HL Deb 12 November 1981 vol 425 cc325-32

3.52 p.m.

Chancellor of the Duchy of Lancaster (Baroness Young)

My Lords, with the leave of the House I will now repeat a Statement being made in another place by my right honourable friend the Prime Minister on the organisation of the central departments. The Statement is as follows:

"We have made a good deal of progress in the last two and a half years in controlling the cost and size of the Civil Service and in improving its efficiency. The Government are most grateful to the Select Committee on Treasury and Civil Service Affairs for all the valuable work they have done in this area and in particular for their report on the future of the Civil Service Department. I look forward to receiving their recommendations as a result of their current study on improving the efficiency and effectiveness of the Civil Service.

"I believe that the time has now come when some organisational changes will help us to make sure that the progress we have already achieved is maintained.

"Setting up the Civil Service Department 13 years ago had a number of advantages as compared with the situation as it existed before; but it had one consequence whose disadvantages have become increasingly apparent over time. It divorced central responsibility for the control of manpower from responsibility for the control of Government expenditure. I judge that the balance of advantage now lies in favour of consolidating the CSD's manpower control responsibilities with the central control of resources.

"I therefore propose to reunify responsibility for the central allocation and control of all resources, and to make the Treasury responsible for control over Civil Service manpower, pay, superannuation, allowances and for the Central Computer and Telecommunications Agency. The staff at present concerned with these functions will be transferred to the Treasury.

"My honourable friend the Member for Hounslow, Brentford and Isleworth will be appointed as a Minister of State in the Treasury to help in the discharge of these responsibilities. He will continue to answer in this House for the whole range of Civil Service matters.

"The duties of the other Ministers of State in the Treasury will remain unchanged, but my honourable friend the Member for Knutsford will assume the title of Economic Secretary to the Treasury.

"I now turn to the Civil Service Department's other responsibilities. It remains my view that there should not be a total merger of the Treasury and the Civil Service Department. The efficiency of the Civil Service in carrying out its functions and the selection and development of civil servants are as important to the Government as the control of public expenditure. The machinery of Government should make special provision for this, since it is a subject in which any Prime Minister is bound to take a close personal interest. I shall therefore continue to be Minister for the Civil Service and to be responsible for the organisation, management and overall efficiency of the Home Civil Service and for policy on recruitment, training and other personnel management matters. My noble friend the Chancellor of the Duchy of Lancaster will, as at present, discharge these responsibilities on a day-to-day basis. She will also answer in another place for the whole range of Civil Service matters.

"The staff involved in these functions will work alongside the Cabinet Office in a new Management and Personnel Office, Sir Robert Armstrong will be Permanent Secretary of this Office and will also continue as the Secretary of the Cabinet to head the Cabinet Office. He will be assisted on the business of the new Office by a second Permanent Secretary, Mr. John Cassels.

"An Order in Council will be necessary to transfer the responsibilities for Civil Service manpower and remuneration to the Treasury. The order will be laid before Parliament shortly. In preparation for its coming into effect, the new arrangements will be introduced administratively from 16th November. During the interim preiod, the Chancellor of the Exchequer will have charge on my behalf of the functions to be transferred to the Treasury. Thereafter, there will not be a department known as the Civil Service Department.

"There will be some staff savings as a result of the new arrangements.

"Sir Ian Bancroft, Head of the Home Civil Service and Permanent Secretary to the Civil Service Department, and Sir John Herbecq, the Second Permanent Secretary, both of whom were due to retire by the end of next year, have with characteristic public spirit accepted that these changes mean their departure from the public service some months early. Both have had long and distinguished careers in the public service, and have served the nation with all the devotion and integrity which we expect from our public servants. Sir Ian served successive Chancellors of the Exchequer with conspicuous distinction. He did much to build up the Department of the Environment before becoming the Head of the Civil Service in 1977. I am sure the House would wish to join me in this expression of appreciation and gratitude for the many years of distinguished service both he and Sir John have given to the country.

"On Sir Ian Bancroft's retirement, Sir Robert Armstrong and Sir Douglas Wass, the Permanent Secretary to the Treasury, will become Joint Heads of the Home Civil Service.

"Arrangements are in hand to explain to all the staff of the CSD how they will be affected by the reorganisation. Both the Council of Civil Service Unions and the trade union representatives of the CSD's own staff are today being informed of the details of the new organisation.

"I have placed in the Library copies of a note setting out the distribution of functions between the Treasury and the Management and Personnel Office."

3.58 p.m.

Lord Peart

My Lords, The noble Baroness the Leader of the House has repeated a very important Statement which is being made by the Prime Minister. I wish to convey on behalf of noble Lords on this side of the House our desire to wish the civil servants who have been made redundant a long and happy life because they have served the country well, and I have a feeling that their arm has been twisted in this case, but I will not develop that too much.

Lord Davies of Leek

Broken, not twisted.

