Select Committee on Public Administration Appendices to the Minutes of Evidence

Memorandum by the Public and Commercial Services Union (PSR 18)


  1.1  PCS is the largest Civil Service union with more than 270,000 members in the Civil Service, non-departmental public bodies and the private sector. PCS members work in the administrative, executive, managerial and support grades in every government department including those which support the devolved assemblies in Scotland and Wales.

  1.2  PCS members are engaged in a wide variety of work from local Jobcentres to remote coastguard stations. The average British resident will come into contact with a PCS member on a weekly, if not daily basis. As the trade union for civil servants and related areas, PCS is a major stakeholder in public services.

  1.3  At the same time, PCS members are also consumers of public services. As a public service union, PCS has obligations not just to the immediate workplace interests of our members, which is our primary role, but also to the wider community interests in public services. PCS takes a long-term view of public services and our interest in public service reform is based on both the need to represent our members' interests and from our deep concern for the provision of public services.

  1.4  Up until the 1980s, private sector involvement in central government (ie Civil Service and Non Departmental Public Bodies) was restricted largely to building works, and the purchase of some goods and equipment. Since then, many areas of work in the bulk of departments and agencies have been contracted out, including IT, secretarial, personnel, cleaning, catering, security, the messenger service, and drivers. Many services within the MOD have been privatised and Royal Navy bases are currently under threat of privatisation. Earlier this year National Air Traffic Service (NATS) was partially privatised as a public private partnership.

  1.5  PCS and its predecessor unions have supported the aim of the Labour Government to deliver public services capable of meeting the challenges of the twenty first century. Our members, who are on the front line of public services, recognise the inadequacies of the status quo. They want better resourced public services, improved equipment and systems; better workplace management, clearer career paths and more opportunities to fulfil their potential.

  1.6  However, they also see these objectives as achievable within the public sector. It is important to remember that, far from resisting change, civil servants have been central to the delivery of key commitments during Labour's first term in office. The minimum wage, Working Family Tax Credit, Scottish Parliament, Welsh Assembly and the New Deal are just a few of the landmark reforms which have been delivered in partnership with PCS and our members.

  1.7  PCS signed a partnership agreement in 2000 with the Cabinet Office and Head of the Civil Service establishing the framework within which we work with the government to deliver public service reform. PCS committed itself to work with the government and other stakeholders to deliver high quality public services tailored to the need of users, ensuring public services are democratically accountable to the communities they serve, championing the adequate funding of public services, demonstrating the effectiveness of public sector alternatives to privatisation, and delivery of excellent workplaces.

  1.8  Among the commitments in the Civil Service Partnership agreement is a recognition that government departments and agencies should regard the civil servant as the provider of choice for the services they deliver. Significant improvements in the delivery of Civil Service output have been achieved without the use or threat of use of the private sector. In particular, management and trade union sides are working in partnership in a range of Civil Service departments from the former DSS (now DWP), Customs and Excise and the Inland Revenue to the MOD and Coastguards, to achieve higher quality public services. In many cases throughout the Civil Service, improvements have occurred because privatisation has been taken out of the equation, enabling civil servants to focus on improving services rather than job threats.

  1.9  In contrast, we believe that an extension of the use of PFI, PPPs or outright privatisation is likely to lead to poorer quality public services. The private sector has had some notable failures when delivering public services, such as chaos in the Immigration and Nationality Department, a huge backlog in delivering new passports and a collapse of the National Insurance computer system.

  1.10  PCS has therefore committed itself to a campaign to ensure that public services remain in the public sector, and at the same time to positively promote the work that is done by our members in the public sector. We recognise that much work still needs to be done to improve service delivery, and have developed a focus for our campaign around "Nine criteria for successful change". PCS's evidence is focused on the issues that reflect our priorities. We have organised our response under the main headings, to fit into the structure of the Select Committee enquiry, but will use our own framework of "Nine Criteria for successful change" within that.

  Our nine criteria for successful change are as follows:

    —  building commitment to change;

    —  fairness at work;

    —  adequate funding;

    —  improved public sector management;

    —  effective delivery;

    —  valuing and strengthening public sector ethos;

    —  celebrating our successes;

    —  accountability and transparency; and

    —  equality of access.


