§ 3.43 p.m.
§ The Lord Privy Seal (Lord Belstead)
My Lords, with the leave of the House I shall now repeat a Statement which is being made in another place by my right honourable friend the Prime Minister on the management of the Civil Service. The Statement is as follows:
"Mr. Speaker, with permission I should like to make a statement on management in the Civil Service. I asked the efficiency unit to report to me on the progress of management reforms in the Civil Service. They have produced a report entitled Improving Management in Government: The Next Steps.
"The report finds that many Civil Service managers want to see further changes to give more room and flexibility for the exercise of personal responsibility. The report recommends, first, that to the greatest extent practicable, the executive functions of government—as distinct from policy advice—should be carried out by units clearly designated within departments, referred to in the report as agencies. Responsibility for the day-to-day operations of each agency should be delegated to a chief executive. He would be responsible for management within a framework of policy objectives and resources set by the responsible Minister, in consultation with the Treasury.
"Secondly, the Government should commit themselves to a progressive programme for attaining that objective. Thirdly, staff should be properly trained and prepared for management of the delivery of services whether within or outside central government. Fourthly, a project manager at a senior level should ensure that the programme of change takes place.
"The Government have accepted those four recommendations, which will set the direction for further development of management reform in the Civil Service. Each agency will be accountable to a Minister, who will in turn be accountable to Parliament for the agency's performance. Those agencies will generally be within the Civil Service, and their staff will continue to be civil servants. The Government will develop a continuing programme for establishing agencies, applying progressively the lessons of the experience gained.
"The Civil Service unions will be consulted about the setting up of particular agencies. They will also be consulted if any change in terms and conditions of civil servants is contemplated. The centre of the Civil Service must be organised in a way which is helpful to bringing about change. A Permanent Secretary in the office of the Minister for the Civil Service will be responsible through the head of the Home Civil Service to me for managing the process of change needed to implement the recommendations.
"I have placed copies of the efficiency unit's report, together with a list of executive functions which appear promising candidates as initial agencies, in the Library and copies are available in the Vote Office.".
My Lords, that concludes the Statement.
§ Lord Cledwyn of Penrhos
My Lords, we are grateful to the noble Lord, Lord Belstead, for repeating the Statement. We have seen a good deal of speculation in the press over the past few days concerning the matter. From my own information, I am bound to say that those reports have caused some concern and uncertainty within the Civil Service. It is therefore good that the Statement is now being made.
There is a case for reform. We certainly do not resist the need for reasonable change. However, we shall wish to consider the arguments in the report very carefully. It is also essential that there should be adequate consultation with all the unions concerned. I understand that the general secretaries of the Civil Service unions are seeing the Cabinet Secretary today and that the unions will be further consulted about the agencies. The Statement refers to consultation on particular agencies. Will the consultation be across the whole range of all the agencies concerned?
Consultation is right and proper because the setting up of the agencies will be a major and radical change whose implications will need the most careful consideration. It has been reported that a large segment of the Civil Service is to be managed by semi-independent executive boards. Can the noble Lord tell the House whether that is the case? If so, what does "semi-independent" mean? What areas of their work will be held accountable to the Government and what areas, if any, may enjoy independence? Is the noble Lord able to indicate some of the executive functions which are candidates as initial agencies? What are the priorities of the Government in that regard?
Further, can the noble Lord tell us something more about the financial arrangements? Will he confirm that all the agencies will remain accountable and subject to government audit? The Statement says nothing about decentralisation and dispersal. Will the objective be to disperse significant units of the Civil Service to the regions of England, Wales and Scotland?
It will help to remove uncertainty if the noble Lord, Lord Belstead, can say a word about redundancies. In view of the significance of the employment issue, has he any idea at this time of the implications of that matter for jobs in the Civil Service? For example, can he give a guarantee on behalf of the Government that there will be no compulsory redundancies as a result of the implementation of the recommendations?
There are currently about 600,000 civil servants in the United Kingdom. How many of them is it proposed will remain in London? How many therefore might be expected to be dispersed to the regions and to Scotland and Wales, with considerable advantage to those areas, especially those with high levels of unemployment?
Finally, there is no indication in the Statement of a timescale. Will the noble Lord say when the four recommendations that have been accepted by the Government may be set in motion and how long it will be before the whole exercise is implemented?
