CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1625-i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Public Administration Committee

Strategic Thinking in Government

tuesday 13 December 2011

Geoff Mulgan, Nick Butler and Matt Cavanagh

Evidence heard in Public Questions 1 - 73

USE OF THE TRANSCRIPT

1.

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Public Administration Committee

on Tuesday 13 December 2011

Members present:

Mr Bernard Jenkin (Chair)

Robert Halfon

David Heyes

Kelvin Hopkins

Greg Mulholland

Priti Patel

Lindsay Roy

________________

Examination of Witnesses

Witnesses: Geoff Mulgan, Chief Executive, National Endowment for Science, Technology and the Arts, Nick Butler, Visiting Professor and Chair, King's Policy Institute, King's College London and Matt Cavanagh, Associate Director, Institute for Public Policy Research, gave evidence.

Q1 Chair : Welcome to this first session of our new inquiry about strategic thinking in Whitehall. May I ask each of you to identify yourselves for the record, please?

Matt Cavanagh: I am Matt Cavanagh; I am an Associate Director at the Institute for Public Policy Research.

Geoff Mulgan: I am Geoff Mulgan, Chief Executive of NESTA.

Nick Butler: Nick Butler, Professor of Public Policy at King’s College London.

Chair : In our previous report we noted a lack of capacity for strategic thinking across Whitehall. We concluded that the National Security Council needed more infrastructure underneath it in order to make it effective. That inquiry was very much concentrated on defence, security and foreign policy-the external piece. This inquiry is changing the emphasis; we are looking at domestic Departments as well as overseas Departments; we are looking in particular at the role of the Treasury. We are asking the question more about how strategy emerges rather than how it is decided and, therefore, we are very interested in your own experiences.

Mr Halfon will start off.

Q2 Robert Halfon: Given the recent reports, particularly in today’s newspapers, that the Treasury played a major role in the veto in Europe, do you think that was as a result of a strategy by Government, or was it something that was reactive?

Chair : Who would like to kick off?

Geoff Mulgan: To step back, the question is whether there been a long-term economic strategy-a sense of Britain’s economic interest, how that intersects with diplomacy and so on. I assume one of the premises of this inquiry is that the UK, which is not unusual in this respect, has tended to be much better at tactics-short-term firefighting, media and political management. It has been not so bad, but often not so good either, at medium-term management of things, implementation of policy and so on. And it generally has not devoted much resource or political attention to thinking five, 10, 15 or 20 years ahead.

As I say, that is not that unusual; many other countries share the same weakness, the US in some respects particularly markedly, but some other European countries have devoted significant resources to that long-term thinking, applying it to everything from technology and healthcare to their relationships with Europe, or where their future economic base will lie. There are things we can learn from those other countries that may help us to make decisions that are necessarily made under pressure in ways that, in 10, 20 or 30 years’ time, will look more sensible.

I cannot comment on what was going through the Treasury’s mind because I simply do not know.

Q3 Robert Halfon: Just to use another example, what about the Iraq war? Was that the result of a Government strategy or, again, a reaction to events?

Geoff Mulgan: The thing about strategy is that you have to start off by working out what you care about, what you want and what your values are. In that sense, strategy is deeply political-small and big "p". There was, for better or worse, a valuing at the time of the Iraq war of humanitarian intervention and a national commitment to being part of maintaining peace, and promoting democracy and human rights worldwide. The second thing you need in strategy though is to be very rigorously aware of the environment you are operating in: what others will do, what you can achieve and what you cannot achieve. Part of the critique of the UK intervention in Iraq was that it was not sufficiently informed by a rigorous understanding of the conditions in which those values were being put into effect. Again, that is a weakness we share with others.

Robert Halfon: Could I ask some of the other witnesses to comment on it as well, please?

Nick Butler: Thanks, Chairman. I agree with Geoff that the UK as a whole, looking at policy in the round, has not developed a national strategy at any time in the recent past that I know of. I think the reason for that is that it has not been felt to be necessary. There have always been tactics, but generally Government has never felt that these grand planning approaches, which are as Geoff says deployed by some other countries, were needed here. That is, I feel, why we now do not have a national strategy for the economy or for the future of the country; that is regrettable and events may change that.

On your specific questions, I think the intervention in Iraq was led by some degree of strategic thinking, to a much greater degree than the current dialogue with Europe. The strategic thinking that shaped Government policy in 2000 to 2003 was very simply to stay close to the Americans, as our key foreign policy relationship, even if we did not always like what they were doing. I think there is quite a lot of evidence to support that: that is why we got in.

On Europe, like Geoff I have no knowledge of what went on on Thursday night-why papers were tabled so late; why people are now so hostile to the UK. I do think that we do not, in any way that I can find, have a strategy now-nor did we have it under the last Government, so this is not in any way a partisan point-for what our ideal relationship with the European Union should be. At a time when events are moving very quickly and you have to be reactive, I think it is quite important that you have a strategy within which your tactics should fit.

Q4 Robert Halfon: Sir Peter Ricketts is reported as saying that Foreign Office strategy needs to change from realpolitik with certain regimes and actually move on to support opposition democratic movements in those countries. Do you think that is a signal that there is now actually a new Foreign Office policy strategy?

Nick Butler: Do you mean in France or Germany? I do not know what the Foreign Office strategy is. As far as I know it is not published; I think you would have to ask Peter what he meant by that.

Q5 Robert Halfon: You have all served in the strategic centre of Government at different times; do you think there is a problem in lack of strategic thinking?

Matt Cavanagh: Like Geoff and Nick I am not privy to the internal thinking of the Treasury or the FCO in the events of this week, but I do think one of the interesting things is that there are strengths and weaknesses in how all the different Departments of Government do strategy. Having worked in the Treasury, among other Departments, I would say actually the Treasury is relatively long term. Shorttermism is one of the problems with strategic thinking in Whitehall but, of the Departments I have worked in, the Treasury is actually relatively long term-much longer term than the FCO. The Ministry of Defence is also quite long term. Both those Departments have other problems, but in terms of who is more likely to be thinking long term, actually the Treasury have a better record in that regard.

Q6 Robert Halfon: The Treasury has a better record in terms of strategic thinking?

Matt Cavanagh: I did not say in terms of strategic thinking as a whole; I am saying there are a number of aspects of behaviour that are likely to make you better at strategic thinking. One of them is being longtermist rather than shorttermist; there are others. Just in that respect the Treasury tends to be better.

You mentioned Sir Peter Ricketts, who is now leading the National Security Strategy. One of the tasks of that new body, which I believe is a step in the right direction although it needs more work, is to knit together those different Departments with their different strengths and weaknesses to try and produce a collective strategy for Government that is better than the sum of its parts. From what I have seen so far, although I think it is an incremental improvement, it is not the radical transformation we need in terms of strategy in Whitehall.

Geoff Mulgan: Just to go back to your question, when you see strategic Governments-there are some who look pretty impressive and the measure is how they improve the living standards and well-being of their citizens over long periods of time-they do usually combine quite a long view about where they want to be, where their economy is going to be, where their society is going to be, where their geopolitical interests are going to be, with great agility to respond to change. Those are, in a way, the two almost opposite aspects of strategy, exactly as they are in the military.

In practice, that means within each part of Government not being afraid of talking about values. In relation to backing oppositions in another country, in part that is about your values and how you weigh that up against perhaps realpolitik and your understanding of the realities of the world you are in. Many countries are quite good at the analytical side of strategy, but then do not connect it to decision making; they do not connect it to politics, budgetsetting, etc. That is one of the common vices in this field: great strategic thinking, but not very strategic action.

You asked about treasuries. I would say one rather good example of a strategic treasury is the Australian Treasury, which over many years has looked long term. It has seen itself as a guardian of linking budget allocations to a sense of where the economy is going and where society is going. To take one example, it has repeatedly done detailed studies on issues like ageing and the likely impacts of an ageing population on pensions, the economy and policy choices. It has acted as a champion of public debate, as well as thinking within Government about those big strategic choices. That is not quite a role that the UK Treasury has ever played, but I think it is quite a healthy one because otherwise finance ministries tend to be rather antistrategic. They can see spending only year to year, or maybe two or three years ahead, and cannot in a rigorous way understand how choices made now will affect prosperity in 20 years’ time, yet that is what a modern treasury should be doing.

Q7 Robert Halfon: Can I just ask how you conceived your respective roles in the administration? What value were you trying to add when you were there? What levers did you have at your disposal?

Nick Butler: Shall I start, and perhaps go back to the previous question for a second? I hate to disagree with Matt, but I do not think the Treasury is a strategic Department. I wish it was. I think that it is a very good finance ministry and a budget controller, but my experience-and I think it is still true now-is that the Treasury concentrates on that side of the economy at the expense of the other side, which is growth and development for the future, and the role of both public and private policy in achieving that growth. I think that is now an imperative and I still do not see it happening in the Treasury, which is regrettable.

Q8 Robert Halfon: What would you do to change that?

Nick Butler: Probably in terms of Whitehall structure, I think you have to end the division between a very strong Treasury controlling finances and a rather weak Business Department trying to support business and industry. That is perhaps getting too political.

Chair : That is exactly what we need to ask about. The Whitehall silos are the recurrent theme that comes up under this Committee almost whatever we are discussing, because we are a crossdepartmental Committee.

Nick Butler: To answer your direct question, my role was to work for the Prime Minister on business and industrial policy-i.e. the future of the economy-and the economic recovery out of the recession. That meant working with and for the Business Department and Peter Mandelson, in many cases, against the Treasury who were not exactly constructive at all times in that debate.