  2.1  PCS believes that the key principles and strategy for reforming public services are building commitment to change, fairness at work, effective delivery, improved public sector management and adequate funding. We will look at each of these five aspects below, using examples to illustrate our points.

Building Commitment to Change

  2.2  Civil and public servants have faced a barrage of change in the past 20 years. Sometimes this change is inadequately explained and therefore poorly understood. Change is often accompanied by much activity that fails to deliver significant if any improvements to the service. More change is then built on change, and the service delivery requirements are lost along the way. Far greater consultation with those at the front-line of delivering services is needed, so that public service staff can have a sense of ownership of, and consequent greater commitment to, the changes. In particular the Government needs a far more sophisticated understanding of the impact that change has had on existing organisational cultures. Too often when major restructuring occurs, two completely different organisational cultures are thrown together without any understanding of the need for gradual adaptation through experimentation and negotiation. Chaos combined with resentment frequently follows.

  2.3  Earlier this year PCS commissioned the Cranfield School of Management to conduct a survey of PCS members, which was aimed at developing at the national level a more precise understanding of the views of members towards working life. (1) The key message from the survey was that Civil Servants are not resistant to change. Rather, they have concern about the way in which change is managed in the Civil Service, and have too often seen the downside of job threats instead of the potential benefits of workplace improvements.

  2.4  The Cranfield survey demonstrated that the public service ethos exists in the Civil Service. Overall, members were positive about their work, seeing the value of the service, which they provide the public. Almost four times as many respondents agreed than disagreed with the statement "My job is interesting and enjoyable". Most respondents also pointed to a high level of teamwork in their workplaces and said that they want the union to develop better relationships with their employers in order to facilitate improvements in the workplace and public services.

  2.5  However, the survey also showed members were concerned about how change was taking place. Just over half of the respondents agreed with the statement "My job is secure" against around a quarter that perceived their jobs as insecure. While job security in the Civil Service is better now than five years ago, these figures do not compare favourably with data taken on workplace attitudes in other sectors.

  2.6  According to Workplace Employee Relations Survey (WERS) data (2), six in 10 permanent employees feel secure in work, a national average above the Civil Service. Sales workers, personal service employees and managers in the private sector feel more secure than civil servants. For public service reform to be successful, it is crucial that stakeholders, in particular the Government and PCS, address the causes which have made civil servants feel less secure at work than the average British employee. While we recognise that civil servants no longer have a job for life, we do see as achievable a return in the Civil Service to the ideals of the model employer. Developing clearer promotion prospects, providing more help with training and development, and improving family friendly policies so that Civil Servants with domestic commitments do not lose out, are all goals on which PCS is committed to work with the Government to achieve within the next five years.

  2.7  The PCS survey found evidence that job insecurity was as a result of real events which, if not threatening members actual jobs, at least would have unsettling effects on members views of their job security. Events most frequently mentioned by respondents were changes in work routine due to reorganisation or restructuring. Just about half of the respondents said they had experienced some change within the past year, and two thirds said that they experienced a change at some point in their careers. Over a third of respondents had experienced a transfer from one employer to another (either between sectors or within the civil service) at some point in their careers, with one in 12 experiencing a transfer in the past year.

  2.8  Also relevant to perceptions of job security was place of work. While the level of job security was low for civil service members, it was even lower for members who are working in the private sector providing services to the Civil Service with around a third of these members agreeing that their jobs are secure. The evidence suggests that career displacement as a result of transfers between employers, the two-tiered workforce in privatised areas and the isolation which many members in privatised areas feel have contributed to a sense of insecurity.

  2.9  Civil service reform will only come about if civil servants feel that they and the services they provide can benefit from change. The survey indicates that members do not recognise the benefits of change. It is not just the constant cycle of organisational change which is affecting members, but also the feeling that they have little control over their careers, and are hostages to fortune of decisions which are made above, on which they have little say. One of the myths about civil servants is that they are resistant to change, yet the PCS members' survey showed that despite their concerns about change and attendant job insecurity, they were more concerned about both union and employer working to deliver better career prospects and better equipment and systems. PCS members are eager to contribute to the modernisation of the services they provide, but want to see the benefits change can provide.

