Civil Service Reform

Kelvin Hopkins Excerpts

Thursday 3rd April 2014 Commons Chamber

[Kelvin Hopkins (Luton North) (Lab)]

It is a pleasure to follow the Chairman of the Select Committee, of which I, too, am a member. May I take this opportunity to applaud him on his strong, intelligent leadership of the Committee? I strongly endorse the report’s conclusion, which is that there should be a parliamentary commission on the civil service. Different views will be taken on this, and I have a different view from many other members of the Committee. I am an unapologetic and unreconstructed statist—indeed, as a student I wrote a paper in praise of the French prefecture system, which is statism par excellence.

As you can see, Mr Deputy Speaker, the report is substantial, and most of it is evidence. The evidence given to us was fascinating. It came from former Cabinet Secretaries, current heads of the civil service, academic historians, political commentators and, most importantly, trade union leaders. Listening to them all and asking them a range of questions was a fascinating experience.

The report came to some conclusions—not recommendations, as such. First, it supports the Northcote-Trevelyan principles, established in 1854, on the political impartiality of the civil service. That is fundamental and I want us to retain it for the long-term. Secondly, the Haldane doctrine of ministerial accountability is supported, although it is questioned. That may be discussed by the commission, as and when it is established. I was one who was appalled when a Labour Minister in the previous Government chose to blame a civil servant in this Chamber. That was a break with tradition; it was shameful at the time and it caused some consternation, and I am glad to say that it has not been repeated. I hope we will continue to retain the principle of ministerial responsibility.

I want to see the historical features of the civil service retained, although obviously we will look at every possible reform to improve it for the future. We should continue to recruit the brightest from the universities to be senior career civil servants, and we want both generalists and senior specialist professionals. I believe the Minister has a similar view to mine that generalists do have their place in the civil service. We do not just want technocrats; we want people who have a broad philosophical view of the world, who understand politics and economics, and who have some sense of history. We cannot have just scientists or just economists—especially not economists, and I say that as one myself.

There is a range of views. Some think that the civil service should be entirely politicised, which is a view that I utterly rejected in Committee. We have now confirmed that we do not want to see the civil service politicised as it is in countries such as the United States of America. We have a unitary system of government; we do not have separation of powers or balance of powers. The civil service has to have power to speak truth to power—that private responsibility to advise Ministers.

Some of our best Departments have made serious mistakes in recent years, so clearly there are things that are wrong, and I think I know why. The Treasury seemed to be stuffed full of monetarists—unfortunately, this was after my time at university—who had a particular view on how to run an economy, and they made some serious mistakes. When we joined the exchange rate mechanism in 1990, I predicted that it would fail, and sure enough it did. We might not have joined that mechanism had some civil servants in the Treasury said, “Ministers, this is a mistake.” If we had had some Keynesians in the Treasury, they might have said, “We have to retain currency flexibility for our economy, and if we don’t do that, we will be in severe danger.” Had someone said that, we might not have made that mistake. That decision led to the 1992 collapse, which destroyed the credibility of the Conservative Government at the time and led directly to the election of Labour in 1997. Some might like to claim credit for that, but it was, in fact, the collapse of the ERM and everything that went with it—the housing problems and so on—that led to political victory for my party.

We need a range of views. When I was student of economics, one of our lecturers was a former Treasury civil servant, and he said that within the civil service or the Treasury, there was always someone working on the alternatives. For example, in the 1967 devaluation debate, we had on the one hand, the sound money people arguing for preserving the pound’s parity and, on the other hand, others working on an alternative devaluation proposal. Eventually devaluation happened, which was sensible. What was important, though, was the range of views, which were privately held within the civil service. Those views were not political; they were based on, among other things, academic research.

I wish to submit my own views, as and when the commission is established. I have already written a paper on what I think is wrong with the civil service and submitted it to a recent conference. Although the civil service is not politicised as such, it was driven in a particular direction after the 1970s. Those who had a critical view of neo-liberalism, monetarism and the markets were marginalised, and it was taken as holy writ within the civil service that the market was right and that we should devolve as much as possible to the private sector. I thought that was profoundly wrong then, and I still do now and would like to see it reversed.

I want to see insourcing, not outsourcing. Outsourcing has been disruptive. It has reduced accountability and led to all sorts of failures, such as the failure in IT. Many of the IT catastrophes in the public sector come about because the civil service does not have the capacity to manage IT contracts. I would establish a public corporation for IT, where those changes to the way we run things would be done inside, not outside, the civil service. We would not have to give gigantic contracts to private sector companies, which then make mistakes and say, “Well, Ministers, if it is all wrong, would you like us to do it again?” They then get a second contract and make even more money, and the civil service is blamed for failures. Such a service should be in-house not out of house.

Outsourcing has caused all sorts of problems. In a recent report, the National Audit Office said that there was a

“crisis of confidence caused by some worrying examples of contractors not appearing to treat the public sector fairly, and of departments themselves not being on top of things.”

