Civil Service

HC Deb 23 March 1995 vol 257 cc549-90

[Relevant documents: The Fifth Report from the Treasury and Civil Service Committee of Session 1993–94, on the Role of the Civil Service (House of Commons Paper No. 27), and The Civil Service: Taking Forward Continuity and Change (Cm 2748), containing the Government's observations thereon.]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Willetts.]

7.8 pm

The Chancellor of the Duchy of Lancaster (Mr. David Hunt):

The British Civil Service is a great national asset. Since the 1870s, it has been the permanent and impartial instrument of all administrations. Governments have always seen it as their duty to preserve its efficiency and honesty for their successors. Those are not only my views; those are the words of the Select Committee on the Treasury and Civil Service in November's report. That report demonstrated the strength of the consensus between the Government and the Select Committee. I congratulate my hon. Friend the Member for Cheadle (Mr. Day), the hon. Member for Durham, North (Mr. Radice) and their colleagues on having produced such a valuable report.

The civil service plays a vital part in underpinning the constitution and in sustaining good government in this country. It always has, and it always will. The important challenge facing us all is to retain and strengthen the traditional principles that have made the Westminster model the envy of the world—independence, impartiality, integrity, objectivity, and permanence—while at the same time making the changes necessary to bring our system into the 21st century.

That will require a combination of continuity and change. That is why, eight months ago, my predecessor published the White Paper, "The Civil Service: Continuity and Change", which was the first Government document since the Fulton report, more than 25 years ago, to address the role and future of the civil service as a whole. It built on ideas stretching back to the great Victorian reformers, Northcote and Trevelyan. The emphasis on accountable management and on developing the professional skills of civil servants can be found in Fulton, and has been carried forward strongly through the initiatives of the Government since 1979.

Those twin themes—continuity and change—reflect the need for continuity in the long-standing traditions of the civil service, and also the need for the service, like other large organisations, to change in order to improve performance. In the White Paper, the Government strongly reaffirmed their commitment to the established values of the service, which include—as well as integrity and political impartiality—recruitment through fair and open competition, selection and promotion on merit, and accountability through Ministers to Parliament.

The Treasury and Civil Service Committee said of those values:

They are as important today as in the last century; their importance should not diminish in the next … These values reflect rather than inhibit the jobs to be done. They are relevant to civil servants serving the public as well as to those serving Ministers directly. They can and should act as a unifying force for the whole Civil Service. The Government's further Command Paper, published in January this year, "Taking Forward Continuity and Change", accepted most of the Treasury and Civil Service Committee's conclusions and recommendations, in particular the Committee's proposals for a new civil service code and for a new independent avenue of appeal to the civil service commissioners.

With Her Majesty's approval, the appointment of Michael Bett as the new First Civil Service Commissioner was announced last week, following open competition. I had my first formal meeting with him earlier today, and he will oversee the enhanced responsibilities of the commissioners for interpreting the principles of fair and open competition for all civil service recruitment.

The commissioners will publish a recruitment code for Departments and agencies, and will audit their performance against it, and will approve all appointments from outside to the senior civil service. The First Civil Service Commissioner will attend the senior appointments selection committee, which is chaired by the head of the home civil service. He will be able to comment on senior selection processes in the commissioners' annual report.

The Government are now consulting civil servants and the civil service unions on the code. We shall also take into account any further comments from the Select Committee, and we will of course listen carefully to all contributions made in the debate.

Legislation is not necessary to introduce the code or the new functions of the civil service commissioners. Action under the prerogative can include implementation of the code once consultation is complete, and the new role of the commissioners can be created through a revised Order in Council. But any such action would be without prejudice to the possibility of legislation thereafter. I make it absolutely clear that the Government have an open mind about legislation. We set out our views in "Taking Forward Continuity and Change", but it may be worth amplifying them for the benefit of the House.

Legislation, as the Select Committee itself acknowledged, would need to be narrowly based. It would cover the powers of the civil service commissioners concerning selection for appointment to the home civil service and the diplomatic service, their powers to investigate complaints arising from the civil service code, and their power to report to Parliament on the number, nature, and outcome of complaints put to them.

Such legislation would also cover the powers of the Minister responsible for the civil service, in respect of terms and conditions in the home civil service—and, of course, the corresponding powers of the Foreign Secretary—and would introduce a new power for the Minister to issue the civil service code. If the code had already been issued the legislation would confirm it. Legislation would also include a power to make orders to amend it, which would be subject to affirmative resolution in both Houses of Parliament.

I am, however, very cautious about opening up the possibility of change in the constitutional position of the civil service. The Government would consider the introduction of a Bill only if we were satisfied that the proposed legislation would sustain the existing constitutional position, retain the flexibility of existing arrangements for regulating the terms and conditions of civil servants, and preserve the current position of civil servants under general employment law.

I would also want to be satisfied that such legislation would be supported in all parts of the House. As the hon. Member for Durham, North will know, I have already invited Opposition parties to take part in discussions, and I hope that in the debate we shall be able to explore some of the important issues that lie before us.

The values of the civil service are vital, not only in a constitutional sense but to ensure that all our citizens are treated equitably under the law. The integrity and objectivity of the service help to ensure that the right decisions are taken, and that those decisions are implemented honestly and without wasting taxpayers' money. Selection and promotion on merit are crucial principles in support of any effective organisation. The values of the civil service go hand in hand with effectiveness and efficiency.

It is the Government's duty to obtain the best possible value for every penny of public money handled through the civil service. That means sustaining the traditional values but also adopting new best-practice techniques to help to increase the quality of service to the citizen, and the efficiency of that service.

Mr. Nigel Forman (Carshalton and Wallington)

I am sorry to interrupt my right hon. Friend at this early stage in his speech, but he has already said how important it would be to ensure that any legislation did not change the constitutional position of the civil service. He then described the characteristics and merits of our civil service, which are indeed terrific. May I ask him, for the benefit of the House, how he defines the constitutional position of the civil service? Even after taking part in the preparation of the Select Committee report, I am still slightly unclear about that. What is the Government's view?

Mr. Hunt

I had hoped that, for the benefit of my hon. Friend and others, I had set that out in the earlier part of my speech. The constitutional position of the civil service rests on the traditional principles of independence—that is fundamental—impartiality, integrity and honesty, selection and promotion on merit, and permanence. The constitutional position is reflected in those key principles. I said that I welcomed what the Select Committee had said, so clearly I share the view that it is vital that the traditional principles be preserved.

A possible change to the constitutional position comes whenever legislation is proposed in this House, because it is open to hon. Members on both sides of the House to propose amendments. One can envisage a situation in which some of those amendments might have a fundamental effect on the constitutional position that I have set out.

That is my concern, but some of those fears may be put to rest during our discussions with Opposition parties. Widespread consultation can provide one with a feel for the way in which the House, the civil servants and the unions wish to proceed. One can make a judgment about whether any legislation would affect the constitutional position.

Mr. Peter Mandelson (Hartlepool)

Would not the values, traditions, independence and integrity of the civil service have been more effectively upheld if the appointment of the First Civil Service Commissioner had gone to somebody from the civil service who was steeped in the service's traditions and ethos, rather than to somebody from the private sector, whose qualifications seem to be a string of public and quango appointments in the gift of the Government, together with his long-standing support for the Conservative party?

Mr. Hunt

I reject the hon. Gentleman's description and analysis of the new First Civil Service Commissioner, and I have confidence that Michael Bett will uphold the traditional principles of the civil service. He has demonstrated that in the range of duties and responsibilities which he has carried out, and I am aware of the extensive public service work which forms part of his curriculum vitae. I sure that he will uphold the traditional values which I have just outlined to my hon. Friend the Member for Carshalton and Wallington (Mr. Forman).

Paragraph 1 of the proposed new civil service code states: The constitutional and practical role of the Civil Service is, with integrity, honesty, impartiality and objectivity, to assist the duly constituted Government, of whatever political complexion, in formulating policies of the Government, carrying out decisions of the Government and administering services for which the Government is responsible". That provides the remainder of the answer to my hon. Friend the Member for Carshalton and Wallington.

I hope that the hon. Member for Hartlepool (Mr. Mandelson) will reflect on the comments he has made, because it has been my experience that Mr. Bett is respected by Members on both sides of the House for his impartiality.

The Government want to see sustained improvement in the administration of the civil service, and intend to achieve that by building on the approaches pioneered in the next steps initiative which we launched in 1988, and the citizens charter and "Competing for Quality" White Papers, published three years later. That means systems appropriate to the end of the 20th century, better management information, resource accounting, delegation to the right level, clear objectives, annual targets, the management of performance, a focus on quality and service to the customer.

From April 1996, individual Departments will have responsibility for implementing their own systems of pay and grading for their staff, and those systems will be suited to their particular needs. Beginning this April, Departments will have responsibility for drawing up their own three-year efficiency plans, which will incorporate a wide range of efficiency measures.

The efficiency plans will build on the "competing for quality" programme, which has realised savings averaging 20 per cent.—over £400 million a year—with no reduction in the quality of service, and indeed with improved service in one third of cases. Competition and new opportunities for the private sector have provided a real spur to increased efficiency right across the civil service.

The focus on quality and service to the customer are at the heart of the citizens charter. The charter aims to raise standards of service and increase the responsiveness of Government. The recent changes in the structure of the civil service are tailor-made to meet those objectives. The creation of agencies under the "next steps" initiative has devolved responsibility for the executive service functions of Government, from remote offices in Whitehall to those who deal face to face with the general public on a daily basis.

That is where the public need high-quality service, and that is where the new structure of the civil service enables it to be provided. All agencies which directly serve the public already have, or are developing, charter standard statements, so that people know what service they have a right to expect from Government, and what they can do about it if that service is not delivered.

It may not sound revolutionary that one can now take one's driving test on a Saturday morning and pay for it by credit card, but ordinary people asked for the change and are benefiting from it. The introduction of a tax helpline may not seem very significant until it is used to solve a problem, and all for the cost of a local telephone call, no matter where one is in the country. The one-stop service being introduced by the Benefits Agency will not mean much to those who have never visited a benefits office, but the people who count—the customers and claimants—will see a real improvement.

There are now 102 agencies in the civil service, including the revenue departments, which run on next steps lines. Some 62 per cent. of civil servants—more than 350,000 staff—work in "next steps" organisations.

Mr. Mike O'Brien (Warwickshire, North)

I hope that the Chancellor of the Duchy will at some stage take the opportunity to deal with the issue of impartiality in more detail. As a member of the Select Committee dealing with that issue, I am aware that we brought Sir Robin Butler back to give further evidence.

The House will be aware that Conservative members of the Committee asked Sir Robin about a number of matters: first, the way in which 80 to 100 amendments were given by civil servants to various Back-Bench Members to wreck a Bill; secondly, the way in which Sir Robin Butler was involved in various investigations—Members on both sides of the Select Committee questioned whether he should have been involved in those; and, thirdly, the involvement of civil servants in what appears on the face of it to be a Cabinet Committee with a political, rather than governmental, objective.

Mr. Hunt

I intended to come to that matter later in my speech. I am in some difficulty, because I understand that the Select Committee is still considering the matter, and at some stage it will produce a report. The Select Committee is at liberty to call for any evidence that it wishes to consider, and I am not too sure whether I should start evolving a response to some of the points which the hon. Gentleman has raised.

I can say that I regard the traditional principle of impartiality to be fundamental to the future of the civil service, and it is a part of the duty of all Governments to ensure that that traditional principle is upheld. I shall return to one or two of the specific points which the hon. Gentleman made a little later, but I hope that my answer will reassure him.

Mr. Kevin McNamara (Kingston upon Hull, North)

indicated dissent.

Mr. Kevin McNamara (Kingston upon Hull, North)

May I follow the point that my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) has made? Will the right hon. Gentleman give an undertaking that no civil servant will be employed in any form of political work associated with the new Cabinet Committee appointed to look for banana skins in the run-up to the next election?

Mr. Hunt

I was going to come to that in a moment, but of course I can assure the hon. Gentleman that civil servants are well aware of the need to retain their independence and political impartiality. However, civil servants have been dealing with the co-ordination and presentation of Government policy for as long as I can remember.

To return to the point raised by the hon. Member for Hartlepool (Mr. Mandelson) about the First Civil Service Commissioner and whether he should have been a civil servant, it is worth noting that the Select Committee favoured civil service commissioners who were not serving civil servants, and that the commissioners should be appointed from a wide range of backgrounds. I hope and believe that we have responded to the tenor of the Select Committee's recommendations.