Fairness at Work

  2.10  PCS believes that there should be an increased emphasis on high quality skills, training and career development, as well as remuneration packages and working conditions that facilitate retention and recruitment of quality staff at every level. There needs to be a greater commitment at departmental level to creating learning organisations. The Cranfield survey showed a strong desire on the part of members for improved career development opportunities, and PCS wishes to give more emphasis to career development and training within partnership arrangements. PCS has established its own Learning Centre in Central London, which is currently engaged in the training and support of a network of learning representatives whose brief is learning in the workplace. It also runs a range of other courses for members including trade union education, learning and development for members, and IT. We have also demonstrated our commitment to learning by our participation in National Training Organisations (NTOs).

  2.11  PCS would also like to see an end to the belief that private sector human resource systems (often American in origin) are a panacea for the problems in the British Civil Service. Performance-related pay is a case in point—most evidence in the UK suggests that extra rewards based on individual performance erodes teamwork and leads to disillusionment for the majority of workers who although not poor performers, do not reach the top markings for entitlement to extra pay.

  2.12  PCS members can no longer be assured of a job for life, and require the marketable skills and assistance necessary to compete in the job market. While the Civil Service has a tradition of providing clear career paths to its workforce, a new generation of civil servants has joined the Crown since previous Governments began dismantling the unified Civil Service structure. Most of our members made a clear career decision to work in the public sector, and transfers to the private sector have disrupted the career development of many staff, particularly those who have faced multiple transfers. Many of the services contracted out under the previous government's Market Testing programme have undergone at least one, and often two, transfers of service providers.

  2.13  Public service reform therefore needs to be underpinned by a system of fair employment practices for all public service providers. Wherever public service staff work in the private sector, they must have the same rights, and conditions and training opportunities no worse than those in the public sector. This could best be achieved by a fair wages clause in public contracting. Such a measure would prevent contracts being awarded to the private sector under which transferred staff and new employees receive worse pay, conditions and pensions. Such provisions have recently been shown to work in a major building management contract in the Civil Service. The Steps contract in Customs and Revenue covering building management services contains a fair wages resolution whereby if a transferred member of staff leaves, newly recruited staff will be employed on the same terms and conditions as departing staff.

Effective Delivery

  2.14  PCS shares the Government's aim of delivering high quality and effective services. However, experience shows that expanded private sector involvement in public sector activity is likely to result in deteriorating service quality and efficiency as private operators cut corners and distort priorities to increase profitability. The private sector has had some notable failures when delivering public services, such as chaos in the Immigration and Nationality Department, a huge backlog in delivering new passports and a collapse of National Insurance computer system.

  2.15  In the last case, the Contributions Agency, formerly an Executive Agency of the Department of Social Security, but now a part of the Inland Revenue, let a PFI contract (NIRS2) to Andersen Consulting (now Accenture) in February 1997 for a replacement for the National Insurance Recording System (NIRS1) to support the pensions payment system. It would develop the new system and operate it for seven years from April 1997. By December 1998, the Public Accounts Committee reported that the system was still not fully operational (3). Seventeen million contributions to individual national insurance accounts had not been posted, and by March 1999 4.5 million items remained unposted. As a result, pensioners, widowers and child benefit claimants suffered uncertainty and loss of income. When the Contributions Agency merged with the Inland Revenue, the Revenue was unable to get details of an estimated 5.2 million records, which resulted in the loss of billions of tax revenue for 1998-99 and 1999-2000.

  2.16  PCS is particularly concerned about the lack of public sector alternatives with which to compare privatisation proposals. Without an in-house proposal, it is difficult to assess whether the private sector is offering a service which is either more efficient or higher quality than can be provided by the public sector. Our concern is shared by the IPPR, which highlighted the lack of public sector comparators in the evaluation of proposals for the partial privatisation of air traffic control.(4)

  2.17  We would also highlight proposals to privatise Royal navy refit services at the Royal Dockyards. It was only through a high profile joint campaign by non-industrial and industrial unions that public sector alternatives were developed. Without this campaign, most of the services would have been outsourced without any competition.

