Select Committee on Public Service Report


Accountability for Policy and Accountability for Operations

(i)  Introduction

  311.    We have described in paragraph 299 above how, for each executive agency, the relevant Minister remains accountable to Parliament for the policy while the chief executive of the agency is responsible for operations. Indeed, agency chief executives themselves answer Parliamentary Questions about the work of their agencies. Yet the 1994 White Paper The Civil Service-Continuity and Change referred to "the constitutional principle that it is Ministers who are accountable to Parliament for all that their departments (including agencies) do".

  312.    Much of the debate about accountability is focused on the assumption that each function of the Civil Service can be described either as a policy matter, or as an operational matter. Ministers are then held to be accountable for policy matters while chief executives are held responsible for operational matters. The first question which then arises is whether the distinction between policy and operations is a valid distinction, and whether it can be clearly made in all, or even most, cases.

  313.    The Driver and Vehicle Licensing Agency is often cited as an example of an agency where it is easy to distinguish the operation of producing licences from the policy surrounding the issue of those licences. However, Sir Geoffrey Wardale, formerly Director General of Organisation and Establishments in the Department of the Environment, (Special Report, p 275) challenged even this view. He informed us that when the new computerised arrangements began in the DVLC (as it then was) there were unexpected failures in producing licences. "Parliamentary pressure built up, Ministers were involved, and action needed to be taken. It was not a question of a division between policy and execution; execution had, by taking on a political dimension, become policy. ... It would not have met the situation to say that the head of the office was responsible for execution and to visit the whole responsibility on him."

  314.    Sir William Reid agreed that difficulties could arise even in relation to the Driver and Vehicle Licensing Agency. Sir William said (Q 559), "I remember one of the difficulties that I had to investigate with the DVLA was their interpretation of some European Directive. That, I assume, is regarded as policy rather than execution where they got things entirely the wrong way round with the result that certain heavy goods vehicle drivers were put out of work because of a misinterpretation by the DVLA of how to draft a statutory instrument. ...the DVLA is supposed to be doing simply executive work, but involved in that executive work was interpreting policy and because they got it wrong, they found themselves required to give redress to the sum of about £1 million to someone".

  315.    Given the problems which have arisen in the case of the DVLA, and given the fact that the DVLA is often cited as a model example of an agency where policy can be clearly distinguished from operations, the Committee asked itself whether there were any cases where the split between policy and operations was totally clear.

(ii)  Where the Split is Clear Cut

  316.    Dame Ann Bowtell said (QQ 457 and 458) that in the DSS a very clear line was kept between policy and operations. "Our system is governed by legislation, so all the Benefits rules, all the Child Support Agency rules, all the Contributions rules, are laid down in main and very detailed secondary legislation. Therefore, for us that makes it a relatively simple distinction. What is in the legislation, on the whole, is the responsibility of policy. What the agencies do is deliver what is in the legislation. Now there is a middle ground which we call operational policy, which I think in some places raises lots of complications, but ... it is how the agency delivers services. On the whole, as long as we all work at it, it does not cause problems. We have not really found serious problems in drawing the line between the real policy; and, indeed, we encourage the agencies to make inputs into policy formation and to bring the benefit of their experience into it. But I think the existence of the fact that our policy is in legislation makes an enormous help in drawing those very clear distinctions for us".

  317.    Aside from this, the Committee received very little evidence that the split between policy and operations was ever completely clear.

(iii)  Where the Split is not Clear Cut: the Problem of Definition

  318.    One factor which reduces clarity in the policy/operations split is the fact that definitions change with changing circumstances. In his oral evidence (Q 127) Professor Bogdanor said "I think that Derek Lewis, the former [Director General] of the Prison Service, once said that if it is difficult, it is operational, and there is some truth in that quip because, after all, it can never be policy that something goes wrong and, therefore, if something goes wrong, it must be as a result of operational factors and the danger in drawing the distinction in that way ... is that Ministers are enabled to shuffle off responsibility onto officials." Similarly, Dr Barry J O'Toole pointed out (Special Report, p 267) that since it is Ministers who decide what policy is and it is Ministers who decide what operations are, it is Ministers who decide what they are going to be responsible for.

  319.    Similarly, Mr Churchyard of the CPSA said (Q 868), "Without wishing to sound cynical, I think to some extent we are in Yes, Minister territory here, are we not, where if a decision is taken which has negative consequences it is likely to be deemed by Ministers to be an administrative decision, whereas if it is something which calls for praise and applause no doubt it would be a policy decision".

