Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses (Questions 40-59)

SIR GUS O'DONNELL

6 FEBRUARY 2007

  Q40  Mr Prentice: It is interesting that you say that, because you told us when you first came before us you wanted policy-making to be evidence-based.

  Sir Gus O'Donnell: Very much.

  Q41  Mr Prentice: The famous mantra is, "We do what works", and yet, if you survey the terrain, there are a lot of things happening that do not seem to be working. Is it the case that the major re-organisations that we are going through in the Health Service, that we are about to go through in offender management are evidence-based, or is it just acknowledging the ideological prejudices of the people running the Government at the moment?

  Sir Gus O'Donnell: It is a very fair question in the sense that there are certain areas where you have got a strong evidence base where somebody has done something like that before and you can look at it and work it through, and various areas where it is more difficult (for example, there are not many NHSs around the world) and then you are imposing changes on them, restructuring, moving towards different methods of delivery. You have not got a strong evidence base against which you can say, "We know precisely what works and what does not", so in that sense it is more difficult.

  Q42  Mr Prentice: The current restructuring of the NHS is not evidence based. The NHS is going through a huge transformational change with the private sector coming in, in a really big way, and there is no evidence base for this that it is going to be more efficient or effective or whatever?

  Sir Gus O'Donnell: I think there are certainly examples on the reconfigurations. If you talk to the clinical experts, they will say that these are ways of improving health outcomes by concentrating specialist resources in key areas. In terms of bringing independent providers in, I think there is clear evidence that that is reducing waiting times and, in various areas, again, producing better health outcomes.

  Q43  Mr Prentice: As we bring the private sector into the NHS in a big way will the NHS be open to European Union competition law, single market rules?

  Sir Gus O'Donnell: The honest answer is I do not know.

  Q44  Mr Prentice: When are we going to see the Capability Review for the Department of Health?

  Sir Gus O'Donnell: It will be in the next tranche.

  Q45  Mr Prentice: Which is?

  Sir Gus O'Donnell: This one will finish about April, so it will start in May.

  Q46  Mr Prentice: The Civil Service has been convulsed at the moment out of a strike. Why is it that the hundreds of thousands of people working for the Civil Service do not share your vision or the Prime Minister's vision and feel so frustrated, so unable to change and influence things that across the piece they are striking?

  Sir Gus O'Donnell: There is only one union gone on strike.

  Q47  Mr Prentice: But they represent 320,000 members?

  Sir Gus O'Donnell: Yes, but there were not 320,000 members on strike, I can tell you that.

  Mr Prentice: Touché.

  Sir Gus O'Donnell: Less than half of them, a lot less than half of them. So, no, I made my view clear that I thought this was the wrong way to operate. The FDA, for example, did the same. I think what they did was counter-productive. I strongly make the point all the time about the great things the Civil Service does and the fact that we deliver services to the least advantaged groups in society, and anything which damages that I worry about. I think this is not the way forward. I agree there are challenges that the Civil Service is operating under now. We are reducing numbers; we are improving efficiency; I am challenging them to do better, but every time I go out around the country—I was in Blackburn last Friday seeing DWP offices there—I am amazed by how proud and passionate they are about the work they are doing and how professional they are. These were people at the front line of getting incapacity benefit people back to work, a really good policy which is actually very evidence-based and is starting to help some very, very disadvantaged groups.

  Q48  Mr Prentice: Is there not a mismatch between the language that you are speaking, the language that the Government speaks and the language that the union (the PCS), however many of the members were out on strike, were using? I give you this example just to locate it. When the Prime Minister appointed Hilary Armstrong to be the Minister for the Cabinet Office after the election he did a little minute to all the ministers, and he said, "In many areas of public service delivery the third sector has the potential for better user focus, better reach and better outcomes than the state", and then he went on to say, "Within a year you"—that is Hilary Armstrong—"should have achieved a step-change in the provision of public services by social enterprises, charities and other third sector organisations, particularly in areas such as offender management, children's services, health, employment services and community care". So there is a huge amount of state provision that the Prime Minister wants to see floated off to these third sector organisations. When we had the Public and Commercial Services Union people in front of us they talked in their memorandum, and they told us from where you are sitting, that the Government's policy is to "fragment, to privatise and outsource the work of the Civil Service", and that is what is causing this erosion in morale. So there are two lexicons here.

