Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses (Questions 520 - 539)

THURSDAY 6 DECEMBER 2001

SIR DAVID RAMSBOTHAM AND WILL HUTTON

Mr Liddell-Grainger

  520. Do you believe there should be a civil service Act? Should there be legislation?
  (Will Hutton) I have come round to it.

  521. Which way?
  (Will Hutton) I am in favour of a civil service Act. There is a growing discussion in Europe about telecom, postal services—traditional areas that have been universally provided by the State that have either been liberalised or privatised. There is even a very urgent debate going on in Europe about what public service means. It seems to me that there is something about accountability and universality and some of the things which Sir David has been saying which actually, in that nexus, defines it. Lionel Jospin, the Prime Minister of France, actually made a very interesting speech in May in which he, amongst other things, said that there should be an EU declaration about what constitutes exactly the object of this inquiry, that there should be an EU declaration about what constitutes public service and what constitutes a public service ethic. It could then be used as a benchmark by everybody from the private sector who engages in public sector activity, it could be used to ensure that actually what they do corresponds to that ethic and that when you write a contract it is there. I think a civil service Act in a sense would allow us to bring home and customise for Britain such an idea. We do have a State, it will have a secretariat, that secretariat will be the civil service, and it seems to me that one of the good points about having a civil service Act is that you could in a declaratory way—I do not think it has to be a long Act—state precisely what we think a public sector ethic is. That itself would be an important reason for having such an Act.

  522. Do you think—and I am pleased to see you have come round to it, because otherwise it would knacker the second part of my question!—that you would be able to cover enough of the public sector within the Act (thinking of teachers, nurses, etcetera) to be able to make it so that it is not so draconian that they do not feel they can operate and that they are too accountable to MPs or whoever, and so that they are actually not feeling that it is too oppressively controlled? Is that not going to be a problem? You may kill the ethos because you are actually making them so stringently controlled by an Act of Parliament that it would actually do the opposite of what it was meant to do? Do you see that as a problem?
  (Will Hutton) I think the problem is the other way, actually. I think that a lot of public sector staff are really very demoralised. In my current job I have found myself talking to CEOs in both the private sector and Permanent Secretaries in the public sector who kind of double-up as CEOs, and it is actually people in the public sector asking their private sector counterparts how they would re-moralise their demoralised staff and re-motivate them and what could be done. I think to be able to say, "If you buy into a career in the public sector it stands for certain values," far from being oppressive would be curiously liberating because, once you had got that said, you could then do things like introduce performance-related pay, internal labour markets, the kinds of leadership programmes and accent on management systems that I think is needed in the public sector, without anyone saying that it contravenes the public sector ethic, because you have protected it by the Act.

  523. The Industrial Society says "everything we do is driven by a commitment to improve working life."
  (Will Hutton) Yes.

  524. You see yourself as acting as a liaison, a direction, a beacon to be able to help public sector workers to see that "Public sector ethos is that, but you could do this to move it on."
  (Will Hutton) Yes.

  525. Is that what you are basically saying?
  (Will Hutton) Yes. We have actually been, together with the Cabinet Office, holding a number of seminars and brainstorming sessions, which we are going to carry forward next year, trying to get at and explore what the improvements might be in the things I have described, precisely to achieve that purpose and to improve the quality of working life in the public sector.

Mr Lyons

  526. On the question of private prisons, are these all new throughout the UK or are they old prisons which have been modernised?
  (Sir David Ramsbotham) Do you mean structurally?

  527. Yes.
  (Sir David Ramsbotham) The first ones were actually the private sector taking over and running the prisons that had been built by the prison service. Most recently the private sector has been contracted to design and build buildings which in fact the prison service lease for a period of time, at the end of which they will revert to them. This is interesting because the private sector—and it applies to a number of other activities—has used its initiative and gone out and gone to the best designs there are on the market, and they are much better for running, they are much better for prisoners and staff, and much more modern, much more up-to-date. It is interesting though that the private sector is still perfectly willing to take over and compete for an old Victorian prison and try and make something out of that because they believe that the stones are not all; it is the attitude of staff and the programmes for prisoners within them which really count.

  528. You must still come up against problems like slopping out in some of the gaols that you mention.
  (Sir David Ramsbotham) That has gone. There are one or two isolated incidents but basically that has gone. I do not say that I am happy with the situation of people living where the lavatories are not screened and so on, but slopping out has ended.