Adequate Funding, including investment in infrastructure and IT

  2.18  The public services need long-term investment, in infrastructure and in IT. For too long, the use of private finance to pay for capital investment has been held up as a means of enabling the government to undertake more projects than would otherwise be the case. In fact, as the June 2001 report from the IPPR Commission on Public Private Partnerships has shown, all PFI projects are publicly funded and incur future liabilities for the exchequer. The public sector repays the full cost of the private sector providing the infrastructure and services in annual payments over periods of 20-30 years, thereby potentially storing up debt for future generations.

  2.19  In their November 2001 response to the IPPR paper, Catalyst authors argue that more and more of the current budget is committed to new forms of public procurement which leaves less and less to the discretion of the public agencies and reduces flexibility. "Furthermore, since the PFI/PPP payments have first call on public finances, any further public expenditure cuts, efficiency savings or increases in prices charged by the contractors will be at the expense of those services that remain in-house. De facto, the giant corporations that carry out these contracts will more and more come to control public expenditure and public policy". (5)

  2.20  PCS would also like to see greater investment in IT and IT training. There is perhaps something to be said for the idea of starting from scratch with a new IT system built around the needs of the citizen, rather than the service providers. In some cases manual systems have been simply automated, without any strategic review of how IT should be used to deliver better systems overall. PCS agrees with the recommendation made in the 2000 Cabinet Office Review of Major Government IT projects. "A change of approach is needed. Rather than think of IT projects, the public sector needs to think in terms of projects to change the way Government works, of which new IT is an important part. Our recommendations aim to achieve this change." (6)

  2.21  Some of the systems, for example in the Benefits Agency are outdated and staff lack upskilling opportunities. Again the Government's own report indicated that skills were needed to deliver improvements in the handling of IT-related change. "They include developing, implementing and monitoring a framework for the skills we need and make links to other work on Civil Service Reform". (6)

  2.22  Contracting out and privatisation have unfortunately led to a proliferation of providers, and a serious loss of in-house expertise. The catalogue of IT failures under the PFI—some a lot more serious than others—has been publicly documented and include those already referred to in this report such as the Contributions Agency and the Passport Agency. One of the ongoing difficulties is that of getting all the major private sector IT providers to talk to each other about developing IT systems to complement each other and simplify the collection and storage of data on individuals.

Invest in public sector management

  2.23  Against this scenario, PCS would like to see greater investment to improve public services currently provided by the public sector. PCS supports the TUC campaign for public sector management academies, and making greater use of existing centres of excellence. As the TUC points out, "too many public sector managers have been managing cuts for 20 years or so. Now they must manage expansion successfully, spend the monies allocated in an efficient manner, and be given help to do so". (7)

  2.24  There is a need in the public sector for a stronger focus on the development of project management, financial management, people management and the so-called "emotional intelligence" skills, as well as a better understanding of organisational cultures. Where transfers, mergers and restructuring occur within the public sector (let alone when a service is transferred to the private sector), difficulties frequently occur with the clash of organisational cultures.


  3.1  PCS believes that the concept of a public sector ethos is real and valid, and that it needs to be promoted rather than denigrated or denied. One of the best ways of doing this is to celebrate our success stories in the public services and raise awareness among the general public about the valuable work performed by civil and public servants.

Value and strengthen the public sector ethos

  3.2  PCS is bemused by the current debate about public services ethos. To suggest that there is no such thing, is akin to suggesting that there is no such thing as society. While it will always be true that pursuing certain policies can go a long way towards breaking down citizens' sense of connectedness with and responsibilities towards other members of society, there will always remain a need for human beings to co-operate together, share common ideals and values, and support each other in the business of life. Nowhere in the world have universal public services been delivered solely by the private sector. There will always be a need for a public service to provide those services that the free market alone cannot adequately provide.

