Select Committee on Public Administration Minutes of Evidence

Examination of Witnesses (Questions 400-419)



  400. Thank you; but I am not sure that Steve Robson has yet advocated sweated labour on us, but we may get to that later on.
  (Mr Dromey) Give him time.
  (Sir Steven Robson) Could I just say, first of all, I very much agree with Jack's point, that having organisations where you have Stalinist performance targets set from the centre is not a way to achieve anything satisfactory. The idea that we kind of somehow use the public sector to drive forward our pensions policy, as opposed to trying to drive them forward across the economy as a whole, I just think is not a very satisfactory one; if there is a pensions policy, which there is not and which there ought to be, that ought to be advanced across the economy as a whole.
  (Mr Baume) Just a slight caveat to that, because officials in the Treasury recently tried to use the Civil Service as a way of driving through pensions policy and tried to end the national Civil Service Pension Scheme and replace it by money purchase schemes, based on the market; and that was driven by senior officials in the Treasury who wanted to do some social engineering, and, as I say, targeted the Civil Service Scheme. Now that was beaten back, and we were quite happy; we have been negotiating, I should add, a new pension scheme for civil servants since 1997, these things do not happen overnight. A happy compromise was reached, which does allow a defined contribution element to the new pension scheme, which the FDA thought was actually quite a sensible move. But I think that caveat needs adding. The public sector pension schemes actually are very important; I was listening, last night, to File On Four, which was talking about the time bomb in pensions, because too many companies now are ending the kinds of pension schemes that are still predominant in the public sector and leaving many companies' pension scheme members extremely vulnerable in their old age. And the news about ENRON this morning and the disaster facing workers there, and their shares, many of which are invested in the company, whose stock is valueless.

  Chairman: Thanks. I do not want to go any further down the pension road.

Mr Liddell-Grainger

  401. Jack, what percentage of your members work in the public sector?
  (Mr Dromey) We have 800,000 members.

  402. What percentage works in the public sector?
  (Mr Dromey) We have 270,000 who work in the public sector.

  403. And the rest are in the private sector?
  (Mr Dromey) The rest are in the private sector and also employed in the voluntary sector and social economy. We have 20,000 who work in the voluntary sector.

  404. That was what I was interested in. Now, what is your position on the voluntary sector, Jack?
  (Mr Dromey) We are very positive about the voluntary sector. I, personally, by the way, have worked in the private, public and voluntary sectors. We are very positive. The people who work in the voluntary sector are typically highly motivated individuals. One recently said to me, that "for me, it is community, not cash, that bring me to work for the organisation that employs me." And the merits of the voluntary sector are legend, but perhaps just to mention two, in particular. The first is that the voluntary sector has been outstanding, over the years, in terms of innovation. Anyone who has ever had a relative die in a hospice has got a great deal to thank the voluntary sector for, because it was the voluntary sector that was the engine of that remarkable and caring change. And, secondly, in the voluntary sector, we have many good examples now of outstanding combinations in organisations that provide high quality services, engage the community and involve their employees. I am going to give a practical example of that, Bristol Community Sport; 13 leisure centres, it is a co-operative, run in close consultation with the local community. It is an excellent facility, the community love it, our members love working for it. So we are very positive about the role of the voluntary sector.

