Select Committee on Public Administration Minutes of Evidence

Memorandum by First Division Associates (PSR 13)

  1.  The FDA welcomes the opportunity to give evidence to the Public Administration Committee Inquiry into Public Service Reform and has considered the Issues Paper. We do not at this stage wish to comment on the paper in its entirety, particularly given its breadth but there are a number of points we wish to make in advance of the oral evidence that I will be giving on 29 November.

Reforming public services

2.  The FDA was involved in the dialogue initiated by the then Ministers, David Clark and subsequently Jack Cunningham, during the preparations for the Modernising Government White Paper published in March 1999. We broadly welcomed the White Paper and remain committed to an agenda of public service reform, recognising the entitlement of UK citizens to high quality and efficient public services.

  3.  The FDA also had significant involvement in the preparation of the Civil Service Reform Programme, agreed by Permanent Secretaries at Sunningdale in autumn 1999 and published in December that year. The FDA again broadly welcomed the programme of reform and remains committed to its delivery.

  4.  The FDA believes that public service reform must be underpinned by a partnership between elected politicians, management and staff that involves staff at all stages during any process of reform and recognises that staff have legitimate interests in the overall delivery of reform. The FDA, together with the other unions in the Civil Service, signed a partnership agreement with the Government and the Head of the Civil Service in spring 2000. This we believe has enhanced dialogue and involvement at the "centre" of the Executive (which we would define as No. 10, the Cabinet Office and Treasury), although we remain concerned at its piecemeal application across Government departments; that said, the unions and Cabinet Office have initiated a joint working group to examine the implementation of the partnership agreement and how this can be enhanced in future.

  5.  We believe that the Civil Service Reform Programme does offer a coherent basis for enhancing the work of the Civil Service and in addition has the potential to offer significant improvements to the quality of working life, and the employment terms, of civil servants at all levels. We remain concerned that reform is running more slowly than we would wish in a number of departments, although a report of progress is currently being prepared, we understand, by the Cabinet Office.

  6.  We are also concerned at the apparent lack of cohesion between the Cabinet Office, Treasury and No. 10. Although the key link between individual departments and the centre is through the Public Service Agreements and Service Delivery Agreements signed between departments and the Treasury, there are also a number of units within No. 10, in particular the Delivery Unit headed by Michael Barber, which also monitor departmental performance. In addition the Office of Public Service Reform, part of the Cabinet Office and headed by Wendy Thomson, is also considering wider issues, mainly outside the Civil Service but which nevertheless impact on the delivery by departments of agreed programmes. There is evidence from departments that they find this overlay at the centre both confusing and at times an impediment. It is also not clear how these different units interact, and in particular the FDA is not clear about the role that the Office of Public Service Reform will play. It would be helpful to have a clear statement of where the boundaries are and how the different departments and units relate to each other.

  7.  Part of this apparent confusion arises from the process by which different units were brought together, often at short notice, immediately following the General Election. We do not believe that it would have in any way undermined the democratic process and political debate during a General Election had the Government planned the creation of units, and the reorganisation within No. 10 and the Cabinet Office, well in advance of the General Election.

  8.  A similar haste is apparent in reorganising departments; an example is the merger of MAFF with a substantial part of the old DETR to create DEFRA. Although civil servants were involved prior to 7 June in plans to merge MAFF with part of DETR, the scale of the change announced immediately after the General Election went considerably beyond that mooted in the weeks before. In a less high profile context, the relationship between LCD and the Home Office was also not clarified, and then at very short notice, until the week immediately following the General Election. The FDA recognises the political sensitivities attached to reorganising Government departments, but we believe that the tendency of both Labour and Conservative governments to propose reorganisations at short notice and without inadequate preparation undermines at least for a period the ability of those departments to deliver effectively.

  9.  We believe that there is merit in a comprehensive review of the role of the centre vis-a"-vis individual departments. Recognising that it would be helpful to let a period of time elapse for the new central structures to clarify their roles and interaction, it would be appropriate to launch such a review next autumn.

  10.  The FDA also supports more effective regional government, drawing together the work of the Government Offices of the Regions and other regional bodies. Enhanced regional government has the potential to play an important role, but we recognise that this would not be feasible without a coherent review of the relationship between central and local government, and the link between the NHS and regional government would require consideration in depth.

  11.  The FDA represents more than 1,000 Chief Executives, Executive Directors and equivalents within the NHS, and is well placed to comment on the concerns and pressures felt by those responsible for delivering change within the National Health Service.

  12.  The pace of change in the NHS over the past decade has been considerable. As senior managers, our members know that they must continue to demonstrate the highest degrees of flexibility, adaptability and creativity to deliver the improved Health Service demanded by politicians and citizens. As senior managers they also have a fundamental commitment to ensuring that the NHS provides the best healthcare possible and we have no doubt that they will continue to provide the health service with the dynamic leadership it needs.

