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House of Lords

Friday, 8th March 1996.

The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Southwark.

Recruitment and Assessment Services

The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe) rose to move, That this House take note of Her Majesty's Government's plans for the future of Recruitment and Assessment Services.

The noble Earl said: My Lords, this debate has arisen from questions raised in your Lordships' House about the Government's plans to privatise Recruitment and Assessment Services, an agency specialising in the recruitment of staff to the Civil Service. The Government's intention to do so has been the subject recently of two short debates in this House, on 25th January and 15th February. It was clear from our exchanges then, in what for an issue of this kind is the rather unsatisfactory medium of Starred Questions, that a number of your Lordships would welcome a wider discussion on these issues. The Motion standing in my name today is a response to that wish.

Recruitment and Assessment Services (which I shall refer to by the more commonly used acronym of RAS) is a next steps agency established nearly five years ago. As its name denotes, and in accordance with its agency status, it is a provider of recruitment, assessment and consultancy services to the public sector. It is perhaps best known for the recruitment of graduates to the fast stream of the Civil Service; but in fact that comprises only about a third of its turnover. Some two thirds of its business relates to appointments, at all grade levels, in other parts of the Civil Service and to wider public sector recruitment.

The role of RAS is essentially operational. Its staff are employed in a variety of roles: providing manpower-consulting services to customers; designing application forms; processing applications; devising tests; supervising the taking of tests; marking, assessing and interviewing. There are currently 140 employees, of whom over half are clerical.

RAS is a provider of those services, but it is not the only such provider. Departments and agencies have for some years been given discretion to meet their own recruitment needs direct or through private sector agencies. In fact, although RAS deals exclusively with the fast stream, the vast bulk of Civil Service recruitment--nearly 90 per cent.--is handled by others. This means that RAS has had to compete for business in a dynamic market place, and it has done so against a background of dramatically falling volumes of Civil Service recruitment. In the three years to 1994-95 new recruits fell from 42,000 to 21,000, a drop of 50 per cent.

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RAS responded well to the challenge by reducing its cost base, notably its staffing levels. It also developed a range of new services for its customers. As a result, it has not only managed to hold its own; it now has a well established reputation as a centre of excellence and is trading successfully. By extending its activities into clerical recruitment, it has steadily increased its overall penetration of the Civil Service market from 7 per cent. in 1991 to 12 per cent. today. For the future, new opportunities are likely to arise as departments and agencies increasingly turn to outside agencies to source their staffing requirements.

The expertise of RAS in high calibre graduate recruitment is well known. Indeed, since April 1994 RAS has welcomed representatives from some 24 countries, seeking advice on techniques in this area of its work and in others. Each year for the fast stream RAS recruits between 100 and 150 generalists and over 100 specialists--economists, statisticians, scientists and engineers--from some 12,000 applicants.

The selection process for all the various fast streams is a rigorous and relatively lengthy one. There are three principal stages to the main fast stream scheme: shortlisting; an assessment centre; and the final interview. Shortlisting is based on the initial application form, a so-called biodata test and a cognitive test. The assessment centre stage--the Civil Service selection board--engages candidates in tests, exercises and interviews over two days, designed to give a feel for Civil Service work. Candidates who progress beyond that stage are invited to an interview: the final selection board.

I mention those details to illustrate what RAS is about and to show what it is not about. As I said, its role is essentially an operational one. It is also a commercial enterprise, a business. As a business in the public sector, it is subject to a number of constraints. There are constraints of public expenditure, denying RAS the flexibility that a private sector enterprise has to grow and adapt. It is prevented from raising investment capital or from borrowing; and, perhaps most importantly, it is constrained in selling its services outside the public sector. RAS's inability to capitalise on its professional expertise by servicing the needs of the private sector is not only a brake on its efficiency, but it also represents a lost opportunity to bring those skills into the wider arena at a time when, in the commercial world, the outsourcing of graduate recruitment--in other words, not recruiting in-house--is seen very much as an emerging trend.