  320.    Professor Bogdanor drew attention to penal policy and to child support policy as cases where operations could not be clearly separated from policy. He wrote in his evidence to us (Special Report, p 36), "Penal policy and child support policy are highly political services, capable of losing votes for the governing party. It is unrealistic to expect Ministers to take vows of passivity in relation to operational matters in these services. It is impossible, therefore, to ring-fence an area and declare that it is purely operational. Ministers answerable to Parliament must have the ultimate right to intervene, if they so wish, even on matters which might appear purely managerial. It is no easier, then, to draw a dividing line between policy and operations in the case of the agencies than it was in the case of the nationalised industries. The result, therefore, is a structure in which responsibility, far from being clarified, is confused."

  321.    Mr Turnbull gave as another example the Highways Agency (Q 2162). He told us that while maintenance and management of roads was uncontroversial, in relation to the "building of new roads what is operational and what is policy is more intertwined, but again it is not something that we find particularly difficult to handle".

  322.    Professor Bogdanor in his oral evidence suggested that (Q 147) "the effect [of introducing executive agencies] has been to confuse accountability and make it more difficult for Parliament to find out who is to blame when something goes wrong and that, I believe, is at the core of accountability-that when something goes wrong in the public service, who is actually to blame? Is it the Minister? in which case there should be some sanction, the ultimate sanction being resignation, or is it officials? and that is the question which Parliament has to answer when something goes wrong in the public service".

(iv)  The Impact of Policy on Operations

  323.    Many witnesses drew attention to the fact that policy could not be separated from operations because of the impact which each had on the other. The Committee wishes first to address the impact of policy on operations.

  324.    The impact of policy on operations is obviously great. Each operation exists only because a policy requires it: and when the policy changes, the operation changes too. The Director General of the Prison Service Agency, Mr Richard Tilt, drew attention to the problem (Q 1470). He said "One of my roles is to act as the principal policy adviser to the Home Secretary. ... My other main role is the day-to-day management of the Prison Service which is operational but, clearly, in carrying out that second task one runs up against the way in which policy has been set. So there are occasions when one has to say to the Home Secretary 'This particular policy is causing this rather unsatisfactory effect', or 'You ought to know that this is what is happening on the operational side, and it may cause difficulties in relation to particular policies'. I do not think you can separate [policy from operations] in the way that has been suggested."

  325.    Another way in which policy impinges on operations is in the case where an agency is given an executive task to perform, but not sufficient time or resources to carry it out properly. Professor Bogdanor (Q 131) gave a hypothetical example: "suppose a policy is adopted that there should be more custodial sentences but the money is not provided to build the prisons needed so that there are, as a result, prison riots. That may seem to be a failure of management, an operational failure, but it is arguable that it has arisen because the resources have not been provided to make the policy effective".

  326.    Professor Bogdanor also drew attention both to the Prison Service and the Child Support Agency, noting that "in recent times the chief executives have resigned after public controversy and in both cases it is arguable that the problems are those of Government, or Government's organisation of the service and not problems of failure of management."

  327.    The point is made in a more general way by Sir William Reid in a report on the Child Support Agency (Special Report, p 135): "Maladministration leading to injustice is likely to arise when a new administrative task is not tested first by a pilot project; where procedures and technology supporting them are untried; and where quality of service is subordinated to sheer throughput". In relation to problems which the Benefits Agency had in introducing the disability living allowance, Sir William said (Special Report, p 134), "I found during my investigation that there had been plans to set up a model office to test the new procedures and systems envisaged but that those plans had foundered because of pressures of time. That was particularly unfortunate because it might have helped the Agency to detect somewhat earlier (and put in hand the appropriate remedy for) the over-optimistic estimation of initial clearance rates and the mistake in estimating the volume of renewals".