On the point made by the hon. Member for Warwickshire, North (Mr. O'Brien) about the new Cabinet Committee, when I was appointed to my present position, the Prime Minister asked me to take special responsibility for the co-ordination and presentation of Government policy. I was also made chairman of seven Cabinet Committees, and I sit on nine other Cabinet Committees. I have been discussing with the Prime Minister what further steps might appropriately be taken to improve co-ordination and presentation, and I concluded that it would help to set up a new Cabinet Committee with a specific remit to undertake that work. The Prime Minister accepted my advice, and asked me to chair it.

The new Committee will provide a forum in which the relevant issues, right across government, can be addressed. It is a Committee of Ministers charged with co-ordinating and presenting the policies of the elected Government of the day and is serviced by civil servants. As part of the present Government's open government policy, the membership and terms of reference of ministerial Committees of the Cabinet are now published and updated regularly, so when a new Committee is established, unlike in previous Administrations, the Prime Minister now naturally informs Parliament, and that is what has happened in this case.

Mr. Mandelson

Will the Chancellor confirm that the membership of that Committee includes the chairman of the Conservative party? Is it a proper function of civil servants to spend their time cleaning up after him?

Mr. Hunt

Without being drawn into the nonsense in the hon. Gentleman's question, may I explain that the Cabinet Minister without portfolio sits on the Committee in his role as a Minister? He is a member of eight other Cabinet Committees.

This Committee consists of myself, in my capacity as Minister responsible for the co-ordination of Government's policy as a whole; the Lord President of the Council and the Lord Privy Seal, who are leaders of their respective Houses of Parliament with responsibilities for handling the Government's parliamentary business, which are highly relevant to the new Committee's work; and the Minister without portfolio, who has a specific role in which he works closely with me to help co-ordinate and formulate Government policy and its delivery. Nothing could be simpler.

Under this Government, for the first time ever, those facts are made public and, as soon as we have a Cabinet Committee, the public are informed of its membership and terms of reference. This is the most open Government in the history of this country, because, for the first time, a range of information that used to be behind the scenes, particularly under previous Labour Governments, is all now made public and open.

The Treasury and Civil Service Select Committee pronounced a verdict on "next steps" which is worth quoting. It described "next steps" as the single most successful Civil Service reform programme of recent decades", and added: We believe that Next Steps agencies represent a significant improvement in the organisation of Government and that any future Government will want to maintain them".

Mr. Giles Radice (Durham, North)

I entirely agree that we said that—it has certainly been my position—but we also said that "next steps" should not be seen as a staging post to privatisation. Will the Minister confirm that he accepts our proposals on that?

Mr. Hunt

I have already made the Government's position clear in our published response to the Committee's report. The foundation of the Government's position is to ask, first, whether the job in question should be done by the Government at all. If not, privatisation is an option that clearly presents itself. What I am now talking about is when the Government decide that the job in question should be done by the Government but that it would be most appropriate and effective for it to be done by a "next steps" agency.

Just recently, in the first open competition for a Permanent Secretary post in a Department of state, the job of leading the Department of Employment went to an agency chief executive—moreover, one who had been appointed to that agency post from outside the civil service following an earlier open competition. In many ways, that symbolises the coming of age of the "next steps" initiative.

The setting-up of "next steps" agencies is, in itself, a valuable process. In progressing the initiative, there has been a thorough examination of every executive function in the Government. The "prior options" test, looking at the case for abolition, privatisation, strategic contracting out, and market testing, ensures that the Government undertake tasks that properly belong to them.

As I have just explained to the hon. Member for Durham, North (Mr. Radice), having determined the answer to that question, the next stage is to ensure that the Government perform those tasks to the best of their ability in organisations with the right structures, skills, and attitudes.

The Government must stick to their core tasks, deliver them to a high standard, and carry them out within tight running cost controls. The plans announced in last November's Budget mean that total cash spending in Departments will be held at the same level in 1997–98 as in 1993–94, which implies a 10 per cent. cut in real terms. That is clear and unambiguous proof of the Government's commitment to continuing improvements in efficiency.

These are, without question, challenging times for the civil service, but the civil service is responding. The changes that we have brought about are designed to make it responsive and flexible. That is the sort of civil service that we shall need for the next century.

I believe that civil servants retain the public service ethos that is their fundamental strength. The taxpayer pays their salary and civil servants want the taxpayer to get value for money. Civil servants want more responsibility. They want to provide the best possible service to the customer; to be efficient; and to be paid according to how well they perform, not how long they have been in a job.

The whole principle of continuity and change have produced a civil service reform that is an outstanding British success story, which will help equip the United Kingdom for the challenges of the 21st century. The Government have built on the enduring values and firm foundations of the civil service, creating more flexible and efficient structures in which staff can work to the best of their ability and provide a high-quality service to the people of the nation.

Stewardship of the civil service is a vital task. I submit to the House that, judged against any standard, the Government have carried out that task responsibly, effectively, and well.

7.37 pm

Mr. Kevin McNamara (Kingston upon Hull, North)

I thank the Chancellor of the Duchy of Lancaster for the consultations with the Leader of the Opposition on the appointment of the First Civil Service Commissioner. I hope that the practice will continue and be extended to all senior appointments to the civil service and heads of significant agencies. After all, it will be standard practice for such appointments after 1 January 1996, as we approach the general election, on the basis of precedent.

Secondly, we support the establishment of the MBA course for civil servants—an important step forward—which is to be developed at the Imperial College school of management in London. Although that is a welcome step, the question of establishing the British equivalent of the Ecole Nationale d'Administration will continue and still has many arguments in its favour.

Thirdly, we welcome the tone of the letter that the Chancellor recently sent to my hon. Friend the Member for Dewsbury (Mrs. Taylor) about procedures to be followed on the code of practice for the civil service. Subject to the usual caveats, we shall do all that we can to help to achieve an agreed legislative framework for the proposed code for the civil service and ensure that it is in the legislative programme for the next Session. The Chancellor said in his letter to my hon. Friend: I shall of course let you know in due course of the outcome of consultation within the Civil Service, and would fully understand if you did not want to give a final reaction to proposals for legislation until those consultations have been completed. That would be precisely our position. It would not prevent us from chatting in the meantime.

There is still a need to grapple with two problems: the relationship of civil servants to Parliament and the House especially, and the problems of the public interest. I hope that those problems can be resolved. The Nolan inquiry and, more especially, the Scott inquiry will doubtless provide some helpful guidance on those matters, but they should not be allowed to prevent the introduction of the legislative framework.

I must add the congratulations of the Labour party to the Treasury and Civil Service Sub-Committee, its Chairman, my hon. Friend the Member for Durham, North (Mr. Radice), and his colleagues, who, by the strength of their arguments, persuaded the Government of the value not only of a civil service code, but of a statutory one.

We now need to turn our attention to how best to secure the values that the Treasury and Civil Service Committee rightly identified as the unifying features of the British civil service—impartiality, integrity, objectivity, selection and promotion on merit and accountability.

In the past 15 years, the British civil service has undergone a period of radical change. Collectively, market testing, agency creation and privatisation have led to the fragmentation of the public service ethos. Although we are pleased with the Government's change of mind on the civil service code, we believe that they must now also recognise the way in which the civil service is being splintered and its essential values dissipated.

No one denies the integrity of civil servants, but what chance do our civil servants have to show their integrity when morale is so low? I do not see the picture of the civil service and its members as painted by the Chancellor today.

Despite the fact that the Government rejected the Treasury and Civil Service Sub-Committee's request for a civil service staff attitude survey, the Treasury nevertheless conducted its own survey in 1994. Sixty-nine per cent. of Treasury staff said that morale was poor, and only 16 per cent. felt that the Department was well managed.

Such is the contempt of the Treasury for its employees that during the recent downsizing—what a charming euphemism for sacking—of the deputy secretary grade in the Treasury, an official was reported in the Daily Mail as saying patronisingly: It is unlikely they are going to the best-paid jobs in the City—if they were that good we wouldn't have let them go"— and the Government wonder why morale is so low in the Treasury, when it denigrates its own employees whose responsible jobs were to supervise the spending in other Departments.

That statement was made shortly after the reported massive overspend and confusion in the Ministry of Defence, in relation to its defence contracts and the handling of its properties. Now there is no one in the Treasury who will supervise the MOD in the handling of such affairs.

Mr. Forman

The hon. Gentleman should consider his facts more closely. I think that he will find, if he does, that the considerable manpower reductions that are proposed in the Treasury, following Sir Terry Burns' recent report, are almost all to be achieved on the basis of natural wastage, hence with the co-operation of the people concerned.

Mr. McNamara

That was not the impression that I received when speaking to some of the people involved and their representatives. It may be achieved voluntarily in the long run, but there are different ways of achieving voluntary redundancies, as the hon. Gentleman probably knows. I do not think that the civil service is any different from any other employer in achieving voluntary redundancies.

Morale is low not only in Whitehall, nor are all civil servants to be found there. Each day, for the thousands of civil servants who work outside Whitehall, the outlook has rarely been bleaker. Pity the poor civil servants who, in employment offices throughout the country, will have to change their whole mode of meeting and talking to the public as they seek to enforce the results of today's mass vote on the Jobseekers Bill.

The increase in casualisation, the decline of promotion and career prospects, the minimal pay increases that civil servants have been receiving and the fervour with which Ministers have introduced large-scale market testing and plans for privatisation—some of them without even undertaking market testing—have left the great majority of civil servants feeling very insecure and worried about their future.

The Chancellor's blanket decision in the most recent Budget to cut numbers in the civil service by 10 per cent. regardless of the role, size or responsibility of tasks, shows the cavalier attitude that the Government display to the civil service as a whole and to individuals in particular. That 10 per cent. cut is a 10 per cent. cut in jobs because that is the most expensive element in the civil service.

Such arrogance has also recently been displayed in the Department of Employment, where the Secretary of State enjoined his Department not to employ temporarily anyone for more than 51 weeks, lest they gain employment rights. By acts such as that, the Government have thrown a blanket of fear across the whole of the civil service, but they are also setting a shocking example to private employers.

The current Conservative period in office began with the Government abolishing the fair wages resolution of the House, continued by abolishing wages councils and ends with the current Secretary of State for Employment setting standards from his own Department for the worst employers—a great change from the Churchillian tradition that used to emanate at one time from the Department of Employment and the way in which the Government then regarded their servants.

In order to cope with that Government-instilled fear, civil servants are forced to sacrifice objectivity. The Government's White Paper, "Taking Forward Continuity and Change", outlines the introduction of individual contracts for senior civil servants at grade 5 and above. In such a job environment, where the proposed employer is the appropriate Secretary of State, how objective can employees be with their policy advice, especially if they know that every word that they say could be used against them in future contract renewal negotiations?

To avoid the risks of politicisation of the senior civil service, such contracts should at least be regulated by an independent or quasi-independent organisation. We are aware of the role that the Secretary of State envisages for the First Civil Service Commissioner. We await the outcome.

Further, there continues to be no explanation from the Government of the way in which they intend to resolve the constitutional dilemma of having a contract for civil servants with terms set out, including notice periods in the event of redundancy and dismissal, yet at the same time the Department retaining the royal prerogative whereby the Crown can dismiss at will.

Not only will senior civil servants have their own special pay arrangements, but, as the Chancellor said, so will all civil servants in every Department by 1 April 1995. Such pay delegation leads to more division of the civil service. National pay bargaining has served the civil service extremely well, underpinning the concept and practice of a national unified civil service. Each year, approximately 40 officials in the Treasury effectively manage the national pay bargaining process of 500,000 people.

Ministers now mistakenly believe that by pay delegation they can offer greater scope for savings on running costs by keeping salaries as small as possible. In reality, after all the gloss has gone, the Treasury will retain financial control of the civil service pay bill. Why the stupid delegation? That delegation will serve to provide little more than a thin veneer of superficial control of the parts of the civil service with pay delegation.