  3.3  "Ethos" is defined according to the Chambers Twentieth Century Dictionary as an "habitual character and disposition of individual, group, race etc: moral significance". The moral significance of the public sector is that it exists to provide necessary services to citizens that the free market alone is unable to provide. For example, as citizens we believe in law and order and we believe in the need for an existing army to defend us from external or internal threat. Here we have not just a self-interested concern for our own safety and welfare, but a deeper moral commitment to protecting the integrity of our country and way of life. We rest in the confidence that our police force and army are committed to the same shared public values and goals as ourselves. Indeed in some countries where law and order has broken down, one finds warring armies often answering first to large companies with a stake in the wealth and resources of the country rather than to the well being of the citizenry.

  3.4  PCS believes that although the public service has taken a battering in recent decades, there still exists within it a "habitual character or disposition" that consists of a sense of commitment to the common good, rather than to private gain or to the well-being of a particular community or group. That is not to say that within the public sector one cannot find people motivated strongly by private gain, or that a concern for the common good is entirely absent in the private sector. But it would be fair to say that the prevailing collective "character or disposition" of the public sector remains one of service to the common good, that of the private sector is profit maximisation, and that of the voluntary sector is the promotion of the rights or needs of particular, sectional interests within society. Not all individuals working within particular sectors will share the prevalent collective ethos and to the extent that morale is low within a sector the ethos may well be eroded. However this does not negate the point that a public sector ethos does exist, and should be valued and strengthened.

  3.5  PCS would have concerns not just about further private sector provision of public services, but also provision by the voluntary sector. Just as for-profit provision can undermine or distort the public sector ethos, so too the incursion of the voluntary sector into the public service will bring its own set of problems. Voluntary sector organisations have as their aim improvements in the position of a particular group within society. They are primarily concerned with sectional representation, rather than the overall public good. Perhaps even more importantly, there is limited accountability within voluntary sector organisations, and the sector has a poor track record in both people and financial management.

  3.6  Private sector providers, as profit maximisers, will always face the temptation to reduce costs by cutting quality, and to worsen terms and conditions of employees thereby reducing their incentive to provide a quality service. It will also be subject to short-term pressures from shareholders, anxious to maximise dividend income, and therefore it may be reluctant to undertake long-term planning.

  3.7  PCS has seen these processes at work in several areas where the private sector has taken over a public service. A recent example was that of Reed Employment Services which won an Employment Service contract to run some of the New Deal pilots. Reed's performance lagged well behind that of the Employment Service run pilots. The company's December 1998 target in Hackney and City District for subsidised placings (the scheme giving employers £60 a week for each job they provide for 18-24 year olds) was 425. They achieved just 11. (8) Despite poor performance, Reed went on to win further contracts running ONE and the Employment Zones. Reed's track record on employment was poor. Earnings consisted partly in bonuses dependent on getting clients into work, thereby putting pressure on staff to increase the number of placements rather than put people into quality, sustainable jobs (9). From the private sector point of view, short-term job placements were desirable as another placement fee became available. Reed's own Candidate Placement Data reported that during the period 1 April—2 November 1998, 47.5 per cent of Reed's placings failed to last 13 weeks.

  3.8  Five years ago, the Efficiency Unit published a report on its extensive scrutiny of the Competing for Quality (CFQ) Programme. The report identified issues which have never really been resolved. These include problems with "joined-up working", and with quality. The review panel conceded that quality of service was a secondary factor in the awarding of contracts under CFQ:

    "Although quality formed part of the evaluation criteria for selecting contractors, it carried considerably less weight than cost in the final decision". (para 4.39)

  3.9  Users of the service expressed dissatisfaction with the effect of Competing for Quality on quality of service. By a ratio of nearly two to one (32 per cent to 17 per cent) users surveyed said that the quality of service had declined rather than improved during the introduction of a new contract. Among the reasons cited for the deterioration of service post CFQ were "lack of knowledge on the part of service suppliers; not enough staff; slower service; inflexibility; poor staff morale, poor communications, poor calibre of staff and lack of resources". (para 4.21) PCS notes that some of these problems were clearly in evidence recently when privatised security guards in government buildings refused to action an "amber alert", as the actions required of them (bag-searching) were not part of their contract. In the currently heightened atmosphere of fear and risk, it is vital that high quality security is provided to all Government buildings and installations as a matter of course. PCS will be making a case to Government in the coming months that it is now timely to bring privatised security guards back into the civil service.