That is precisely what I have described in relation to IT.

There are so many details that one could go into. Some Departments have had serious problems, but I am reluctant to name names. However, the Department for Transport was in chaos over railway franchising; clearly, there were people involved who were not able to handle the situation. We had the west coast main line debacle. I understand that because of churn, those who had some vague understanding of franchising were quickly moved on, and there was nobody left to do the job properly. Keeping experienced staff—avoiding churn—is vital. That means not cuts at all costs, but making sure that we retain those civil servants with experience and skills rather than just reducing staffing come what may.

The vast tax gap has been caused, at least in part, by savage cuts to personnel in HMRC. Everyone knows—I have said this in this Chamber many times—that one tax officer collects many times their own salary in additional tax, so why not put in place hundreds if not thousands more HMRC officials and collect the billions that remain uncollected? That would perhaps help to solve some of our financial problems.

There are all sorts of problems that I want to address when I make my modest submission to the commission, when it is set up. There are issues that have to be addressed. I want to see the restoration of the strong big state that we had after the second world war, under which the lives of working people were transformed. A small state with privatisation and marketisation will, I think, bring no good to working people or the economy overall. I have a particular view, I want to put that view and I hope that others will think likewise.

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[Margaret Hodge (Barking) (Lab)]

I congratulate the hon. Member for Harwich and North Essex (Mr Jenkin) on securing this hugely important debate, even if it is taking place in the twilight hour of a Thursday afternoon. I also congratulate the Minister for the Cabinet Office on undertaking important reforms, and we should wish him well across the House. I welcome the work that has been done by bodies such as the Institute for Public Policy Research and the Institute for Government to try to tackle some of the complex issues that we face. I am delighted by today’s launch of GovernUp, so I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the right hon. Member for Arundel and South Downs (Nick Herbert) on their hard work. I also congratulate the hon. Member for Harwich and North Essex on his Committee’s important cross-party work, as well as on the proposition that we should have a commission. My view on such things is that we should let a thousand flowers bloom given that, as there are so many complex issues, every new idea will add value.

To get to the meat of the debate, wherever we sit in the House the challenge that faces us all in an age of austerity is how we maximise the value of constrained expenditure to meet the pressing and ever-growing needs of our constituents. That interest in best value crosses political divides and, I hope, unites Members on both sides of the House. If we are to achieve that, however, radical transformation is essential, and that, too, should be a shared objective. Bringing about such transformation is a huge challenge that requires absolute commitment and will take a long time, so we need to work together across the House so that the vital reforms that are needed to deliver more effective and efficient government are taken out of crude party politics, which is why the work that is being done by the Public Administration Committee and in other forums is important. We need to build a cross-party consensus on reform that can be delivered across electoral cycles.

I want to talk about three issues, although I could talk about more: the capability of the civil service; the organisation of Government in managing and delivering projects and programmes; and responsibility and accountability to Parliament and the taxpayer for services and projects delivered. First, on capability, I think that we all agree that the civil service recruits the brightest and the best, and people who are committed to public service, yet all too often the Public Accounts Committee finds that they fail to deliver major projects and vital services efficiently. We find that they too often cannot manage major business transformation, such as universal credit, and that they waste money on big projects. For example, with the aircraft carrier project, which has spanned Governments of both parties, the original proposal was for two aircraft and delivery in 2016 at a cost of £3.65 billion, but now, if we are lucky, it will involve one aircraft by 2020 at a cost of £6 billion. All too often, people working for the Government liberally use other people’s money—taxpayers’ money—in a way that they would never use their own, and our Committee has seen the NHS and BBC pay-offs as cases in point.

Although people come into government with the best of motives and abilities, they are not trained in the skills that they need to carry out the job that is required of them today, so they do not have commercial, project management, financial and IT skills that we need in a modern civil service. My Committee has seen many examples of things going wrong, most recently with the letting of the interpreter contract by the Ministry of Justice and the contract for offshore power transmission to the grid.

[Kelvin Hopkins]

Managing contracts is the issue, because if less was contracted out and more was done in house, some of those problems might be overcome.

--- Later in debate ---

[Nick Herbert (Arundel and South Downs) (Con)]

In 2010, when I accepted an invitation to join the Government of Britain, to coin a phrase, I found myself as a Minister in two Departments—the Home Office and the Ministry of Justice. My experience was precisely that outlined by the right hon. Member for Barking (Margaret Hodge) as regards the problems of silo Departments. They were two Departments created from one, and they found it very difficult to co-operate to address holistically the problems that clearly needed to be addressed; how to tackle crime, at source, at the earliest possible stage. Just as people were trying to deal with those problems in a joined-up manner on the ground, the Departments had been split nationally.