Last year Ministers commissioned the consultants Coopers & Lybrand to prepare a feasibility study on the possible privatisation of RAS. Following that report, Ministers came to a twofold conclusion: first, that RAS's expertise, confined to the public sector, was an under-utilised asset; and, secondly, that a move of ownership to the private sector was not only feasible, but would serve to obviate the constraints that I have just described. Freed from those constraints, it was clear that RAS would be able to continue its efforts to widen its customer base in the public and private sectors and would be well placed to beat the competition in doing

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so. The spin-off would be not only greater operating efficiencies, which would offer even better value for money to the Civil Service, but also a benefit, albeit an intangible one, to the community at large. In tandem with that, there might also be a further gain--one which we have seen arise from so many privatisations in the past--that private sector disciplines would make RAS an even more effective organisation than it is today.

I described RAS just now as a business, but of course it is not just any business. A large portion of its activity bears upon an area of our national life about which, rightly, there is great sensitivity: the ethos of the Civil Service. No privatisation of RAS could be contemplated if what we were doing put that ethos at risk. The integrity and impartiality of the British Civil Service are, I venture to say, bywords throughout the world. And therefore any change to the system of recruitment to public sector posts must give us the confidence--indeed, the absolute assurance--that those standards will not thereby be undermined.

The Government take those matters extremely seriously. That is why, in taking forward our ideas, we have been single-minded in insisting on appropriate safeguards. It may be of reassurance to your Lordships if I expatiate a little on what those safeguards consist of. First, there is currently a complete separation, and will continue to be, between RAS and the regulatory functions exercised by the Civil Service Commissioners. The most important features of that regulation are the rules of selection on merit by fair and open competition. Those rules are embodied in the Civil Service Order in Council and are set out in the recruitment code drawn up by the Civil Service Commissioners. The code is mandatory, and the rules of selection govern all recruitment to the Civil Service, regardless of who carries it out, whether it is RAS, departments or businesses in the private sector. And adherence to those requirements is subject to the commissioners' audit.

The second safeguard is that the actual selection decisions, as distinct from the processing and testing of candidates, will remain in the hands of civil servants. The Civil Service, through in-house nominations, will continue to provide assessors for the fast-stream selection boards, and panel members for final selection boards. The decisions on the success or failure of candidates at these stages will therefore remain a public sector responsibility.

Other assessors involved in the fast-stream selection process will also continue to have a key role. They come from a variety of backgrounds in the wider public and private sectors and include psychologists, former civil servants and academics with expertise in assessment procedures or in particular specialist disciplines. The assessor's job is to ensure that the highest standards are maintained in recruitment to public service posts. That task, and the range of people who perform it, will remain exactly the same. The assessors work on behalf of their customers, who are of course government departments, and the customer consortium of

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departments who employ fast-stream entrants will itself approve the arrangements for selecting and training the assessors.

Thirdly, the tests and exercises developed by RAS for the fast-stream process will at all times remain the intellectual property of the Government. All future developments to the schemes by RAS and any changes to the tests will be protected by confidentiality obligations, preventing RAS from compromising the integrity and efficacy of the fast-stream competitions. There will also be continuing involvement of civil servants in the preparation of certain exercises to ensure that they are a true reflection of Civil Service work.

Underpinning all fast-stream work done by RAS will be a contract. We propose to offer the business for sale with exclusive contracts for the fast-stream services. The contract for the main administrative fast stream is being drawn up in close consultation with the customer consortium of departments. I can tell the House that those departments approved the contract's principal terms and conditions and declared themselves content with the safeguards. Similar arrangements apply to the specialist schemes. Not only will the contracts define carefully the selection process for each fast-stream intake, but departments will actively monitor the contracts as they go along. The Office of Public Service will have a strengthened role to carry out such monitoring. It will not therefore be possible for the new owner to seek to take short cuts in an effort to reduce costs.

What incentive will the owners of RAS have to adhere to the contract? I suggest that there will be several. The desire to win future contracts will be a powerful encouragement to perform well. RAS will also have every reason to maintain the standing of its flagship activity--the Civil Service fast stream--and the wider reputation that it has established for its leading edge recruitment work on behalf of the public sector. And in the background will be the thought that its performance will be subject to periodic audit. Should it fall down on the contract, it will lose it.

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