  Sir Gus O'Donnell: The lexicon I use is the lexicon of pride in what the Civil Service does and the Civil Service operating—hence we had the first ever Civil Servant of the Year Awards towards the end of last year celebrating the successes—and I try and do that whenever I can around the country. It is certainly true (the point you made) that the Prime Minister is very strongly of the view that the Office of the Third Sector, which is now within the Cabinet Office, hence the letter to Hilary Armstrong, should explore the extent to which charity and voluntary sectors can help reach those very difficult to reach groups where they may have strong links. The area I saw, I guess, is when I went to Wormwood Scrubs and the charity and voluntary sectors who are working with prisoners to help them re-engage in the community afterwards. They have ways in that probably ordinary civil servants do not have, and I think it is perfectly reasonable to think about how you can find the best ways of using the charity and voluntary sectors.

  Q49  Mr Prentice: We are not talking about changes at the margin here. The Prime Minister in that minute to Hilary Armstrong was talking about the transfer of major state provision to the third sector. Ian went off to the Passport Office to have a look, and a number of the rest of us went to Jobcentre Plus down in Clapham Common.

  Sir Gus O'Donnell: Excellent.

  Mr Prentice: It is excellent.

  Sir Gus O'Donnell: It is a very good office.

  Q50  Mr Prentice: You have been there as well?

  Sir Gus O'Donnell: It is close to home, but not recently, I have to say, just because I get my other third sector colleagues interested.

  Q51  Mr Prentice: We had this private session with the staff, upstairs, door locked, management outside, just us talking to the civil servants, and they were telling us about their concerns for the future and someone said to me that she thought there was a possibility that the work that they do for people with disabilities could be just floated off to a third sector organisation, and what she was saying about that particular aspect of work other people were saying about other aspects of work. So, how can you build positive morale in Jobcentre Plus when the people working there, who are doing a good job, think they may no longer be working for the Civil Service in a year or two but could be working for Age Concern, or whoever?

  Sir Gus O'Donnell: I think it is a fact of life that people will look at different ways of supplying services, and if we are talking about the disabled, I think what will be at the centre of the Government's desire is to give the best possible service to disabled people; and they will look at different ways of doing that, that is inevitable. I think ultimately we have got to do this from the point of view of helping those disadvantaged groups and what is best for them. What you are saying is we should somehow organise this to be best for the producers rather than the consumers.

  Q52  Mr Prentice: I am not a producer-ist, and who am I to say this, but I sense that if you are going to change organisations in this kind of way you try and bring people with you, and it is clear in the Civil Service you are not bringing these—

  Sir Gus O'Donnell: I disagree. Let us look at the facts. People are desperately keen to join the Civil Service. Our fast-stream is always in the top five of where university graduates want to come. We are doing incredibly well in terms of attracting more diverse groups. Outside of London and the South East we have actually got areas—and this is one of the reasons where you might pick up dissatisfaction—where people really enjoy working for the Civil Service.

  Q53  Mr Prentice: So much so they want to stay in the Civil Service?

  Sir Gus O'Donnell: Absolutely. Exactly. So when we are making efficiency gains and the numbers are falling, they are disappointed by that because we are a very, very good employer and we just have to cope with that. It does not mean somehow they are not enjoying or being passionate about their job. It is that they want to keep it.

  Q54  Mr Prentice: The people we saw were very positive, very committed and they wanted to stay in the Civil Service. One final thing, picking up from what Tony asked you at the beginning about re-organisation of government departments. We have got some reorganisations that do not cost a bean: the Office of the Deputy Prime Minister becomes the Deputy Prime Minister's Office. I think that cost £600. Then we had the Department for Productivity, Energy and Industry. Do you remember that one? That was just a bit before your time.