Geoff Mulgan: My role in the UK was setting up and running the Strategy Unit, which in a way was meant to be an answer to these questions. That meant building up a capacity to do three sets of things. One was that longterm thinking and analysis of the big trends, whether on drugs, climate change or the nature of economy and technology. Secondly, it was to design quite detailed policies that would then be taken through Cabinet, get approval and get legislation and budgets attached to them to avoid the risk of just doing the analysis. Critically too, it was to help Whitehall work in a more joinedup way. Most of the projects we did were crossdepartmental; they often had governance structures bringing together various Ministers, permanent secretaries and so on; and often they led to structures that cut across departmental silos.

We had quite a lot of capacity, at one point 130 or 140 people, drawn from within the Civil Service, but critically too we always tried to have half the people brought in from outside, whether from the voluntary sector, business or academia, and indeed from other parts of the world to ensure a different way of thinking that was not so hidebound. I have also worked in other countries that have copied that model. There are about eight countries around the world who have essentially copied the UK model in different variants. There are pros and cons of every aspect of it, but in a sense I would sum it up as one thing: helping politicians make better decisions.

Ultimately, everything we did was to enable Cabinet Ministers, the Prime Minister, the Chancellor and so on to have a better sense both of the opportunities that they might not have thought about, but also sometimes about the downside risks of decisions. The ultimate test is whether they ended up making better decisions than they would have otherwise.

Q9 Robert Halfon: Just a final question: what do you think changed in the way the Government did strategy between 2004, when you left, and 2009?

Geoff Mulgan: As I say, my eyes were mainly in other parts of the world.

Chair : You mean you averted your eyes.

Geoff Mulgan: I averted my eyes as well. The strategy capacity continued. I think some of the ways it worked were probably not quite as effective; it became much more inward looking rather than outward looking. One of the principles we tried to apply was doing a high proportion of the work fairly openly and publicly, and setting out ideas and projects on the web for people to comment on. That did diminish rather in the years that you are describing. Perhaps inevitably since the last election, in some ways the pressures of events and of public finances have made it quite hard to be strategic. In a way, the UK is not unlike many other countries in that respect: the long term has to some extent been put on hold.

Matt Cavanagh: I can attempt an answer to that on the basis that I had a different time scale to Geoff. I started in Government in 2003 and finished in 2010, and I worked as a Special Advisor for Ministers in the Home Office, then the Treasury, then the Ministry of Defence and then Downing Street. I worked on strategy in a number of areas and worked quite a lot with the Strategy Unit. Although I would agree with Geoff that in some ways, it was probably not as strong by 2009 as it was earlier, it still had an important role in helping Ministers to think a bit more strategically about things than they might otherwise.

One thing I noticed was the absence of that in relation to foreign policy and defence. For example, in 2006-07 there was an exercise looking across Government as a whole trying to think about strategy towards the end of Tony Blair’s time as Prime Minister. The exercise had pros and cons, but I thought the foreign policy side of it was notably weaker than the different domestic strands, and part of that was because there was not a Strategy Unit to help and also to scrutinise what the Departments were doing.

Can I just pick up on what Nick said? I am not sure we actually disagree. I probably was not clear. I do not think the Treasury is a wonderful strategic organisation; I just think there are a number of things that you need to be if you are going to think strategically: one is longtermist; one is to have clear objectives; one is to have broad thinking rather than narrow, which is one of the things we have talked about; and another is to be coherent across what you are trying to do. I think the Treasury is not broad-as the other witnesses have said, it is often quite narrow in its focus-and it also does not always have clear objectives. The point I was trying to make is at least it is longtermist, whereas the Foreign Office, for example-and this is why I was struck by some of the stuff in the newspapers at the moment about the Foreign Office and the Treasury being rude about each other-needs in particular to think about the longterm aspect because that is something that they are not very good at.

Chair : All these comments about the Treasury are going to cause us great grief with the Treasury Committee, but do carry on.

Q10 Lindsay Roy: We have heard frequently that the silo mentality is an inhibitor in effective crossdepartmental working and, indeed, in sharing their priorities. Geoff, you mentioned crossdepartmental strategic initiatives: how effective were they and can you give some examples?

Geoff Mulgan: There were a lot of them in the UK, and there still are quite a few under way. Some of them were made manifest in units, teams, crosscutting budgets or shared targets; there is a whole array of different things. At one level, one of the first ones I was involved in was about reducing the numbers of rough sleepers on the streets of British cities; that achieved an 80% reduction; that is an extraordinary, almost unmatched success anywhere in the world, though almost never talked about. It created both a crosscutting structure in Whitehall and at the local level. There were others on postconflict reconstruction, around drugs policy and programmes around early years, like Sure Start.

My overall sense though is that Britain did not go far enough in reshaping the political underpinnings you need for crosscutting work. Some other countries have not simply kept existing Cabinet allocations and then lopped on a bit of crosscutting structure under them, but have actually changed ministerial roles better to fit that. My experience here and in other countries is unless you align the politics, the career incentives of your Ministers and the political kudos, all of these other things will tend to get pushed to one side when push comes to shove, when there are tough budget negotiations and so on.

Q11 Lindsay Roy: Were these successes not highlighted strongly enough? Because I feel others may then have followed on and taken up these successful types of initiative.

Geoff Mulgan: They did continue. It is a general problem of politics if your average tenure as a junior Minister is 18 months, and as Secretary of State maybe two or three years; you do not have strong incentives to make a lot about your predecessor’s brilliant ideas and successes. We have shorttermism built into the way careers are organised.

Matt Cavanagh: I would say that is exactly the same with the Civil Service. I completely agree with that in terms of Ministers: they have too short a tenure. It is an admirable thing about the current Administration that the Prime Minister has said he wants people to serve longer in posts. It is the same in the Civil Service, in that you have people cycling through posts in two years, and they themselves have no incentive to think, "Well, actually, am I prepared to do something that is about me investing for a result that is going to pay off in three or four years’ time?" They do not stay in post long enough and their career structure again does not incentivise them to work across Whitehall.

Can I offer one example on crossGovernment working? It is going to sound as though I am obsessed with time scales, and I am slightly. For example, on Afghanistan there were a number of factors that prevented the MOD, DFID and the Foreign Office working better together, but one of them is that they were operating on completely different time scales. DFID was operating on a 10year time scale, which is a perfectly respectable time scale and there is no reason why they should not have been operating on that. The MOD, notoriously now, was operating on a sixmonth time scale because they had operational tours going through every six months. Often, it felt that the Foreign Office was working on a oneweek time scale-that’s slightly unfair, but "What’s the next big international conference? What are our lines to take for that?"

All these are respectable time scales, and no one is suggesting they have to stop thinking on that basis, or that DFID have to stop being long term, but they all needed to get together and agree on a strategic time scale, in which they would have a conversation about what was going to happen in the next two or two and a half years. We failed to do that, I am afraid, and I am not convinced that in some of the things I have seen-obviously now looking at it from the outside-that has changed. If they were in the same position again-for example, if Libya had not gone as relatively well as it seems to have gone-I worry that we would have had the same problem there.

Nick Butler: I think there were many attempts at crossdepartmental working, and some of them no doubt succeeded. I will just quote one I was involved in that did not succeed-and this is not quite strategy as I understand it; this is policy. We tried to get an initiative going to make sure that the UK was a leader in the building of electric vehicles. That is not a huge issue, but it is something that matches the change in other policies where we felt we were not doing enough and we wanted to do more. I was asked by the Secretary of State and the Prime Minister to convene a meeting to agree what the policy should be and what needed to be done that was not being done.

I convened the meeting, and it turned out that there would have to be 16 people there from five different Government Departments, all of whom felt that they had the lead in determining what the policy should be. There was a great dispute on where it should be held, so in the end they all had to come into No. 10 rather than meeting in a much more convenient room in any Department. We had the meeting, we agreed what should be done and then the Treasury said there was no money.

Matt Cavanagh: Just to endorse what Nick is saying, I have had similar experiences. Geoff has already mentioned the drug policy, which is a good example that goes across Government; I would say alcohol policy is the same; I would say the response to youth knife crime in the summer of 2008 was the same; I would say immigration policy throughout my time in Government was the same too. In all these issues there are a large number of Departments, all of whom have a legitimate interest. It is as bad on the official side as it is on the Ministerial side. The process of getting the relevant people in the room feeling empowered to make decisions rather than simply representing their departmental interest often seems unbelievably frustrating.

Q12 Lindsay Roy: So people are too precious of their inbuilt frustrations, and these all contributed to our relative failure.

Nick Butler: I would say that civil servants work for their Department, not for the Civil Service or the Government.

Geoff Mulgan: There is a constitutional aspect of this in terms of Secretaries of State’s accountability to Parliament, which really locks in the Department as the key unit. If you take an issue like the Prime Minister’s speech on life sciences a few days ago, that is a classic issue that cuts across quite a few Departments, exactly like electric cars. It is of enormous strategic importance to the UK, to job creation, wealth creation and so on. It is exactly the sort of issue that, if you treat Departments as the only building blocks of Government, is bound to be underperformed. If you instead disaggregate Departments and reshape teams, budgets and laws around the task rather than about departmental interest, then you come up with very different answers.

The additional thing I would just throw in is that one of the most strategic countries in the world at the moment is China. It devotes enormous efforts to long-term thinking, planning and strategy, but also devotes very substantial time to the training of Ministers and senior officials every year in being on top of the leading edge of green technologies, life sciences or geopolitics in ways that have absolutely no parallel here. Unless you embed some of these things not just in structures, but also in the training and formation of the key people and their career incentives, then we should not be very surprised if we do not do very well on things like life sciences, electric cars and so on.

Chair : We are going to come back to the capacity issue later on, but the conclusion from that bit of the conversation seems to be that crossdepartmentality militates against strategic thinking and in favour of what Tim Montgomerie has described as "Government by essay crisis".