Last year, the pay deals in delegated parts of the civil service were remarkably similar to the national pay agreement of 2.2 per cent., yet the cost of those parallel deals is evidenced by the fact that more than 3,000 people have taken courses at Sunningdale to learn bargaining procedures in the new Departments and agencies, and as many as 200 pay bodies will be needed to administer the various departmental and agency pay systems—3,000 people, when 40 did it in the past. There were four main negotiated settlements, but now we shall have 200. The Government call that less bureaucratic and more efficient. It is rubbish; and that from a Government who extol the virtues of efficiency.

The Government's means of efficiency—market testing, contracting out and privatisation—have eroded the civil service values of selection and promotion based on merit. Successful agencies, such as the Chessington Computer Centre and the Insolvency Service Agency, which, respectively, administer the Government payroll and investigate the affairs of bankrupts, and meet their yearly targets and beat off all private sector competition, are to be rewarded with privatisation. Since its creation in 1993, Chessington has outperformed all its private sector competitors. A high-quality service such as Chessington should be valued by, and retained in, the public sector, not primed for privatisation in order to fund tax cuts before the next election. The irony is that Chessington will possibly be sold to one of the private companies that it has regularly beaten in competition.

We believe in rewarding the agencies' hard work not by privatising them, but by keeping them in the public sector, serving the public good and setting an example to the private sector of the smooth and efficient delivery of service to the public. But the pace of reform is causing the fifth essential feature of the civil service—accountability—to be left behind. If one allows agencies such as Chessington and the insolvency service to leave the Government via privatisation, the existing accountability arrangements no longer suffice. The Government do not seem to have taken that on board or to have introduced appropriate procedures for it yet.

In the case of the Prison Service, accountability for mistakes saw the buck pass from the Home Secretary to the head of the Prison Service to the prison officers and, then, to the IRA for daring to try to escape. That is a dangerous precedent, and it happens not only in the Prison Service. What a shambles the Child Support Agency was, but the Minister with responsibility again came up smelling like roses, just like the Home Secretary. They are escaping scot free from what should be their proper responsibility.

We are further worried about the Government's intention to implement a trial contracting out of the drafting of Treasury legislation to private sector lawyers, as announced by the Chancellor of the Exchequer. Significantly, he made the announcement to the European Forum rather than the civil service or the House. The European Forum has been touting on behalf of some private sector lawyers for the work for some years. Private industry will draft some of the most politically controversial and market and price-sensitive legislation. One can only conclude that the Chancellor came up with that idea when suffering from mental and physical exhaustion after his efforts to create a new steel industry in Consett and build new nappy factories.

There are serious conflicts of interest in lawyers' chambers and solicitors' firms to be resolved. Private law firms will almost certainly use the trial period as a loss leader. Civil service lawyers are highly qualified and highly intelligent, but are paid only between one third and one half of what lawyers in the City can expect. Any widespread contracting out of the drafting of legislation will lead to a significant exodus of senior civil service lawyers to more lucrative opportunities in the private sector. The expertise of the most experienced and able draftsmen will be lost, not only to this Government but, more significantly, to any incoming Administration. There is a growing fear that, despite the Chancellor of the Duchy of Lancaster's fine words, the Government's policies towards the civil service will make it increasingly difficult for an incoming Labour Government, elected on a popular mandate, to have the resources to legislate, implement and administer policy effectively.

The five unifying features of the civil service are threatened by the incessant drive for dogmatic change. I conclude by stressing a sixth feature: flexibility, which was also mentioned by the Chancellor. Flexibility is not a value, but a necessary quality of any organisation at the end of this millennium—especially in the increasingly vital sphere of information technology, its control and its use.

Information systems are, or should be, central to the operations of Government, Departments and agencies. Under market testing, those information systems are being sold to private sector companies. The information technology operations of the Inland Revenue and the Department of Transport have been sold to the same company, Electronic Data Systems. The Inland Revenue contract is worth £1 billion over 10 years. Electronic Data Systems offered the lowest tender, thereby winning a valuable prize—the Inland Revenue computer systems were admired throughout the Government and by many foreign Governments.

Now, the National Audit Office has identified 43 risk factors in the Inland Revenue contract. If EDS were to fail, it is estimated that to reconstitute the in-house organisation could take up to five years and cost the British taxpayer millions of pounds. EDS is excluded from liability for consequential loss arising from a breakdown in computer service. That means that the Inland Revenue cannot recover from EDS lost tax revenue or interest payments that it may be required to make on delayed tax refunds. What sort of contract is it when someone cannot receive damages when his partner fails to deliver the service that he said he would? That policy comes from a Government of business men.

The Inland Revenue runs the risk of losing control of its information systems. It will be virtually impossible for the small contract management team that remains to keep abreast of the constantly changing world of information technology or to have the knowledge to utilise it. The ability to change policy now depends on technological infrastructures. We have already seen that with the concern expressed by some members of the Inland Revenue about the structure of the EDS contract. The Government will rely on EDS to tell them what it is prepared to provide, and it will not necessarily answer to Government needs. The Inland Revenue's current plans to computerise tax returns depend upon EDS's design and supply of the relevant equipment by 1997. EDS is currently deciding whether it can meet that deadline successfully, under the terms of the contract. The Inland Revenue must wait, twiddling its thumbs, for the decision.

Now, on top of all that, the Government are considering whether to make another contract with EDS to control the computerised identity database that will cover the entire population and could be tied to a national identity card scheme. The question immediately arises whether the Government should place so much trust in one company that claims in its battle honours the botched Student Loans Company's computer systems contract. Control of that company will not be in this country or even in the European Union, but in the United States of America. The company will be subject to American legislation.

If there were to be a breakdown in the contract or a failure to renew, the Inland Revenue would be at the mercy of EDS and any other private companies that may have some of the knowledge. None of the control will be in this country. The Government have surrendered their responsibility abroad. What does that mean? Government by contract can lead to loss of flexibility and of the ability of the civil service to react to immediate events.

The Opposition would not argue that all Departments and agencies should be building their own information systems. But when we look to private sector expertise, we must recognise the difficulties in separating completely one from the other, policy formation, information technology, policy delivery and policy supervision. Government agencies must retain control of the strategic elements of their information technology and the technological know-how to be intelligent customers. The Government are running down that ability within the civil service until eventually it will be lost.

Privatisations such as those in the Inland Revenue and the Department of Transport are being carried out by the Government in the name of private sector practice. Yet few private sector companies would enter into contracts of that scale and lose their core abilities. Contracting out should be a management tool that enhances flexibility. But under market testing it has been used as an institutional dogma that engenders rigidity in what future Governments will be able to do. It is not the reforms themselves—"next steps", market testing and pay reform—that are endangering the essential qualities of the civil service, although one can raise all sorts of questions about them. It is the particular way in which they are being carried out.

Decentralisation is being implemented in a centralised manner at a pace that is leaving vital features behind and causing the Government to lose control. We must understand the effect that pay reform and job insecurity are having on civil service morale in order that impartiality, objectivity and integrity may be restored. We must select and promote on merit rather than on the principle that private is synonymous with good and public is synonymous with bad.

We need a revised framework of accountability for a reformed civil service that is not so dependent on the illusory distinction between policy and administration. The Cabinet Secretary tried to create that distinction and the Home Secretary and the Secretary of State for Social Security sought to take advantage of it. We must establish a creative balance between public and private provision, resisting the temptations of cut-price options with hidden long-term implications and recognising that government by contract can lead to increased risk and loss of flexibility. We do not want 20,000 civil servants in Westminster writing contracts that are dictated by the would-be service providers.

We must pull back from the brink of hollow government and restore the civil service as a national asset. The Chancellor's remarks about the civil service being a national asset were laughable when, by their policies, the Government are demonstrating that they are the biggest asset stripper in the land.

8.1 pm

Mr. Peter Brooke (City of London and Westminster, South)

It is quite like old times for me to follow the hon. Member for Kingston upon Hull, North (Mr. McNamara), although on this occasion I am not following him in wearing a tie colour coded in orange and green. As we have disagreed before, I am sure that he will not mind my doing so again on the subject of pay delegation.

As, among other things, Customs and Excise Minister, I would spend one day in six weeks in the field. I had the opportunity to talk with civil servants during the day and it was my experience that, south of Watford, they wished to discuss only pay but, north of Watford, they did not raise the subject at all.

I am taking part in the debate primarily to deliver a personal paean of praise and a vote of thanks. Although the late Nick Ridley of enchanting memory used to say that the most confidential place to say something was the Floor of the House of Commons, I am delighted to offer both paean and appreciation in so public a forum.

I served in five Government Departments over 15 years, if one includes the Whips Office, and I pay the utmost praise to the service that I received from civil servants in each and every one of those Departments. Those men and women were knowledgeable, diligent, agreeable, honourable and wholly devoted to the public weal. It was a pleasure to be a visiting player in their team. Many of them are employed in my constituency and, as a master of business administration, I welcome others to that state.

The most vivid index of their collective quality is the compliment paid by the last Secretary General of the European Commission, who was French. We are so often told, in Sterne's phrase, that they order these things better in France, so it is a delight to record the verdict of that long-serving French fonctionnaire: that, of all the civil service machines in the Union that interfaced with Brussels, the British was the best. It took a cross-Whitehall trawl on policy issues before a debate took place in Brussels in order to determine what was best for Her Majesty's Government as a whole. In many other capitals it was simply left to the lead Department to decide on a policy.

The proof of that pudding is the speed with which we implement EU directives and the infrequency with which we are taken to the European Court. In other capitals, the debate often begins only after the Council of Ministers has made up its mind.

Lest I should be thought purblind in a Panglossian manner, I remark in passing—as evidence that parts of the state of Denmark still require improvement—that, while I acknowledge that the instance occurred a decade ago, the worst spelling, punctuation and grammar of my experience occurred ironically in what was then the Department of Education and Science. The spirits of Chaucer and Rabbie Burns can rest easy in the knowledge that the most consistent good examples of those literary disciplines occurred in their old Department of Customs and Excise. In this case, I am perhaps being a little unfair to the Northern Ireland civil service; but my readings therein were diluted by the Northern Ireland Office. Perhaps Trollope can rest easy also.

My slender credentials for the debate include an unlikely one. The fact that my great granduncle served in this House with Stafford Northcote is less germane than the fact that my father shared rooms at Oxford with John Fulton of the Fulton report, at whose knee I therefore partly grew up. However, I served for four years in the late 1980s as Treasury Minister responsible for civil service pay and conditions and I was likewise responsible for some of the wider efficiency initiatives in the public service.

Without washing red tape in public, I admit that some of those initiatives were perhaps a little overdue. In one purchasing episode—where it had been assumed for years that costs rose with the inflationary tide—I salute the official who went to see for himself and inferred from the ubiquity of BMWs in the suppliers' car park that perhaps in that area of industrial activity the technology was moving in a deflationary direction.

The fact that the reforms have been spread over more than a decade has softened the process of change. Commercial bankers, like civil servants, had grown up in careers where it was assumed that there was a berth for life, with all the attendant industrial relations implications for pay and conditions. The implicit breaking of that contract, which occurred a decade earlier for bankers than for civil servants, came as a shock.

I can still recall the jejune embarrassment of the first essays in pay flexibility. But Departments learnt quickly, as they could soon be on the receiving end of another Department's unthinking ineptitude—I refer to the events of 10 years ago. With regard to civil service pay policy, I always found it easier to identify statistics for attraction and retention rather than for motivation.

Where change does not occur—as is recognised in paragraph 85 of the Treasury and Civil Service Select Committee's report and in paragraph 6 of the Government's response—is in the civil service's commitment to Governments of different hues. The late Dick Crossman used to inveigh against the capacity of civil servants to thwart his plans or to seek to do so. There have been echoes of him in the past 15 years and no doubt they will continue into the next century.

Like the perennial complaint by Governments of all colours that the BBC is biased against them, even-handed scepticism across all parties must be evidence that all is reasonably well in this area of our constitution. Leaving aside the ingrained British habit of always thinking of reasons for not doing something and leaving aside the great Sam Rayburn's memorable remark that the three wisest words in the English language are "wait a minute", it is the duty of civil servants to draw attention to all the disadvantages of a ministerial policy and to avoid those two terrible embarrassments for any Minister: changing policy in a hurry in mid-stream; and being caught at the Dispatch Box in the crossfire of arguments that he or she has clearly never addressed before. What Sir Humphrey describes as "Courageous, Minister, courageous", becomes reckless ignorance if no one said, "Wait a minute" first.

It is a compliment to the civil service that the Select Committee has done so thorough and even-tempered a job.