  328.    The Committee asked Ms Ann Chant (Q 527) whether this sort of operational problem could arise in the Child Support Agency as a result of a policy decision (such as a decision to cut funding). In response, she described the procedures which exist to prevent such a problem arising in the DSS: "there is a sort of iterative process within the Department-assuming of course the Department has done its business with the Treasury so we know the slice of cake we all have to divide amongst us. Then you do your discussions in a corporate way, and ... of course we do have to take the corporate good of the whole DSS into account. It would in fact, conversely, be no good at all to the Department of Social Security if I could use such incredible eloquence and such wonderful statistics to get me a much larger set of resources than I actually needed which made me feel very comfortable as a chief executive, but say the Contributions Agency were to be denuded and not to operate properly. So this iterative process includes being a corporate manager as well as a specific chief executive. But there are two halves to a budget ... [and] they come together in the business plan. Again it does not always happen like this, but I could say to my Permanent Secretary and Ministers, 'If this is what you would wish to give me, then I could explain to you now very clearly because of the management information system I have, what I can give you for that, but I cannot give you all you want'. If I have done my own professional managerial work properly with appropriate information systems to back up my argument and I am credible, the judgement for them will be, 'You have a choice: you can either give me more resource and get more, or we can negotiate about what you can get with that resource'. Once I have signed up to that business plan and done the deal on it, I have agreed, as an agency accounting officer and on behalf of my staff, that that is a plan I believe we can realistically deliver".

  329.    The Committee discussed this issue at some length with its witnesses from the CPSA. Commenting (Q 874) on the example of an agency which had had to reduce its services in a rural area because the Minister had reduced the funding of the agency, Mr Churchyard said, "if someone in a rural part of the country is upset and writes in to his MP and the MP asks a question, the Minister is likely to say, 'I am referring you to the area director of whatever agency it is and he will respond'. What he is not going to say is, 'Well, it is a Ministerial policy decision'. That is not likely to be the outcome. We are in a very grey area here where it is difficult to precisely pin down who has got the responsibility. That is one of the consequences of moving to executive agencies, there is no doubt about that".

(v)  The Impact of Operations on Policy

  330.    The obverse of the impact of policy on operations is the impact of operations on policy. Sir Brian Barder (Special Report, p 218) put it thus: "policy is often little more than a distillation from the aggregate of operational decisions."

  331.    Sir William Reid gave an example of this phenomenon when speaking about the Child Support Agency (Q 561). He said that "some of the ways in which that policy became implemented threw up new areas that required new policies to be devised and there has been quite a lot of new legislation on Child Support Agency work thrown up not just by the execution of the executive work but by the implications for policy of how that came to pass."

  332.    It appears to the Committee that this process of ensuring that operational considerations are taken into account when formulating policy is very important. The Committee therefore raised the question whether the introduction of agencies (and the necessary consequence of attempting to classify all activities as either "policy" or "operations") had interfered with that process. On balance, witnesses thought not. Officials working within agencies felt that they were given ample opportunity to inform the policy-making process. Mr Richard Tilt described agency status (Q 1447) as "a helpful management arrangement". He said (Q 1449) that it was his function to provide the Home Secretary with policy advice on issues to do with prisons and (Q 1508) pointed out that there was no residual part of the Home Office that dealt with prison policy. His colleague Mr Hugh Taylor reminded the Committee (Q 1516) "that what was brought into the agency was, in effect, the old set of Home Office policy divisions which always formed part of the Prison Department, so there is still that policy input within the Prison Service. ...we still have relations with other parts of the Home Office obviously on personnel and finance issues, but also on what you might call macro-penal policy issues. For example, sentencing policy as a whole is determined in the Home Office, and at the moment we are reflecting on that in consultation with Ministers. We will be in frequent contact with officials in other parts of the Home Office dealing with sentencing policy on a wider front."

  333.    Lord Mackay of Ardbrecknish said (Q 900) that he saw an agency chief executive as "almost an alternative source of information, of advice to Ministers, other than the policy section. So this aspect is quite important. I will not call them competing sources but certainly they are looking at the issue from a slightly different point of view. One is looking at how well you actually run the system and the other policy makers are looking at how you fine-tune the policy or change the policy, or whatever it might be". He added (Q 901) that if a policy was going to be difficult to administer, the sooner Ministers knew about that, the better.

  334.    This was echoed by Ms Ann Chant. She explained (QQ 519 and 520) that she was the Permanent Secretary's and the Secretary of State's principal adviser on the day-to-day operations of her part of the Department, and that she monitored policy and evaluated it. It was not her responsibility to formulate policy but "where applicable, to make suggestions or comments about how the intention of policy does not seem to be working out quite that way in practice. Or, knowing the intention, we may suggest a way that operationally we could achieve the same thing better". She added (Q 524) "What I do not have is any responsibility at all for the construction of policy and the development of policy, but there is indeed a very strong and very practical and, I think, a now well-developed link certainly in the DSS, and in other agencies and other departments as well from my contacts in the chief executive network, that you can feed in ... and say, 'This would be practical. This would not. We would suggest this.'"