Q13 Kelvin Hopkins : I just have a couple of comments first of all. Geoff Mulgan said that we entered the Iraq war as a liberal intervention and in fact we actually went in, I understand, because there were weapons of mass destruction; if that had been put forward as the argument we might have got a different policy. Anyway, setting that to one side, when it comes to the Treasury, it has made classic mistakes over decades-and I can go into detail if you need-from the ERM to failing to spot the credit crunch and the disaster that followed. The Treasury has been at the heart of that and they have just made mistake after mistake after mistake.

My question-and I think Professor Butler touched on this-is this. We keep confusing policy with strategy. There are areas of policy-electric cars, life sciences and so on-but my own view is that there is a strategy in Government, or there certainly was during the Blair era. Can I ask particularly to Geoff Mulgan: what were the most successful pieces of strategy work done from No. 10 during that time?

Geoff Mulgan: There were a lot of them, and one of the interesting things about strategy work is you can sometimes judge it by direct policy recommendations, implementation and effect. I would say, on a series of fronts from childcare and education to energy, there are good examples of successes. However, I would also say that a large part of the role of a strategy team is not just to devise policies that are then implemented; it is about a frame of mind. It is promoting a way of thinking or a culture in senior Ministers and officials that is always looking at not just next two or three months, or the next couple of years of policy implementation, but also at the further horizon. That was done quite well; Tony Blair as Prime Minister regularly spent significant chunks of time with his colleagues, officials and outsiders looking at the UK’s interest 10, 20 or 30 years ahead. That is relatively unusual, but is probably helped by having a strategic capacity inside.

Just to go back to your point about the Treasury, one of the things you do need in Government is the ability to think ahead in terms of bad things that might happen. One of my frustrations in the past with the Treasury was their unwillingness to think through negative scenarios. Indeed, several times I have tried to get them to do scenario exercises about a slowdown of the world economy, the credit crunch and about rises in unemployment. There was always a great sensitivity about doing those because they might leak and they might be interpreted as meaning the Treasury thought the economy was about to turn down or there would be a credit crunch.

I have been impressed in other countries, and Singapore is perhaps the clearest example, where officials and Ministers are regularly taken through scenario exercises to game play or role play bad things happening. Singapore did it again and again on military issues and on financial crises. If our Treasury and, indeed, our Cabinets had spent more time doing those sorts of exercises on economic downturns, we would have been much better prepared in 2008/2009 than we were. That requires a very different mode of thinking from what is normal in Government or, indeed, normal in a central bank, the FSA and so on, which are repeatedly victims of essentially wishful thinking and believing that growth will continue. That is why one always needs within the structures a contrary way of thinking that is a little bit scaremongering, warning and looking at the unpleasant possibilities. One of the things you might perhaps look at is how a Government more systematically will look at the negatives as well as the positives. The great risk now is perhaps almost the opposite: that we have become so doomladen about the world we will miss some of the great opportunities there are for us in the next few years.

Q14 Kelvin Hopkins : It is my view, and I do not know if you share it, that there was a world view being promoted from Downing Street very forcibly by yourself, Tony Blair and that little knot of people who ran things during his era, but it did not always go your way. When things did not go well, what got in your way? Was it officials, structures, processes, politicians or Parliament? What were the things that frustrated you in your drive in this particular direction? The direction was obvious to me, but may not be so obvious to other people.

Geoff Mulgan: All of the above.

Q15 Chair : We work in that environment. That environment is taken as given and you make strategy in that environment. What was the most frustrating thing that militated against dealing with that environment?

Geoff Mulgan: The biggest frustrations come in those fields, of which there are quite a lot in domestic policy, where almost any group of sensible, rational people looking 10 to 20 years ahead can come to a broad agreement on what needs to be done. Healthcare is actually quite a good example where there is a broad consensus on what actions will lead to better health and less spending in 20 years’ time. The barriers to that are almost exactly the list you have said. They are about departmental interests, subdepartmental interests, professional interests, vested interests and, to a degree too, the lack of demand pull from the public for those things to be done; so the media and the public are part of this picture as well. This is why, to my mind, any serious strategic exercise cannot be an internal one within Government; it cannot be purely technocratic. It is also about a national conversation about what we need, about our choices and what we might need to sacrifice now in order to have a better outcome in 20 years’ time.

Q16 Kelvin Hopkins : So you have a world view and you are constantly frustrated by officials, by politicians and even by the public who are suffering from what you might call false consciousness; they have to be educated to follow your strategic world view-one I may say I did not share myself. I will not go into it now, but I think there was a fundamental difference of view about the direction we wanted to go in. You talk about reducing spending on the health service, not about providing a health service fit for a modern, civilised society.

Geoff Mulgan: I was talking about better health outcomes and I very much said it is a conversation that is needed, not a monologue. To my mind-and indeed I think this was done by many of the strategy teams I was involved in-we often started off with conversations with the public about what they needed. When we were working on homelessness we involved people who were living on the streets to tell us what might be most useful to them. If you are trying to come up with a way of cutting crime it is often quite sensible to talk to victims, but also to the people who might be criminals. You do then need a conversation, which is a twoway conversation-absolutely not "the man in Whitehall knows best". If you read anything I have written about strategy and the methods we use, they were precisely to avoid that kind of technocratic error, which has been very common in Governments around the world, of believing they have a monopoly of wisdom, and if only they could persuade the stupid public everything would be fine. That is not the approach we took at all.

Q17 Kelvin Hopkins : My impression is that you were the people who thought you had the monopoly of wisdom and had to drive everybody before you, including the public.

Geoff Mulgan: If that had been the case we would not have done all the exercises of-

Q18 Kelvin Hopkins : Let’s say you were pursuing a neoliberal model in economics and a neoconservative strategy in foreign affairs and you did not like the checks and balances that are all part of our democratic tradition.

Geoff Mulgan: I have never been a neoliberal or a neoconservative to my knowledge, but maybe you know better.

Chair : Matt, do you want to chip in?

Matt Cavanagh: A lot of the remarks that I think all of us have said have been quite negative, but one of the questions asked was whether there were any good examples. Geoff has already mentioned the example of rough sleepers, which was before my time but I would endorse. Another one that I can think of-because I was racking my brain thinking, "Surely there was something successful"-was a new youth crime plan in 2007/2008, which spanned enforcement, sentencing and also prevention. It was properly resourced, it was implemented pretty well-again, Geoff’s point that it is not just the ideas but how you implement them-and the results were broadly good, in that crime went down and the number of young people in custody also went down.

What you see from those examples is that they are slightly second tier issues. We did the youth crime plan before the public debate about knife crime became very high profile. I struggle to think of an example of good strategy where something has been really front and centre in the public eye, and so for me this gets to the heart of it. It is how you manage the interaction between Government, Parliament and the media on the really big issues so that it is possible to do strategy.

I absolutely endorse what Geoff said about scenario planning. There was not enough of it and we needed to do it. The excuse that he remembered is people worrying about leaks; we have to accept that is real. Often Departments would refuse to do it, but I remember cases where they did do scenario planning and the leaks became a serious problem. For example, you do a bit of scenario planning on Afghanistan and what leaks is the Government admits it thinks it is going to lose, even though that is one of several scenarios where surely we need to plan for the possibility that it does not go well. Another was summer of 2008 where the centre of Government, No. 10, asked all Departments to do some work on what they thought would happen if we had an economic downturn and what the big challenges were that each Department would face. The one I was involved with was the Home Office saying, "In previous recessions crime has gone up, and so what are we going to do if that happens?" Again, that was a front-page story: "Home Office admits that crime is going to soar".

I am not saying that as a result of that you do not do scenario planning. You do the scenario planning, but you need somehow to handle this better so we do not get into this dynamic where we do a bit of it, a bit of it leaks and everyone shrinks back. Geoff might want to say more about this, but I think the answer is you need to get what you are doing out into public more proactively at the start, so that people actually engage with the whole of the scenario planning rather than just the bits that leak.

Chair : Mr Butler, very briefly?

Nick Butler: I thought that the greatest strategic achievement of the first 10 years when Labour was in power, which I am surprised Geoff did not mention, was actually the combination of sustained economic growth and modest but still tangible redistribution of wealth through particular programmes. I think that is the real level of strategic thinking that underpinned the domestic side of those years. The strategic aim of the last three or four years was to manage the country through an international economic crisis, using the G20 and other devices including public spending. Rightly or wrongly, that was the driving strategic goal. That was partially achieved, but I would say it was imperfect because we did not lay sufficient foundations for economic growth.

Q19 David Heyes: Can I ask you about your views on the role of the NSC in all this nowadays? The Government have described it as a "powerful centre of strategic assessment and decisionmaking at the heart of Government." Is the NSC the right place to address these sorts of challenges around prioritisation and co-ordination that you have all been touching on?

Matt Cavanagh: I have said, and I would reiterate, that I think the NSC is a step in the right direction; it is better than what was there before. In my view, it has been rather oversold, in that if you actually look at the composition of the NSC, it is not that different from some of the Cabinet Committees that were there beforehand; they also included military chiefs, the heads of the security services, the border chief and so on. It does meet more regularly and the process of work is better organised, as I think is broadly agreed. I worry about the strength of support that it has in terms of its Secretariat because it is not just about what the body does when it meets, but the officials it has working in support of them. My sense, which I think is shared by some other observers of these issues, is that the Secretariat needs to be beefed up if the NSC is really to play a role in terms of co-ordinating the different Departments.