These are serious matters and it is right that they should be seriously addressed. As they are addressed in the Select Committee report, let me also praise civil servants for their self-restraint in not wondering aloud when Ministers would apply the same management techniques to themselves as they cheerfully endorsed for officials.

There was no question but that Lady Thatcher ran a tight ship, yet whether a guru would have recognised it as management by objectives at individual level is more doubtful. Perhaps it is the highest compliment of all that civil servants are the regulars, the custodians of the constitution, while Ministers are simply territorials who pass by with short service commissions.

Mr. Radice

Will the right hon. Gentleman comment on the fact that the Government have turned down our recommendation that there should an efficiency study of Ministers?

Mr. Brooke

The hon. Gentleman, with whom I have also crossed swords on occasions, knows that when one passes from an Administration, one acquires a certain independence of mind on these matters.

At the end of 15 years as such a territorial I was and am left with one nagging doubt. If I am right, the debate started in the last century by the Earl of Iddesleigh, as he eventually became, will carry on to the next.

When the efficiency unit was starting on its mid-1980s trawl on the future of the service, which was the harbinger of the next steps agencies, I asked the senior official who interviewed me to define the management responsibilities of the Secretary of State and the Permanent Secretary. I continued asking that question at intervals while I was a Minister. I suspect that Permanent Secretaries found the question a little naive, which reinforces my analogy of the regulars and the territorials.

Yet I went on wondering and came to a mild moment of truth in my final month as a Minister, when giving evidence to the Select Committee on National Heritage when its Chairman, the right hon. Member for Manchester, Gorton (Mr. Kaufman), asked who was responsible for what he considered the shambles of the British Library—a narrative 16 years in gestation that was conceived by a Labour Government in the 1970s.

Clearly, no one person has been continuously responsible throughout that period, though the distinguished architect has been involved throughout. It has been a chapter of long-term errors, yet to say that, whatever its underlying truth, is to imply that accountability is dead, so in answer to the right hon. Gentleman's question I said, with full recognition of what I was saying, that I was responsible.

When it is all over, and that great library is functioning to the satisfaction and admiration of all, it may be a good case history for a PhD to determine where precisely between Ministers and officials responsibility did and does lie. That is as good a coda to this paean as I can imagine. The fact that we can discuss these issues academically, and with the public weal as our lodestar, is the best possible tribute to the quality of the civil service.

8.12 pm

Dr. Jeremy Bray (Motherwell, South)

The final theme of the right hon. Member for Westminster, South (Mr. Brooke) put what he said earlier into perspective. It was wholly proper for him to pay tribute to the support given by officials in a variety of offices, but to dwell on the nonsense and disasters of the British Library was to hark back to some of the points made by my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) in a masterful speech which made the Chancellor of the Duchy sound like a used car salesman. When that expression was first used, it was more derogatory than it seems nowadays, when used car salesmen are the summit of creation.

I should declare an interest in the subject of the debate as I am parliamentary consultant to the Institution of Professionals, Managers and Specialists. Lest that should be taken as accounting for the origins of my interest in the subject, I remind the House that I chaired the Estimates Committee inquiry which recommended setting up the Fulton committee. I also chaired a Treasury and Civil Service Committee inquiry into the effectiveness and efficiency of the civil service some 10 years ago.

The Select Committee reminded us of the dominant theme of the Fulton report, which was the cult of the amateur and the uncertain role of the professional and specialist civil servant and I shall speak mainly about that.

There is a general demoralisation in the civil service today, but nowhere more so than among professional and managerial staff. It is accounted for partly by the privatisation and contracting out and the unfair terms under which they are able to bid for work, and partly by the Government's lack of understanding of the areas for which the professionals have been responsible.

One example is the Transport Research Laboratory. Not long ago an edict excluding that office from examining road pricing came directly from the Secretary of State for Transport. The Building Research Establishment has been another victim at a time when the public and the building industry need much guidance in the development and use of new materials and the effects on the comfort of people in their homes of a muddle in Government standards, in the enforcement of building regulations and the improvement of standards, particularly in the public sector.

The enormously important role of the Meteorological Office in weather forecasting and the study of climate change calls for a back-up and integration of Government scientific activities generally into the environment, which has not been forthcoming.

The lack of perception by Government of the real role of the professional civil servant is the underlying problem, rather than the management questions. We have seen it in the attrition in the numbers and roles of Government chief scientists. The extreme case is the Department of Trade and Industry, where there is no longer any such creature in that sad wreck of a Department. More attention must be paid to the role of doctors, economists, statisticians and, as the right hon. Member for Westminster, South reminded us, the use of architects. My hon. Friend the Member for Kingston upon Hull, North reminded us about the role of information technology specialists. All those aspects have been severely mishandled by the Government in the past 15 years.

The Government should consider carefully the point that my hon. Friend the Member for Kingston upon Hull, North made about the role of Electronic Data Systems. I know that the Minister had some background in this area. I hope that he will look up the employment practices and the origins of EDS in the early days and compare them with the standards that he knows from his own experience are necessary in information technology and management consulting. EDS has always grossly exceeded in its promises and failed to fulfil them in many contracts in the United States, and hugely threatens to do so in Britain. Among the parts of administrative history that will have to be written is the story behind the emerging dominance of EDS, which is a sinister development under the present Government.

The role of the professional is important not just on the domestic front, but in shaping international debate and the framing of policy. Obviously, health is a key issue. At research level it is wholly possible for Britain to exercise influence in projects such as the Human Genome Organisation. All the ethical and moral debates underlying that will help to condition international attitudes in the emerging area of public policy, which will be of great importance to the future of our race.

Another subject which is less in the future, or at any rate more in the present of current parliamentary debate, is global climate change. Debate is hotting up with the shifting of the Antarctic ice sheet. The evidence will be coming in slowly over the next 10 years. There Britain developed a key role through the contribution of one man, Sir John Houghton, the former director general of the Meteorological Office, who became chairman of the research committee of the intergovernmental panel for climate change. That continues today through the role that Professor Julian Hunt, the present chief executive, is playing in the encouragement of meteorological development in other parts of the world.

The forecasting of the path of tropical storms was a Meteorological Office development, building on the idea of a Chinese meteorologist resident in Hong Kong, For Britain to be involved in forecasting the path of tropical storms which barely touch any remains of the British empire may seem a remote and unimportant development, but underlying it is a major shift in approach to the handling not only of meteorological forecasting but of the management and the forecasting of complex systems distributed through space generally.

The sort of issues that I am talking about can be handled only by Government and at a time of public debate when there is serious, restrained and competent discussion of what are quite difficult issues, not by a Government who think that they know all the answers before they start. Nowhere has that been more disastrous than in the sphere of economic policy, where we have suffered from a succession of Chancellors—excluding the present one—who thought that they knew all the answers in advance and who failed to maintain the apparatus, the thoroughness of analysis and keeping up with the state of the art in the framing of economic policy. The Government's handling of appointments in the economic service, and currently in the statistical service, shows a sad rundown in the intellectual leadership that the Government and the public sector once provided. That is important not just for Government but for the way in which these things are handled in society generally.

The Select Committee on Science and Technology was in California a fortnight ago looking at the emergence of the new high-tech biotechnology companies. One thing that is clear there is that the drive and initiative is largely due to the emergence of a new type of animal. The right hon. Member for City of London and Westminster, South reminded us that he was an MBA. I add to that the fact that that qualification was gained at Harvard. Shortly before he gained his MBA at Harvard I was at the graduate school of arts and sciences at the same university. In America today, the MBA that he was and the PhD that I was have become one person. There is the integration, the breadth of skills and competencies at a double post-graduate level, which are the necessary tools of business, administrative and public service development in the future.

Where does that have any chance of emerging in the British civil service as it is conducted today? I just do not see it. In which Department? Where would young men and women with the necessary competencies be motivated to go? An admirable scheme has been developed by the Royal Academy of Engineering and the Institution of Electrical Engineers, financed by David Sainsbury or one of his trusts, for the training of chartered engineers/MBAs. There are some 60 graduates of that double discipline. Will the Minister find out how many of them are working in the public sector? I doubt whether he will find more than three or four of the 60 there. That is not good enough if we are to get the necessary width of background in the public sector.

The themes 30 years ago at the time of the Fulton report were concerned with questioning amateurism and competence and comparing that with the professionalism and specialism that was needed. Today, the questions are much more those of strategic contracting out, market testing and worries about the politicisation of the civil service. Those themes may not be so far apart. The link between them is that they both reflect not so much the problems of the civil service as the problems of Parliament and our perception of the nature of the job of Government.

If we are to achieve a sensible balance in the development of a public service which is competent, which has breadth of vision and which is practical and realistic in the handling of social and political problems, the way forward has to be set in this place. I ask my hon. Friend the Member for Durham, North (Mr. Radice)—I look forward to hearing what he has to say in summing up his admirable report—how far the Treasury and Civil Service Select Committee really taps the frontiers of economic research. Unless the House is doing that, it cannot expect Government Departments to respond.

That process will receive a further shift onwards with the new generation of Members of Parliament who will come in after the next election. I am sure that we shall see a continuation in the raising of the technical background of Members of Parliament in many walks of life. I am not a pessimist in any way about current developments, but they are not always of the nature that public debate and debate in the House in particular make them out to be.

I hope that when the Minister replies he will deal with some of those points and, perhaps most important of all, that he will deal with some of the practical points made by my hon. Friend the Member for Kingston upon Hull, North, which are of immediate public concern and also very much the concern of some of those civil servants in the union with which I am associated.

8.27 pm

Mr. Nigel Forman (Carshalton and Wallington)

I see that it is relatively easy to catch your eye in this debate, Mr. Deputy Speaker, and I am delighted to have done so; but it is a pity that there are so few people in the Chamber on a Thursday evening. I have counted 12 in all on both sides of the House. That is a pity, because the future of the civil service and its relationship to the House and the British constitution is an important subject. I want to say a few words about that in the time available.

Before doing so, I want to take up a point that arises from what the hon. Member for Motherwell, South (Dr. Bray) said. It concerns the potential for British civil servants, as perhaps some of the best in the world, to contribute to the quality of government not only in Britain but increasingly, I hope and believe, in European Union institutions, such as the European Commission.

It has always struck me that the French, from a nation that I have long admired, seem to have the ability to second and post many of their best people, albeit for short periods, from the public service to other institutions, whether public or private, where French national interests can be served at the same time as the wider interest of those particular institutions. Invariably, that means that the French have mastered the art of writing the critical first draft in many Community initiatives over the years and have hogged some of the best positions, the key positions, in European institutions.

I have long pressed Ministers—I hope that they will make a note of this point tonight—to make an even greater effort to see that some of our best, brightest and most imaginative civil servants are seconded and posted to European institutions. That can be in Britain's interest and the wider European interest. I hope that we will give that greater prominence. That thought was prompted in my mind, albeit a bit tangentially, after listening to the hon. Member for Motherwell, South.

In talking about a flexible civil service for the late 20th and early 21st century, it is every bit as important that our civil service, with all its talent and opportunities, should engage, and should be encouraged to engage, in more secondments and swaps with the private sector. I know that there is an element of that now. Perhaps when he replies, my hon. Friend the Minister will give the House the latest figures on the extent of two-way movement of civil servants, in and out of the civil service, for temporary periods, to invigorate the private sector with their perspectives from the public sector, and to do the obverse—to invigorate the public sector with very necessary perspectives of the private sector. I fear that, all too often, those who leave the civil service on short-term secondment—or what was intended to be short-term secondment—for the private sector do not return, for reasons of pay, conditions, morale, and so on. If the figures show that there is a net outflow, it should be a warning sign to Ministers to do something about the problems that might lie behind it.

On the more central subject of the debate—the issues raised in the Government's latest White Paper on the civil service—and prompted by the report of the Treasury and Civil Service Select Committee, on which I have the honour to serve, I should like to say how much I have benefited, as always, from the free adult education that is available to those of us who sit on Select Committees. I have served on three Select Committees in my time: Foreign Affairs, Science and Technology, back in the bad old 1970s, and now the Treasury and Civil Service Select Committee. I find them most interesting. Whatever impact we may or may not have on policy in those Committees—in this case, I think that we have had some impact on policy—they benefit the quality of debate and thought in Parliament by providing a free and top-class adult education for those who are lucky enough to serve on them.