  405. Two things out of this then. The ethos of the voluntary sector, I think, from what you have said, you could learn a lot and teach your members a lot about ethos. The second of that is, under half your members actually work in the public sector, and I got a sort of view that you were talking about short-termism, the interference of politicians, etc., are you not, I am trying to search for the word, it is not "hypocritical", it is "lost", as to where you are going in the future? Because you are probably going to have this situation where more of your members are in the private sector, therefore you should be looking at that, and that you can see there is a balance, which is probably out of sync., but you do not know the answer to that, as to where you are going, is that right?
  (Mr Dromey) A preliminary comment and then two very quick points. The preliminary comment is, we have argued for many years that we need, unions that represent public servants, a new mind set, whereby we see ourselves as not just the champion of our members' interests but also of the public interest. It is that notion of the twin champion, accepting the primacy of public interest, but arguing, of course, that it is then true that how you treat people who provide public services is crucial to the quality of the service that they provide. As far as the voluntary sector is concerned, to be frank, there has sometimes been ambivalence, in what is called this great movement of ours, on the voluntary sector; we do not share that ambivalence. Of course, there would be problems if we were talking about whole-scale replacement by the voluntary sector of public service, direct service provision, but that is not what the voluntary sector wants; it wants a dynamic partnership with the public sector, and we think that is strongly in the public interest. And the final point is that, on this question of members in the private sector, if Government has, all too often, made the mistake of suggesting "private good, public bad", we are not going to make the reverse mistake of saying "public always good, private and voluntary always bad"; not least because, you are absolutely right, we have tens of thousands of members who work for the private and voluntary sectors, providing public services, and their experiences range from the dreadful to the good.

  406. Can I come on to some general questions; well, the rail privatisations, I do not want you to answer any specifics. We have seen rail coming in, out, in; what is that doing to the ethos of the people within that industry? You have then got small operating companies throughout the United Kingdom, and we all use the trains; what is that doing to the ethos of people, and the ethos of the public-spirited—they are coming back in again, I am talking about the employees, how is that affecting their ethos?
  (Mr Dromey) It has been deeply damaging to what was, historically, a rather interesting ethos, on the railways; my father, by the way, drove a train. It has been deeply damaging. And, incidentally, there is a parallel to this, in terms of what has happened, for example, in London Buses, where there was, historically, a very strong sense of "we are a public service." What you have seen, as the consequence of what has happened, coming back to Railtrack, is a demoralised, confused, ever smaller workforce, being asked to do ever more, and you see it manifested in a number of different ways; but you have only got to talk to anyone right now who works for Railtrack to see somebody who is completely insecure as to their future, and, coming back to a point I made at the start, it is a job, it is no longer a vocation or a service.


  407. On that precise point, is it not interesting though, there was an old phrase called "railway servant", people who worked on the railways would call themselves "railway servants" and you could not encapsulate a sense of public interest better than that; but what was interesting about it was, that began pre-nationalisation, people who worked for GWR regarded themselves as "railway servants". So does that not show both what the public service ethos is but also show that it does not just work in the public sector?
  (Mr Dromey) If it was once true, and I agree with you, that the notion of railway servant is one that goes back for generations, that there was an army who saw themselves as railway servants, I have to say, that is no longer true now. There is a demoralised, confused workforce that feels bitter, and understandably so, about the way that they have been treated.

Mr Liddell-Grainger

  408. Do you see the ethos being restored, in whatever guise it comes back, that it will have state involvement, can that be repaired, given what they are trying to achieve, bringing a railway up to date for the 21st century; they are still going to have to go to external industry for a lot of the work they are going to have to do?
  (Mr Dromey) I think, crucially, that lessons have got to be learned about the collapse of morale on the part of the workforce; and one strand of a total solution has got to be what do you do about that, in practical terms. And that raises a whole number of issues, in terms of, obviously, how the people are treated, who manages them, but also a wider issue, which we have not touched upon today, which is crucial in the whole debate around public service ethos, public services generally, and that is how you involve employees and their representatives, the trade unions, how you involve them, how you give them a sense of ownership of the job that they do.

  409. Could you not end up competing against your own members, if you did that? Have you got employees who are employed by, for instance, Balfour Beatty, I cannot think of anyone else?
  (Mr Dromey) Yes.

  410. Could you not end up in competition?
  (Mr Dromey) Yes; and, historically, that has always been the case, that we have members in competing companies, and that is true across the economy.

  411. Jonathan, just coming on to you, because you were talking about management and the amount of management, you say there is not enough management in the Health Service; is that right?
  (Mr Baume) Yes.