Celebrate our successes

  3.10  As noted at the beginning, civil servants have been central to the delivery of most, if not all of the Government's first term commitments. Both the Scottish Parliament and Welsh Assembly were delivered through partnership with PCS, and the commitment of Inland Revenue staff has been crucial to the enforcement of the national minimum wage. Far from resisting change, civil servants have helped deliver significant reforms set by this Government.

  3.11  Concerning the delivery of service quality and efficiency improvements, PCS representatives at the workplace and departmental level have been working in partnership with management to develop viable alternatives to competition. In many departments, PCS representatives and management are jointly using the European Foundation Quality Management (EFQM) model to identify ways to deliver higher quality public services. PCS representatives have been able to bring staff on board by demonstrating the benefits of reform to members' working lives.


Accountability and transparency

  4.1  PCS believes that accountability and transparency have been weakened and eroded with all the changes that have taken place in the public sector over the past twenty years. To use a current and obvious example, the break-up of the rail industry graphically highlighted the dangers of fragmentation of service delivery and the subsequent erosion of responsibility, quality and accountability.

  4.2  Although the public sector bureaucracy may be prone to rigidity and cumbersome processes, it is nevertheless the one structure which is best suited to meet the needs of the state. A single hierarchy, for example, in which responsibility leads to the office of the head of the government may, arguably, inhibit innovative thinking by junior civil servants, but it is the one way in which to ensure political accountability for public services. Conversely, a private company may in some cases be attuned to the demand of the customer, but it is not the proper mechanism for collective decision-making through government, particularly if the political decisions prove unpopular.

  4.3  The Government's emphasis on contracting out the PPP's has reduced the amount of information available to the public. The contracting process itself is usually subject to strict commercial confidentiality.

  4.4  PCS would like to see the re-establishment of Parliamentary accountability, and greater use made of Select and Standing Committees. We also support the IPPR proposal (4) that the National Audit Office (NAO) should have statutory powers to access information on private providers relating to public contracts above a certain size.


Equality of access

  5.1  PCS believes that public services should be available to all, regardless of gender, race, sexual orientation, disability, age or economic circumstance. They should also be far more responsive to customer need, with more work done to research how people want their services provided. We wonder what happened to the People's Panel, established in 1997 as a way of gauging what the public wanted in the way of service provision. Although in practice the People's Panel focussed more on monitoring how departments and agencies were performing rather than on what customers needed, something similar could perhaps be re-instituted, with the focus very much on proactive customer service and managing customer needs.

  5.2  There is clearly a need to deliver the Government's targets for E-Government. However this should not be at the expense of high quality services delivered in local and accessible locations. Recent research suggests that Internet usage has peaked in the UK, with fewer than 50 per cent of households logging on. If this is the case, it is unlikely that government services will in the foreseeable future be delivered electronically to the majority of citizens.


  1.  A Report by the International Trade Union Centre Cranfield School of Management In Conjunction with PCS Policy, Research and Information Department, 2001.

  2.  Mark Cully, Britain at Work as depicted by 1998 Workplace Relations Survey, Routledge New York 1999, ISBN 0415206367.

  3.  Public Accounts Committee, (1999). Twenty-second report: Delays to the new National Insurance Recording System, HC182, London TSO.

  4.  IPPR, Building Better Partnerships: the final Report from the Commission on Public Private Partnerships, June 2001, ISBN 1 86030 158 4.

  5.  Allyson Pollock, Jean Shaoul, David Rowland and Stewart Player, "Public Services and the Private Sector: A response to the IPPR". Catalyst Working Paper, November 2001.

  6.  Cabinet Office, Review of Major Government IT Projects.

  7.  TUC General Council Statement on Public Services 2001.

  8.  Employment Network (Unemployment Unit) Briefing, Hackney and City District, January 1999.

  9.  Liverpool Daily Post, 27 August 2001.

December 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 21 June 2002