I have played some part, therefore, in bringing about what we might describe as the all-party consensus which lay behind our report. I am delighted to pay personal tribute to my hon. Friend—I do describe him as such—the Member for Durham, North (Mr. Radice), because he gave the Committee considerable wise leadership and went out of his way to build the consensus which helped to make the report that much more influential.

It is timely to pay tribute, like my right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke), in whose constituency I live—he is keeping an eye on me—to the British civil service, not only for its qualities, which were mentioned by my right hon. Friend the Chancellor of the Duchy in his opening remarks, but for its ability to manage and, indeed, survive extensive change within its own sphere. That was the subject of much of our investigation in Committee. It is notable and worth setting on record that, during the Conservative party's period in office so far, the overall size of the British civil service has been projected to fall from the 755,000 which we inherited in 1979 to 477,000 at the end of the current Parliament. That is a significant reduction.

Clearly, there have been some worries in certain quarters that such a reduction—indeed, it has been described as a fragmentation—could lead to a severe loss of morale, which could be permanent rather than temporary. I was therefore relieved to see this said succinctly in paragraph 36 of the White Paper: The Government accepts that the process of change"— change in the civil service— is unsettling; but the Civil Service, like other areas of the economy, has to adapt if the country is to improve its competitiveness. That is a slightly bleak statement of reality, but it would be naive to suppose that our excellent civil service could have stood aside from the process of seeking greater efficiency—and, indeed, achieving it—which the private sector had to go through, very often in even more difficult conditions.

It is fair to put one's hand up on the Conservative Benches and say, "Yes, it is true that we have privatised parts of the state." We have privatised not only the state industrial sector, which used to be called the nationalised industries, but the very heartland of the state itself. That was necessary and timely. It has happened in other Organisation for Economic Co-operation and Development countries as well, to a greater or lesser extent. So we are not being eccentric. In my view, the state apparatus that remains—this is the important point—is more open and more efficient and is delivering public services to a higher standard than 15 or 16 years ago. I welcome that. It is one more reason to signal one's gratitude and admiration to the civil servants, at all levels—from the permanent secretaries right the way down to the humblest clerk in a social security office—who are delivering services in an exemplary way.

One important conclusion to be drawn from civil servants' achievement is that, in parallel with the dramatic reduction in the size of the civil service, indeed even in its thrust—with greater emphasis on policy advice in relatively small Departments at the centre and greater emphasis on the agency principle in terms of the delivery of public services—my hon. Friend the Minister should consider the need for fewer Departments and fewer Ministers. That is perhaps a revolutionary thought, but in the current Government there are about 90 Ministers, in round terms.

There are also all sorts of Ministers-in-waiting, like my hon. Friend the Member for Eastbourne (Mr. Waterson) and others who sit on the Bench here. They are known as parliamentary private secretaries. Admittedly they do not take the Queen's shilling, but I suggest that the whole apparatus is becoming almost overladen, particularly when the civil service itself, the people whom Ministers are supposed to command, in military terminology, has slimmed down so admirably. My suggestion is that the great advantage of slimming down ministerial ranks might include the following points. Lines of accountability could be improved. I have been a junior Minister. I know a little bit about it. I have also been PPS to the Chancellor of the Exchequer, so I have seen some of these things from the inside. There is no doubt that lines of accountability can get blurred, even in small Departments, let alone large Departments like Environment or Trade and Industry, by having a plethora of junior Ministers.

It is fair to say that, in Churchill's first post-war Government, it was standard practice to have only one junior Minister in a Department. Who is to say that the problems that Britain faced in those years were any smaller than the problems today? In many ways, they were greater, because we had our imperial responsibilities, and so on. Equally, PPSs scarcely existed. There were one or two to very senior members of the Cabinet and that was that. I know that the Government Whip is looking worried, but that heretic thought is worthy of consideration.

Mr. Brooke

Is my hon. Friend aware that, in that period of Government in the mid-1950s, it was perfectly possible that if the parliamentary secretary was not available, the PPS might be asked to take a decision himself?

Mr. Forman

That sounds admirable. I am sure that some wise decisions were taken in that way. I remember reading that in the Churchill Administration of the early 1950s, when Sir Winston was seriously ill, the government of the country was in the reliable hands of Mr. Christopher Soames.

Dr. Bray

The hon. Gentleman mentioned the role of junior Ministers. I was told by no less than "Otto" Clarke—the formidable Sir Richard Clarke, the inventor of the modern system of public expenditure control—that junior Ministers functioned merely as parliamentary public relations officers for their Departments, and had no managerial policy role.

Mr. Forman

I am grateful to the hon. Gentleman for his copious memory.

I suggested that the first advantage lay in the improvement of lines of accountability. The second is the possibility of more coherent policy making: the existence of fewer, slightly larger Departments would necessitate better co-ordination across subject areas. Thirdly and importantly, Parliament would benefit from more wise contributions such as the one that we heard tonight from my right hon. Friend the Member for City of London and Westminster, South, whose speech was eloquent and even elegiac.

Let me turn to my main point. I intervened on my right hon. Friend the Chancellor of the Duchy of Lancaster in an attempt to establish what he saw as the constitutional role of the civil service—an issue that the Select Committee considered to be central. Either I did not put my question clearly or my right hon. Friend misunderstood: he did what I rather expected him to do, and rehearsed the list of admirable qualities possessed by the British civil service.

We are all agreed on those qualities. I believe that all tonight's speeches will be found to have referred to them, in all sincerity. In a more precise context, however, the role of the civil service raises issues relating to the nature of the British constitution—to the way in which the service, which is sometimes described as an important pillar of the overall architecture, fits into that architecture and to how well entrenched it is. We need to consider whether it is on shaky foundations, and on what its position depends.

My right hon. Friend the Chancellor of the Duchy said that he had an open mind on the question of a proper statute to back up the civil service code that our report proposes. I am glad about that: perhaps by the end of the debate we shall have been able to close my right hon. Friend's mind in our favour—to persuade him of the wisdom of our report. He said that one of the conditions was that the legislation should be narrowly focused. In a letter to the Chairman of the Select Committee, my hon. Friend the Member for Hazel Grove (Sir T. Arnold)—a copy was probably sent to all members of the Committee—my right hon. Friend specifically stated that such legislation, if it went ahead, should not include attempts to extend its scope.

I am happy to give way to the hon. Member for Kingston upon Hull, North (Mr. McNamara), bearing in mind his expressed wish to give a fair wind to the legislation. Perhaps he will give an assurance that he would not only give it a fair wind, but not seek to extend its scope.

Mr. McNamara

The Chancellor of the Duchy said that it would be possible at a later date to change the legislation by means of affirmative resolution in the House—by means of a statutory instrument. Given the necessary consensus, that could certainly be done. We welcome the principle, but we have yet to see the precise terms of the Bill. We shall want to hold discussions with the civil service unions before reaching a conclusion.

Mr. Forman

I am delighted to hear that. I think that it constitutes some extra progress.

My right hon. Friend said that the constitutional position of the civil service should not change. In a moment, I shall ask what that really means. He also said that there should be all-party support for the change. That is clearly vital in a constitution that involves no single codified document to govern the country's affairs: we must do everything by all-party consensus, if it is to last. As I have said, I am delighted by what the hon. Member for Kingston upon Hull, North has said, and I hope that the hon. Member for Eastleigh (Mr. Chidgey) will say something similarly supportive if he catches your eye, Mr. Deputy Speaker.

What, then, is the role and position of the civil service in the constitution? My right hon. Friend the Chancellor of the Duchy drew my attention, in the second chapter of his reply to me—the first was not quite so forthcoming—to the first paragraph of the proposed new civil service code. It states that the duty of the civil service is to assist the duly constituted Government, of whatever political complexion, in fonnulating policies of the Government, carrying out decisions of the Government and in administering public services for which the Government is responsible". That is a fairly clear statement, but it has important implications.

The statement is, for example, very traditional. In the eyes of the current ministerial team—I do not know whether this would be true of the Opposition, if they ever returned to office—the civil service has no constitutional position independent of Ministers. That is important in the light of the debate about Clive Ponting, and numerous other events in recent years.

Mr. Radice

As the hon. Gentleman knows, one change is contained in the second paragraph of the document: all those duties and responsibilities are subject to the code.

Mr. Forman

That is a potential advantage. If we examine the constitutional lineage of the proposals, we see that the code clearly suggests that civil servants are servants of Ministers in the Government of the day while Ministers, in their turn, are servants of the Crown—hence the expression "Her Majesty's Government". My interpretation is that, strictly speaking, civil servants are not seen by Sir Robin Butler and his senior colleagues to owe any duty to the state over and above their duty to Ministers. That is an important constitutional point.

Mr. McNamara

In my speech, I said that the relationship between civil servants and Parliament—particularly the House of Commons—still needed exploration, as did the question of public interest and "whistle blowers". Both issues will be discussed in Lord Justice Scott's report, which I look forward to reading. My point was that they were thorny questions, but I do not think that that would prevent the Labour party from approving the legislation that we need for the code; the other parties can speak for themselves.

Mr. Forman

The hon. Gentleman was right to mention Scott in this context. Scott was always hanging over the Select Committee's deliberations. We wondered when he would report, and what the implications would be. Eventually we decided to press ahead, which was probably just as well: if we had waited for Scott, we might have waited for ever.

Ministers should, however, take full account of whatever Lord Justice Scott has to say, and also of what Lord Nolan says. Incidentally, I should be interested to know whether Lord Nolan has officially been invited to comment on the draft code and, if so, when his comments are expected and whether they will be published, along with others.

Because there is a chain of responsibility from civil servants to Ministers to Crown, it puts a particular responsibility on Ministers not to ask or require civil servants to do things that they properly should not do. It is all very well having a code of practice with statutory backing for civil servants—I welcome that—but we need to think carefully about something analogous to cover Ministers.

I am sorry to have to say that, but events over the past 30 to 40 years—I go back that far in my thinking—justify our considering it. It makes all the more important the idea of having a code with statutory backing. If a code is simply dependent on Ministers acting under existing powers, through an Order in Council or whatever, that would not have the same authority in these matters and would not enable arbitration to take place on the independent and authoritative basis that would apply if there were statutory backing.

In a system that does not have a codified constitution and where we are living under a regime of alleged parliamentary supremacy, it becomes all the more necessary to give a code statutory backing so that it is credible in the eyes of not only civil servants—all 477,000 of them, or whatever the figure is—but, just as important, in the eyes of the British public. There is no way at present to entrench such a code other than for Parliament, with all-party consensus, to give its support to legislation designed for that purpose.

If and when we have a more far-reaching form of constitutional change, the position might be different. In the interim, for as long as we have the status quo it is vital—and this is my main point—that there should be clear statutory backing for the code. It is the one area where there is an element of ambiguity in the Government's response to the Select Committee report. Other than that, we welcome the way in which Ministers have responded to what we said. Not only do I believe that there should be such an Act of Parliament but, as a little dicky bird tells me that there is not exactly a plethora of candidates for legislative slots in the coming Session—for various reasons which I shall not go into tonight—that strengthens the argument for an appropriate Bill finding an early and prominent place in the next Queen's Speech.

8.52 pm

Mr. David Chidgey (Eastleigh)

I compliment the hon. Member for Carshalton and Wallington (Mr. Forman) on a thoughtful and thought-provoking speech. I share his dismay at finding the House so empty for a debate on an important part of the fabric of the Government and governance of this country. Indeed, I feel as though I have inadvertently wandered into a rather discreet and erudite debating club, comprised solely of the members of the Select Committee. I hope that they will excuse me for gate-crashing what is almost a private affair—

Mr. Radice

Please come in.

Mr. Chidgey

I thank the hon. Gentleman—it is one more to swell the numbers.

I offer my congratulations, which I am sure all hon. Members would wish to share, to the civil service staff for the way in which, over the past 15 years, they have stoically coped with the trauma and uncertainty of major changes in their working culture. I am sure that we all realise that that cannot have been easy and still is not easy. My party and I welcome the concept of introducing a civil service code; we should pursue the suggestion that that be backed by statutory obligations. Of course, it will depend on the detail. It is a vital part of establishing for civil service staff exactly where they stand. I take on board the point made about accountability and responsibility. I shall return to that later.