§ Lord Diamond
My Lords, we too wish to thank the noble Lord the Leader of the House for having repeated this very important Statement. Our reactions very largely tie in with what has just been said by the noble Lord, Lord Cledwyn of Penrhos. 767 My major difficulty is that, as is made absolutely plain in the Statement, the report on management in government relates to the next steps. We are grateful to be informed about the next steps but we cannot honestly judge "next steps" until we have an idea of the Government's general policy. Next steps in what direction? One must surely think through, work out and agree upon one's general policy before one starts taking steps. Although we know that the Government have given great thought to those matters, we are totally unaware of the general policy decisions with regard to management in the Civil Service and the Civil Service generally. We shall not be able to come to a firm conclusion about those steps or indeed any steps until we know the direction in which the Government wish to step.
The Statement begs many questions. For example, as has been hinted at by the noble Lord who has just spoken, we on these Benches are very interested in devolution—devolution downwards, to the regions and indeed to local authorities in order to get as near as possible to the citizen himself or herself. The Statement says nothing about that possibility. The indications seem to be that the Government if anything are consolidating their attitude of moving control ever further from the citizen back to Whitehall and taking ever more steps, ever more control from the local authority which is in close touch with the citizen and bringing it back to Whitehall which is not. I shall be grateful if the Leader of the House could say a word on that subject.
We are also very concerned about the question of accountability. After all, the whole of the Statement seems to be about the balance of advantage in terms of improving management of the Civil Service so as to provide more efficiency and, we hope, a better service on the one hand as against lack of accountability on the other. Where does the balance lie? We are unable to come to any conclusion on that point until we are told exactly what the Statement means on that score.
The Statement says that:Responsibility for the day to day operations… should be delegated to a Chief Executive".We all know the phrase "day to day operations" and are familiar with it in relation to all the nationalised industries. The Statement goes on to say that the Chief Executive:would be responsible for management within a framework of policy objectives and resources set by the responsible Minister".which seems to indicate that day to day management is not in the same category as general policy and resources set by a Minister. Ministers are of course accountable and responsible to both Houses of Parliament. The Statement continues:Each agency will be accountable to a Minister, who will in turn be accountable to Parliament for the agency's performance".There is nothing inconsistent between that statement and the earlier statement, if the earlier statement means that Ministers will no longer be accountable and responsible to Parliament for day to day actions of the civil servants in their departments which has been and is the situation up to this very moment.
I am not suggesting for one moment that we should return to the stage where a senior Minister feels obliged to resign his office because some individual 768 civil servant in his department who acted in good faith has taken a step which is clearly subject to criticism. I am not suggesting that for one second. However, Parliament must know exactly where it stands in terms of which actions of which civil servants it can question. The whole purpose of questions, especially in the other place, is that they should be a direct link between the citizen and the Minister which does not exist except through his Member of Parliament and that Member's right to ask questions which must be answered. Therefore we are pressing the Government very strongly to be quite precise and clear about the extent to which parliamentary accountability will be diminished as a result of giving effect to the proposals in the Statement.
Another matter on which I think clarification is needed is the statement that:These agencies will generally be within the Civil Service, and their staff will continue to be civil servants".On a strict reading that can only mean that there will be some staff who will be civil servants and members of agencies which will be within the Civil Service and some staff who will continue to be civil servants and will be members of agencies which will not be within the Civil Service. I do not understand that point and I ask for clarification.
Also I should like to know whether the Government will continue to accept their responsibilities—as I know the Leader of the House does from a statement that he made on a previous occasion—and continue to justify in public and in both Houses the acts of civil servants within their respective departments. They should not try to shift the blame to individuals who are totally unable, and should continue to be unable, to express themselves in defence of something that they have done. They need to be defended by government Ministers standing up and taking responsibility and I hope that the Government will say that they continue to recognise that responsibility under the new arrangements.
We welcome what has been said about consultation. We assume that those consultations cover all matters relating to pension rights, redundancy and conditions of service. Questions have already been asked about numbers, so there is no need for me to raise that point.
Finally, I believe that there are two much smaller questions on internal arrangements which also need clarification. What will be the position as between the two branches as it were: the policy-making staff and the agency staff? In terms of their promotion what will be the ability of civil servants to move from one branch to the other? It seems as though two parallel ladders of promotion are being set up. I ask whether it will be possible for promotion to continue as hitherto, irrespective of the particular type of responsibility held.
The other question on the same matter of internal management refers to the last statement to the effect that a permanent secretary in the office of a Minister for the Civil Service will be responsible through the head of the Home Civil Service for managing the process. Does that mean that the head of the Home Civil Service will be responsible, full stop? Of course he will delegate certain responsibilities to those who 769 assist him, as all heads of Civil Service departments do. But the reference to the permanent secretary being responsible is rather confusing. Will the Minister be good enough to remove that confusion?
