This weekend, Pat McFadden, the Chancellor of the Duchy of Lancaster, announced that he is attempting to improve the performance of the civil service. I genuinely wish him luck, but I am not optimistic. After a decade in and around government – including five years as a schools minister – I am convinced the Whitehall model of government is broken.
Unfortunately, it seems like McFadden’s civil service reforms – such as performance related pay and more digitalisation – only scrape the surface. And with the Labour party in hock to the unions and with a dearth of business experience on its benches, I can’t see any serious change happening.
It helps to understand first that the civil service’s organisational structure is still in the dark ages. Layers of officials spend weeks drafting carefully worded documents (or submissions) for ministers, meetings are rarely attended by fewer than ten people, and decisions are made at a snail-like pace.
This is partly because the civil service has far too many organisation layers. At the top, senior people would generally know far less than me about any particular issue, while the junior people who did the work were left out of meetings.
Often there was a lack of expertise. As a rule, the civil service employees far too many arts graduates and not enough scientists, data and computer experts and mathematicians. It also believes in the concept of generalists and moves people around far too much so they rarely build up any subject knowledge. A lack of performance management means that poor performers are either kept in post or moved to other parts of the bureaucracy rather than fired.
I should say that none of this is the fault of individual civil servants who generally I found hard-working and committed. It is the fault of the structure.
Effective organisations operate with fewer, more able and highly paid people. They fail when there are too many middle-managers who can’t make decisions – it creates a culture where people are terrified of risk.
The lack of a business culture in the civil service is a problem too. The experience and background of civil servants makes them generally very uncommercial. I remember when I was a schools minister having to explain to a now very senior civil servant, and a good one, the principles of leasehold.
When I arrived at the Department for Education 2013 and was put in charge of the academies programme, I discovered that the department was paying each secondary academy an average of £70,000 for buildings insurance. A quick analysis showed this was a rip-off and we should be self-insuring. This was no great insight by me – any senior businessperson would have spotted this in a heartbeat. But no one inside the civil service had realised it was a problem. In the end, adding the risk to the department’s balance sheet saved over £1 billion.
Things were not much better in the department’s free schools property section, which was
almost entirely staffed by generalists with no property expertise. As a result the department was constantly making bad deals. To counteract this, I proposed we set up a separate company owned by the department staffed with property professionals. Officials had to write three 100-page submissions to the Treasury – which arguably should be abolished – to get this through.
How can the civil service fix its lack of business savvy? For a start, more civil servants should be seconded out to business and vice versa. I also found that the right targets could givecivil servants a more commercial mindset. I sometimes offered officials a bottle of champagne if they found ways to reduce costs – this was very effective, though it no doubt broke some rule.
For any change to work, the civil service will have to stop being a job creation and preservation society. At present, civil service pay is at least as favourable as the private sector, even without its gold plated and increasingly unaffordable pensions. Yet the civil service is considerably less productive than the private sector, even though the latter pays the former’s wages. This is simply unsustainable.
I experienced first-hand the civil service’s keenness to protect its own job security. An experienced businessmen once offered to run – for free – a scheme which aimed to get children in care into boarding schools. The civil service said hiring him was impossible because – wait for it – it would deprive a civil servant of a job. Eventually we managed to confirm his appointment, but it was terrifying that civil servants believed it couldn’t be done.
For civil service reform to work there needs to be change in Westminster as well. We desperately need more people in politics with serious business experience. With very few exceptions, most MPs have a similar background: they have worked in politics, for think tanks, as special advisors, or for unions. Most will have had jobs where they employ very few people. And yet as ministers they will have to oversee thousands of employees.
New ministers should undergo training and all MPs who want to be ministers (which is all MPs) should be asked to write and constantly update their areas of interest, the departments they would like to be assigned to, and what their relevant experience is. This should be used as a basis for ministerial appointments rather than the current shambolic process.
Ministers should also have much larger offices and try to recruit experienced businesspeople, by making them non-executive directors. When in 2010 Michael Gove arrived at the Department for Education he turned to the top civil servants and said that he had never run anything except the news desk on the Times, which mainly involved the equivalent of asking essays to be handed in on time. He said if civil servants wanted to discuss organisation, budgets, or money, they should talk to myself and Theodore Agnew (we had both been appointed as non-execs).
The mandarins’ mouths fell open. But after some silly games they realised we didn’t have any dark agenda but were there to help and we worked very effectively together. We reduced the size of the department and its quangos by several thousand and the department worked much more effectively as a result. Unhappily, since then it has boosted its numbers with no real increase in its responsibilities.
There are many experienced businesspeople who want to become non-executive directors of government departments and quangos, but the appointments process is run in the most amateurish way. The process takes far too long and is often overseen by civil servants, intent on preserving the status quo. This process could easily be professionalised by appointing some experienced ex-headhunters to run it.
None of this will be easy. But if Labour really wants the civil service to move into the twenty-first century, these kind of reforms are absolutely necessary.
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