  335.    In relation to his own Department, Mr Michael Scholar described (Q 1572) the working arrangements between the Department of Trade and Industry and one of its executive agencies, the Radiocommunications Agency: "the work of the agency is largely executive in nature: granting licences for the radio spectrum, policing those licences, monitoring, and so on. That is its job. It always advises Ministers on the policy in relation to the radio spectrum, so it is that agency which took the lead on the recent White Paper on Spectrum Management. It is that agency which is taking the lead on the Bill going through Parliament on the auctioning of radio spectrum. Now, those in the agency who deal with those policy matters work very closely with those in the core department, for example in our Communication Industries Directorate, who deal with very closely related topics, telecommunications and so on. There is very close working and it is as though, in this respect, the body were not an agency when it is doing that kind of policy work".

  336.    Mr Scholar also said (Q 1632), "An agency can cope perfectly well with giving policy advice. An agency can cope perfectly well with representing the British Government at international meetings, which a number of our agencies do with no problem at all. They function in those ways as though they were part of the core department". But he added that if a body was heavily or largely engaged in giving policy advice on politically sensitive issues, "one does ask the question, why are they an agency?"

  337.    The Committee notes that this great flow of policy advice coming from agencies into core departments seems to controvert one justification put forward for the very existence of agencies-that policy and operations are separable, and that it is better to separate them. It seems inevitable that agencies should advise on the basis of their experience of operations and managing, but at the interface of advice from agencies and advice from core departments it is necessary to ensure a working relationship, or friction will result. If there is really so much policy advice coming in from the agencies, it is not clear how the division of functions between agencies and core departments is made.

  338.    Sir Christopher Foster answered that question in relation to the prison service (Q 119). "One of the objections about the state of the Prison Service ... is that there were no Civil Servants left within that department of the Home Office who had any locus whatsoever to advise the Home Secretary on the Prison Service, it had all been hived off to the Prison Service, so that the Prison Service became in a sense the judge and jury in its own interest. That was bad. You need a group of Civil Servants at the centre in relation to all these agencies and quangos whose job it is to balance the advice and views coming from quangos and executive agencies against all sources of advice."

  339.    Sir William Reid echoed these reservations, saying (Q 555) "I am slightly concerned about the residue of a large department that has most of its business hived off into agencies because I do not think that you can very easily divorce policy aspects from the executive functions of some of the agencies."

  340.    It appears to the Committee that, given the propensity of operational matters to turn into political matters, and given the very close symbiotic relationship between policy and operations, there will always be many cases where it is difficult or impossible to draw a clear line between policy and operations. In those cases, the question arises whether agency status is appropriate. Sir Robin Butler said (Q 2080) "I am very suspicious of this distinction between policy and management. I have never seen the borderline between what is put into an agency and what is not as being a borderline between policy and operations. Even the most mundane operation has an element of policy about it". The Committee acknowledges that other factors such as standards of service and staff morale need to be considered when deciding whether to transfer a function to an agency. Nevertheless, accountability remains a vitally important component of agency status, and it is arguable that where agency status makes accountability more difficult, it is an inappropriate structure to use.

(vi)  Agency Status?

  341.    Much of the attention in this debate is focused on the Prison Service. Lord Armstrong of Ilminster, for example, (QQ 2 and 3) suggested that the Prison Service "perhaps was an area in which it might have been better not to move to an executive agency because it seems to me that in that service some of the operational issues or some of the day-to-day issues that arise are highly political and raise highly political issues such that the Home Secretary and his Ministerial colleagues simply cannot detach themselves from it in terms of answerability." He went on to say that "in the Prison Service at least the former relationship, whereby the Prison Service was part of the Home Office and the members of the Prison Service were Civil Servants answerable directly to the Minister, was a better arrangement." Sir Christopher Foster took the same view, saying (Q 83) that if a body is like the Prison Service where it is impossible for Ministers to let well alone, "then an executive agency or quango is not a sensible way of proceeding".

  342.    Mr Derek Lewis, former Director-General of the Prison Service, agreed (Special Report, pp 260 to 261) that there was difficulty in defining precisely who takes what decisions or when the Home Secretary should be involved. "When the Prison Service framework document was originally written, it was decided that it was too large and complex a task to define precisely what was policy and what was operational in all possible circumstances. It was therefore decided to set out only general principles without providing any rules on interpretation. This will only ever work with difficulty and even that requires a close working relationship between the Home Secretary and the Director-General of the Prison Service. It is an unsatisfactory situation, which leaves Ministers, Members of Parliament, management, employees, prisoners, solicitors and many other groups uncertain and subject to unpredictable changes in interpretation."