We have not had time between half-past three and now to consider the report, which was not available until then, or to consider the candidates in the report, and we shall have to do that. Everything is therefore subject to very careful consideration. We do not wish to reject the general idea. The Government may have good reason for moving in this direction; we do not know, and we shall examine the proposals with sympathy.
§ 4 p.m.
§ Lord Belstead
My Lords, I am grateful to the noble Lords, Lord Cledwyn and Lord Diamond, for their reception of my right honourable friend's Statement. The noble Lord, Lord Cledwyn, said there is a case for reform, and I agree. Although there have been very good examples of improvements in Civil Service efficiency, nevertheless we must look back 20 years to the Fulton Report, which was accepted by the Labour Government of the day, to see that Fulton recommended that principles of accountable management should be introduced into the Civil Service, and recommended also further study of hiving-off functions as a means of ensuring accountable management. So although today's Statement is an important one, it is not exactly revolutionary.
The noble Lord, Lord Cledwyn, asked whether the consultation he understood was starting today would be across the whole range of the agencies concerned. I am sure that departments will be consulting their trade unions about the establishment of the agencies that have been suggested for them and that there will also be central consultation with the project manager —the new permanent secretary who has been appointed in that respect and to whom the last question of the noble Lord, Lord Diamond, referred. I am sure also that staff and unions will be consulted in the normal way if there are any changes proposed in conditions of service.
The noble Lord asked also what were to be the financial arrangements and about the semi-independent executive boards of which he had read. I can best refer him to paragraph 20 of the report itself, which states:These units,"—meaning agencies—large or small, need to be given a well defined framework in which to operate, which sets out the policy, the budget, specific targets and the results to be achieved".It is that framework, to be agreed between departments and the Treasury in consultation with the project manager, which will be absolutely crucial in setting up the agencies.
Both noble Lords also asked the important question: will there continue to be ministerial accountability? It was a question to which the noble Lord, Lord Diamond, devoted quite a few of his remarks. The answer is, yes. Ministers will continue to be accountable to Parliament for the work of their departments including the work of the agencies. That 770 means that the scope of the Parliamentary Commissioner for Administration will not be affected by today's proposal. Indeed, the scope of the Public Accounts Committee will not be affected by what has been said today.
The noble Lord, Lord Cledwyn, asked about dispersal, and indeed I believe he was looking for the Government to say that this would be part and parcel of a new thrust for dispersal. Today's Statement is about Civil Service structure and not about geographical location, which is not actually mentioned in the report. Relocation remains among the Government's policies for helping the Civil Service to become more flexible and more responsive to market conditions, but there is no more I can say about that subject today. The noble Lord also asked me to give him an assurance about redundancies so far as concerns today's Statement. I cannot give any such assurance but I emphasise that the new approach announced today is about organising the Civil Service so that it can do an even better job: it is not about cuts.
The noble Lord asked me what will be the timescale for the setting up of agencies. Copies of the report have been placed in the Library of your Lordships' House together with a list of executive functions that look to be promising candidates for the first agencies. there are 12 of them and they include Her Majesty's Stationery Office. the Employment Service, the Passport Department, the Driver and Vehicle Licensing Directorate, the Vehicles Inspectorate and so on—there are 12 of them. So far as concerns the timescale, Mr. Peter Kemp, at present a deputy secretary in the Treasury, is to be promoted to permanent secretary and to be the project manager. He will continue in post as long as is necessary to get the changes established. His task is to assist with the process of setting up the agencies; management of the agencies will be the responsibility of the departments. We intend, with proper consultation, to proceed with that but I cannot give the noble Lord an exact timescale.
The noble Lord, Lord Diamond, complained that The Next Steps is all right provided the Government's general policy is known. That is set out on page 2 of the copy of the Statement that the noble Lord has, which states:The report finds that many Civil Service managers want to see further changes to give more room and flexibility for the exercise of personal responsibility".The noble Lord asked whether there will be devolution, of which his own party is in favour, to those who are individually working in the Civil Service. The key feature of today's proposal is the delegation of responsibility for day-to-day operations to a chief executive and those who will be working with him in the agency. He asked also whether all that is to happen inside or outside the Civil Service. The Statement makes clear that generally the agencies will remain within the Civil Service and directly accountable to Ministers for the implementation of government policy, but I will say more about that. It may be appropriate in some cases to appoint the head of an agency from outside the Civil Service, but I am sure that in many cases the Civil Service will provide good candidates.
