§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]
3.42 pm§ Mr. Tim Eggar (Enfield, North)In initiating the debate, I am not seeking to bash the bureaucracy or even to produce my own theme on "Yes, Minister". I feel that even the Civil Service's harshest critics will readily admit its virtues as compared with the civil services of other countries. The quality of individual senior civil servants in the Civil Service is hard to match in many other areas No of employment. It would be wrong also to pretend that increases in efficiency and effectiveness within the Civil Service will bring about, by themselves, large savings in public expenditure. The real importance of improvements in management efficiency and effectiveness in the service is in the way in which the quality, speed and consistency of decision-taking in the Government would be improved.
Over the past 20 or so years the Civil Service has expanded sharply. At the same time it has developed its own attitudes and culture. It is worth trying to identify the weaknesses in that culture and in those attitudes. Unfortunately, good management has not traditionally featured strongly as one of the virtues of the Civil Service.
Throughout Whitehall the emphasis and premium has always been on policy advice. The way to the top has been through the Private Office and through the policy advisory divisions. This state of affairs has been acquiesced in and in some ways encouraged by Ministers. The emphasis within the service has been not on decision-taking but on consultation. Most civil servants have always advised against risk-taking. Imaginative solutions have been discouraged because, after all, the fewer risks taken, the fewer mistakes made and the fewer fingers pointed.
An expanding public sector for so many years, at least up to the mid-1970s, has meant that most Departments priorities and preoccupations have been the provision of services, not the cost-effectiveness of the services. The centralised nature of the Civil Service and the parliamentary accounting requirements have led to highly centralised accounting systems and as far as they exist, centralised information systems. That has made it almost impossible to devolve decision-making, even of the smallest matters, to line managment. As a result, for line management in local offices, discussion about the use of resources has all too often taken place in terms of norms and entitlements rather than on the basis of what is most appropriate to do the job in hand.
The lack of interest in management by Ministers and civil servants has inevitably led to the strengthening of the trade unions, which have been able to extract the most extraordinary and extravagant privileges from their employers. The best example is the 1974 facilities agreement.
When listing some of the weaknesses, it is only fair and right to stress that Parliament has, over the years, tended to exacerbate the weaknesses. We have spent too much time looking for mistakes and too little time praising success. That has led to the file mentality—to the premium on ensuring that every decision is widely discussed and put down in memoranda on the file so that if anything goes wrong there is a defence for the individual concerned.
For the first time since the war Government have been determined to improve the efficiency and effectiveness of 1301 the Civil Service and, perhaps more important, to change attitudes towards management. Such pressure from the Government has proceeded against considerable opposition from a number of Departments involving not only senior civil servants, but Ministers.
It is worth recording some of the pressures to increase efficiency. The first is the manpower reduction target of about 100,000 civil servants. We are on target to achieving the smallest Civil Service since the war. That is an achievement in itself. The Rayner scrutinies have been successful and have resulted in major changes in administrative methods. They have identified savings of almost £300 million.
Perhaps the most important Rayner scrutiny was the first, in the Department of the Environment, which led to the development of MINIS—the management information system for Ministers. MINIS is soon to be combined with MAXIS—an internal accounting system. That is a major step. It is a pity that other Departments have not adopted the system. Last, but not least, for the past six months all Departments have been working on their responses to the financial management initiative.
The combination of the different pressures, the increasing recognition within the service, from the bottom to the top, that all is not well on the management front, and above all the Prime Minister's personal commitment, has brought about a discernible change in attitude. The best evidence of the change in attitude is the fact that a number of high-flyers in the service have deliberately chosen to take jobs in regional offices. Others have gone to jobs as principal establishment officers and principal finance officers which traditionally are regarded as being reserved for people at the end of their not altogether distinguished careers. That is a great step forward and a very important one.
But I believe that unless we are very careful the drive for management efficiency may fade away. There is no published manpower target beyond April 1984. Sir Derek Rayner's resignation means that his team appears at least to have been downgraded in importance even though it is still headed by a distinguished and well thought of civil servant.
It is too early to judge the impact of the financial management initiative, but I believe that it is already clear that the aim of measuring outputs is unlikely to be met in anything like the near future.
