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Civil Service Reform

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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