  529. Are there figures available of how much it would cost to run a private prison? Is there an ability to scrutinise the figures?
  (Sir David Ramsbotham) Yes, and various cost comparisons have been done. People like PriceWaterhouse and Coopers Lybrand have produced analysis. They are quite difficult to be precise about because you have got to compare like with like in the role of the prison. I counselled against this. I can look at it as Chief Inspector of two prisons which have the same role in the same part of the country (for example, Altcourse and Liverpool, which us making the better job of looking after its prisoners?) but I cannot judge about the money side. That is up to them. But the costs are known. But then there is a lot of discussion about costs because, in the new ones which the prisons are leasing, they are actually paying a mortgage on top of the cost of the prisoner. You have got to get two costs, really—the costs which are related to the prisoner and the costs which are related to the mortgage or the leasing—and separate them. The other thing is that there is a lot of discussion in the private sector companies that when competing for contracts they are not now competing on a level playing field, because the prison service writes off, if you like, the administrative overheads and the private sector have to add the overheads when they add up the cost of the whole exercise. That gives them a sort of unfair advantage when the respective contracts are being considered. This I know is being looked at currently by the National Audit Office because of complaints that have been made.
  (Will Hutton) I just wanted to make a 30-second remark about the private finance initiative in the context of this. I think it is important for the Committee to consider it. There are a couple of PFI contracts, particularly in building prisons, which, because of the ability to refinance them at very substantially lower interest rates, threw up enormous windfalls. I think this is an area where you really get to this public interest question very fast. Those windfalls fell beyond the contract. No-one is ever able to write a contract to specify every eventuality and when it fell outside the contract, there was not a public spirited, "Let's share this money out." The companies, not unreasonably, because of their responsibilities to their shareholders, said, "That windfall is ours." In subsequent contracts that has been dealt with but my point is—and one has to be wary about contracts and writing contracts—that nobody can foresee when you write a contract all the outcomes and unanticipated things that are going to happen in the future. It is enormously important because of that actually, if we are going to get into the business of public/private partnerships and PFIs, that we have structures which embody the public interest, which is why I am a strong advocate of public interest companies. That, in a sense, overlaps with what Sir David was just saying.

  530. The service level agreements which you referred to earlier on, who actually ensures that someone is delivering the level of service. How is that done?
  (Sir David Ramsbotham) As far as the private sector is concerned, the contracts are let by a part of the prison service Headquarters, which is the contracts group who let them, and the controllers who work inside each of the private sector prisons report to that office. They monitor a whole lot of targets that they have to watch, and they are huge. Some of them I complained about as being silly. For example, a private sector prison would be fined if they found drugs in the prison on the grounds that they should not have been in there in the first place. I said, "Well, steady, because if that is going to happen people will not look for them in case they get fined for finding them. So be sensible. What are you going to do about the public sector prisons where you find drugs?" and so on. So some of them are silly, some of them are sensible. Other than making certain that you actually acknowledge that you will give them three meals a day and what the meals consist of (so that you are not fiddling the catering fund, for example), all the contract points should be about outcomes for prisoners. Those are the ones you have really got to test. The public sector have sort of business agreements and they were going to have gone down the route of converting those to service level agreements as well (where, for instance, Parkhurst would have been told that it was responsible for looking after so many people, it had to deliver so many hours of education and all the rest of it), but they have not done that. They have sort of fudged a half-way solution—which I think is a pity because it means that you have in fact got two separate management systems running in the same organisation, one to manage the private sector and one to manage the public sector, and I think that is unsound. I would argue that the public sector is the one where performance needs to be driven up. It can be driven up by the example of how they have managed the private sector.