The other thing I would say is you distinguish the two kinds of things the NSC will do. One is to deal with the big issues of the day that fall within its remit-that would have been Afghanistan a few years ago; it has been Libya this year; it might be Iran or whatever-in a way that is largely driven by events. The other is the longterm strategic thinking, the kind of thing that Geoff has been talking about, the things that we are going to be worrying about in 10 years’ time. It would be unfair to say the NSC is not doing those things at all; I think it does do those things, but there is less evidence that it is really transforming the way Whitehall works on those longer-term things. Whether that is because, as always happens, the daily and weekly events crowd out the time for the other things or whether, again, it is because the support of the Secretariat is not here, is unclear to me.

Geoff Mulgan: I am glad it is there. In the US, which in part is the prompt for it, in some ways it is an extraordinary mix of great capacity on geopolitics, security and so on-a whole set of institutions-but there is almost nothing comparable on domestic policy or domestic strategy, which is a great tragedy for the US but not a topic for this Committee to worry about. In a way we had almost a mirror of that. I would hope the NSC takes a broad view of security. One of the things that has changed in the last 10 or 20 years, in a way, is that the classic concerns of people who call themselves security experts have to be joined by as much focus on issues like energy, drugs or migration. This is what security means in the modern world and it is still the case that our decision-making structures-FCO, MOD and so on-are locked into a different set of answers for Britain’s strategic-

Q20 Chair : Just to interject, even that list is a bit modest. What about the skills base or the science base?

Geoff Mulgan: I was just going to come on to that. It again relates to what Nick said. In a way, the biggest source of security for any nation is having its overall strategic stance right. For better or worse-well, I think for better-the 10 years from 1997 to 2007, in simple objective impact on economy, redistribution and so on, were as successful as any period in British history. In strategic terms, it was based on a set of hunches about the balance of open markets, investment in education and skills, rising investment in public services and infrastructure, encouragement of entrepreneurship, etc. You can argue about the details, but there was an overall strategic stance that worked in terms of the numbers for quite a long period. It then fell apart fairly dramatically when hit by the financial crisis.

The fundamental question for Britain looking ahead is to get a similarly coherent strategic stance to help us through a very different period, and that then has to inform the more specific policies on skills, migration, drugs, energy, etc. I know one of the anxieties of the Government and the public at the moment is it is not quite clear what our overall strategic position is for the next 10 or 20 years.

Q21 Chair : Sorry, I must just press you here: there was a bit of strategic blindness about the imminence of financial collapse.

Geoff Mulgan: There were a number of blind spots. That was one. The need for a different stance on financial regulation was obviously another, and one could carry on with the list. However, the overall package in terms of GDP and the standards of living of the British people did very, very well by historic standards. I do not think anyone could contest that.

Q22 Chair : Was there a bit of blindness about how much was being borrowed in the economy?

Geoff Mulgan: Part of the mistake was certainly about household debt and, to a lesser extent, Government debt, undoubtedly. All I am saying is that you would be very hard pressed to find a 10-year period in the last century or, I suspect, in the next century, where the UK has done so well at the fundamentals of strategy and in terms of the outcomes achieved for British people. If there are better examples, I would love to see them.

Q23 Chair : If you do not care about how much you are borrowing, it is quite easy for a while.

Geoff Mulgan: I suspect that even household borrowing would have been sustainable without the financial crisis.

Chair : Mr Butler.

Nick Butler: You have taken the points a little beyond the NSC. Can I come back to that? I think it is a most disappointing body because I do not think it takes into account whether we have the capabilities to sustain the commitments that we are making. We make a lot of commitments and we seem to keep making them, but I do not think it pays attention, not just to skills, but to the economic strength that is required to spend sufficiently on defence and security to achieve what you say you want to achieve. I do not think it has paid any attention to the industrial base, which is being weakened by decisions being taken, rightly or wrongly, and which once weakened is very hard to replace.

Matt Cavanagh: I would completely agree with Nick in terms of the substance of the criticism of the Government’s approach. The question for me is whether those issues should be dealt with by the NSC. I agree with Geoff that it should take a broad rather than a narrow view of national security, but at some point, as you broaden out indefinitely, you need to realise that the right place for the overall questions about the country’s strategy to be discussed is in the Cabinet, and the NSC is never going to replace the Cabinet. So in terms of whether our economic strategy or expectations for economic performance match up with what our ambitions are on defence or in other areas, my sense is that that is actually a question for the Cabinet, and the NSC should focus on things like realistic debates about what kind of capabilities we should have and how they should be deployed.

Q24 David Heyes: For example, I guess it is not looking at the security implications of the economic crisis in terms of breakdown of social cohesion and those sorts of things.

Matt Cavanagh: To be fair, I think the NSC has looked at questions of the implications of the financial crisis for national security. Indeed, I think its predecessor committee under the last Government also had specific papers and discussions that were focused on that.

Q25 Chair : Moving on then, we have talked a bit about the Treasury already. When you were in No. 10, what involvement did the Strategy Unit have with the setting of Public Service Agreements for example?

Geoff Mulgan: A lot. The man who invented them went on to run the predecessor of the Strategy Unit, the Performance and Innovation Unit. In some ways, all of the work of the Strategy Unit tried to integrate and align with budget allocations and spending reviews, the setting of targets such as PSAs, decisions on the legislative programme and the other key levers of power in the Government. We tended to work very closely with the Treasury; we had many secondees from the Treasury; the Treasury sat on the overall governing structure of the Strategy Unit and quite often commissioned projects as well.

Q26 Chair : PSAs fell into disrepute, presumably partly because a lot of PSAs looked very unstrategic in the detail into which they went. Were they a strategic tool or actually rather typically a tool of the Treasury, wanting to get a grip of something from their perspective?

Geoff Mulgan: I think the PSAs improved over time. Certainly, the first set of them were a bit of a rag-bag of genuine strategic outcome goals, activity measures and output measures. Over time they became more serious and joined up; I think a third of them were shared across Departments by the last set of PSAs. The UK is going through an experience mirrored in many parts of the world of how you get the right level of granularity of your overall targets, so that at least the system all the way down knows what you are trying to achieve, whether it is exam results in schools, fewer cancer deaths or reducing household burglary, but not to the level of detail that they then dramatically distort behaviour so that teachers teach the test, or police only focus on vehicle burglary and do not take any notice of antisocial behaviour, just to give a few examples. That is a task of calibration.

I think the best examples around the world are getting that better and are making both the setting of targets and the assessment of them a much more open process that involves the public, and involves looking at evidence and critical scrutiny. I think it is fair to say none of those things were in place when the PSA regime was created here, and I have sometimes been quite critical of target regimes and the excess of targets here. I do think it is quite hard to run a modern Government without some targets, some objective measures of success and some objective ways of holding to account not just schools, hospitals and so on, but also Departments.

Q27 Chair : Mr Butler, in business, do you feel that the PSAs made the Treasury more engaged in strategic concerns in a businesslike way, or did it just reinforce the Treasury’s prejudice for telling other Departments what to do?

Nick Butler: I would say I do not have enough experience of how they worked when I was there. By that time, the Strategy Unit had been abolished; we worked in the Policy Unit, which was a much more shortterm venture. The Delivery Unit, which was within the Treasury, produced these results on all the targets. I would say they had a constructive use, but possibly set too many targets for those who were trying to deliver things to be able to interpret what was really important.

Matt Cavanagh: Just a point of information: the Strategy Unit had not actually been abolished at that point, it was abolished after the election, but it is true that in the last year or so there was less focus on the PSAs, partly I think because of the overriding aim of managing our way through the financial crisis. I would agree with what Geoff said: that we got some things wrong in the PSA target regime, which I saw from both a departmental and a Treasury point of view-there were too many, some of them had perverse effects and so on. However, the idea that you could try and run a Government without some sort of targets, I agree, is hopeless. I thought the last general election campaign where you had political slogans like "We believe in patients, not targets" was political knockabout, but in terms of reality of Government it is hopeless and actually quite damaging.

I have not worked in the business world as long as Nick has at all, but I did spend three years on strategy in business before I came to Government. If you talked to anybody in that world and said, "Do you think you need to have targets, measures of performance of how your business units are working or do you think you can get rid of those?", they would think you were mad if you were trying to get rid of them. The only serious debate to have is whether they are the right kind of targets. Are there too many? Are they the right kind? Have we thought through how people might game them, try and get round them and distort behaviour? That is the only conversation to have, not yes or no to targets.

Q28 Chair : So actually they are not strategic targets?

Matt Cavanagh: You need to have a strategy and then you need to devise your targets in a way that will help deliver and monitor that and not create perverse effects. They are not the driver of the strategy-they need to be consistent with it-but they are a vital part of managing an organisation. If you care about outcomes I do not think you can do without targets.

Q29 Chair : Is this an entirely separate process from the Comprehensive Spending Review, the Green Book and the other things that are the core business of the Treasury?

Geoff Mulgan: No, I think there should be a single process for any part of Government to think about what we are trying to achieve and how we are going to achieve it. It’s not rocket science. What we are going to achieve will in some cases involve quantitative targets, in others qualitative goals; in some cases they will be things you have a lot of control over because they are perhaps provided within public services; in other cases they will be things like economic growth, where you do not have so much direct control and you probably should not set targets in the same way you would for your own operations. But these should all be in an integrated process and budget allocation should follow strategy, as happens in any sensible organisation or any business; you do not separate out your financial allocations from what you are trying to achieve and how you are going to achieve it. Again, this is not exactly rocket science.

Q30 Chair : Looking into Whitehall, whether you agree with the Government’s strategic priorities or not, where you can discern them, do you feel the Treasury is following a set of strategic priorities that does reflect the Government’s aspirations or do you think there is a disconnect?

Nick Butler: No. The disconnect is that it is following one goal, which is to reduce the deficit-quite legitimately-but is not following the other, in my view necessary, goal of how you achieve economic growth over time to sustain living standards in a very competitive world.