  13.  However, senior NHS managers are increasingly concerned and affected by the "blame culture" in which many of them have to work. The FDA is alarmed by the number of cases where our NHS members are forced out of their jobs on pretexts that defy the most basic tests of fairness. All too often this removal is on the whim of a board of non-executive directors and has more to do with decisions that managers' faces no longer fit than the quality of those managers' performance. The effect of this unreasonable and unfair employment context goes beyond the individual dismissal and creates a climate of fear among his or her colleagues with all the negative effects on morale and trust that such insecurity generates, as well as diverting much needed resources—both human and financial—from the delivery of health services.

  14.  Senior NHS managers have fewer safeguards against unfairness at work than almost any other comparable group of public sector professionals. No one benefits from this situation. Our members face a working environment where no matter how well they do they can be dismissed, and patients end up relying on a health care system where those responsible for the quality of that health care lack many of the employment rights and expectations they take for granted. The FDA believes that systems and structures need to be put in place that ensure that NHS managers' performance is assessed and responded to fairly and proportionately. Insecurity and unreasonableness will never lead to optimal use of any senior professional's capabilities.

  15.  The FDA believes that reform of public services cannot however be successful unless the political framework overseeing the delivery of services is also subject to reform. Two important areas of political reform are required.

  16.  Firstly, whilst the Government can take credit for the Freedom of Information Act, it is disappointing that implementation has been deferred until 2005. Reform within the Civil Service and NHS is likely to be more successful if it takes place within a framework of greater transparency and openness. The decision to defer implementation was taken by ministers and sends an unfortunate signal throughout the public services.

  17.  Secondly, the FDA is disappointed that the Government has, despite an election commitment in 1997, moved extremely slowly in seeking to reform the House of Commons and appears highly reluctant to ensure effective scrutiny and accountability of ministers and departments. There is clearly a balance to be struck with regard to Parliamentary accountability, just as with freedom of information. For example, the FDA has not supported those campaigners who argue that civil service advice to ministers should be available for public scrutiny when decisions are announced. Similarly, given the multiplicity of monitoring from the centre of the Executive, detailed monitoring and scrutiny by Select Committees could be extremely burdensome. However, the FDA believes that there is too little effective scrutiny by the House of Commons of the work of departments and are disappointed that the Government has rejected proposals from the Select Committee on Liaison to enhance the role of select committees in a constructive manner. Linked to the failure to enhance accountability within Parliament has been the clear failure to review the Parliamentary processes, including the way in which legislation is taken through Parliament.

  18.  We believe that there should be an overhaul of the role of select committees to enhance their responsibilities in conjunction with the proposed review of scrutiny by the centre of the Executive in a way that could develop a more comprehensive but co-ordinated balance of scrutiny and accountability between the Executive and Legislature. It would be interesting to compare the experience of scrutiny by the Scottish Parliament and Welsh Assembly with that undertaken within the House of Commons. The key is to achieve a balance between scrutiny within the Executive and scrutiny by the Legislature, within an overall framework of greater transparency.

  19.  Further, though this may seem like wishful thinking, consideration and debate about public services, including the role of the private and voluntary sectors, currently suffers from the adversarial approach of Parliament, an approach often replicated at other levels of government. Too often a Government tries to hide issues about public service delivery and reform because it fears taking political flack were it to be more open about problems. There is a responsibility on all political parties in the UK to seek to examine issues about the public services and service delivery in a way that fosters meaningful debate rather than seeking to score easy political points. Clearly, there are important differences at a political level about the future of Britain's public services, but as we are clearly now seeing, the country as a whole has been the loser for the failure to address these issues in a more mature fashion.

  20.  A move away from the blame culture, highlighted above in the context of the NHS, and from partisanship would also benefit the work of the Public Accounts Committee. Too often witnesses are subjected to hostile, but nonetheless superficial, examination by some MPs.

  21.  Finally, the Government needs to come to terms with the scale of the task they are undertaking in reforming public services that have suffered from at least two decades of persistent underfunding and neglect. The Government, for obvious reasons, has not always drawn attention to the level of spending cuts required of the Civil Service and other public services throughout the 1990s, including during most of New Labour's first term. The Government often gives the impression that it believes that the Civil Service and NHS have "failed to deliver". At one level this is hard to refute; big problems obviously still exist in many areas of the public services, and the Civil Service and NHS managers no doubt share some of the blame (if blame is an appropriate concept). But the Government is at special risk of confusing a failure to "deliver" with their own failure to lead, and their even more marked failure to understand the discrepancy between a realistic timetable for "delivery" of any major change, whether in the public or private sector, and the political/electoral timetable of expectations.