It was a salutary experience. When I walked into the Ministry of Justice for the first time, I was shown the lifts by my private secretary. The MOJ had a more intelligent allocation of lifts than the Home Office: you indicated the floor you wanted to go to and the right lift would arrive for you. My private secretary told me that it was possible to override the programme in the event of a Division so that a lift would immediately arrive for me, the Minister. I tried this out on what I thought would be a quiet afternoon. The lift hurtled to my floor, and a sign on it said, “This lift is under ministerial control.” The doors opened, and out stepped the then Justice Secretary, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who questioned whether the lift was indeed under his control. If so, it was about the only thing there that was under ministerial control.

The serious point I want to make is that, just as my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) and the right hon. Member for Barking have said, although set by an historical doctrine, questions of accountability arise today. If, in the mid-19th century, a form of permanent government was effectively created, that is fine when that permanent government happens to do things in the way that accountable Ministers like and that is satisfactory, and when it happens to be performing well. The problem comes when that permanent government does not perform well. Accountability then falls on Ministers who have little ability to wrest improvements from the system.

As my hon. Friend the Member for Harwich and North Essex suggested, the failures do not need to be rehearsed. As the right hon. Member for Barking said, there have clearly been major and costly project failures. When this Government came to power, only a third of major projects were running to time and to budget, and the problems have persisted. There are issues with skills, given the commissioning failures we have seen. There is also the issue of poor financial control. It is a paradox that in our centralised state the willingness of the centre to exercise careful financial control over Departments is actually very limited. The Treasury does not wish to exercise that detailed financial management or scrutiny, and it shows. All these things often lead to poor value for money, a waste of resources and poor outcomes. It is the weakest in our society who pay the price, but we all pay a price through higher taxation. I think it is common ground that these issues need to be addressed.

Every time a Government come to power, they arrive believing that there are few problems that cannot be solved by the arrival of an enlightened Government with a different set of political objectives, and that all the problems are the fault of the outgoing Government. That was certainly the case in 1997 and in 2010, when most Ministers—my right hon. Friend the Minister for the Cabinet Office was one of the notable exceptions, and it shows—had little experience of government. Soon the scales drop from Ministers’ eyes as they realise that not all the problems can be laid at the political door—the door of the Opposition—and that there are systemic problems.

As my right hon. Friend the Member for Meriden (Mrs Spelman) said, we have an opportunity for forging a cross-party agreement about the changes that need to be made. Why? Because, for the first time since the second world war, every party has had recent experience of being in government and understands that while the political debate goes on, there are issues that we need to address. That is why I am pleased today to have launched GovernUp with the right hon. Member for Wentworth and Dearne (John Healey), a non-party project with cross-party support. I am delighted that the Chairman of the Public Accounts Committee is a member of the advisory board. The board also includes the Government’s lead non-executive director, Lord Browne; Lord Bichard, a former permanent secretary; Lord Birt and Baroness Lane-Fox—all Cross-Bench peers with important experience to bring.

Over the course of the next year the project will do important research in the areas of accountability, skills and international comparisons—work that needs to be done. It will not do that work alone, or simply be an isolated research project, but will draw on the experience of former Ministers, in this place and outside, and of civil servants, whom we wish to appoint to a reference panel. We have secured agreement to that proposal from the leadership of the civil service and the Minister.

That approach will be evidence-led, will involve detailed and careful research, will be open, involving outside bodies, will involve dialogue with the civil service itself and will draw on the experience of parliamentarians in both Houses. I want to suggest that that is a better approach than that of a parliamentary commission. I have grave doubts about the capability of a parliamentary commission to do what is necessary. Indeed, I think that the concept of a parliamentary commission—an old-fashioned, inquisitorial model—is entirely wrong, quite apart from the question of who would be on it. The real question is whether it is a body that looks backwards or forwards: do its members wish to be a part of it because they think that proposals for civil service reform are dangerous and wrong, or are they looking forward to addressing the challenges that face this country and the kind of system we need to develop? The danger of the commission as currently constituted, with a judge leading it, is that it would be the worst kind of backward-looking and reactionary body, so I do not support the proposal.

Although the Public Administration Committee report has some interesting content, I think it is evidence of some of the weaknesses of a parliamentary approach. After months of deliberation and evidence-taking, what is the report’s conclusion? It is that there needs to be an inquiry. Where are the detailed recommendations? Where is the detailed analysis and evidence of the kind of change we need? We have only a year left and I believe that now is the time to do the careful work.

[Kelvin Hopkins]

I am disappointed at the right hon. Gentleman’s criticism of the concept, but the fact is that there are enormously wide ranges of views about the civil service. A conclusion would not have been consensual: there would have been serious division among members of the Select Committee and we would have gotten nowhere. A parliamentary commission could do that job.

[Nick Herbert]

I find great difficulty in understanding how a cross-party Select Committee would find it impossible to come to a conclusion, but a parliamentary commission would not. Perhaps the hon. Gentleman could explain that.