In his opening remarks, the Chancellor of the Duchy of Lancaster spoke of efficiency and cost cutting in the same breath as retaining the quality, integrity and honesty of the civil service. I shall deal with that in due course. I confess that before I was elected to Parliament I was a consulting civil engineer—so I have been on the other side of market testing, having been successful in securing work that came from that process. I worked closely with civil servants who were about to lose their functions, if not their jobs, so I knew what they were going through. Many of them were dedicated but despondent civil and public servants. Many were high-quality staff, but they had been trained and were operating in a different culture from the one in which we now try to operate our national institutions.

Privatisation can be a ruthless tool with which to gear up efficiency. The emphasis should be on the modern management techniques of establishing clear goals and objectives for staff. Staff are flexible and will change, so we should not always rely on the sledgehammer to crack the nut. There is a great danger of discarding dedicated and experienced staff when motivation is the prime ingredient that we need. I say that from my experience of being on the other side of the fence and seeing the effects that the changes had on the morale of staff. It was a great tragedy that that happened.

We have heard a great deal tonight, especially from Conservative Members, about cuts and efficiencies and how the Government's public sector policies have generated enormous savings. We need to look at that claim a little more closely. There is a feeling—indeed, there may be a case for saying—that the reality is that in some cases the Government are attempting to tackle waste where there is none. I cite as an example the staffing cuts at Customs and Excise, especially among VAT inspectors. I am sure that the House knows what good value VAT inspectors are. Each one costs about £25,000 a year in salary, pension and so on, but on average brings in about £360,000 in revenue. That is not a bad return by anyone's calculations.

The number of inspectors has been cut by about 600 when, instead, we should have targeted those resources on combating an increasing problem in our ports—the smuggling of alcohol and tobacco. That is especially true in my constituency as there are several cross-channel ports on the Hampshire coastline. Increasing rather than cutting the number of VAT inspectors could result in earning another £500 million a year in tax revenue.

The Government are not dealing adequately with an extraordinary amount of real waste that still riddles parts of Government bureaucracy. I want to deal with some of the key issues. I shall be as brief as possible because I realise that other hon. Members wish to speak.

I want to refer, first, to absenteeism in Government Departments and the lack of policy to deal with the problem. There seems to be an ever-increasing rise in the use of external consultants. There is almost a total lack of information on personnel matters from many Government Departments, which any efficient organisation must have. I should like to examine, and perhaps the Minister will reply to this later, some of the claims for efficiency improvement through job-shedding. The figures that I have seen seem to have gaps. I should like to test that if I can.

Another important issue is the damage to staff morale, which has been mentioned by several hon. Members. When I come to my final remarks, I should like to talk about the vacuum that has been created by the Government devolving their responsibilities to agencies, which the hon. Member for Carshalton and Wallington dealt with. It is an important issue for the civil service's future.

Many hon. Members may have noticed that, in recent months, I have asked Ministers a series of questions. Some of the results that have come through are interesting. In 1993, the Occupational Health Service estimated that the direct cost of sickness absence in the civil service, taking account of salaries, pensions and national insurance contributions, was about £459 million. No one is saying that those costs can be wiped out at the stroke of a pen. Of course there will always be absenteeism: that is a factor in any organisation, business or institution. But the figures show clearly that absenteeism rates are running far higher than the average, and that, therefore, a substantial cost saving could be made.

In 1993, the National Audit Office conducted a review of sickness absences in the Inland Revenue. Its review uncovered serious shortcomings in the way in which absenteeism was dealt with. The Comptroller and Auditor General wrote to me on the matter. As a result its work in 1993 with the Inland Revenue, the National Audit Office found that it was necessary to produce guidance on best practice for other departments and agencies to incorporate. The recommendations have stood from that time. I have to ask the question: what has happened since?

Despite the guidance, in 1994, there seem to be more departments and agencies with rising rates of sickness absence than departments and agencies with falling rates. Despite guidance, absenteeism is still rising. More than 60 per cent. of the departments and agencies that I questioned had an absenteeism rate above the figure that the Industrial Society identified as the national average.

I would not wish hon. Members to think that this is a witch-hunt of civil servants who are not performing properly. I am trying to emphasise the trauma, lack of morale and despondency that generate the illnesses that create extra absenteeism, which must be dealt with in this period of change. The position is simply not good enough. The Government must recognise that there is a real waste of resources on their doorstep. They must take steps to tackle it.

In answer to my written questions, a number of Government Departments claim to have introduced modern management techniques, such as return-to-work interviews and better defined policies on absence and absenteeism. The right hon. Member for City of London and Westminster, South (Mr. Brooke) has an MBA and will be familiar with those two techniques, which are important tools in management. Absenteeism is still rising and it is clearly linked to falling morale.

The Government seem to be conducting a love affair with external consultants—and not a cheap one either. They are spending more than £860 million a year on their services. But having paid the bill, all too often they seem to dump them, to use a current phrase. Time and again, they ignore the advice that external consultants provide, and, speaking as an ex-consultant, I know the frustrations that that can generate. In recent parliamentary replies, not a single Department has been able to identify any savings from expenditure on external consultants. Only two agencies managed to identify any savings at all, which totalled £382,000. That is a pathetic return on expenditure of £860 million. That has come about despite the recommendations of the Government's efficiency unit that Departments should be assessing moneys saved through consultancy work for the benefits expected, and to determine when those benefits are likely to appear. It has not happened.

The lack of information about personnel and staffing is a great cause of concern, especially in relation to absenteeism. What information is available from Government Departments? What responses have I had to questions? From the Foreign Office, I have had nothing; from the Department of Employment, nothing; from the Employment Service, nothing; from the Ministry of Defence nothing; and from the Ministry of Agriculture, Fisheries and Food, nothing. Those five bodies employ about 145,000 people—more than a quarter of all civil service employees—yet not one of them was able to produce absenteeism figures in response to my questions.

Even more surprising, none of the MOD agencies, which were set up with the aim of improving efficiency, was able to provide any information on sickness and other forms of absenteeism, which are key factors in any study of manpower efficiency. Even when agencies were able to provide me with information on sickness absenteeism and its causes, they seemed to be incapable of getting it right. It appears that different hon. Members received different answers to the same questions.

When I challenged Departments about that, the excuses that I received included the use of incorrect figures for staff in post, the omission of categories of sickness absence, and the inclusion of certain absences not due to sickness". The mystery deepens.

Similar unavailability and inaccuracies extended into the external consultancies. For example, the Department of Health produced figures for spending on external consultancies that directly contradicted those given for the efficiency report, while the Ministry of Defence, the Department of Employment, the Home Office and the Department of the Environment all declined to produce figures, despite the efficiency unit's recommendation that all Departments should be able to do so.

I deal now with the number of jobs that have been shed recently, especially in the past year. The Government claim to have made efficiency savings in the number of civil servants employed. I believe that the figure currently cited for the number of jobs shed in the past year is about 40,000. I am sure that the Minister will confirm or correct that figure later, but I should like to know whether it includes the jobs that have been created or are being paid for through contracting out. Is 40,000 a net or gross figure? I think that we should benefit from clarification.

Perhaps one of the most important aspects of the developments in, the restructuring of and the changes to the culture of the civil service is staff morale. The constant and arbitrary use of the figure of 500,000 personnel as the target to which the civil service will be reduced, without it being related to specific savings or Departments, is having a devastating effect on morale. Indeed, the report recognises that morale is an important factor that will inevitably affect the quality of service. Of course, it also has a direct impact on absenteeism and the consequent lack of efficiency.

Morale has been badly damaged by the many changes that have so far occurred in the operation of the civil service and it will be damaged further by the Government's proposals for contracting out and for privatisation in the future. Of course, there is a need to increase efficiency, reduce bureaucracy and shed unnecessary jobs—we live in a changing world—but in making privatisation an inevitability the Government have created chronic job insecurity by subjecting staff to constant expenditure reviews and market testing. However, the Government still expect staff to be highly motivated and to perform to the highest standards. Frankly, that is unreasonable. In fact, there is a catastrophic decline in the morale of civil servants, which is manifesting itself in increasing absenteeism, and that must be dealt with. The increasing absenteeism rate is clearly a symptom of something more serious.

It is all very well for the Government to attempt to justify their continual cost reviews and market testing by claiming that the Civil Service … has to adapt if the country is to improve its competitiveness", but, unless they deal with the trauma and despondency that they have created in the work force, their claims will continue to have a hollow ring.

I urge the Government to look again at the difficulties facing agencies in developing long-term plans and at the periodicity of the review—I know that it has been extended but has it been extended enough?—and, above all, to recognise the need to create a period of stability in the civil service. Agencies could then make proper and meaningful long-term plans and civil servants would be able to regain some sense of job security, job satisfaction, belonging and achievement. The result would be improved staff morale and real improvements in internal efficiency and service to the public.

Hon. Members have already mentioned accountability—another matter that needs clarification. The Select Committee found unconvincing the Government's attempts to draw a sharp distinction between accountability, which cannot be delegated by Ministers, and responsibility, which can. I have not found anything in the Government's response to the report or heard anything in the debate tonight that could remove that feeling of uncertainty. Indeed, I found nothing in fiascos such as the Parkhurst break-out, for which neither Derek Lewis nor the Home Secretary was prepared to take responsibility, that convinced me that they would not be repeated. It is a very important issue that affects public confidence. Such examples highlight problems that will persist unless some clarification is given and acted on.

Clearly, changes are still to be made in the civil service. Improvements must be made in the efficiency of the bureaucracy. There needs to be better management practice, better long-term planning and some understanding of staff needs and motivation. The reforms need to be addressed further. The Chancellor of the Duchy of Lancaster said earlier—the hon. Member for Durham, North insisted that the right hon. Gentleman expanded on the point—that it would be ironic if the Government came to regard the most successful reforms for decades in the civil service as simply a transitional phase and a staging post to privatisation.

We need, as the Committee recommended, positive assertions of the value of those agencies remaining in the civil service. Modern management techniques and the stability for which I am calling are the means to address the problems facing civil servants. Frankly, reliance on ham-fisted, dogma-driven policies is not.

9.10 pm

Mr. Mike O'Brien (Warwickshire, North)

I intend to make a brief speech. I join other hon. Members in expressing regret that there has not been greater attendance of this debate on an extremely important issue. After 15 years of a Conservative Government, government is still Britain's biggest business and the Government are Britain's biggest employer. It is therefore important not only to our economy but to our constitution that we get it right.

I join hon. Members in paying tribute to the hard work of many civil servants throughout the country in various Departments and agencies. It is a very difficult time for them, yet they work hard to serve the public and to ensure that services obtained from Government are provided in the best way that they know. It is important to pay such a tribute because civil servants have gone through a period of great change. For many of them, that change has caused much personal insecurity over their future and, often, caused alarm about the prospects for the areas in which they work. I recently spoke to people who were working in the Insolvency Service. They were desperately worried about the future, not only of the organisation for which they worked, but of the quality of the work if the Government's proposed changes were undertaken. They deserve all the tributes and all the respect that they can get from hon. Members.

I welcome most of the Government's response to the Treasury and Civil Service Select Committee report. I was able to join that Committee towards the latter part of its preparation of that report. At times, it seemed as if the report would never end, but it did. Although it has obviously not set the House alight with enthusiasm, it was valuable and workmanlike. The great British institution of our civil service is important to the very foundation of our constitution.

I join in the praise that the hon. Member for Carshalton and Wallington (Mr. Forman) gave to my hon. Friend the Member for Durham, North (Mr. Radice), whose chairmanship of the Treasury and Civil Service Sub-Committee during the preparation of the report was an example to us all, displaying the skill needed to achieve a consensus report that all members of the Committee could support.

Today I shall talk primarily about one issue—the values of the civil service, especially impartiality. Many values are mentioned in the Select Committee's report and in the Government's response to it—such as the permanence of the civil service, its impartiality, its meritocratic nature, its honesty, accountability and integrity, its financial propriety, its commitment and its high standards. It is important that all those values be present in a civil service, and that we protect them, but the main and central concern of any Government must be to ensure that impartiality is protected.

At times during my speech I may appear to introduce a note of partisanship, but that is not my intention. If there is partisanship, it is partisanship not for party but for the constitutional role of a non-party political civil service.

There has been concern over many years—it was especially true in the 1980s and to some extent before that—about the way in which the impartiality of the senior civil service has been brought into question. The phrase "economical with the truth"—the words of a head of the home civil service, Sir Robin Butler—has gone into the dictionaries of quotations.