Public Service Ethos

  22.  The FDA does not consider that the concept of public service is in any way an anachronism. We also recognise that it is an extremely difficult concept to define. That said, we have been impressed by the recent work of Professor Raymond Plant and would draw the Committee's attention to his paper "A Public Service Ethic?" published by the Social Market Foundation. We understand that Professor Plant is revising the paper in the light of debate fostered by the Social Market Foundation.

  23.  We also believe that notwithstanding the difficulty of defining a public service ethos, senior managers and professionals in the public sector are motivated by such an ethos, which is internalised by senior public servants and impacts upon the goals of their organisations. Public servants deliver services (of whatever type) in order to benefit the wider community and nation, and are accountable, even if indirectly, to elected politicians, whether that be a government minister or a parish councillor. This clearly differs from the private sector, where the ultimate accountability is to the financial viability of their business, and to the voluntary sector where different accountabilities operate.

A Single Public Service?

  24.  The FDA has traditionally represented the more senior civil servants. However, as noted above, we represent a growing number of senior managers within the National Health Service, as well as representing senior managers and professionals in NDPBs. In addition, although we do not recruit senior local government managers and professionals, we regularly receive applications from such individuals seeking to join the FDA. We believe that this is in reflection of a recognition, particularly by younger public servants, that careers in the public services will in future tend to move across different areas of the public sector rather than, as in the past, for individuals to work predominantly in, say, the civil service or local government. This is a trend that has been encouraged, rightly in our view, by the Government. In England this trend is particularly noticeable already within the NHS and Department of Health, where the boundaries for individuals are increasingly blurred, but has also accelerated in Scotland and Wales since devolution.

  25.  We believe that this process will continue, particularly in Scotland and Wales, and possibly Northern Ireland although there the architecture of the public sector is somewhat different to that of the rest of the United Kingdom. Given the population and size of the public sector in Scotland and Wales, we believe this is a positive development and can help to ensure that senior public servants have a much better personal grasp of the intricacies of both policy making and delivery in different parts of the public sector.

  26.  In England the process is moving more slowly given the size of the public services, although were the Government to move ahead with proposals for stronger regional government, the process is likely to accelerate.

  27.  Overall, we believe that this is a healthy development but that it would be unrealistic to expect the creation of a single public service in the short term, even in Scotland and Wales. It would also have profound HR implications for existing public servants and would possibly be unmanageable. Rather, individuals should be encouraged to experience work in different parts of the public sector as a natural career development and HR barriers to such movement should be minimised as far as possible.

Joining Public Services from the Private Sector

  28.  Whilst there is a natural tendency for any union to protect promotion and recruitment at senior levels to ensure promotion opportunities for more junior staff, the FDA has accepted the trend for an increasing number of posts to be opened up to public competition. We recognise that this helps to foster greater cross fertilisation even within the public services, and of course recruitment to local government and NHS posts has always primarily been by public advertisement, and a percentage of posts publicly advertised are nonetheless awarded to serving civil servants.

  29.  The single most obvious barrier to private sector individuals joining central government has been the salary differentials between the civil service and private sector, which become more acute the more senior the post. Unless there is an overwhelming business case, because of say a specialist skills shortage, for offering a higher salary to a private sector applicant than to a public servant, we believe that this should not be undertaken. A salary is either fair or it is not. However, a more significant barrier for private sector individuals joining the civil service is often the different levels of accountability required in senior posts linked with the need to understand the political framework within which public servants, and in particular civil servants, operate; this is a feature of civil service work that private sector individuals have rarely encountered.

  30.  We believe that three steps can help to minimise the negative consequences of private sector individuals being recruited to senior civil service posts. Firstly, all private sector recruits to the civil service should be given very early, intensive and comprehensive induction into the positive cultures of the civil service, including ethics and accountability. Secondly, such recruits should, as is now increasingly the case, have the opportunity to develop careers in the civil service rather than be offered short term contracts which inevitably give an individual little stake in the future success of the civil service nor, for that matter, helps retain their skills for the future benefit of the civil service. Thirdly, we are pleased that there is now a register of both inward and outward secondees to the civil service, which will help to avoid any public suspicion of conflicts of interest. There must also however be very clear and continued monitoring of individuals who leave the civil service, whether permanent civil servants or previously private sector recruits, to avoid any suspicion externally of conflicts of interest.

  31.  Examining the Civil Service in the round, over and above the centre, we now have a significant number of appointments made either by secondment, with sketchy protection of the proprieties from the Civil Service Commissioners, or appointments on a permanent or fixed term basis by open competition. The FDA does not doubt that these are generally made on the basis of excellence for the job, although we are aware of a prior intention in some cases to appoint from outside the Civil Service come what may, because ministers want "fresh blood". However, the concept of a professional, permanent and politically impartial Civil Service does not stand on appointment by excellence alone—it requires an ability to deserve the confidence of a future government of a different political persuasion. An individual who wins appointment by excellence, but could not realistically serve under another government, ought not to be appointed.