  Sir Gus O'Donnell: That was before my time.

  Q55  Mr Prentice: It is fun to say this though. Downing Street said this was necessary in order to make the department refocused and reinvigorated, but Alan Johnson disagreed and the sign came down, so that did not cost anything. Then I was thinking about the reorganisations that must have cost an arm and a leg, and one example is the Department of Transport became the Department of Transport, Environment and Regions, became the Department of Transport, Local Government and Regions in 2001 and now is back to being the Department for Transport. There has been a lot of transporting going on in that department. I have no idea how much these cost. I put a question to the Prime Minister, and he said the cost of machinery of government changes are met by relevant departments within existing budgets. That is what he said just a few days ago. My question to you is what is going to be the cost of reconfiguring the Home Office, because it is going to be met within the existing budget?

  Sir Gus O'Donnell: Indeed, because basically departments have got their spending totals set out, we would have to meet it within existing resources. I do not think the Treasury would accept a reserve bid on a machinery of government change. I am fairly sure from my previous existence that they would not. Therefore, it is incumbent on us to make sure that machinery of government changes produce lasting benefits which outweigh any transitional costs.

  Q56  Mr Prentice: Finally, we do not know, it has not been costed, how much the changes that were floated by the Home Secretary would cost.

  Sir Gus O'Donnell: Like I say, I am still looking at the issue of what potential changes there might be. That has not been decided.

  Chairman: Thank you very much for all of that.

  Q57  Julie Morgan: Just to return to the strike briefly, many of the PCS members in Wales who were on strike last week are very enthusiastic, very committed civil servants, very proud of being civil servants and they believe some of the efficiency reviews are going to damage the more disadvantaged people that you said earlier the Civil Service must reach. What are your views on that?

  Sir Gus O'Donnell: I very strongly believe that we should be making sure that we do meet those disadvantaged groups. In terms of making sure that we organise our services efficiently, that is a key part of why things are in the public sector, because, as I said before, I think the private sector would say, "They are too difficult to get at, too hard to reach, so we will not do it." I do not think there is a trade off between being more efficient and worsening services there. This is where I think I have my fundamental disagreement. I think we need to increase our efficiency. If you look at the kinds of things that can increase efficiency: the process of re-engineering, for example, of Revenue and Customs, looking at why a piece of paper has to go round a very long journey inside a building, why you can make the pensions agency provide a much better service to customers working through contact centres, than it could when it was doing things in a much more expensive way, so actually I think improving quality of services and becoming more efficient can go very much hand in hand.

  Q58  Julie Morgan: I think a considerable number of civil servants do not believe that. Have you any thoughts of rethinking this? Are there civil servants who enthusiastically support that?

  Sir Gus O'Donnell: There are, and actually the best efficiency gains you get, the Pensions Agency up in Longbenton was a classic example of this where it was not people like me from senior management coming down saying, "Here are the new methods of doing things more efficiently", absolutely not; it was doing what you have said: lock them up in a room, get the people who are actually the front-line deliverers and say to them, "Look, how could this be better? What is stopping you doing this more efficiently, providing a better service to customers?" They are the best ideas you get, and getting people's energy, their commitment, their passion, getting them to tell you how to do things better—"What are the obstacles that management have imposed?"—actually produces enormous efficiency savings and allows us to provide better services.

  Q59  Julie Morgan: An additional problem we have in Wales is that where the jobs are going, some of the jobs are from Objective One, where we are trying to invest, and so I wondered if you had any thoughts on that?

  Sir Gus O'Donnell: We are very much, from a Civil Service point of view, trying to relocate jobs outside London and the South East. The classic would be ONS, which is coming to Wales, which is going to transfer a very large number of jobs to Wales. The whole process of moving out of very expensive places in London and the South East to areas like Wales, where they can be done more efficiently and better, is something I would strongly applaud. Within Wales, I am not getting down into that detail.


 
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