Geoff Mulgan: I will just make one comment on technique. I think modern treasuries have been trying to adjust how they think about money in pretty much the same way businesses have changed how they think about buildings. In the old days you would buy a building and look at its price; nowadays you look at the lifecycle cost of the building and what it will cost in terms of energy and maintenance over 30 years. That gives you a much more sensible way of making business decisions. We need treasuries to do that so they can compare the longterm effect of building a new road, childcare centre or hospital and look at their effects over 10, 20 or 30 years.

Our Treasury has made a few faltering steps in that direction; the OBR is potentially one additional bit of machinery that could be looking in that direction; but this is again where I think Parliament should be holding Government and Treasury to account much more rigorously on the longterm lifecycle effects of spending decisions, not just yearonyear decisions, because as we all know in our own lives or in any business, if you only focus on yearonyear decisions you are almost certain to get things wrong over five, 10 or 15 years.

Q31 Chair : How do you evaluate the longterm value of an aid programme against the longterm value of being able to be a leading country to build electric cars? Is that what we are asking the Treasury to evaluate at the moment, or are they even trying to do that?

Geoff Mulgan: They should not be trying to do that, but they should be looking at the core items of public expenditure that relate to health, education or crime where there is evidence on the medium to longterm impacts of different spending decisions. When it comes to things like electric cars or, to a degree, life sciences you have to take hunches, make strategic guesses or use your intuition to judge where things will be.

Q32 Chair : Can I ask Mr Butler to expand on that?

Nick Butler: I think this is not the proper role of the Treasury or any Whitehall Department. It is the proper role of Cabinet.

Q33 Chair : But Cabinet does not have the infrastructure to do that.

Nick Butler: No, but only the Cabinet and only the politicians whom we elect can make the decision between overseas aid and industrial support or unemployment benefit. The Civil Service should provide them with the choices, the best information on what could be done, on the track record and so on, and where necessary with limited targets that could be achieved. In the end, though, it has to be politicians who decide in a democracy.

Chair : And the question is: how do they decide?

Matt Cavanagh: Can I just say I completely agree with that. Asking the Treasury, or the Strategy Unit if it still existed, to evaluate electric cars versus overseas aid is asking the wrong people; you should be asking the Cabinet. However, there are other areas where policies actually sit in different Departments and are part of the same objective. In the case of drugs, which has been mentioned already, how do you evaluate the effectiveness of drug treatment versus drug enforcement, versus sentencing, versus whatever you do with troubled families who have drug problems? You can actually see those things as all part of the same objective, and in that case it is appropriate to ask an expert to assess how these different ways of spending money are going to deliver on this shared objective.

Nick Butler: To take an immediate example, Chairman, you cannot ask the Treasury or Civil Servants to say whether we should go further into Europe or come out. They can give you a view of what the consequences of either step or anything in between would be, but it must be for politicians to say where we go now. I think that is a big strategic decision that Government has to take.

Chair : We touched on the question of public engagement earlier. Part of the pushback we had against our previous report was the idea that having a national strategy that was thought up and then laid out and run by the Government was much too authoritarian and did not fit with a consensual, liberal, democratic society. That has led us in a different direction, in this inquiry, to consider how we engage the public.

Q34 Greg Mulholland: When coming up with new strategies, how important is public opinion as part of that and how does public opinion relate to what is the national interest? Is there a conflict there? I would be interested particularly if you could give us experience of your time in No. 10 to give a sense of how public opinion did shape Government strategy.

Geoff Mulgan: You could use two examples, one relating to your previous question on aid. Whether the UK helps the longrun development of the Congo through aid, through military action or police support, through encouraging remittances or technology transfer: these are in part technical choices, but underlying them would be essentially a public and political judgment about whether Britain should be doing anything and, certainly, be making any sacrifices of its own resources to help the development of the Congo. Governments in those cases will respond to opinion but I think in relation to aid also shape opinion over long periods of time.

I think things become more interesting and more difficult where public opinion takes one form if you simply do an opinion poll, and a different form if you engage in a detailed conversation. Certainly, Government by opinion poll is a pretty stupid way to run Government and has never really worked that well for anyone, but how you get the conversation right is not easy. Let me give a very live example, which is hospitals and healthcare. All over the world, if any Government tries to change the pattern of health provision the public not surprisingly want to defend their hospital. Almost anywhere, if you engage the public in a detailed conversation about what the choices are for the next 10, 20 or 30 years you will come up with a very different conclusion, where the public wants the hospitals scaled down, wants more resources in primary care, in maternity provision, care for the elderly and so on. That only comes out of an in-depth, genuinely reciprocal conversation about choices and priorities. The task for Government on quite a number of fields is to learn different skills of engagement and conversation with the public.

At the end of those conversations you still might say, as an elected majority in the House of Commons, "We’ve heard the public and we don’t agree; we’re going to do something different and we hope that, come the next election, you will come around to our point of view". However, either to rely on opinion poll data, quantitative feedback or simply to ignore the public and have an internal technocratic conversation is very unlikely to deliver you the legitimacy of the difficult decisions you have to make.

Q35 Greg Mulholland: What should Governments do when you have a conflict, as it seems, between public opinion and what the Government believes to be the national interest? You give one example, but the current austerity measures in Greece or perhaps in this country could be another where, clearly, public opinion will say, "We don’t like them. We don’t want these cuts; we don’t want these reductions to pensions". If that is in the national interest, how is that balanced in an era of increasing connectivity, democracy and epetitions? Is that making it more difficult to have coherent strategy in Government?

Geoff Mulgan: I think it is certainly making the craft of politics harder. It is fascinating to see how, in different countries, different groups of politicians are handling exactly the issue described: how to handle austerity and make it be understood as necessary, fair and so on. At one extreme, you have a country like Estonia, which I think is quite an interestingly strategic but small country; in 2008, even before the crisis hit, the Prime Minister implemented a 15% cut in public sector pay, a larger cut in Ministers’ and others’ pay, and essentially said, "We’ve had a good few years; we’re now entering a really difficult time. We need to share the sacrifices. If we all pull together we will bounce out of it quicker", as indeed they have. That is compared to Greece, where there is not even a sense of public acceptance of the premise of the need for the austerity measures in the first place. There are no strategy methods that on their own can solve the problem you are describing; this is about the craft of politics and leadership at its most fundamental.

Nick Butler: Chairman, I think we should understand that Government is a matter of balancing interests in a complex society. On all these interests, issues and everything you have mentioned, there is not just one strand of public opinion; there are many strands. On Europe you will find some people who are viscerally opposed to our current membership, some people who make their living by virtue of us being engaged. It is impossible to satisfy everybody all the time. The role of Government is not just to follow public opinion; it is to lead. When I was there that was what we were trying to do out of the banking crisis. That meant doing things that were unpopular such as supporting the banks and beginning the process of increasing taxation, which has now been continued. That was not popular and in the end the Government paid the price, but I do not think Government should respond just to opinion polls or just to immediate popularity. It is elected; it is responsible for guiding the country through many difficult issues. I think it was Shimon Peres who said Government is not a pleasure.

Greg Mulholland: I think there are many who would share that view at the moment.

Q36 Robert Halfon: If there is proper strategic thinking done in Government, how do you stop it becoming an establishment view of primarily people like yourselves, and multinationals and big corporates; how do you genuinely involve ordinary members of the public?

Geoff Mulgan: On the make-up of strategy teams, for all the ones I have been involved in we tried to have a formula that at least half of the members were from outside the Civil Service. We tried to ensure that on every topic there were people with frontline practical experience as parts of teams. One of the vices of Whitehall is how often decisions are made without anyone with direct frontline experience of the topic being involved in the decision. There is also the use of a whole array of tools for getting out and talking to the public on their terms where they are, rather than waiting for them to come to London for consultations.

I think all of those are only partial counters to the tendency to internal "group-think" or "elitethink" that you will get in any capital city in any Government. If you are not trying quite hard then I would agree with the premise of the question that you are likely to become a victim of establishment group-think, which as we saw in the late 2000s will often disastrously misread what is going on in the outside world.

Q37 Robert Halfon: In other words, can we have open source/Wikipediatype strategic thinking and will it work?

Geoff Mulgan: We did experiment with lots of things that would now be called open source or crowdsourcing of policy debate. There is a whole set of technologies for involving thousands if not tens of thousands of people in public debate, from things like NATO’s policy jam to Australia 2020-there are all sorts of ways of doing this. The decisions still ultimately have to be made by elected politicians, often in quite a lonely way. On some specific elements of what Governments do, there is a lot to learn from things like Challenge.gov in the US, which opens up the public to coming up with proposals and then helping develop them. In NESTA we are doing that in several public services areas, opening up the design process beyond the insiders to the public as well. I think it will become increasingly mainstream for Governments to tap into collective intelligence wherever it is-and it is not all within the walls of Whitehall and Westminster.

Matt Cavanagh: Just briefly, I would agree with Geoff that although the Strategy Unit was not perfect, it was slightly better at that than Departments are, for whatever reason-because they do not have the time or they do not have the imagination. The question now the Strategy Unit has been abolished and a lot of Departments are forming their own internal strategy units is: will those strategy units, even though they are within Departments, still have a bit of freedom to think, and a bit of time? Are they doing that and taking on that challenge to be more outwardfacing and involving people from outside more?

Q38 Chair : Before we pass on from that, how much of that deeper, iterative, conversational polling did the Strategy Unit do and how important was it?

Geoff Mulgan: A reasonable amount, but probably at a fairly superficial level, if we’re honest.

Q39 Chair : Do you think there is a scope for doing that more intensively and comprehensively?

Geoff Mulgan: I think there is a lot of scope for doing it more intensively, more comprehensively, making more use of technologies that were not really as mature seven or eight years ago but are absolutely useable. It is key for Ministers to be part of the process.