The main drive for better management has come from Ministers, most notably the Prime Minister and the Secretary of State for Defence. Of course, it is the failure of senior civil servants to manage that has made ministerial involvement both necessary and inevitable. However, ministerial involvement means that there is always the danger that, when Ministers change, so the pressure for better management changes.
The objective within the House must be to ensure that the pressure for better management is maintained, whichever Minister is in charge of the Department and whoever the Government are in power. It is on that that I wish to make a few proposals.
The first step that must be taken is to increase still further the power at the centre, by which I mean the MPO and the Treasury, in ensuring that better management gets a higher priority. The centre should have the power to insist that Departments produce information and accounting systems. This is important, not only so that 1302 senior civil servants and Ministers are fully aware of the costs and implications of what they are doing, but so that line managers are much more aware of costs.
I have said to the Minister before that the financial management initiative does not put enough emphasis on the need for proper internal information and accounting systems. We should be moving towards a position where the power of the centre in terms of the use of manpower and increased efficiency in the Civil Service should be similar to the power of the centre at public expenditure review time: it should be feared by the Departments just as much.
It is important that Parliament itself should be involved in monitoring efficiency and effectiveness. There should be an obligation on each Department to submit an annual standardised report to its relevant departmental Select Committee. That would stress both to Ministers and civil servants the importance that Parliament places on good managers.
There are some who say that this can be done by the Comptroller and Auditor General. I am not against the Comptroller and Auditor General having a power to investigate in this area, but his record so far has been spotty, to say the least.
As part of the expansion of the role and power of the centre, it is important to expand the expertise of the MPO, especially by ensuring that there is the maximum interchange between the MPO and other Departments. Traditionally, senior appointments within the service have been made in somewhat obscure ways. I hope that the MPO will increase the emphasis on sensible career and succession planning, because it is vital that we train for management and also that there can be no accusations of political bias.
I am confident that these measures, together with the measures that have been taken already by the Government—provided that they are monitored carefully by Parliament and Select Committees, and there is an obligation on us to ensure that they are—will make sure that we have a permanent emphasis within the Civil Service to improve management and that the pressures are there to raise the priority of management within the Civil Service. If we can keep up the pressures for a few more years, there will be no need for ministerial involvement and very little need for parliamentary involvement. The quality of the Civil Service itself will ensure that management reaches a higher place. That wild be important for us all and for the country.
§ The Minister of State, Treasury, (Mr. Barney Hayhoe)I congratulate my hon. Friend the Member for Enfield, North (Mr. Eggar) on his choice of subject for the debate and on his constructive and helpful comments, which were in harmony with his many previous contributions on these matters in the Select Committee and on the Floor of the House.
I was particularly glad to hear my hon. Friend's proper and warm tribute to the quality of our Civil Service and the individuals who comprise it. I am happy to underline and reinforce that tribute.
Improved efficiency and greater cost-effectiveness in the enormous and wide-ranging business of Government is of both immediate and lasting importance. As my hon. Friend knows, the Government have given an extra boost, and will maintain a sustained drive, to that end. My right 1303 hon. Friend the Prime Minister takes a close and detailed interest in that work and other Ministers have made their distinctive contributions, the best publicised being MINIS, the creation of my right hon. Friend the former Secretary of State for the Environment.
My hon. Friend mentioned the size of the Civil Service. The most visible sign of our progress is the slimming down of the Civil Service from the 732,000 in post when we took office to the present level of 652,500. The figures that are published today show a reduction of 11 per cent. and a saving of about £600 million in the annual Civil Service pay bill.
I confirm that we remain firmly on course for our target of 630,000 civil servants by April next year. We already have a smaller Civil Service than at any time in the past 17 years and when we reach the level of 630,000 we shall have done better than at any time since the second world war.
I am glad that we have been able to achieve that slimming down largely through natural wastage, by people resigning or leaving because of retirement or ill-health, rather than through redundancies, although there have been some redundancies. We were right to attempt to achieve our target through natural wastage.
Of course, reaching our target of 630,000 civil servants by April next year will not be the end of the matter. The slimming down will not end then. As normal good management practice, Departments have already been asked to review their manpower needs from April 1984 to April 1988. They will be looking in particular at the scope for further efficiency savings and more privatisation and contracting out.