771 The whole point of today's announcement is the management of the Civil Service, not from outside it. I give an undertaking that appointments will continue to be by fair and open competition in accordance with the rules of the Civil Service Commission.
Finally, the noble Lord, Lord Diamond, asked about the position of agency staff in relation to policy staff, who remain completely within the departments. That is an important question because a key aspect of the proposals is that those concerned with the formulation of policy should have experience and information about its implementation and execution and that interchange of staff between agencies and the centre of departments should be fostered. I believe the approach I am trying to describe can provide the basis for further advances in management in the Civil Service. In making this Statement today, there is no intention on the part of the Government to try to keep everybody in watertight compartments; I think that interchange will be the name of the game and could help very much towards further improvements in efficiency within the Civil Service.
§ Lord Belstead
My Lords, Ministers will continue to account for all the work of their departments including the work of agencies. The rights of honourable Members in another place to question Ministers and to hold them to account will not change.
§ Lord Alport
My Lords, can my noble friend say what are the implications of this scheme so far as concerns recruitment in the the Civil Service? Will it mean that the present standards of entry into the Civil Service will continue as at present, or will the agencies have complete freedom to recruit as they wish and to hire and fire as they wish in respect of the staff at all ranks of their agencies?
§ Lord Belstead
My Lords, our intention is for agencies to be allowed some flexibility on terms and conditions for service within the framework set by the responsible Minister, though obviously there will need to be controls to safeguard public expenditure. The degree of flexibility can differ from agency to agency depending on the requirements of the job to be done—and that is a very old expression. That goes back to Fulton. Staff and unions, however, will be consulted in the normal way if any change in terms and conditions of service is contemplated.
§ Baroness Seear
My Lords, my noble friend Lord Diamond has indicated that we on these Benches are interested and have considerable sympathy with the objectives of this report. Perhaps I may be allowed to refer to the yellow report and to the paper accompanying it.
There is one point on which I should like clarification. I see that among the departments for which agencies are to be set up is the Employment 772 Service. For the past 12 years the Employment Service has been part of the Manpower Services Commission. Only last autumn it was told that it was going to be split away from the Manpower Services Commission and returned to the Department of Employment. This is inevitably causing a considerable amount of upheaval.
The link between training and employment is so close that many of us involved in these services were very worried at that split. However, having gone back to the Department of Employment, if they are to be taken out again and put into another agency with yet another upheaval, this can have only an adverse effect on the operation of these extremely important services. Does the left hand know what the right hand is doing with these moves?
§ Lord Belstead
My Lords, this is not as revolutionary as all that. It is an attempt—and I believe that it will be a successful attempt—to follow on from what Fulton recommended as along ago as 20 years with regard to improving management in the Civil Service. We are talking about Jobcentres and unemployment benefit services, which offer a comprehensive service to employment seekers. We believe that these are promising candidates, as the Statement says, for agency status. There will be proper consultation. However, we believe that this is right.
The noble Baroness said that this involves an upheaval. We are not talking about relocation. We are not talking about privatisation. We are talking about what we believe is a more effective management structure.
§ Baroness Seear
My Lords, the noble Lord has not answered my question. We are having two changes simultaneously, both of which disrupt the operation of the Employment Service. Why on earth does the Employment Service have to go back to the Department of Employment in order to be taken out again? Why can the Government not wait and simply take it from the Manpower Services Commission into this new agency in one jump, because these changes disrupt?
§ Lord Belstead
My Lords, this is a matter to which we should return. There will be proper consultation. I am anxious to underline the fact that the list of executive functions which look to be promising candidates for the first agencies have not yet been subject to final decisions. Nonetheless, what I said in answer to the noble Baroness stands. At the same time, the noble Baroness had made clear her concerns on this matter.
§ Lord Peston
My Lords, may I ask the noble Lord to bear in mind, as policy develops, that some of us consider that we have an excellent Civil Service? It is one of the few institutions in this country that is admired world-wide for its honesty, probity, reliability and devotion to duty. I believe that it is one of the few institutions that the rest of the world would swap for their own. I do not think that they would change their businessmen for ours; and they would not change their trade union structures for ours. But I think that they would like to have our Civil Service.
773 It would be quite out of keeping with the times if I were to suggest that it did not require reform. But I hope the noble Lord will bear in mind that what might be required is some reform and some conservation of what is good. What is not required is destruction of a first-class service.