Lord Peart

It seems, however, rather a volte face on the part of the Government, my Lords, and I hope that we shall be provided with some more information about the background to this development. I hope too that there may be a debate on it in this House. Perhaps we can discuss that through the usual channels. I know there is a feeling that it is such an important matter that we should know what is happening.

Meanwhile, I have some questions to put to the Minister. What consultations were there with the staff before today's announcement? Why is the Prime Minister now rejecting the advice of the Civil Service associations? May we be told why the Prime Minister has changed her mind since January of this year, when she told the Commons that she had decided to strengthen and improve the existing organisation of the CSD rather than merge the two departments? What has happened in the interval? Has there been annoyance with the Civil Service because it took industrial action against Government decisions earlier this year, I wonder? Can we now have an assurance that the Management and Personnel Office will have all the power and authority of a full department of state? This subject is too important to relegate to a side room in the Cabinet Office.

Why is it thought important to diffuse control of the Civil Service, and will that necessarily make it more efficient? I cannot see the argument here. Does not the Minister consider that, at a time when Civil Service morale is low, it can only make things worse to give overall control to the Treasury, whose main consideration will be economic policy, as it has always basically been? Will not the Civil Service under the scheme become an irritable burden on both the Treasury and the Cabinet Office?

There is another point on which I wish to question the noble Leader of the House. I had hoped to put this point to her previously in the House; it is not connected with the Statement. I refer to the whole issue of science, its policy and direction. This came under the Civil Service Department. ACARD, which has worked so well, producing major scientific documents and providing leadership in the science world, came out of the Civil Service Department. Is this to be dropped, or is it to be extended? I wish to know because the importance of science is obvious, and I have a feeling that the Government are rather lackadaisical about this, so I hope that we can have a positive view from the noble Baroness when she replies.

Lord Rochester

My Lords, from these Benches I should like to join in thanking the noble Baroness the Leader of the House for having repeated the Statement. The Statement does not say so, but we are of course concerned, as is the noble Lord, Lord Peart, that the Government's decision in this matter appears to run counter to the conclusions reached less than 12 months ago by the all-party Treasury and Civil Service Committee in another place. We are much more concerned about the damaging effects that this somewhat precipitate announcement may have on the morale of civil servants. We note that the staff of the Civil Service Department are today being told of the details, but we should like to know what consultation there was with the Civil Service unions before the decision was taken.

Can the noble Baroness assure us further that this decision will not prejudice the outcome of the Megaw Inquiry into the future of Civil Service remuneration? As the noble Lord, Lord Peart, has already suggested, the aim of the reorganisation appears to be to tighten still further the control exercised by the Treasury over that remuneration. Is the noble Baroness aware in particular that in the light of the happenings of last summer, the Liberal Party has reached the conclusion that in the event of negotiations in future resulting in a failure to agree, there should be provision for awards to be made by a standing commission, chosen not by the Government of the day but by an electoral college? That would be designed to ensure that the commission was independent, that there was continuity of office for its members, and that its composition was acceptable to the Government, the main opposition parties, and organisations representing both employers and trade unions.

4.5 p.m.

Baroness Young

My Lords, I should like to thank both noble Lords for their comments, and I wish very much to endorse the point that the noble Lord, Lord Peart, made about Sir Ian Bancroft and Sir John Herbecq, who have done so much very valuable work for the country. I think it most important that they should know that thanks come from all parts of the House. The noble Lord asked a number of questions. In particular, he asked why was it decided to make a change at this time. My right honourable friend the Prime Minister has made clear that we believe that much good work has already been done and that we are well on course for the 1984 Civil Service manpower target of 630,000, but much remains to be done. Experience has shown the disadvantages of divorcing the management and the control of expenditure on manpower resources in central Government from the manpower and control of Government expenditure as a whole. That was a point that was made by Sir Derek Rayner.

The noble Lord, Lord Peart, raised a number of other quite specific points, and the noble Lord, Lord Rochester, raised some similar questions. In matters affecting changes of this kind in Government machinery, it is not the custom to consult the trade unions, but, as I have indicated, they have been informed and the changes are being explained in detail to the staff at the CSD. I should like to confirm that the Management and Personnel Office will be a department of state. The noble Lord, Lord Peart, might recall that science has not been under the Civil Service Department since 1979, when it was placed under the Department of Education and Science and the Department of Industry.

The noble Lord, Lord Rochester, raised a particular point about the Megaw Inquiry, and I should like to confirm that this will continue and will be taking evidence. Its work will not in any way be affected by these changes. I also wish to say that we attach great importance to the morale of civil servants, and I want to stress that although, with the co-operation of the Civil Service, we have been successful in reducing the total numbers of the service, that has been done so that it may become a leaner and more efficient service. I and all my colleagues in Government are most grateful for the very good work that we obtain from the civil servants, and I should like to place that, too, on record.