  412. How would you get to the level of getting enough managers into the Health Service, would they come from the Civil Service, or would they come from the private sector, or both?
  (Mr Baume) We have structures that now need to be able to deliver good management, it is not a question of there being a magic number, but at the moment the structures we have, and have had in place really since the early 1990s, require significant numbers of managers to make them work effectively. The first thing that needs to be done is to end the blame culture. Senior NHS managers are some of the most exposed people, certainly anywhere in the public sector and possibly in the private sector as well, and we deal with case after case, almost week after week, of people who, in a sense, have been subject to personnel, HR policies, that simply would not be tolerated anywhere else. And there is a problem at the moment, just quietly beginning to seep through, of finding good people prepared to take on senior jobs in the NHS, and that really does need to be addressed; now, to be fair, the Department of Health has recognised there is a problem, and there are a lot of initiatives under way, the leadership programmes, management development programmes, things like that. Now where do the next generation come from, of senior NHS managers; it will be a mixture of all sides, there will be civil servants from the Department of Health, and nobody now in the DoH, for example, will get to a senior position there unless they have spent time working out in a Trust, and, to be fair, people in Trusts are expected to spend some time in the centre, and that is happening very quickly in Scotland and Wales, and it is happening, increasingly so, in England. It is worth noting that the three heads, as it were, in Scotland, England and Wales are all ex-NHS managers, who are now doing the Civil Service roles, in charge of the health for those departments, and that is great. Some of those managers will undoubtedly come from the private sector; I do not think there is a problem with that, there are very good management skills out in the private sector, and I have got no problem with people coming in and out, we have been quite happy to see that happen in the Civil Service. There are parameters around that, but, nevertheless, let us train people up, let us offer structures within which people can develop their skills and their career without feeling vulnerable to endless political pressure, in the very broad sense. But I do not think there is a magic answer as to where those people will come from. As Jack was saying, none of this is black and white, it is not that the public sector is automatically better than the private sector, or the other way round, it is trying to recognise the best in both parts of the economy and the voluntary sector as well, although we are not, personally, involved in the voluntary sector, and what works, what delivers, is important.


  413. Can I ask one question, just on that. Surely, the logic of that is that we ought to pay Health Service managers, who are these indispensable people, who are now difficult to recruit because they are under all this flak and do not want to do the job, huge amounts of money, whether from the public sector or the private sector, vast amounts of money, the Steve Robson view of the world, I think? But, surely, then the unions would be queueing up to say, "This is monstrous, paying all these people these kinds of fat monies when our people are earning nothing"?
  (Mr Baume) I think they do deserve fairly high salaries, given the pressures they are under; again, there is a balance to be struck, it depends what you call a high salary. Chief executive salaries are somewhere between about £70,000 and £100,000, depending on the size of the job; occasionally, as you have seen in local government, I think, the Lambeth job, a year or two ago, was advertised at around £150,000, because it was seen as one of those difficult jobs to do. I think Hackney have done the same recently. The FDA is in favour of fair salaries for senior managers in the public sector; that does not mean we are talking about paying somebody half a million pounds to run an NHS Trust, it is about getting fair balances, just as more junior staff in the NHS should also be paid fair salaries.

Mr Liddell-Grainger

  414. Can I ask one very small one, to Sir Steve and you, Jonathan. Do you think the Head of the Civil Service now should be a businessman?
  (Sir Steven Robson) How long have you got?

  415. Sorry; this whole question is bigger than us?
  (Sir Steven Robson) My view is, in simple terms, that if what we want to do is to improve our public services, one of the interesting things about this morning is that I think there is a sense that people do want to improve it, but the only person who seems to be suggesting ways (which is me) seems to be the one who is constantly on the defensive, and I am looking here for the good ideas from everybody else, in all this, but here is another idea. I think we have got to change the top level of Government, if we are going to make these improvements, it is not simply, or only, a question of trying to get diversity into monopolies, and there are also these huge questions about getting clear objectives, getting incentives right, throughout the public sector. In my view, we need to be thinking about a new structure at the top of Government, for the purposes of today, let us call it the Office of the Chief Executive of Government, and have that office populated by the Prime Minister, the Chancellor of the Exchequer and the Head of the Civil Service, and the person who is the Head of the Civil Service in that structure has got to be, in my view, a person who has got the experience and the confidence that goes with the successful marriage of delivery and change somewhere in the economy. Now it could be from somewhere in the public sector, it could be somewhere in the private sector, and that person would have to be empowered to change staff in senior positions in the public sector to help that Office of the Chief Executive deliver the improvements that we want to see. So that is my answer to your question, in a nutshell.