Q40 Chair : I hope as a Committee we are going to be able to conduct some of that kind of polling in order to scrutinise the quality of the Government’s strategic thinking and strategic priorities. When you were running your Strategy Unit, is that the kind of scrutiny you would have welcomed?

Geoff Mulgan: Absolutely. I think Parliament needs to be more involved in these processes. Going back to part of the earlier conversations, some of the job of thinking ahead-in particular things like scenario exercises and looking medium to long term-is much easier to do from Parliament than from within the Executive.

Q41 Chair : Except we do not have the resource either.

Geoff Mulgan: You need to get the resources then. In a country like Finland a lot of this is led by Parliament. The technology assessment capacities in countries like the Netherlands or in Congress reside in legislatures, not in the Executive, because it is easier for them to look broadly and perhaps to explore uncomfortable options and facts than it is for the Executive.

Chair : Any thoughts on that? No, let’s move on.

Q42 Lindsay Roy: It has been argued that strategic thinking tends often to generate internal reports rather than having a huge impact directly on services to individuals. How do you avoid the time and resources needed for strategic thinking being portrayed as a waste of taxpayers’ money?

Geoff Mulgan: My view was that quite a lot of it in the past has been a waste of time and money. In setting up the Strategy Unit we did quite a lot of research on the history of such things in the UK and their equivalents around the world. The most common vice was what you have described: a lot of clever people sitting in a capital city producing very lengthy, very intelligent reports that have no effect on anything whatsoever.

Lindsay Roy: Divorced from reality.

Q43 Chair : You don’t include yourself in this.

Geoff Mulgan: What we tried to do was put in place some protections against being too bad an example of that vice. One was wherever possible to design solutions and to take our reports through Cabinet, link them in, as I said earlier, to decisions on allocation of money, programme design and so on, so there had to be buy-in to the action; strategic thought was not separated from action. The second thing was I actually said to my team right at the beginning that our ideal project is one where we have no report at all, where we involve all the players in the system, some of whom will be inside Government and some outside, in a shared journey of understanding the problem, the possible solutions and putting them into practice. Ideally, you would never have a paper report for that because you are taking people through the process. To be honest, in practice we did not really achieve that. We did on a couple of things, but Whitehall still likes paper documents and is rather addicted to them.

Q44 Chair : Whitehall also hates people setting off on journeys without knowing where they are going to end up.

Geoff Mulgan: That’s true.

Chair : And Ministers hate strategy for that reason because it ties them down, doesn’t it?

Geoff Mulgan: It ties them down; it also opens things up.

Matt Cavanagh: There is no perfect answer to this. There is a trade-off or a balance between how close a Strategy Unit is to the end users of their products and how far away they are. I think it is absolutely vital that people doing strategy have to be walled off a bit from the people who are managing everyday business because if they are not they always get sucked back into whatever the latest crisis is. They have to be a bit walled off, and that gives them the freedom and the independence to think afresh at least. If they are too walled off though, you get the problem that Geoff mentioned, which is it is much more likely that they come up with something that for whatever reason is just not going to be doable. You need to manage that balance between the Strategy Unit and Ministers-the people who will ultimately sign off-but also, I would say, permanent officials in their Departments. Whoever is doing the strategy needs to be close enough to them but not too close. There is no perfect blueprint for that; it is just something you have to manage.

Nick Butler: I think you could build a house the size of Downing Street with the bricksized reports that were sometimes presented by strategy units and others, and which were never read because they are totally unattuned to the time scale of life of political leaders who, if you are lucky, read the first two pages. I think that absolutely crucial to getting this right is that the strategic thinking and the key questions have to come from the top-a view of, "This is what we need to do. How can we do it?"-so that you have an audience. This is how it would much more commonly work in business: "This is the choice we face. What are the options? Work through the options for me". But I think too much strategic thinking over the last 20 years in Government has been rather selfindulgently large pieces of work that had very little impact indeed.

Q45 Lindsay Roy: The strategic thrust for the Big Society has come from the top and yet, even after the fourth launch, we hear that people are not really clear what the Big Society is about. What does Government need to do to clarify what the Big Society means and how will we know if it successful?

Nick Butler: I defer to the Chairman.

Chair : I don’t defer to me at all.

Lindsay Roy: Seriously.

Nick Butler: I have no idea what it is.

Q46 Chair : Without wanting to ask you to evaluate whether you think it is the right political concept, given that it is a concept, from the Government’s strategic point of view what is going wrong?

Nick Butler: What is going wrong is there is no clarity as to what it means. You need some clarity for people to then interpret it, to present options and to work within it. From outside, I simply do not understand what it means.

Q47 Lindsay Roy: It is a concept, a vision, a project, an agenda. We still do not have clarity as to how we will gauge the outcomes of this socalled Big Society strategy.

Geoff Mulgan: There are three or four fairly specific things it is mutating into. I am involved in at least two of them so I probably cannot wholly evade this question. This links to what Nick said: the starting point of strategy has to be compelling priorities for elected politicians. Unless the tasks are coming from them, then we should not be surprised that we end up with piles of reports. Clearly, that is a compelling task for the current elected Ministers to create a Big Society, by which they mean a number of things including increasing volunteering and community activity, etc.

Secondly, the work of design has to involve, as Matt said, both insiders and outsiders. It needs a capacity and I think there has been a bit of a problem for this Government in identifying the institutional machineries to translate that very broad aspiration into practice. Some of those are now coming into existence. I am on the board of Big Society Capital, which is essentially the Bank using dormant accounts that will be implementing part of that agenda. I hope it will be extremely effective and will be able to answer your question in terms of large numbers of social enterprises being helped to grow and deliver services better than they would have otherwise.

However, I think often with strategy-and again I agree with my colleagues on this-the answer is not to have big, fat documents. If there were 20 Big Society strategies for every Department this would probably not be a good thing. Often the key you are looking for is quite a simple insight into what really makes a difference. Up on our wall we had a quote from an American jurist in the 19th century-that what we should be looking for is not the simplicity this side of complexity, but the simplicity the other side of complexity. That is to say, you immerse yourself in a complex field, but out the other end you come to some insight of what really will perhaps encourage people to do more in their community, to volunteer more and to create new organisations to achieve the goals of the Big Society. Perhaps what is still missing a little bit are some of those strategic insights rather than the big, fat documents.

Q48 Chair : Are we confusing strategic thinking with effective planning and implementation? Obviously strategy is otiose without implementation, but in the Big Society we are really lamenting the lack of effective planning and implementation, because there are plenty of ideas about. Would you agree with that?

Geoff Mulgan: It has been a challenge for Government machinery to turn the aspiration into planning and implementation. I think one could criticise the current Government for not having realised that that would happen and that there was going to be, essentially, a lack of delivery machinery, whether on health, schooling or in the Home Office. I did actually publicly say shortly after the election that that risked being the problem here; it was essentially one of the rather boring challenges of institutional design, funding, capacity, etc. However, I think every Government often learns the hard way that it is not enough to issue the press release; you have to work on the boring prose of governmental design if you want your ideas to succeed.

Chair : I think you nodded in answer to my question, Mr Butler.

Nick Butler: I think there are some very creative ideas like the Bank that are put under this banner, but if you have to launch a brand four times, it is broken and you should think again.

Lindsay Roy: Action without vision is chaos.

Chair : But it’s not really a brand, is it?

Q49 Priti Patel: I am interested in covering the ground that we have already touched on only slightly, which is capacity and skills around strategic thinking in Whitehall. I am interested in two areas. On the first, Mr Mulgan, you touched on the fact that the No. 10 Strategy Unit had an external pool in excess of 130 to 140 people that you would tap into and presumably there was a lot of external expertise there. I am interested in the capacity of the Civil Service, and Mr Butler’s written evidence to the Committee said that strategic thinking is a valued skill and is one of the six core priorities that they are judged on coming in. The question I have is: what is that skill set like in the Civil Service compared with that strategic thinking skill set amongst those in the external domain who were brought in? Is there a capacity gap from the Civil Service compared with the external individuals you worked with?

Nick Butler: I was thinking about this, having put the note in. I think the capacity gap is not in the Civil Service, where there are a lot of people who are very capable of thinking strategically and often do, usually at departmental level. There are also plenty of skills in the private sector, the voluntary sector and so on that can be brought in. The gap is actually among the politicians and the leadership in setting the strategic questions, in defining the direction and then asking the right questions to these very able people. I am sure many Civil Servants would love to do more strategic work than they do, but they are not asked to, particularly across Government, and I think that is where capability lies: how to ask the right question.

Geoff Mulgan: If you disaggregate the skills we are talking about here, they are a number of very different sorts of things. There is the ability to analyse a situation, a problem and the dynamics of systems; then skills of creativity and being able to imagine very different solutions to the conventional wisdom. They are the skills of detailed policy and programme design, and understanding how that will actually work in a prison, school or business. There are then the skills of implementation and learning. There is nowhere outside Government that has all of those skills and our approach, and the only possible approach, was always to try and construct teams that did bring together those skills.

Sometimes you would find external bodies that were much stronger on one set of skills. Some of the analytic skills were actually stronger in the consultancies than within Government. Some of the financial design skills were stronger in business than they were within Government. No big institutions turned out to be very good on creativity or innovation skills, in our experience, and I think that is still a major gap across our systems. Very few were wellversed in what I think is a basic modern competence, which is how you learn from the rest of the world about who is doing what you want to do already, and who is doing that well.

None of these are in themselves all that difficult to learn so long as you teach teams. But I would agree with Nick that the problem then is you might end up with a very skilled, strategic Civil Service, but if Ministers come in on top of them who simply want a headline tomorrow, who in a sense trust only in their own hunches and intuitions to make decisions, then those skills will quickly atrophy. We do need to learn from the bestperforming countries around the world that are taking political and Ministerial training much more seriously, and recognising that our political system often dumbs down the capacity of the system rather than smartening it up.