§ Lord Belstead
My Lords, the genesis of this in many ways goes back to Fulton. There are quite clear recommendations to distinguish those within departments whose primary responsibility is planning for the future from those who are responsible for accountable management.
Perhaps I may say to the noble Lord, Lord Diamond, that I believe a very important integral part of this will be interchange in the future. Meanwhile, the noble Lord has expressed his party's admiration for the Civil Service. On this side I pay tribute on behalf of the Government to the service which the nation has every right to be proud of.
§ 4.15 p.m.
§ Lord Renton
My Lords, will the members of these agencies and the people recruited by them be subject to the Official Secrets Act and to the usual duty of confidentiality?
§ Lord Belstead
My Lords, I have answered such a question earlier. They will generally be within the Civil Service. Those who are will be responsible in the same way as all other civil servants.
§ Lord Sefton of Garston
My Lords, on 17th December the Minister—who was not then the Leader of the House—in reply to a debate said that he was very interested in the suggestion from one of his own friends that we should look carefully at the question of moving a government department out of London to the regions. He has already said that the question of decentralisation and dispersal of civil servants is not mentioned in the report.
Who will take the decision about dispersal of civil servants? Will the Government take the decision, and will they take it before the new organisation is set up? I see a very real danger that if we have semi-private organisations they will become more closely related, if they remain in the South-East, to other aspects of our society, such as the banks and clearing houses, and it may well be that in those circumstances the London weighting—which is a blight on this country—may increase fivefold. If that is the situation then all the congestion in the South-East will become considerably worse.
I repeat my questions. First, what is the timescale? Secondly, will it be the Government who decide on decentralisation, especially in view of the rumours that civil servants in London are bitterly opposing any such idea?
§ Lord Belstead
My Lords, I have answered the question about the timescale. I have told the noble Lord, Lord Cledwyn, that I cannot give him any exact timescale. However, matters will proceed based, first, on the list which has been placed with copies of the report in the Library of your Lordships' 774 House, giving the list of executive functions which look to be promising candidates.
In answer to the second point of the noble Lord, Lord Sefton, I understand his concern about relocation. But perhaps I may underline this point. Relocation is not mentioned in this report. Nonetheless, relocation remains among the Government's policies for helping the Civil Service to become more flexible and responsive to market conditions. It is no good the noble Lord pressing me; there is nothing more that I can say on that today.
§ Lord Sefton of Garston
My Lords, is the noble Lord seriously telling the House that he is not aware whether the decision about relocating government departments will be taken by government or by the new set-up?
§ Lord Belstead
My Lords, I suggest that the noble Lord reads the report. He will see then that relocation does not form part of the report.
§ Lord Sefton of Garston
My Lords, the noble Lord has me at a disadvantage. He has read the report and therefore should know.
On the same important principle, perhaps I may ask this question. Will this House and another place have more time to consider these proposals before they are put into effect; or will this be a matter between government and the civil servants?
§ Lord Belstead
My Lords, we intend to proceed now to implement the proposals in the way that I have explained. But there will be opportunities for the views of those who wish to comment to be taken into account as the programme for establishing the agencies proceeds. We welcome consideration and discussion of these matters by the Select Committees.
§ Lord Diamond
My Lords, I apologise for rising again but I should like to clarify one point. I drew attention to the enormous importance attached by us to The Next Steps as being those consistent with the overall policy. The Minister suggested that I should look at page 2 which indicates that many Civil Service managers want to see further changes to give more room and flexibility for the exercise of personal responsibilities. Is that the totality of the Government's policy with regard to the Civil Service? The Minister must be as aware as I am that the morale of the Civil Service is at a low ebb. The removal of uncertainty would assist in improving morale. We are anxious to discover what is in the Government's mind overall with regard to the Civil Service. The report merely indicates giving more room and flexibility to the exercise of personal responsibility.
§ Lord Belstead
My Lords, it is important that I should say at what is probably the end of this exchange that the report—prepared by civil servants on secondment from their departments—records that many people in the Civil Service wish to see a move in this direction. The report recommends a move in the direction which the Government wish to see as a matter of policy. The strides made in the past within the Civil Service have been undoubted and have 775 improved value for money, efficiency and productivity.
The steps announced in the Statement will enable us to carry the improvements still further. The new approach will define responsibility more clearly within departments and will provide a framework within which Civil Service managers have greater incentive and opportunity for better management so that they can produce an improved service for taxpayers and for the public at large. That is the general strategy so far as concerns the Government and also the main thrust of the report.