Memorandum On The 2012 Civil Service Reform Plan

The government published its Civil Service Reform Plan (the Plan) in June 2012 (www.civilservice.gov.uk/reform). It followed the publication of the 2011 Open Public Services White Paper (Cm.8145, ISBN 9780101814522) which called for a smaller, more strategic civil service that does less centrally, and commissions more from outside. The Plan has many themes in common with previous initiatives that attempted to reform the civil service, and adapt it to the changing needs of governments and public service users, but is arguably the broadest such reform programme since 1968. This Memorandum is intended primarily to inform the Committee's discussions with the leadership of the civil service about the Plan. Given that the Plan is less than a year old, it is not an evaluation of the reforms in the Plan, the progress made against them, or the implementation arrangements in place. It is designed to support the Committee to engage with the breadth of the Plan, so that they can use their influence to help ensure that its implementation improves efficiency, reinforces Parliamentary accountability and protects value for taxpayers and citizens. The Civil Service, in its present form as of 2012, employs 459,000 people across 106 departments and other bodies. The annual spend on Civil Service pay is £16 billion. The projected cost reduction for the Civil Service, between 2010 to 2015 is £80 billion and the projected reduction in the number of full-time equivalent civil servants over the same period is 110,000 representing about 23% of total staff.

The Government now accepts the urgent need for a leadership group that can think across departmental boundaries and lead change but there is still a long way to go to change the long-standing culture of the Senior Civil Service. The NAO watchdog welcomed the ambition of the Civil Service Reform Plan and emphasised the urgent need to make progress, given that the plan underpinned the Government's chances of achieving further efficiency savings. At present there are significant skills shortages, particularly in the areas of commerce, project management, digital delivery and change leadership. In December 2012, only four out of 15 Permanent Secretaries at major delivery departments had significant operational delivery and commercial experience. The 24 professional networks in the civil service lack influence across departmental 'silos' and may not be the right groupings to meet the needs of the modern service. The Government intends to open up the service, with more internal transfers and free flow of skills to and from the private sector, and build on an approach already in place for the top 200. But the proportion of new recruits from the private sector fell in 2009-10 as departments cut spending, and has yet to recover. Promotion to the Senior Civil Service is becoming so financially unattractive as to put off talented people. The NAO warns that the latest moves to increase pay flexibility and offer incentives for business critical roles may not be enough to recruit, motivate and retain the right people.

The 2012 Civil Service Reform Plan (the Plan), published in June 2012, outlines plans to transform the civil service so that it is sharper and quicker, more delivery-focused, and has sufficient commercial, digital, project and change management skills. The Cabinet Office is responsible for overseeing implementation of the Plan. The Committee hope that the reforms and enhanced capabilities will help prevent the failures in project and programme delivery it has seen so often, but is concerned, however, that government has not set itself objective measures for assessing the impact of its reforms. If the public is to have confidence in the system for holding permanent secretaries accountable, the Government must be clear about the detail of what each permanent secretary is expected to achieve and how their performance will be assessed. Commercial and contracting skills in the civil service remain weak and underdeveloped, despite the many attempts to address this skills deficiency in recent years. Efforts to fill skills gaps are hindered by real or perceived barriers to recruiting people with the necessary expertise and paying them enough. The process for overseeing major projects lacks real teeth and is seemingly unable to stop ill-conceived or poorly-managed projects. Yet the Government will only be successful in cutting public spending with minimum impact on frontline services if it finds new and innovative ways to deliver its programmes. This innovation can only be implemented if the Civil Service has the necessary skills and competencies.

