Mr Leigh) asked, given that 70% of civil servants work in operational roles, will he clarify how many permanent secretaries do not have two years’ experience in such roles?

I do not have the last fact immediately at my fingertips, although it could no doubt be there soon. On my hon. Friend’s first point, yes, we do plan to publish permanent secretary objectives. They ought to be set in a rigorous way through agreement with the Secretary of State, with the lead non-executive on the Department’s board, with the Prime Minister and with the head of the civil service. That needs to be done. We will then publish those objectives, because the public need to be able to see the extent to which they are being met. My hon. Friend also asked about milestones. We are becoming much more open and saying much more about the way in which the major projects are governed, and about their performance, than has ever been the case.

As well as suggesting a greater role for Secretaries of State in the recruitment process for permanent secretaries, the right hon. Gentleman referred to Ministers being able to ask permanent secretaries to appoint a limited number of senior officials to time-limited executive or management roles. Has he any plans to circumscribe or, better still, proscribe any involvement, interference, intervention or influence by special advisers in relation to such matters? Does experience not teach us that special advisers should not taste, touch or handle any aspect of such a process?

Special advisers do not take part in the recruitment and appointment of mainstream civil servants, but they do play an important part in the way in which Ministers achieve their priorities and deliver their programmes.

I welcome the thrust of the reform, but will the Minister clarify one point? Does he support the idea that a Secretary of State should have the final say in the recruitment of a private sector individual to the post of permanent secretary, provided it is done on a fixed-term, performance-related basis?

Yes, I do believe that. Obviously, that would need to follow a selection and recruitment process that had been regulated by the Civil Service Commission to ensure that the appointment had been made on merit following fair and open competition, as the law requires. Given that degree of regulation, however, and the assurance that that should give that the individual was an appointable candidate for not only the current Secretary of State but any future ones, there is no obvious reason why that should not happen.

The Minister said that there was nothing dramatic in his plans. Is it not time for a bigger reform than one that simply involves the appointment of permanent secretaries? Should not a change of Government mean a change at the top of those agencies delivering the most important parts of the new Government’s programme? Perhaps we should consider a system closer to that of the United States, in which Ministers would propose appointments which would then be confirmed or rejected at hearings in this House. Those who were appointed would then, like Ministers, be publicly accountable as well as directly accountable to Parliament.

I hear what the right hon. Gentleman says. As an experienced former Minister, his views attract respect and deserve careful consideration, but his suggestion would involve a fundamental change to the model that we have in this country. That is not unthinkable, but a deep change would be involved. We believe that our system works really well—or is capable of doing so—and that we can make these changes within the current model to deliver real change. We can also get on with that quite quickly.

My right hon. Friend rightly began his statement by saying of the civil service: “It is there to implement the policies of the Government of the day, whatever its political complexion.” He will be aware, through his role as a constituency Member of Parliament and as a Minister, of the frustrations expressed by many Ministers at the lack of determination of some in their Departments to implement the programme on which the Government of the day were elected. What assurances can he give us that this programme of reform will keep its central facet—namely, that the civil service is there to implement the will of the people as expressed by those elected to the House of Commons?

That is a fundamental tenet of our system, and if there were widespread concern that that was not happening, pressure to change the system along the lines that the right hon. Member for Wentworth and Dearne (John Healey) has outlined would become hard to resist. The key point, however, is that the permanent secretary of a Department is under an obligation to provide Ministers with officials who are capable of delivering the Minister’s priorities. If that is not happening, Ministers are entitled to—and should—make quite a fuss.

While I fully agree that we need to deal with poor performance effectively, and I look forward to seeing the Minister’s capabilities plan, will he tell me why he has chosen to use norm-referencing at an arbitrary 10%, which is going to encourage colleagues to have a dog-eat-dog approach and to vie with each other to get out of the bottom 10%, like in some ghastly TV game show, rather than to deal with poor performance where and whenever it occurs?

All the evidence suggests that without some, by its very nature, relatively arbitrary way of ranking performance, we will not get the focus on dealing with poor performance. I do not take a simplistic view of poor performance that suggests that anyone who is underperforming should immediately exit the civil service because the first thing that should be done is to provide proactive support and development of the individual to get them to improve. If that does not prove possible, then it is not right and it is not fair to the rest of the civil service, who work hard and are dedicated, to see the civil service’s reputation pulled down by those who are consistently underperforming.

When looking at civil service reform, will my right hon. Friend continue to ensure the curtailing of millions of pounds of taxpayers’ money spent on civil service management conferences? Will he also curtail the huge spending on expensive head-hunters by civil service departments, often staffed by former senior civil servants themselves?

Spending on all those things has massively reduced since the coalition Government were formed. We can often do these things much more effectively. Management-type conferences, away-days and all that sort of thing now take place largely in the Government’s own property at much lower cost. It is sometimes necessary to use head-hunters to do particular recruitments, but this should be the exception rather than the rule.

I thank the Minister for his statement, in which he said that the civil service of the future would be smaller. In light of that, what will be the staffing head count implications for those parts of the civil service that reside within the devolved regions, such as the Northern Ireland Office and Her Majesty’s Revenue and Customs?