The Private Provision of Public Services

  32.  The FDA believes that there can be a legitimate role for voluntary or private sector providers in delivering public services although the appropriateness of adopting such forms of delivery depends on the service and the circumstances; each proposal should be considered on its merits. However, we are concerned at the framework within which the private sector is involved with public service delivery.

  33.  We believe that all too often the decision to use private or voluntary sector providers appears to be driven by political considerations, not the merits of the case. Whilst the Government appears to have retreated from some of its more strident claims for the benefit of private sector involvement, particularly in the period immediately following the 2001 General Election, there has been a great deal of spin and rather less substance about the Government's overall plans for the private provision of public services. There are a number of uses that should be considered if such provision is to continue.

  34.  First, PPP or similar vehicles must be developed within a framework of greater transparency and accountability. All too often, such proposals and detailed contracts are shrouded by a catchall of "commercial in confidence" which appears to be being deliberately used by ministers to prevent scrutiny either by the public, those to whom a service may be directly delivered, or by Parliament or elected bodies at more local level. Further, all too often the private provision appears to be being used by politicians to shield themselves from accountability for service delivery. We see no reason whatsoever why contracts awarded to the private sector for the delivery of public services should not as a matter of policy be open to public scrutiny. Procurement exercises are already covered by European legislation. Any company that did not wish a successful tender to be public need not tender in the first place. The main argument against appears to come from companies claiming that it would "threaten their competitive advantage" were successful contracts to be public. However, publication would put pressure on such companies to continue to innovate and moreover would, if these fears are correct, simply mean that other companies themselves might become more competitive and therefore be in a position to offer the public sector a wider cross section of potential service providers in future. Too many tender exercises at present are restricted to a tiny handful of private sector organisations. Further, given that some PPP contracts run for up to thirty years, to shackle future governments or public sector organisations and managements to contracts signed in secret and subject to no scrutiny or accountability whatsoever is storing up trouble.

  35.  Second, the NAO and Audit Commission must have the right to intervene and scrutinise any tendering exercise at any stage. Such scrutiny could also consider the dangers of such contracts, in effect, cherry picking more easily delivered public services to the potential detriment of the efficiency of a particular service overall.

  36.  Third, the NAO and Audit Commission should agree and publicise "value for money" procedures that should operate in all cases of private or voluntary sector tendering for public service delivery. These should include agreed methodology and value for money criteria which are open themselves to public scrutiny. There should be consistent and open principles and models for the evaluation of PPPs, which would give a much more assured framework for Parliamentary or other scrutiny.

  37.  Fourth, there must be greater clarity about funding for services. All too often where guaranteed funding over the longer term is necessary, the Government almost automatically sees a PPP as the preferred option. This appears to be partly driven by ideology but also by Government accounting conventions (although resource accounting reforms may ameliorate this pressure). Some of the worst decisions in Government appear to be made where a PPP is seen as the preferred option for guaranteeing funding beyond a spending review period. There is a real danger that in a few years' time departmental budgets will be heavily committed to projects that do not offer particularly good value for money but the terms of which cannot be varied. It is also highly unfair to criticise public servants when they operate within a regime of short term funding commitments with great uncertainty about the future whilst private sector operators are increasingly being offered guaranteed funding over an entire contract period.

  38.  Fifth, where tenders are awarded to the private or voluntary sectors, the existing accountability of public servants should transfer. These should include the application of the Seven Principles of Public Life, the scope of Freedom of Information and other related legislation, the requirement if necessary for private sector providers to be subject to Parliamentary scrutiny, and a declaration by senior staff of other interests to avoid conflict.

  39.  Sixth, there must be clear mechanisms to prevent any deterioration of service and the ability to end contracts if standards are not maintained or targets delivered. Similarly, all targets set for private sector providers should be transparent and public, just as with targets set for government departments and other public sector organisations.

  40.  Seventh, the Government should ensure that private or voluntary sector providers of public services offer guaranteed underpinning in terms and conditions of employment to all staff they have engaged to work in the delivery of public services, including equality and diversity commitments.

The Civil Service Code

  41.  Clearly, the Civil Service is of necessity reskilling, with project and contract management skills, and a better grasp of financial accountabilities, all increasingly important for senior civil servants. However, under both this Government and its predecessor, civil servants are now expected to offer a more public face on behalf of the Government. This is particularly acute in the context of private sector provision, where civil servants are often negotiating with the private sector about the delivery of services which can involve selling and "championing" a policy where for example a PPP is involved, although it is a problem not unique to such circumstances. This is increasingly blurring the traditional role of the civil servant in representing Government policy and the FDA believes that it warrants a review of the terms of the Civil Service Code to take account of this new environment.

November 2001

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