  531. Can I come back to a point you made earlier, this question about management responsibility, leadership and so on. It always was an issue for me in the public sector that we were dependent—and in the private sector—on the person heading up the organisation. If he or she is useless, then the place will go down and the whole public sector will be lost and it will be privatised. Is there any way we can avoid poor leadership and poor organisation? How can we improve it?
  (Will Hutton) This is the heart of it, in my view. The first point is that there is always going to be a degree about two areas of the public sector. One is this leadership question because who leads a department of State? The Minister or the Permanent Secretary? The Secretary of State or the . . .? You really need—in just the way any private organisation requires complete alignment between the chairman and the chief executive around strategy—complete alignment between the Secretary of State and the Permanent Secretary and between Ministers of State and department heads, it seems to me. There is absolutely no culture of producing that or thinking about it. I think this question of how you lead and manage an organisation is not one which in a sense is part of the induction process or thinking of people who go into politics, but, if you are going to achieve things as Secretary of State, how you run and manage a department is actually fundamental. That is one thing. A second difficulty of course is that the public sector has to do things for every citizen because it has to have mechanisms of accountability in there and transparency and open-book accounting. Definitionally what it does is going to be per unit of things it does and at marginally more expensive than the private sector doing it. So you have to pay for accountability. We often do not accept that. I think that the precondition to getting successful leadership in the public sector is a recognition by everybody in the political class that actually how departments of State are led when they have become Ministers and Secretaries of State is actually fundamental to their success as politicians. I do not believe that is in the culture, I really do not. Then there is maybe a question about what that means for how we structure the civil service and perhaps—and here you get into a very interesting debate—to what extent is the notion of an impartial Permanent Secretary a reasonable one. If you are going to align with a Secretary of State from whichever political party commands a majority in the House of Commons, plainly you are going to take a political position. Maybe we need to build round our Secretaries of States and our Cabinet Members and our Ministers small teams of managers and leaders who are actually politically aligned with what they do: overtly accept that this is going to be political, rather than pretend that it is impartial and through the pretence of impartiality just get no leadership actually embedded into the organisation. I think all three political parties would probably accept that, so there is a constitutional question raised. Then actually there is the whole question about leadership. We do it in the Industrial Society and there are a number of places in the UK which attempt it, to talk, teach, discuss, debate what the initiative is about. Leading and how you lead in some respects requires professional skills. These skills can be acquired and learned. Actually, only now, the NHS have just introduced a leadership school. It is literally about eight or nine weeks old. If you talk to the civil service Permanent Secretaries, they are increasingly used in this whole question, but we are really just beginning.

Brian White

  532. Following on from that, this discussion that we are having about public sector ethos, is that not part of the obsession that Britain has had with ownership rather than liberalisation? What we ought to be talking about is methods of management, methods of public accountability and how you liberalise the system, rather than this obsession with who owns what just as a way of getting round the public sector borrowing requirement.
  (Will Hutton) I would actually slightly turn that question on its head. I think that ownership does matter but I also think that leadership, management and efficiency matters. I think sometimes you do have to own things to prosecute what you want. I would argue that one of the difficulties, for example—here is Railtrack. I think this public interest company that has been set up to run the rail system with the failure of Railtrack is quite an interesting development, but it needs to own the assets in order to manage them and integrate them. It is obvious that that has become a really self-evident truth about the rail system. What has tended to happen in the past, if you go back to the kind of socialist tradition in Britain, is that it has almost said: "Once the assets are owned, all falls out." But once the assets are owned is actually just the beginning. There has been a massive let down in the way I think public assets were managed really post-nationalisation. I do not think that we set up financing mechanisms, incentive structures—and I have said it all before, so I will not repeat it. I would not say that because I have become so interested, partly through my new job at the Industrial Society, in these organisational questions, that it just means that ownership questions become unimportant—you know, I would not throw the baby out with the bathwater.

  533. Sir David, you give a very clear accountability, one to one, but is reality not that a lot of organisations and partnerships have a lot of different stakeholders, whether it be the private sector or whether it be central or local government or whatever. How do you achieve that clear accountability and responsibility you were talking about when you have a multiplicity of interested parties?
  (Sir David Ramsbotham) You see I would argue, let us get to the bottom of that, let us go to the prison. A prison is not just a single entity, inside the prison there are a whole lot of separate activities, there is the custodial bit, the health care bit, the education bit, the provision of the work bit, the rehabilitation bit, and so on. All of those people are stakeholders and they are all accountable to the person in charge for a particular part of the operation. I believe that is the principle that should apply. Certainly in prisons, to my mind, the principle person who is accountable and responsible for all this is the Home Secretary, after all he is accountable to Parliament and the public for what goes on in prisons.