Those decisions will be taken by those Departments themselves. We do not expect to do that by central diktat. So far as civil servants in the devolved Administrations are concerned, that is of course the responsibility of those Administrations. The Northern Ireland civil service is slightly different as it is separate, but in Scotland and Wales, the permanent secretaries of both those Administrations have been involved in the development of these plans.

Civil servants at GCHQ and elsewhere in my constituency already deliver what I call a gold-plated service to government, despite serious challenges to recruitment and retention. Will these reforms strengthen the hand of unique institutions such as GCHQ in the face of serious private sector competition for highly expert staff?

I am very aware of the amazing work done by GCHQ and of the extraordinary talents that get attracted to Cheltenham, and by and large retained there, in support of work of the highest importance for the safety of the nation. There is certainly nothing that we are doing that will inhibit the ability of organisations such as GCHQ to do what is necessary to recruit and retain the very best.

There are many talented public servants at all levels of the civil service, but will my right hon. Friend assure me that these plans will allow that talent to be recognised and advanced by rewarding innovation and successful outcomes?

My hon. Friend makes a very good point—that the system does not always reward those who innovate. We make the point in the paper that no one’s career ever seems to suffer if they continue to preside over an inefficient status quo, but if people try something new that does not work, they can feel very exposed. We need to be as rigorous in examining, testing and challenging the status quo as we are with innovation and change. We need to be supportive of those who try new things. Not everything new that gets tried will work, but the best organisations learn at least as much from things that are tried and do not work as they do from things that are tried and do.

The Prime Minister recently stated in Malaysia that “Yes Minister” remains true to life. The Minister has said today: “There should only exceptionally be more than eight layers between the top and the front line…That will help to speed up decisions and empower those at more junior levels.” Could we not be a little more ambitious?

I am always open to encouragement of that nature. In a really big organisation—and some parts of central Government are very big organisations—eight is not an inordinate number of layers. Those are still quite big spans of authority. In most cases, however, the number should be significantly lower. We particularly want the changes to empower people at the front line to make decisions and judgments without constantly having to refer them up the hierarchy, because that will make their jobs more rewarding and satisfying.

Can my right hon. Friend confirm that a reduction in the size of the civil service will not be offset by an increase in the number of former civil servants who are subsequently re-employed as consultants?

I have no control over whether former civil servants obtain employment as consultants. I can say, however, that the amount of money that the Government spend on consultants has fallen by some 60% since the election, that it remains at a much lower level, and that it will continue to do so.

I am delighted that my right hon. Friend is prepared to learn from local government. The Communities and Local Government Committee is conducting an inquiry into the operation of mutuals and co-operatives, and other forms of working. The evidence is still coming in, but it is clear that such arrangements lead to better services, more job satisfaction, and innovation. However, in order to go forward, people need support: they need financial backing, and they need to be encouraged to take the work on. What measures will my right hon. Friend take to provide them with that opportunity?

We have set up a mutuals information service so that we can provide ready access to information. We have also set up a small fund that can buy legal and commercial advice for groups of public sector workers who want to establish themselves as mutuals. That is beginning to succeed, but what is needed above all is for the managers in such public sector organisations to support those who want to spin themselves out as public service mutuals. There is a tendency for managers to feel that that is somehow a threat and to resist it, but they should see it as a big opportunity, for all the reasons that my hon. Friend has so eloquently cited.

The 2001 reforms of the Foreign Office led to a torrent of management jargon, and to officials managing themselves instead of getting to grips with foreign countries. Will the Minister reassure us that this round of reforms will not promote people on the basis of abstract management skills at the expense of the energy, imagination, practical wisdom and courage which are at the heart of good administration?

If it were possible for us to encapsulate the spirit and the culture that we want to see in the civil service in a few phrases, my hon. Friend would just have done so.

Bristol is currently negotiating its exciting city deal, which will create a revolution in regional growth. Can my right hon. Friend confirm that the reforms will enable the civil service—particularly in the vital Department for Transport, which oversees the infrastructure for growth—to be as dynamic, growth-focused and, indeed, business-minded as Bristol, our regions and the nation need it to be?

My hon. Friend makes a powerful point. In whatever we do, we need to focus on what we are trying to achieve rather than on whether we are undergoing an agreeable process, and that needs to be done with pace.

I welcome the statement. Does the Minister agree that one of the most important things the modern civil service needs to do is look at new ways of delivering public services, particularly given the challenges of the digital era?

Yes. When we said we wanted those services that can be delivered online to be delivered only online, we meant it. It is not easy to do this, but it can be done, and my hon. Friend, who has considerable expertise in this area, will no doubt support the aim.

My right hon. Friend touched on the importance of importing the very best of transformational change from the enterprise sector. Will he say a little more about that?

We want a civil service culture that is much more recognisable to those who come from the private sector so that there can be greater interaction. Where people do move from one sector to another, frequently it does not work because they feel like they have landed on a different planet. It is particularly valuable for civil servants to spend some time in the private sector as they will pick up additional skills, as well as vice versa. There can be very valuable cross-fertilisation. This has often been tried, but it has worked far too rarely. We are going to have another go.