Mr. Radice

No, it was Sir Robert Armstrong who said that.

Mr. O'Brien

My apologies, it was Sir Robert Armstrong.

The quotation "economical with the truth" has done great damage to the reputation of the civil service, because people remember it.

There was also the television series in which Sir Humphrey Appleby was presented as the image of the civil servant. Okay, that was a joke, but at the same time it helped to give Sir Robin Butler, who took over from Sir Robert Armstrong, the responsibility of ensuring that he enhanced the public reputation of the civil service—and I am sure that that is what he set out to do.

Not only senior civil servants but the Government have the responsibility to protect that impartiality and integrity. The Government hold the integrity and impartiality of the civil service in trust for the nation, and I fear that there is concern that a Government who have been too long in office may begin to treat the senior civil service as a sort of particular party political fiefdom. That is the real danger to the impartiality of the civil service, because the civil service should not get too close to party politics. I fear that there is real concern that it may have done so in recent years.

Certain incidents immediately spring to mind. While the Civil Rights (Disabled Persons) Bill was before the House last year, civil servants were asked to provide certain Government Back Benchers with amendments designed to wreck it. That Bill had wide support in this place—on both sides of the House, to some extent. Yet the Government ordered the amendments to be prepared. The civil servants cannot be blamed for preparing them; they were told to do so, and it was right for them to obey the order. No blame can attach to them.

However, I think that the Ministers who ordered the amendments to be prepared in such large numbers broke the spirit of trust in which they hold the responsibility of government. They should not put civil servants into the position where they are expected to wreck a private Member's Bill of that nature, especially when it is known that the Bill has great support in the House.

Sir Robin Butler suggested to me in evidence that he knew of previous Governments who had been involved in preparing amendments to private Members' Bills for Back Benchers. That has happened for many years under different Governments. It has not been wrong when the objective has been to assist Members in genuinely putting forward amendments to improve a Bill. However, questions must be asked when civil servants are obliged to provide amendments to wreck a Bill, and particularly a private Member's Bill.

Another issue that caused great concern to members of the Select Committee when Sir Robin Butler gave evidence was two investigations undertaken by Sir Robin. Again, I speak not from a partisan point of view, as hon. Members on both sides of that Committee raised their concerns. Sir Robin Butler, as the head of the home civil service and the Cabinet Secretary, was ordered to investigate the incidents by the Prime Minister.

The first incident involved the Chief Secretary to the Treasury's visit to a Paris hotel. I do not wish to go into the details of that visit, as I am not particularly interested in the background. I am interested in what happened between Sir Robin Butler and the Prime Minister. Questions were raised about who paid the hotel bill, and the issue became a matter of intense media and political in-fighting. The Government had recently lost a number of Ministers through resignations, and did not want to lose the recently appointed Chief Secretary.

Into that political and media dogfight, the Prime Minister appears to have plunged Sir Robin Butler by asking him to undertake an investigation. Sir Robin was, at best, ill qualified to undertake any such investigation, as he did not in any previous incarnation have experience of being a policeman, a private investigator or a barrister trained in interrogation. He had none of the qualifications for playing the detective, yet it appears that he was supposed to conduct an investigation and give a report to the Prime Minister on what happened.

Sir Robin asked questions, got answers and accepted them. He did not question all the main witnesses for the prosecution; for example, it appears that he did not question Mr. Al Fayed. Sir Robin then provided the Prime Minister with a report. The importance of the report was not just that it was used to give advice to a Minister or a Prime Minister, but that a report prepared by the head of the home civil service and the Cabinet Secretary was used to limit the political damage being sustained by the Government at a particular time. The suggestion being made was that anyone challenging the conclusion of the report was questioning the integrity of the head of the home civil service.

The Prime Minister had put the Cabinet Secretary—a supposedly non-political and impartial figure—in a position where he was being used to prevent questions from being asked by Opposition Members about party political concerns that were being aired legitimately in this place and in the media. That report effectively stopped the damage that was being sustained by the Government. Yet the investigation that was carried out was not thorough, and questions remained to be asked. But how could Opposition Members ask those questions without calling into question the integrity of the Cabinet Secretary, which we had no wish to do?

The Prime Minister should never have allowed the Cabinet Secretary to become involved in that sort of party political row. It was a dogfight. It was a row in which the Prime Minister got the Cabinet Secretary involved, and when Sir Robin Butler was asked to undertake that investigation, he should have said, "No, Prime Minister. It would not be appropriate in these circumstances to do that." It might have been appropriate for the Whips or the chairman of the Conservative party, or someone else, to undertake that inquiry.

Similar concerns have arisen about another investigation in which Sir Robin Butler was asked to become involved, when two hon. Members were the subject of accusations about money. Again, I do not propose to go into the details of the case. The question is: should a Cabinet Secretary ever get involved in investigating the circumstances of Back-Bench Members? No Prime Minister should involve a Cabinet Secretary in such matters as it may compromise the impartiality of the civil service. It may be that it does not; Sir Robin Butler may have acted entirely properly. But the perception of many people outside this place as well as, I regret to say, many inside it, is that that investigation should not have been carried out by that individual and that impartiality might have been compromised.

The Prime Minister is in a position of trust in this matter. Perhaps unintentionally, but perhaps also with some malice aforethought, he managed to use the Cabinet Secretary to limit the party political damage that his Government were sustaining.

A further issue has arisen in the past day or so. Serious questions are being asked about civil servants' involvement in a particular Cabinet Committee. That Committee's aim appears to be to provide the Government with a way to deal with policy problems and issues that will cause them difficulties in the run-up to the next election. It is about winning the next election, and the chairman of the Conservative party is on the Committee. He is a Minister without portfolio—he has no departmental responsibility—yet civil servants are being asked to advise and assist him in performing his task of winning the next election for the Conservative party.

Other questions have been raised over a period about the payment of a Chancellor of the Exchequer's legal expenses and other matters. All those issues have caused many people to question whether there has been what has been called a weakening of the moral compass in the Government and their relationship with the civil service. Lord Callaghan has expressed concern about politicisation. That concern is, to some extent, justified by what we have seen in recent years.

Let that be a warning to the Government and the civil service that the values of the civil service must be held in trust and protected, not only by civil servants but by the Government. The Olympian Sir Robin Butler should not allow himself to be dragged into the gutter of partisan politics, nor should any civil servant. Some members of the Select Committee fear that impartiality has been undermined, and that should never happen again.

9.29 pm

Mr. Giles Radice (Durham, North)

We have had a good and thoughtful debate, in terms of quality more than quantity. We have heard interesting speeches from the hon. Member for Carshalton and Wallington (Mr. Forman), who played a prominent role in drawing up our Select Committee report, and from my hon. Friend the Member for Motherwell, South (Dr. Bray), who made some perceptive remarks and put us on our mettle in the Treasury and Civil Service Select Committee. We shall bear his remarks in mind.

I congratulate my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) on mentioning some important matters. It would have been wrong if the debate had passed without mention of those issues, and I shall refer to them later. I also congratulate my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) on his excellent speech.

Perhaps I may say a word to the Parliamentary Secretary, Office of Public Service and Science, who is to reply to the debate. His appointment drew some rude remarks from some areas of the press about rats joining sinking ships, which was unkind as I do not believe that he is a rat at all, although he has perhaps changed his mind more frequently than most. I have known him well in several guises, and when we started out as rookie Labour Members of Parliament I certainly would not have supposed that he would end up as a Conservative Minister; nevertheless, I wish him well in his new post.

The report of the Treasury and Civil Service Select Committee has in some senses dominated the debate, and it is perhaps fair that it should. The background to our report was great managerial change, the next steps process—we have been told by the Chancellor of the Duchy of Lancaster that that now greatly exceeds 60 per cent. and is likely to be 75 per cent. of the civil service in the future—and from 1992 onwards market testing, contracting out, privatisation, and so on. Many people have regarded those changes as increasing the danger of fragmenting the civil service. That argument was made to us by several of our witnesses, including former heads of the Civil Service.

There is no doubt that problems of morale result from all the great change that is going on. Although we were unable to carry out a survey ourselves—I shall discuss that in a moment—a number of other surveys of Government Departments have shown that there is a problem of morale in the civil service. Difficulties are also caused by bringing a great many private enterprise people into the public service. When the Comptroller and Auditor General, Sir John Bourn, appeared before the Committee last February, he emphasised that some of the private sector managers being attracted into the public sector do not always understand that special care is needed when one is in charge of public money. That is obviously part of the background.

One political party has been in power for a long time, having been elected at four successive general elections. Although there is no evidence of general politicisation of the civil service, as Lord Callaghan told us, inevitably the younger civil servants pick up the scent, and I believe that that is true. As an Opposition Member of Parliament, I had indeed noted a difference between the attitude of the younger civil servants and that of those who have known another Administration. With the possibility of a change of Administration ahead, perhaps things will improve in that respect.

The Scott inquiry has revealed a great deal about the workings of Government, hovering like an angel above our deliberations—or perhaps like a black cloud over the Government and Whitehall, but it has certainly influenced both sides.

Two things emerged strongly early on in the Committee's hearings. The first was the importance of the civil service. I believe that all who have taken part in the debate have paid tribute to the civil service as a great national asset, and our report begins by saying just that. We go on to say: Since the 1870s, it has been the permanent and impartial instrument of all administrations. Governments have always seen it as their duty to preserve its efficiency and honesty for their successors. The Civil Service's commitment to the highest standards of performance and conduct is a guarantee of constitutional and financial propriety and good government. It is therefore very important in our constitution and in the running of our democracy.

There was general support from our witnesses for the values which underpin the civil service, including its non-partisan nature. No one argued, for example, that we should have a "spoils system". Everyone agreed that we should have an impartial civil service, with integrity, the ability to act objectively, selection for promotion on merit, and accountability. Above all, it was agreed that we should have an honest civil service. A number of our witnesses reminded us just how important it is to have an honest civil service. One only has to go to countries where civil servants are not honest to realise the economic cost of that and how it undermines the democratic process. We must therefore preserve those good qualities.

In the past, the shared values of the civil service were associated with shared ways of working, and shared systems of pay, grading and departmental organisation within the service. The intangible values to which I have been referring were linked to more tangible unifying factors. With reform and fragmentation, however, many of those tangible common elements have disappeared.

It seemed to us that in the new era of managerialism, the old methods of ensuring that the values of the civil service were maintained were no longer sufficient. That was the case for having a proper code, which has distinct advantages over the plethora of existing codes. It offers far greater clarity about civil service values, and about the duties and responsibilities of civil servants and Ministers in relation to civil servants. The code applies to all civil servants, not just to mandarins, and is both concise and comprehensive.

I stress the importance of the second paragraph of the code, which states that civil servants owe their loyalty to the Government subject to the provisions of this Code". That is the first time that any external authority has been brought into the relationship between Government and civil servants. I agree with the hon. Member for Carshalton and Wallington that we need to enshrine that aspect. That is the case for having statutory backing in the way that he described.

The code contains a new duty on Ministers to familiarise themselves with its content and not to ask civil servants to act in breach of it. That is important. It asks Ministers to behave with propriety. It reminds civil servants of the importance of obeying the law, of dealing with the public honestly, fairly and without maladministration, and of ensuring the proper use of public money. It reminds them of their duty in relation to the separation of public and private interests and their confidentiality, and of their political impartiality. We say that it should be a condition of employment that all civil servants should read the code and conduct themselves accordingly.

We also say that if the code is to work effectively civil servants should have the assurance that if Ministers or heads of departments ask them to do things which are unconstitutional, illegal or improper, the civil servants should be able to appeal to an independent, outside body—hence the case for a civil service commission based on statute. The statute is important, and I endorse everything that the hon. Member for Carshalton and Wallington said about that. A subsequent Government or Administration must not be able to remove it: it must be part of our permanent constitution.

I am delighted that the Government have broadly accepted the code. I am delighted that they have accepted that there should be an independent element in the appeal system and I am delighted that they are open minded about statutory backing. I am grateful for the support of my hon. Friend the Member for Kingston upon Hull, North and of the Labour party for the idea. I am also grateful for the support of the Liberal party, which is major progress.