Each of the areas in the Whole-Place Community Budgets scheme has identified potential benefits from taking a more integrated approach to frontline services, focusing on outcomes like preventing avoidable hospital admissions or reducing reoffending. Greater Manchester, which covers ten local authorities, has estimated net savings of some £270 million over five years, while in West Cheshire savings of £56 million are estimated for the same period. In general, government has only limited information for identifying opportunities for integration or making an assessment of costs and benefits, which is needed to support the case for integration. In some instances where government has identified integration opportunities, benefits have not been achieved because of implementation difficulties. While the centre of government has recognized the importance of integration, it does not have clearly defined responsibilities to support or encourage frontline integration initiatives across government. It is early days for Whole-Place Community Budgets, central government and the four local areas have worked together effectively to assess the case for local service reforms. The true scale of potential benefits will become clear only if projects are implemented and evaluated robustly. Foundations have been laid but continuing collaboration - including sharing of data - between local and central government and delivery partners is essential to maximize the potential of Whole-Place Community Budgets. Accompanying this report, the NAO has released a case study looking at the four Whole-Place Community Budget areas, finding that these areas have taken a positive first step in assessing the case for integration (HC 1040, ISBN 9780102981339)

As one of a small number of cross-government select committees, this Committee has gained a perspective on the state of Whitehall and its agencies which is not available to departmental select committees. Throughout the past five years, the recurring theme of their findings and recommendations reflects the importance of effective leadership in creating effective organisations. It is the positive or negative attitudes and behaviour in the people and the culture of an organisation which determines success or failure. Structures, processes and systems are important too, but preoccupation with these so often becomes a distraction from the real problems, which are about why people do not share information for the common good, collaborate effectively and trust one another. PASC took control of the process of selection of the Parliamentary and Health Service Ombudsman (PHSO) away from the Government altogether, so that for the first time Parliament has appointed its Ombudsman. They have also held many pre-appointment hearings for the Chairs of public bodies and were the first Select Committee to refuse to accept a government nomination for the chair of a public body. The Government was forced to re-run the selection for the post of Chair of the UK Statistics Authority under a new selection panel, and to propose a different candidate. They also hold hearings on PHSO's thematic reports, to interrogate and hold to account those who must respond to its recommendations. PASC has worked together effectively as a team despite political differences and the often controversial issues tackled

The Government's fiscal consolidation programme is now expected to last longer than originally planned, and wide-ranging service reforms are being implemented. The role of financial managers is therefore critical to ensuring that opportunities to improve value for money are realized. The Finance Transformation Programme has been set up to develop the skills and capabilities of finance professionals, and qualified professionals are better represented at senior levels. However, given the importance and urgency of the challenges presented by fiscal consolidation and public service reform, further improvements will be needed to support sustainable public service delivery with fewer resources in the longer term. Government is a long way from ensuring that decision-making is routinely based on robust information. Departments often do not integrate financial management with their strategic and operational planning. Departments and other public bodies have generally managed within reduced spending limits up to now, but some of the savings they have made are more sustainable than others. In order to respond to financial and demand challenges, government needs to go further than controlling spending, by redesigning public services so that they operate permanently at lower cost. The NAO recommends that the Treasury ensure a more effective leadership to better enable and incentivise the finance profession to confront the challenges it faces. The Government's Finance Leadership Group should take responsibility for diagnosing the key current financial management challenges facing the finance profession and the wider civil service, and for addressing them quickly

For many years Governments have sought to breakdown silo working in departments and ensure better integration across departments to ensure more effective services and better value for money. The Cabinet Office and the Treasury are best placed to support and promote integration across the Government, as they are responsible for coordinating policy and allocating monies. However, they are failing to provide the necessary strategic leadership and are not doing enough to tackle the barriers to integration. These include the lack of good information to identify where the Government could do better by joining services, funding arrangements which make it difficult for bodies to invest in joint working, and the risk that Accounting Officers are reluctant to pool budgets in case they lose control and authority. In contrast, the Whole-Place Community Budgets programme has involved local public bodies and central government working together to develop evidence-based plans for new integrated services. Four local areas have analysed in detail the expected costs and benefits of integration and their findings show clear potential for improving outcomes and reducing costs. The Department for Communities and Local Government, which manages the Whole-Place Community Budgets programme, has provided effective support to date. However, if other central government departments are not committed to Whole-Place Community Budgets it may, like similar initiatives in the past, fail to deliver any significant and lasting change. The programme must be evaluated properly to see whether the early promise translates to real change on the ground and improves value for money.

This study provides policy guidance on how to rebuild public services in postconflict settings. It conducts a comparative analysis of public service reform trajectories in five postconflict countries: Afghanistan, Liberia, Sierra Leone, South Sudan, and Timor-Leste.