However, declining numbers, though important, are but part of the story. I shall not attempt to cover all the ground, but my hon. Friend referred to the financial management initiative and I should respond to his comments. The aim of the initiative is to promote and establish in each Department systems that will give managers at all levels clear objectives and measures of performance, individual responsibility for using resources effectively and economically, adequate information, especially about costs on the basis of control, and proper training and easy access to specialist advice.
A total of 31 Departments are involved in the initiative. Some are further ahead in developing such comprehensive management systems, but I am glad to report that all Departments have already submitted their plans to the Treasury and the MPO. As my hon. Friend knows, appropriate reports will be made to the House later this year. I attach considerable importance to this decision to publicise as much as we possibly can of this work. It is good that it should come into the public domain and be looked at by others.
§ Mr. EggarWill my hon. Friend confirm that there will be little, if any, editing of the reports as they go into the MPO before they are published?
§ Mr. HayhoeI assure my hon. Friend that we shall seek to publish everything that is possible, and that only considerations of security or national interest—I am sure my hon. Friend accepts that some matters must be kept confidential—will prevent publication.
I often wish that we could go faster, but I am convinced that sufficient time must be allowed and adequate 1304 resources allocated to ensure that this more rigorous approach to financial management is securely implement-ted. It will take time to develop the complex management information and accountancy systems that are the essence of the new arrangements, and we must ensure that line managers can fully absorb the responsibilities and benefits that will ensue.
While I have generally welcomed my hon. Friend's Bow Group pamphlet, which was reflected, to some extent, in his speech today, I believe that his critical comments about the response to the FMI being mixed, with Ministers and senior officials lukewarm and seeing the programme as a time-consuming chore, are not at all justified. I readily accept that the clear unambiguous commitment of Ministers and senior officials is essential, and I am glad that this is being demonstrated by the plans now coming in from the various Departments, which I can assure my hon. Friend are far from lukewarm. These plans contain a valuable picture of how much has already been done, together with a great deal of extremely sensible and down-to-earth proposals for future action. Of course, they are not final answers—no one, I hope, ever thought that they would or could be—but they provide convincing evidence of the considerable efforts that are being made. They deserve encouragement rather than adverse comment.
Let me say this:
There can be no doubt of the importance of what has been set in hand. The task now is to push it forward and carry it to enduring success. I see it as a central theme of Treasury policy over the months and years ahead.Those are not my words. They come from the recent speech by Sir Anthony Rawlinson, the second permanent secretary at the Treasury. I endorse them completely. I can promise my hon. Friend that Treasury Ministers, and indeed the whole Government, will put their weight behind the initiative. If I may once again quote Sir Anthony:The potential prize is great, both in terms of the management of public money and in terms of its presentation to Parliament and the public in a more intelligible way.This is of course, an area in which the Treasury and Civil Service Committee, of which my hon. Friend was until last summer a leading member, has been very active, and I trust that it will continue to be active. So has the Procedure Committee. We are all anxious to develop information systems that are useful to managers in Departments, useful to Ministers in taking allocation decisions each year in the public expenditure survey, and useful to Parliament in considering and debating the Supply Estimates and the annual public expenditure White Paper. We share a common purpose, and to some extent we must share common tools, too.The scope of the FMI is a matter for judgment. My hon. Friend suggests in his pamphlet that we should be less ambitious. I note, however, that the Treasury and Civil Service Committee—whose views we also respect and consider carefully—think that we should be more ambitious. So perhaps he will understand that in my view we have got it about right, balancing the scope of change against the ability to produce tangible results in an acceptable time frame.
Since my hon. Friend and I have so much in common, I am sure that we would both want to stress another area of difference between us—the role of the central Departments. My hon. Friend is quite consistent about seeking a more prescriptive role, and about the power of 1305 the centre to insist upon its will throughout the Civil Service, despite my efforts to explain that that would not be truly in accord with our basic system of Government. My hon. Friend recommends that the MPO should be empowered to undertake efficiency audits in Departments against the wishes of the departmental Minister concerned. The main point at issue is a constitutional one. Although the collective responsibility of Cabinet for certain matters is very powerful, each Minister is nevertheless responsible for his own Department. Ministers must answer to Parliament for that responsibility and such parliamentary accountability is at the heart of our democratic process.