Q50 Priti Patel: Are there no opportunities for politicians at Cabinet level or senior Ministers to enhance their own strategic capability and to work alongside the Civil Service and others who will be brought in at departmental level from business or outside organisations?

Geoff Mulgan: I mentioned China before; there, even the President has 60 to 70 hours a year of training. That is obviously highly customised to his needs, but essentially he sits in seminar rooms, gets briefings and does exercises. Ministers in China have to write essays; you talked about "Government by essay crisis" before. They actually have to sit in residential training where they write an essay on, for instance, what a strategy for electric cars in China would be. This is a world away from how we think about Ministerial roles. It would require a significant shift of time and of Ministerial diaries from their current allocations, and it might mean fewer speeches or fewer openings, but I suspect it would deliver a pretty big return in the national interest.

Q51 Priti Patel: There are some politicians who do have strategic capabilities, having come in from industry, for example. Do you know, from your experience working in Government, of any examples where they have been able to bring in their insights, in particular their capabilities, to actually work, in a way slightly untypical of other Ministers, alongside the Civil Service?

Nick Butler: I think there have been some very good examples. In the last Government, Mervyn Davies, who came in from Standard Chartered, was excellent at commanding the resources in the Civil Service behind the agenda that he was trying to pursue. It is not just business; other people have skills from other sectors where they have led and run organisations. They know how to set direction. It is not common though, and I agree with Geoff that a bit of training, guidance and sharing of experience would be very constructive.

Matt Cavanagh: I strongly agree with that and I think we need to accept that Ministers are not necessarily selected for the ability to ask these questions and get the most out of the Civil Service, nor are the influences on them designed to bring that out. I would agree with all the suggestions made about training and so on, but I think they are letting the Civil Service off too lightly. I could give other examples of Ministers who have been strategic and who sometimes do ask the right questions, yet repeatedly get inadequate advice in terms of advice that would facilitate strategic thinking. I completely agree that there are a lot of incredibly bright people with the ability to do strategic thinking still joining the Civil Service all the time, and that is not a problem.

One point is something happens as they go up the career path in the Civil Service; when you look at the very senior mandarins you do not see the same flexibility and strategic thinking. The second point is some of the things we have talked about so far about the way the different Departments interact with each other, and also about the way the internal management structures within each Department interact, deadens that ability that you find in a lot of individuals in the Civil Service. It means that the actual product of the Department as a whole is not the kind of advice that will facilitate strategic thinking by Ministers.

Q52 Priti Patel: Is there effectively an element of system failure here, in the sense that the machinery, Whitehall itself, does not really facilitate or encourage the challenge and build culture that you might have outside Whitehall in other organisations between Ministers and the Civil Service? Presumably at a more junior level in the Civil Service they will have lots of ideas and think strategically but, as you have just said, the career structure at a higher level does not encourage that or support it the more senior you become.

Matt Cavanagh: I completely agree. One point I would like to make is that I actually think this is a function of bureaucracies. It is not necessarily the function of public versus private sector; I encountered a lot of the same problems in some big, old bureaucratic private sector organisations before-a lot of the things about management structure deadening down creativity and strategic thinking. The million dollar question is how you avoid that; if you have turned into that kind of company, for example, how do you try and get back to a more flexible and adaptable way of thinking? If I were the people who were trying to train and develop the careers of civil servants I would be looking around for examples of companies that have managed to turn things around in that way.

There is no point looking at the culture of some startup; they will be very vibrant and have lots of strategic thinking and so on, but you cannot transplant that into Whitehall. The people we should be looking for are big companies who have managed to turn themselves around, who have got a bit tired, bureaucratic and stultified, but have managed to turn things around. That kind of thing ought to be applicable to a big Department of State as well.

Q53 Priti Patel: We have touched on the issue of targets and the culture of targets previously. Using your business analogy, for example, any business would have, with any employee, key results areas and objectives that are all aligned to the business strategy. Is that a model or cultural approach that could be introduced in Government Departments?

Nick Butler: That is part of it. I would say that what you would find in most businesses is that the people at the top spend far more time working on the strategy of the company going forward than Ministers do. That sets an example right down through the organisation, because that is what is seen to matter and people would generally-they do not always get it right, of course-not be promoted unless they have those skills.

Geoff Mulgan: I think we should be a little bit wary here. I am very much in favour of bringing in more business skills and business people. I am in favour of civil servants spending parts of their careers outside the Civil Service. But a fairly universal experience around the world is, when you simply bring business people in as Ministers or as senior officials, they tend to fail; they tend to fail if they are put into too senior a position too quickly, because they simply apply exactly what you have described-business methods-to the very different environment of Government and public services, which is necessarily different.

The ideal is when you bring them in maybe a layer or two down and they combine the rigour and the disciplines they have learnt in business with an awareness of political climates and public policy. Then they can be very effective. The simple thing of, "If only we could bring in a business leader and they could sort this thing out" has been tried so many times in the Western world and almost always failed; it would be sad if we reverted to that as being the answer. We are talking about a subtle set of competencies. The same would of course apply to putting a Civil Servant in charge of a bank or a retail business. It would almost be a category error to think that they were the answer.

Q54 Priti Patel: Do you think that there is therefore the infrastructure within Whitehall to, dare I say, bridge that strategic capability issue-it sounds to me less so within the Civil Service-with the political class, those who are elected, who eventually assume office and become Ministers?

Geoff Mulgan: A decision has been made in this country, unlike in most other Western countries, pretty much to do away with the capacitybuilding machineries of Government: the abolition of the National School of Government and various other entities there were in the centre. For all the flaws of those bits of machinery in the past, I suspect something will have to be invented, not just to ensure there are the right capacities in place-and they are different capacities to run a large central Government than to run a business, a local authority or a health service-but actually also to enthuse a spirit and ethos. What is really interesting in the best-performing countries around the world is they see that to be as important as the specific technical skills. It is the spirit of how you actually serve the public in a modern environment.

Q55 Chair : This whole business of capacity came up in our previous inquiry. The pushback we got was twofold: one is the Foreign Secretary told us, "I do the strategy; I don’t need people doing strategy for me because I do the strategy". There is a clear problem with that, isn’t there? The pressures on a Secretary of State do not give them the time. Indeed, the Prime Minister told us in the Liaison Committee, "I don’t have the time". What is the answer? Where does this capacity have to be? It has to be close enough to Ministers that they feel in control of the strategy, but not so powerful that they feel the strategy has been taken away from them.

Nick Butler: Or they need to learn a little more in the way of time management. I think strategy is so important that, if you neglect it, then you just fill your diary with immediate things at the expense of perhaps the more important.

Chair : We filled our diary with this.

Matt Cavanagh: It is a serious and depressing point. I have worked in or seen a number of ministerial offices, and the tendency will be just to fill up their diary with meetings. I would agree with Nick that they have to push back against that and insist on having some time to think properly. The cynical Yes Minister interpretation is that civil servants do not actually want their Ministers to think, and there may be a part of that, but actually I think much more it is just institutional momentum. There is just a lot of business in the Department, almost an indefinite supply of business to be done. If you do not push back against that and insist that you actually need some large blocks of time to do some thinking about the big questions that you think are the issues facing your Department, you will just end up being overwhelmed by the daily business as usual.

Q56 Chair : The other thing that Ministers hate is the truth to power thing. In real strategic thinking, there needs to be somebody thinking offpiste, offpolicy or outside the box who can go to the Prime Minister or the Secretary of State and say, "You haven’t considered this bit of it". The classic example is the attempt by the Advanced Research and Assessment Group to bring the threat of banking collapse into the first iteration of the National Security Strategy, which was vetoed by the Treasury so it did not appear. How do you tackle that problem? You must have been in that situation.

Geoff Mulgan: All the best leaders throughout history have tried to have some people close to them who will say uncomfortable things, usually in private. It is quite difficult if those uncomfortable things are being said in public, and that is why you need some of this process to be internal. In terms of time management, in the past I have advocated the crude formula of about 50% of time on daytoday, short term issues, another 30% on the medium term, but ideally 15% to 20% devoted to issues more than three years out. I think that is reasonable to expect of a Secretary of State or a Prime Minister.

Chair : That’s very interesting.

Geoff Mulgan: Then what we are talking about in some ways is a series of very different levels. There are the levels of high political strategy, like Britain’s relationship with Europe, where it is fine to have your intuitions and your hunches. There is another level of more detailed policy design on, let’s say, energy security or migration, where however brilliant you are as a politician you need some help with understanding the choices and the options. The layer down is a much more granular strategic question, which we touched on earlier, and we grappled with in the Strategy Unit and failed. It is the simple question: in Britain’s relationships with, let’s say, Finland, Brazil or South Africa, at the moment we will have different policies and strategies from the FCO, DFID, the MOD and probably from other bits of Government. At the very least, let’s try and have a single strategic approach to major countries. You cannot expect your Foreign Secretary or any Cabinet Minister to have to design that in detail. You have to have some capacity-

Q57 Chair : But that’s a machinery point.

Matt Cavanagh: As an example, early on in my days in Downing Street I asked where was that strategy on Pakistan that brought in DFID, the Foreign Office and the Home Office-

Chair : And they looked at you and thought, "What a fool".

Matt Cavanagh: Exactly. They also then explained why there were all sorts of reasons why we should not even have that and we should not do that; it would be somehow wrong. First of all, it would inevitably obscure the detail of all these things and do violence to the purity of the departmental advice on each issue to try and bring it all together. We went through a process, and I am pleased to say that the Government now does have a place where it attempts to bring these things together, but it was a deeply imperfect process that raises a lot of things we talked about earlier in terms of departmental ways of thinking rather than collective Government ways of thinking.