  416. So we will abolish the Cabinet Secretary, we have now got this new Office?
  (Sir Steven Robson) No; the decision between the Cabinet Secretary and the Head of the Civil Service was not one I was loitering on. But it seems to me that you do not try to separate those roles, because, if you do, you get to a situation, essentially, the Cabinet Secretary is part of a mechanism which formulates policy, the Head of the Civil Service is part of a mechanism which implements policy, you do not want to get into a position where they can pass the buck, and that one guy says, "well, there's nothing wrong with the policy I designed, it's that bloke's implementation," and we do not want to get into a position where the implementer says, "well, I couldn't implement the rotten policy this bloke conceived," we have got to bind it together in one person.
  (Mr Baume) Can I just quickly comment on that. I agree with that, I agree very much with the last point, and, certainly, in terms of reform, the FDA has fully endorsed the Government's reform programme for the Civil Service, we were involved in the dialogue prior to that, and we have endorsed and been supportive of the "Modernising Government" White Paper and the programme that is set out in that. So I do not think it is a matter of a union like the FDA not being in favour of reform. I think the answer to should we just bring in somebody from outside is no, although I would be astonished if this Committee at some point in the next few months does not start looking around that area, knowing the interests of the Committee. We have an extremely capable Head of the Civil Service, Sir Richard Wilson, who has committed himself to a reform programme, which has been personally endorsed by the Prime Minister and which Richard is driving through. I am not convinced it is moving as quickly as it should in some areas, and I look forward to a report that is being prepared at the moment for the Prime Minister, I think it is delivered in February. But I think the idea that somehow the answer is simply to bring somebody in from outside into an organisation like the Civil Service is the wrong answer. I am happy with the notion that people should be able to come into the Civil Service at senior levels from outside, whether from other areas of the public sector or from the private sector, that happens, I think it adds value to the work of the Civil Service.

Mr Prentice

  417. Can I stick with this, just very briefly. The DTI, specifically, is being reconfigured, as you know, four new divisions, and we read that three non-executive directors are going to be brought in from the private sector. What is the FDA line on this, and what contribution do you think these private sector non-executives will bring to policy-making in the DTI?
  (Mr Baume) I do not have a yes or no answer, in terms, are we in favour, are we against that. The use of non-executive directors is now quite common across most Government Departments. I cannot, hand on heart, say every single Government Department does that, but many Government Departments now have on the management boards non-executive directors.

  418. This is sitting in a room with the Secretary of State?
  (Mr Baume) That goes further than we have seen before. We are currently exploring exactly how this will operate. I am also aware that John Monks, on behalf of unions, has raised the issue of influence, the fact that the DTI is not simply about business; the reorganisation and refocusing of the DTI is welcome, and the new Minister, new Permanent Secretary, set that agenda very early on, and I think that is fine. There will need to be some clear understandings about exactly what role people play, and how do other parts of the economy, including the interests of employees, of unions, influence decisions taken in the DTI. So I think at the moment we are looking at this one and we may want to comment, but I think we need a few more answers as to how this mechanism is going to work. I am cautious about it, frankly, but I certainly would not want to say "no, this is the wrong way to go" until I have explored the facts fully.

  419. Just very briefly, a question to Steve Robson on this, and I do not want to malign individuals, you understand that, but would Gerald Corbett be a fit individual to be brought in, who has managed big organisations, such as Railtrack, to be brought into the DTI in that kind of role?
  (Sir Steven Robson) First of all, I was talking about the role of the Head of the Civil Service and the—

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