§ Mr. HayhoeIf there is time at the end of my speech, perhaps my hon. Friend will intervene then, because there is more ground that I should like to cover. Perhaps I meet my hon. Friend when I say that of course the central Departments have a legitimate interest in the quality of departmental management—no one would dissent from that—as the financial management initiative, the centrally co-ordinated efficiency exercises and the joint centre/departmental exercises, such as staff inspection and effectiveness reviews, show only too well. This approach provides a sure foundation for joint action—on efficiency audits as in other ways—and I believe that that is the surest way to make progress.
The Select Committee has rightly urged us to develop use of output measures. The Treasury is actively pursuing that with other Departments and this year's public expenditure White Paper contains more than 400 output measures, which is over 60 per cent. more than last year. This whole area is technically difficult, but I assure my hon. Friend that we are putting great effort into it.
I am glad that my hon. Friend referred to the immense contribution made by Lord Rayner. Over the past three and a half years, Lord Rayner's work, which has been undertaken in addition to his own work for Marks and Spencer and on a wholly unpaid basis, has been of an inestimable and far-reaching value. The Government and the country are much in his debt. However, we should also remember that Lord Rayner has stated on many occasions his belief that the best of reform will always come from within the organisation. He would, I am sure, be quick to acknowledge that that belief has been strengthened by his experiences as adviser to the Prime Minister. His faith in the ability of the Civil Service to respond to the challenge has proved well-founded.
It would be a mistake, though, either to think that the impetus so far has been due only to him or that his departure signifies any loss of momentum or resolve. It is departmental Ministers, backed by central Ministers and by the Prime Minister, who, with their senior officials and managers, make a reality of improved efficiency, and their resolve remains as high as ever. There has been some press speculation about Lord Rayner's successor, but Lord Rayner remains the Prime Minister's adviser on efficiency. However, after three and a half years of very hard work he has relinquished the leadership of the Rayner 1306 unit and the scrutiny programme. The unit's work and the scrutiny programme will nevertheless continue on the lines that have now become well established, and I am confident that there will be no weakening of its contribution to the Government's overall objective. What we have known as the Rayner approach is now firmly planted and has taken root throughout the Civil Service. It is not now something that is imposed from outside—even if it ever was—and is part and parcel of our general thinking. However, this whole approach, and particularly the FMI, depends upon having staff with the necessary skills and providing them with the incentives and motivation that will secure an environment in which the best of management practices can thrive.
Recruitment, promotion and succession planning are all involved. Special training for financial management is required and is becoming available. For example, a new senior finance course has been introduced at the Civil Service college, and it is notable that demand for the course has been extremely high. Any fair-minded assessor of progress already achieved will agree that the results are impressive. But they are not the end of the road by any stretch of the imagination. The Government's commitment to further improvements in the management of their operations is strengthened by the successes already recorded. The foundations for deep-seated and long-lasting changes in Civil Service management have been laid. I think that my hon. Friend saw that as the central theme of his message for me. He sought to point out that these matters are not transient and that if we can get the direction right now, it will continue for many years ahead. He knows as well as I do that the financial management initiative is not something that can be constructed and put into place, to remain in concrete for ever more. On the contrary, it must develop, evolve and improve just as MINIS is now MINIS 4 and developing. It is right that that should be so. We have made plans through the FMI and our programme of reviews in 1983—which I announced on 20 December—to continue to build on all those measures.
There are already signs that the persistent drive for the better management of resources and operations is changing traditional values about the role of management in Government. We shall certainly press on with that work. The achievements of the past provide a basis upon which we can make a fundamental change in the management of Government operations for efficiency and effectiveness. The Government have no intention of letting that opportunity pass.
Once again, I am grateful to my hon. Friend for having raised such an important issue. I hope that we shall have many more opportunities in which to debate such important questions and that we may be able to do so when the House is a wee bit more involved than it is at 3 pm on a Friday afternoon. Nevertheless, though few hon. Members are in the Chamber, the message that goes out from us is of considerable importance.
§ Question put and agreed to.
§ Adjourned accordingly at twelve minutes past Three o'clock.