The Future of the Civil Service

Lord O'Donnell Excerpts

Thursday 16th January 2014 Lords Chamber

[Lord O'Donnell (CB)]

My Lords, I should like to add my thanks to the noble Lord, Lord Hennessy, as the noble Lord, Lord Armstrong, said, in his long journey from the dark side. I also thank both Houses of Parliament for passing the Constitutional Reform and Governance Act, which, I have to say, civil servants advised Ministers to do about 150 years before they finally did it. Pace is something we need to think about.

If we are thinking about the pace of change, we should think about what has happened in the past three years. The Civil Service has downsized by about 75,000. It has managed an effective coalition Government, which has not been done before. It has had to deal with cuts in real pay, pensions, redundancy terms and promotion prospects. Yet throughout all of that, morale has gone up. Engagement scores for the Civil Service show an increase of two percentage points. Trust levels, as the noble Lord, Lord Turnbull, said, have gone up by six percentage points at a time when, as we know, trust in the political system is not exactly strong. I put it to the House that if the Civil Service were a private sector company, the Harvard Business Schools of this world would be doing case studies on it, and we should applaud that success.

However, let us not hark on the past but talk about the future. What are the challenges for the future? We are in a period of austerity until 2015 and beyond, or is it infinity and beyond—who knows? Can we carry on? Yes, we have skills shortages in the Civil Service in areas such as commissioning, financial management and project management. I commend the noble Lord, Lord Browne, for the work that he has been doing on some of these areas. The innovation, of which we need more in the role of non-executive directors, has been fantastic. They have been incredibly helpful in departments and in bringing home to civil servants and Ministers the business skills that we need to deliver these big projects. That is very good.

However, we also need a broader set of skills if we are to look at the reforms for the challenges of government—and I stress government—for the next few years. It is going to be all about things such as behavioural public policy and sorting out how we measure success. In health, we have quality-adjusted life years. For the whole of government, we will need well-being years. Those are things to come. We need a broader range of skills, including those of psychologists and multidisciplinary people. We need more risk-taking, as I have said. If we are to get risk-taking right, we will have to stop the emphasis on ex-post Spanish Inquisitions and do a lot more on ex-ante appraisal of projects before they come to us. Parliament should be demanding more information. We should have something like an office of taxpayer responsibility which, building on the OBR, would look at these projects and give you evidence to show what the risks are. Where is the evidence base? Too often we have what I call the Bachelors’ approach to policy. Do noble Lords remember that Bachelors’ hit “I Believe”? Ministers come in with very strong beliefs and you say, “Very good, Minister, let’s test them. Let’s have a bit of evidence. Let’s have a randomised control trial”. They say, “No, too slow”. We need all of that.

Finally, I strongly support more experts. Of the top 200, 41% were externally recruited in the first place. They should not be experts in telling the Minister who appointed them how brilliant the Minister’s ideas are. They should be genuine experts, based on meritocratic principles. If we think about the future of government, we should analyse government. You cannot just analyse the Civil Service. If you are going to have a commission, make it on government and about Ministers and Civil Service together. It would be a nonsense to do one half of the horse.