Q58 Chair : But there is Ministerial resistance to being tied down. Mr Butler, you have been accused of wanting to pick winners.

Nick Butler: Yes, but not by the Prime Minister. I never found this problem with Gordon Brown; he was very open to challenge, criticism and different ideas.

Q59 Chair : But the Treasury feels as soon as you start picking technologies or industries, you are going to empty large sums of public money into a black hole.

Nick Butler: Correct, and that is a long-standing and I think mistaken philosophical belief that cuts across British Government.

Q60 Chair : This whole business of picking winners and a national strategy has an echo of a preThatcherite type of Government, doesn’t it?

Nick Butler: Yes, but that may not be too bad. I think that if we carry on without that we will be in a weaker economic and political position in 10 or 20 years’ time. You need to combine private incentives and market forces with the creative use of public power, which is not going back to public ownership in the old sense, but putting in place something rather different to ensure we sustain living standards.

Q61 Lindsay Roy: To take a slightly different tack, what influence has devolution had on the capacity of Government to make and shape national strategy? For example, Alex Salmond was highly critical of the fact that he had no influence on the decision taken by the Prime Minister in relation to Europe-the politics of grievance.

Geoff Mulgan: Let me turn that on its head. The way in which the Scottish Government has dealt with these issues in the last few years is becoming quite an interesting challenge to Whitehall and Westminster. The Scottish Government does have something that looks like a strategy and does have certain kinds of targets at different levels of detail, has instituted a set of processes to try and embed them, and has encouraged things like the Christie Commission to try and raise big, strategic questions about how Governments should act. It is sad that very few people in London ever go and look at what is happening in Edinburgh and see what they might learn.

Chair : Maybe we should.

Geoff Mulgan: Maybe you should. I feel that in some respects certainly the Administration in Edinburgh is moving ahead of London in terms of strategic behaviour. I think it is easier in some respects in a population of 5 million or 6 million than it is at the level of 60 million. There is perhaps another issue behind all this about scale and strategy, where many of the countries that are doing this sort of stuff best are under 10 million, but maybe that is an argument for devolution.

Q62 Lindsay Roy: You would recommend a visit not only to Washington and Ottawa, but also to Edinburgh.

Geoff Mulgan: Washington is not a particularly good example of good strategic Government. I don’t think anyone there would claim it is, either.

Q63 Chair : But they have more infrastructure for it than anybody else.

Geoff Mulgan: They do on defence and national security issues but not on domestic policy.

Matt Cavanagh: Just briefly, my experience of how devolution affected strategic decision making in Whitehall was it definitely added a layer of complexity, but it is a perfectly manageable layer. The difficulties are where you are dealing with a set of issues some of which are devolved and some not. That can get quite complex. Unlike some of the other problems we have talked about, which I think really mess things up in terms departmentalism and so on, I think devolution is there and it needs to be handled; it makes it a bit more complicated, but it is not fundamentally a problem.

Lindsay Roy: It’s transparent.

Matt Cavanagh: Yes.

Q64 David Heyes: If not Washington then where should we be looking overseas for better ways of doing strategic thinking? Did you yourselves in your No. 10 roles look at and learn from other countries?

Geoff Mulgan: Very unusually in British political culture, we looked at lots of overseas examples and tried keeping in touch with how they were doing things. There is now a loose network of strategic teams in Governments around the world. They are very different in nature depending on their political cultures. In some ways, the best examples probably are some of the Scandinavian countries, which have managed both to link up departments and link in Parliaments better than others. In Asia, certainly Singapore but also China and Malaysia do well. Australia has built up a capacity in recent years that I think is pretty good. The Gulf States are desperately trying to create new capacities because they see this as critical to their longterm success. None of them have a model that could be simply replicated and adopted, but it is hard to engage with any of those countries-which happen to be the ones growing fastest in the world economically-and not come away thinking about Whitehall in a different way.

Nick Butler: I would not only go and visit Governments; I would actually go and talk to one or two people in the private sector. I agree with Geoff that there is not a neat transfer of one set of skills from one to the other, but there is a great deal of experience at a company like Shell or some of the other big multinationals who are not too far away. Because I think strategy is about the effective use of power and understanding of power, I would go and talk to the Bundesbank. I went to the Bundesbank the other day, and they really understand what they are doing; they have a strategy for doing it and a very clear organisation behind it.

David Heyes: The timing is not good for us actually.

Nick Butler: They may not let you in.

Chair : Unfortunately, their strategy was right but they failed to stop the euro.

Q65 David Heyes: You have given us a very interesting list of Committee visits around the world. Are there any more to add?

Matt Cavanagh: In my time, I mainly collected a list of examples of countries that had made equally poor decisions in some of the areas that we were in.

Q66 Chair : So is this a fruitless exercise? We should try and do it better.

Matt Cavanagh: I think it is relatively easy to make a series of incremental improvements. You have suggested a number of things; we have suggested some. It is more difficult truly to transform it. With something like the departmentalism, which I think we all agree is a problem, you can see how you can make it slightly better with pooled budgets or structural fixes, but in my view they are secondbest solutions that will be slightly better. What will change the culture to make the Departments actually see themselves as part of a collective whole that is trying to solve shared problems? That is the big prize; I think that will be very difficult, but it is what we should aim for.

Q67 Chair : So is one of your recommendations perhaps that the Government needs a stronger headquarters?

Matt Cavanagh: It would certainly be mine.

Geoff Mulgan: It does not need a stronger headquarters if there are big walls around that headquarters. What it needs is a stronger capacity for organising the intelligence of Government. That probably does mean some people sitting in No. 10 and the Cabinet Office, but much more important is how they work with the other bits of the system. If you do what Germany does, the Chancellery has 1,000 people but is actually not very good at orchestrating the intelligence of the whole system. A stronger centre on its own is not the answer.

Q68 Chair : Could a private business operate with 16 large subsidiaries, all of whom fight each other over turf?

Nick Butler: No, they would not be allowed to work like that because the purpose of the organisation would override that sort of bureaucratic conflict.

Q69 Chair : Why does the purpose of Government not override that bureaucratic conflict in Government?

Nick Butler: That is a very good question. Having been there and seen it, I was astonished to find the silo mentality and the lack of co-operation, and also the lack of grip on it from the centre to change it, under any Government. It seems to be a burden on Britain that ought to be addressed.

Matt Cavanagh: Strength alone is not enough. You could have a stronger central Government and still have these problems, but I believe it is a necessary condition that it should be stronger. I would also say as a qualification that with a stronger centre it would need more accountability and more transparency about what it was up to and who was there and doing things. However, it is a necessary condition of a more strategic approach.

Q70 Priti Patel: I would just like to go back to the business analogy here. The Chairman has raised the issue of a business and 16 Departments fighting each other, but the point about business is that they have a board that is accountable to shareholders, etc. and have all sorts of codes around corporate governance, standards, business ethics and transparency. Is this not about the role of Cabinet becoming strengthened and, going back to the skills base of Ministers, enhanced but with more accountability around Cabinet decision making across the board?

Nick Butler: You may need that, but I think what makes the difference in good private sector areas and also the voluntary sector is that the behaviour that underlies silo mentality would just not be tolerated. People who did that would first not get promoted and then would probably move on. That is quite the reverse of where it seemed to me that there was an incentive for people to defend their departmental territory at the expense of the good of the whole.

Q71 Chair : That is because Ministers have an independent power base, don’t they?

Nick Butler: Yes.

Matt Cavanagh: It is also the rest of the Department. You find other Departments who are the victims of that; they see someone just refuse to help and defend their departmental interest. Rather than resenting that, they respect it and would then, for example, be quite happy for that person to join their Department because they think they would do the same for them.

Geoff Mulgan: This is partly a matter of our constitution that Cabinet Ministers are accountable to Parliament individually, not collectively. One of the bits of machinery change that could be recommended is not just to have annual Budgets and autumn statements, but an annual statement of Government strategy in the round, and that should be presented to Parliament. In a way, what should then flow from that are the financial allocations to achieve that strategy and the people allocations across the board, just as you would do in a company. One final one that we have not mentioned, but I think is going to be key, is the management of knowledge within the system. At the moment that is even more siloed than everything else, which means that it is very hard in Government to find out what is known, what was tried and what worked before. I think we do need a partially centralised knowledge–management system across Whitehall to have any chance of doing the things you are talking about. Even though knowledge management is boring and sometimes quite difficult, and many large businesses have really struggled to have knowledge management across their silos, that has to be part of the picture for Government in the future.

Q72 Chair : So the Queen’s Speech should not just be a list of Bills; the Queen’s Speech should be the Government’s annual review of national strategy.

Geoff Mulgan: Five paragraphs long.

Chair : Quite. The shorter the better.

Geoff Mulgan: Yes.

Q73 Chair : I would like to see a Queen’s Speech only five paragraphs long. Mr Cavanagh, I have just a very brief question: you mentioned your experience with some companies. Could you tell us the names of those companies or would that be a breach of confidentiality?

Matt Cavanagh: Certainly, if it was at the time, it would be a breach of confidentiality. The honest answer is, I should check.

Chair : It would be interesting to know.

Matt Cavanagh: It was seven or eight years ago, but they were a range of big banks, retailers and so on. They were standard clients.

Chair : This has been slightly like Mozart’s candlelight symphony, in which each of the players in turn gets up, blows out their candle and goes home for the evening, leaving one solo violin playing at the end of the last movement. Select Committees are often like that, but we are very grateful for your time; it has been a very rich session for us and a great start to our inquiry on this strategic thinking question. Thank you very much indeed.

Prepared 6th January 2012