  343.    On the other hand, the Prison Reform Trust (Evidence volume, p 222) wrote that "The Prison Service has probably been the most controversial of all the agencies with the former Home Secretary's assertion of a difference in responsibility for policy and operations, the sacking of Mr Derek Lewis as Director General ..." but "for all that, our strong feeling is that agency status does offer a more appropriate management structure for the Prison Service than any alternative model. Indeed, the Prison Service can, overall, be proud of its achievements as an agency".

  344.    Sir Richard Wilson (Q 941) approached the question of agency status by explaining why the Prison Service had been made an agency, while the Immigration Service had not. He said that the Prison Service was an operation which was a very difficult blend of management and political sensitivity, but "In the case of the Immigration Service, I would argue that the blend of political sensitivity and management is even sharper, and where you get to a point where so many decisions have necessarily and rightly to be taken by Ministers because they are difficult and because they are ones which Parliament would expect Ministers to account for in Parliament, then I do not think you can reasonably achieve the kind of autonomy that is necessary in order to make an agency really successful".

  345.    Sir Christopher Foster and Mr Francis Plowden argued (Special Report, pp 23-24) that the scope for conflict between policy and operations needed to be resolved by breaking down the functions of executive agency operations, often in detail, so that exactly what needed to be reserved to Ministers and what delegated to the chief executive was well defined and enshrined. "Where responsibilities cannot be set down precisely enough for them to be clearly apportioned between Minister and agencies or boards, or where frequent policy changes are expected, then there is a strong case for keeping such activities within departments under the old doctrine of Ministerial responsibility whereby the departmental Minister is wholly responsible to Parliament. Otherwise, whatever break it may seem with the old doctrine of Ministerial responsibility, it is surely not tolerable that Ministers can disclaim responsibility for large areas of business and yet resume it over any part of that business whenever they choose. It plays fast and loose with Ministerial responsibility to Parliament."

The Committee's Conclusions

  346.    It appears to the Committee that within the agency structure there will always be cases where the dividing line between policy and operations is blurred. An operation may fail because the policy behind it was bad: yet as Professor Bogdanor told us (see paragraph 318 above) "it can never be policy that something goes wrong". Operational matters enter the political domain when they go wrong.

  347.    The Committee has heard that matters which have a high operational content are suitable to be dealt with by agencies, whilst matters with a high policy content should remain in the core. However, the Committee has seen no guidelines specifying which activities are considered to be matters of policy, and which operational. Nor is the Committee convinced that precise guidance as to this distinction could be produced. Any operation can involve a question of policy-even the issue of driving licences-if circumstances are right. It is therefore not surprising that such precise guidance does not exist. Decisions as to whether an activity should be undertaken by an agency or by the core department appear to have been taken on an ad hoc basis within departments. In general this is unobjectionable but, even though allocation of activities to core departments or to agencies cannot be made simply on a clear-cut policy/operations distinction, general criteria should be defined to indicate what should or what should not be transferred to an executive agency and what should be retained within a core department. In any event, when a decision has been made to transfer a given set of activities to an agency, it should be standard practice to carry out a pilot test before the decision is implemented fully. In this way the problems which beset the Child Support Agency and the Benefits Agency at the outset might have been avoided.

  348.    The Committee also questions the opinion that it is desirable to separate policy from operations. The focus on operations in agencies may have raised standards of service (see paragraph 368ff below); but those who point out the benefits of isolating operations from policy equally protest that agency staff are deeply involved in policy decisions. An acknowledgement that policy and operations must inform each other in a continuous loop can not be accompanied by a dogmatic assertion that it is best to separate them. The Committee has heard no serious argument for the separation of policy from operations other than the opportunity it affords to improve standards of service. The Committee considers that standards might have been improved within the existing, unaltered Civil Service. The Committee does not accept the view that it is possible effectively to separate policy from operations, or the view that such a separation is desirable.

  349.    By devolving some activities of a Government department to an executive agency, there is a risk-and perhaps it is inevitable-that no-one will remain in the core department who is able to brief and advise the Minister on those aspects of the department's work which have been devolved to the agency. It is obviously important that a Minister should be able to obtain such briefing, which formerly would have been given by an official working in a core department. It is essential therefore to ensure that Ministers are and continue to be able to obtain the necessary briefing and policy advice from senior officials in the executive agencies if it is not available in the core departments.

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