All those factors add up to a big triumph for the Treasury and Civil Service Select Committee. Select Committees occasionally take a bit of stick—as happened for different reasons earlier this week. The study was long running. I agree with my hon. Friend the Member for Warwickshire, North (Mr. O'Brien)—I, too, thought that we would never finish it. The inquiry was very comprehensive and I give thanks to my colleagues on both sides of the House for enabling the Committee to reach a consensus. It is interesting how the process of argument during the Committee hearings changed our minds and that of the Government. I do not pretend that the Government's change of heart was due only to the brilliance of our arguments or even to the power of Conservative Back Benchers who served on the Committee. The changing political situation—the fact that the Scott report was pending—also had an effect. The Government argued strongly against the Committee's proposals for 18 months, but then they changed their minds and I give them credit for making that excellent decision.

The time remaining is short and I should like to give the Minister the opportunity to answer some of the questions raised in the debate. I shall therefore not mention a number of issues to which I wanted to refer, such as the selection of top civil servants and the fact that the senior appointments committee has not been abolished as we had hoped in favour of the Civil Service Commission, although there has been some improvement.

We are sceptical about fast-streaming and I do not believe that the Government response has been adequate on that point. We proposed project teams and the idea of policy audits, but we have not had much joy in those areas either. With regard to managerial changes, we support the "next steps" process, but it should not serve as a stepping stone to privatisation. Market testing and contracting out must not be used in the doctrinaire way in which the Government have used them in the past.

My position is this: efficiency changes, yes; permanent revolution, no. I do not believe that reducing civil service numbers as an end in itself—irrespective of the effect on function and morale—is a sensible way to proceed. It is a pity that the Government did not accept our request to commission a survey of civil servants and we drew our own conclusions from that refusal: the Government were clearly worried about the final results.

We have not solved the problems in the area of accountability, and we were certainly not impressed by Sir Robin Butler's distinction between accountability and responsibility. The problem with his explanation is that no one would ever be responsible for their actions. We were also not impressed by those Ministers who appeared before the Committee and said that there were occasions when Ministers could lie to the House of Commons and get away with it.

Committee members appreciated the difficulties with agencies and the way in which responsibility could fall between Ministers and agencies, with the result that no one would take the rap in the event of a disaster. Several examples of that were cited in today's debate. One proposed solution is that chief executives could be responsible to select committees for framework documents. However, I do not pretend that we have answered all the questions and I think that we should examine the subject of accountability again.

In conclusion, I endorse what my hon. Friend the hon. Member for Warwickshire, North said about impartiality. We all want an impartial civil service. I warn that we must be very careful in the run-up to elections because that is when Governments are most tempted to take short cuts, and they must not do that. I have written to Sir Robin Butler about the Cabinet Committee which is serviced by civil servants. I am sure that every hon. Member would seek the reassurance that civil servants will not be used for party political purposes.

I do not believe that the civil service has been politicised, although some worrying incidents have been reported by the First Division Association. I believe that civil servants would be able to serve another Administration and I hope that they will have the opportunity to do so quite soon. The existence of a code with an independent appeals system which is backed by statute will underpin this great British institution and help to maintain the impartiality, non-partisanship, honesty and efficiency of the British civil service.

9.44 pm

The Parliamentary Secretary, Office of Public Service and Science (Mr. John Horam)

We have had a very timely debate, because, as the House and all aficionados of the subject who are gathered here tonight know, we have had the first White Paper and the highly regarded report from the Select Committee. I pay tribute to the hon. Member for Durham, North (Mr. Radice) who, as one of my hon. Friends said, gave wise leadership to the sub-committee that prepared the report.

We have also had the Government's response in the shape of the second White Paper, which accepted the proposed code and went into discussions on the possibility of legislation. We hope to settle the code after further discussion before the summer recess and have it promulgated in the second half of the year. Included in the consultations will be further discussions with the Select Committee and the Opposition spokesman, obviously taking into account all views that have been expressed during the debate.

The debate was not only timely but has been conducted mainly in a relatively bipartisan spirit, for which, in the long run, both sides of the House will be grateful. Where it was not bipartisan or where political points were made, I accept that they were serious and not irrelevant.

We are all aware of the importance of the subject. The hon. Member for Eastleigh (Mr. Chidgey) regretted that so few were here to discuss it, and so do I. He characterised himself as a gatecrasher to a rather small coterie who were used to discussing the matter. That is a pity, and I am glad that he was not a party pooper and is still in his place, as he said that he might have to leave the Chamber.

The seriousness of the subject was reflected in all the contributions to the debate. The hon. Member for Kingston upon Hull, North (Mr. McNamara) made a number of points. I was disappointed by the relentlessly negative approach that he seemed to adopt, and I would contrast that markedly with the Select Committee report, which was positive about much of what the Government have done in the past 15 years. It is a pity that he did not take a more balanced view of the true picture.

I echo the remarks of the hon. Member for Warwickshire, North (Mr. O'Brien). My right hon. Friend and I are certainly concerned that there should be good morale in the civil service. Any such group of Ministers is bound to have great regard for that fact, and any thought that there might be poor morale gives us genuine concern.

Mr. McNamara

Do something about it.

Mr. Horam

The hon. Gentleman should listen to what I have to say.

As the Select Committee said, morale is bound to suffer during periods of continuous change, but that is not a reason for not embarking on those changes. As my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) said, the public sector cannot be exempt from changes, nor can the private sector. We cannot ring fence the public sector and say that it must be exempt from changes that are happening elsewhere.

The hon. Member for Kingston upon Hull, North exaggerated the problem of morale. The Select Committee report used the expression "unease". The hon. Gentleman used very different words and mentioned a blanket of fear. Although we are concerned to maintain good morale and we were disappointed that it was bad, the hon. Gentleman has clearly exaggerated the feeling inside the civil service.

Mr. McNamara

I assure the Minister that if I felt morale in the civil service was high, I would say so and I would praise the Government of the day, but I know from my experience, and from those in the civil service whom I have met and know personally, that there is a blanket of fear, which results from their not knowing what will happen to them and from the ethos of the public service that they entered being undermined by the Government.

Mr. Horam

No, I must disagree totally with the hon. Gentleman. That really is not true. I am glad to see that he is winking. I think that he is making a point about which he is not wholly serious.

Mr. McNamara

It is true.

Mr. Horam

The hon. Gentleman also made an important point about pay delegation. I agree with my right hon. Friend the Member for City of London and Westminster, South, (Mr Brooke), who has great experience in personnel management. I think that he would agree that the delegation of pay in the civil service brings closer a matching between performance and reward, which will be wholly beneficial to an efficient civil service. That is what we intend. I think that the hon. Member for Kingston upon Hull, North will find that his fears about low pay and so on are in many respects groundless. In fact, pay may be higher for many civil servants as a result of that approach.

The hon. Gentleman referred to contracts. Contracts for senior civil servants do not change the existing terms of employment and they will not expose civil servants to political or other pressures. As now, decisions on performance will be a matter for departmental management, not Ministers. My right hon. Friend the Member for City of London and Westminster, South gave a marvellous evocation of the real qualities of the civil service—"elegaic" was one word that might be used. He relished it like an old wine that he loved well over many years; that was the feeling that came across. I liked his analogy of civil servants as regulars and Ministers as territorials. I was very glad of the speech that he made.

The hon. Member for Motherwell, South (Dr. Bray) made some interesting and serious points about information technology, the importance of which I fully accept. As he pointed out, I too have a particular interest in that area. I understand his point about EDS, but it is not my immediate responsibility; it is the immediate responsibility of the Treasury. None the less, I have taken careful note of what he said and I shall look into the matter. In a recent report the National Audit Office pointed out that over a 10-year period EDS would save the taxpayer £225 million. That is not an inconsiderable sum. I put that into the balance against the considerations that he legitimately raised.

The hon. Gentleman also made a fair point about the Sainsbury scheme. As he will know, my right hon. Friend and I are responsible not only for the public service, but for science policy, including technology and engineering. I am interested in that scheme and I shall certainly take account of what he said.

The hon. Gentleman regretted the disappearance of a serious, restrained, competent discussion—those were his words—on many issues. He cited disastrous economic policy. That was a rather unfortunate example. He may have seen the article by Wynne Godley in the Financial Times recently. [Interruption.] The hon. Gentleman and I have discussed the matter over many years and he knows well that Wynne Godley is certainly not a Conservative supporter. He is a distinguished economist and the hon. Gentleman will be satisfied of his mathematical and statistical qualities. After criticising Government economic policy since 1970, he has had to admit that during the past two years Government economic policy has been virtually perfect and that it would simply be vulgar to carry on criticising the Government. Government economic policy has been virtually perfect in the past two years. That is why now, for the first time in my life, we have an export-led economy with real prospects in the world. [Interruption.] That is absolutely true. I am glad to have support from quite independent economists on that subject. There is nothing like a good economist who is running his own business; I speak from considerable experience. I am glad that the hon. Member for Motherwell, South concluded that he was not a pessimist on these matters.

My hon. Friend the Member for Carshalton and Wallington asked about secondments and two-way movement between the civil service and the private sector. I have some figures for him. Long-term secondments have increased threefold since 1979. In 1993, there were 400 outward secondments and 200 inward long-term secondments. In 1994, just over 1,700 civil servants undertook a secondment of some kind outside the civil service, so it is going pretty well.

My hon. Friend also advocated fewer Departments and fewer Ministers. There are, of course, no fewer than 89 Ministers at the moment, although people tend to say that there are far more than there were 15 years ago. There are not, of course. There were 86 Ministers in 1979, and there are 89 now. My hon. Friend may have been thinking of the time in Disraeli's period when there were only 24 Ministers—13 in the Cabinet and 11 outside. I have to tell him that the 11 outside included a Minister for the Horse, who was the Earl of Bradford. I am not sure whether my hon. Friend really wants to go back to that particular period, but I have some sympathy with him for his general position.

Mr. David Hunt

Only for three weeks.

Mr. Horam

Indeed. A Ministry with two Ministers is infinitely more efficient and productive than a Ministry with three, four or five Ministers. [Interruption.] I do not know how many the Department of Health has.

My hon. Friend the Member for Carshalton and Wallington also raised the constitutional role of the civil service. He pointed to the code and seemed to be saying that my right hon. Friend had not made a clear distinction between the various parts of the code, and was talking about the qualities of the civil service rather than the constitutional position. The fact is that the code, which is excellent, spells out the clear relationship between Ministers, the Crown and the civil service. It also says, as has been pointed out, that the civil service acts subject to the provisions of the code. That meets squarely the point that he was making.

My hon. Friend the Member for Carshalton and Wallington asked about Lord Nolan, and I can confirm that my right hon. Friend has written to Lord Nolan, sending him a copy of the proposed code, and the Government will, of course, take account of any point that the Nolan committee may make about that.

I was interested in the remarks of the hon. Member for Eastleigh on absenteeism. The Occupational Health Service, which is one of our agencies, is taking a look at that. There are differences between the Departments that we cannot wholly explain at the moment. None the less, the point that he made is relevant. I noted his other points, although absences are not necessarily always related to sickness.

The hon. Member for Warwickshire, North made a serious and good speech about the potential politicisation of the civil service. I recognise the threat that he outlined, but the Select Committee itself—the hon. Member for Durham, North reaffirmed this—did not think that the civil service had been politicised. I do not think that anyone seriously thinks that it has been, and that is precisely what the code, which now has all-party support, has been drawn up to deal with.

I thank the hon. Member for Durham, North for his kind words. Neither of us expected to find ourselves in this situation after 26 years in politics. We are where we are, however, and I pay tribute to the code that he produced. As he says, it is concise and comprehensive and applies, importantly, to all the civil service.

The work of the Select Committee shows the improved relationship that has occurred between Parliament and Government since Select Committees were established some 20 years ago. The iterative process that has occurred over the Treasury and Civil Service Select Committee's report has been profoundly helpful both to Parliament and Government as a whole.

The Government's policy, as we know, is continuity in values and change in performance. We have, I think, shown that we are concerned—that the whole House is concerned—about the continuing good value of the civil service. We have, however, achieved a remarkable change in the performance of the civil service, and the public service as a whole, in the past 20 years.

I pay tribute to the civil servants who have taken part in that change, as well as the Ministers who have pushed it along. Ultimately it was the civil servants who bore the heat and the burden, and I feel that the main tribute should be paid to them for all the effort that they put into making the reforms work. I believe that we now have the best public administration in the world, and—these are not my words, but those of Simon Jenkins in The Times the other day—the most cost-effective and efficient.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.