  534. The education is the responsibility of the Secretary of State for Education.
  (Sir David Ramsbotham) Let us take education, what happens with education is that every prison lets an educational contract to a provider. The provider is accountable for the way it is delivered. In addition to the actual delivery within the prison, that is monitored by an agreement which I came to with Chris Woodhead when he was Chief Inspector of schools, who happened to let me know one day that he had 100 days of prison inspections in his budget and he did not know how to use it. I said, "I can tell you how to use it, you give me 100 days of your inspectors and I will go and look at the way education is delivered in prison in the same way as you look at it in schools, so we have the same judgements, and the report on the delivery of education goes both to the Home Office and the Department of Education. The same things happens with health, working very closely with the Department of Health and the Royal Colleges the inspection of medical arrangements in prison goes to both parties. The Home Secretary is responsible overall for what goes on but the Department of Health is a subcontractor, if you like, in this process. What has always struck me is, I am very interested by what Will Hutton says about this, I do not think you can forget the history of prisons, that until 1962, from 1877, they were in effect a next steps agency run by the Prison Commission and the Prison Commission had a staff of 168 people and they ran all of the prisons in a functional way. In 1962 the then Permanent Secretary went to the Home Secretary and said the biggest part of the Home Office budget is prisons and he thought they ought to be made a department of the Home Office and run by career civil servants, and that is what happened and they remained a department of the Home Office until Derek Lewis was appointed by Kenneth Clarke to break the mould, during which time the headquarters has gone up to a strength of 2,000 and there are as many governor grades in Prison Service headquarters as there are prisons. The bureaucracy has increased and whatever else civil servants are in the way they serve ministers they are not capable of running operational organisations. I believe that this is where Will Hutton's point about leadership and management is so important. Civil servants make excellent servants to their ministers but they do not make the right people to run these organisations.

  535. How do you change to get them to do that?
  (Sir David Ramsbotham) I would make them an operational organisation. I would select and train the people in the Prison Service in a completely different way so that you had a pool of people from whom to choose to be the professional head of the service, who got there through a career which was properly managed. I am not in any way criticising Martin Narey, because he has been appointed and he was the best they could get. In military terms Martin Narey's last appointment in the Prison Service was the equivalent of a captain in the Army and he then appears as a general without doing anything in the middle. He had no intermediate managerial experience. I do not think it is fair to put someone in charge of an operation like that who has had no managerial experience on the way, because he does not know how to do it. Then when he comes under the sort of pressure, you must conform with budgets, you must conform with this, you know, he has not got the background to enable him to make the sort of point that Will Hutton is making as being so important to develop a properly structured, motivated public service.

  536. Can I just turn it round, if you are trying to affect change within the public services and you have had these external regulators, whether it is yourself, OFSTED or the NAO sitting there, and you are a public servant you are not going to take the risk, you do not want to be up in front of the National Audit Office, you do not want to be in front of the Public Accounts Committee. You are quite happy to be in the middle, you are not going to be in the top or the bottom, is that not part of the problem, we have too many targets and too many inspectors and people playing it safe?
  (Sir David Ramsbotham) I think there is a great deal in that. My regret during my time there is I never felt I was actually totally clear as to what aim ministers had for the prisons that I was looking at. I was quite clear from the Act of Parliament as to what I ought to be looking for. The danger of that is that there then becomes confusion in the mind of the practitioner, they did not want what I was seeing when I was talking about prisoners and, as I mentioned to the governor of Parkhurst, they were under a different heading. What I believe, and I said this to the Home Secretary, was that the role of my inspectorate was actually his quality assurance. That is what I was there for. The fact there is an independent objective quality assurance mechanism is, I think, very important for maintaining the standards in the service. I was not a regulator. I was not "Ofnick", and I think that was a good thing! You can only have, I believe, one direction and one regulation, and that means that you do need this clear direction to which everyone can relate. One of the problems is there is not that clear direction to which everyone can relate.
  (Will Hutton) There are some very interesting ideas in the public sector and there are some interesting champions of change. One of the outcomes of the seminar series and brainstorming sessions we have had was almost a universal view that the "at risk" order issue is wrong, you do not take risks and you do not venture into anything, you play it safe. You need to be prudent before you try it. That is enormously cramming. I do think there is, amongst the emerging bodies and permanent secretaries, a new interest in these matters. You just have to have changed champions, they have to be led from the top. There has to be a kind of political consensus around the necessity for what they are doing, and beyond that there has to be national public conversation in which you start to redefine the issue in a way that we have been trying to redefine them this morning.

Mr Prentice

  537. On that very point, my question is to Sir David, you are pretty disillusioned with the Home Office, are you not?
  (Sir David Ramsbotham) I am not disillusioned with the Home Office as it exists today, because one of the channels of change is the new Permanent Secretary is there, John Gieve, for whom I have immense regard, and I have to say that I was enormously taken by David Blunkett's approach when he took office, I felt that he was going to push on with the things that needed pushing on with.

  538. I only ask the question because you tell us that no official or politician in the Home Office acknowledged your annual report, save on one occasion.
  (Sir David Ramsbotham) That was David Blunkett.

  539. He acknowledged it.
  (Sir David Ramsbotham) He acknowledged it. Nobody until then. All of the points that I made to you this morning are actually in my annual reports, they are not new.


 
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