Lord Soames

My Lords, I should like to give my support to the noble Baroness over the broad thrust of this question. For a long time I have felt that divided responsibility for financial control on the one hand and manpower control on the other was a bad thing for the Civil Service Department and indeed for the national interest. In view of a false report in The Times today, I should like to assure the noble Baroness, lest she should not already know it, that I have consistently held this view and advocated it unequivocally in the proper quarters. I am glad that action is now being taken, but I must say that I am a little worried that it is not going far enough. My fear is that we are substituting one form of divided responsibility for another form, inasmuch as, if I understand aright—and I had the advantage of reading in the daily editions this morning what I thought to be a fairly authoritative leak—the Treasury (the Chancellor of the Exchequer) will be responsible for pay and for numbers, while my noble friend will continue to have responsibility for what goes under the generic term of personnel management, which includes everything concerned with morale and efficiency. I deeply question whether it is wise to divide one from the other. Perhaps my noble friend will tell me whether or not I have rightly understood the proposal. If I have rightly understood, why was the dividing line drawn just there? I hope that I am wrong.

Baroness Young

My Lords, in answer to my noble friend Lord Soames, I should like to say how very glad I am to have his support on the Statement, and I hope that he will recognise that it includes the important work that has been done since May 1979 in the Civil Service Department. He asked whether I had noticed a comment in today's edition of The Times, which of course I had, but I was aware that it was his personal view that there should have been a merger between the Treasury and the Civil Service Department; and I am sure that he, like me, does not believe everything he sees in the newspaper, even when it is such a good newspaper as The Times.

On the second point he raised, as to whether we shall be having further divided responsibility, it is the view of my right honourable friend the Prime Minister that there are certain aspects of Civil Service management with which she should be particularly closely concerned and these are notably personnel management and appointments. As the House will know, she has taken a keep personal interest in the promotion of efficiency in the Civil Service, and she in fact appointed Sir Derek Rayner in May 1979 to his present post with a remit to report directly to her. On the exact division of responsibilities, there is a note now placed in the Library, and I think it would be easier for noble Lords to refer to that rather than for me to go into precise detail as to how the division between the two departments will be made. But we recognise that it is extremely important that there should be the closest liaison at both ministerial and official level between the Treasury and the Management and Personnel Office.

Lord Diamond

My Lords, I am sure noble Lords would wish to hear the views of those on this Bench, small though it is but ever-expanding as it is. We on this Bench welcome very much indeed the Statement that has been made. Indeed, one of us gave evidence to the Select Committee exactly along these lines. We feel that the new division of responsibilities is right; it contains nothing which will be damaging to the essential interests of the Civil Service but contains a great deal which will be helpful in the interests of the nation. I refer in particular to the sentence appearing in the Statement which says that the previous division divorced central responsibility for the control of manpower from responsibility for the control of Government expenditure". That will no longer exist. Your Lordships will appreciate what an enormous element in the national budget is manpower expenditure in such a matter as the departments of state with which we are all concerned.

I would also want to associate every one of us—and in this every single Member of your Lordships' House who has had the privilege of working with these two distinguished civil servants will join with me—in supporting what the Prime Minister has said about the work of these two most able civil servants. Indeed, I remember how Ian Bancroft, as he then was, worked himself into a hospital bed in order to try to cope with the work which his Ministers required of him. We wish them both very well indeed.

My Lords, there is just one part of the Statement which I would seek to question, and that is with regard to the remaining responsibility of management where the control of it is not absolutely clear at the moment. I would ask the noble Baroness to use her good offices and her responsibilities, as she will now have them, to ensure that professionalism (if I might so put it) in management is even more apparent in the future than it has been in the past.

Baroness Wootton of Abinger

My Lords—

Baroness Young

My Lords, I will just answer the noble Lord, Lord Diamond, and then I will turn to other noble Lords. I should like to thank the noble Lord, Lord Diamond, very much for his welcome and for his recognition of the importance of the amalgamation of the functions of manpower and expenditure in the Treasury. I should also like to thank him for his most warm and welcome remarks about Sir Ian Bancroft and Sir John Herbecq, and say that we absolutely accept his comments about professionalism in the Civil Service. This is something to which we attach great importance, as well as to efficiency.

Baroness Wootton of Abinger

My Lords, may I raise a point of order? Under standing orders a debate on a Statement may not take place unless there has been a Motion of the House to allow such a debate. Standing orders require that after a Statement has been made speeches from the rest of the House should take the form simply of questions for information and clarification. I do not think anybody could deny that a debate has been taking place here and now, and that is entirely contrary to standing orders.

Lord Boyd-Carpenter

My Lords, may I ask two questions of my noble friend? Is she aware of the fact that many of us who served at the Treasury at the time when the Treasury was responsible for the Civil Service never understood the wisdom of removing that responsibility in 1968, and therefore welcome very much the return of a good deal of it as announced in the Statement that has been made? But will my noble friend explain a little further why it has been thought necessary to split the responsibility, and, in particular, whether (I hope my noble friend will not think that this question sounds too materialistic) it really makes sense to leave morale the responsibility of one side and pay the responsibility of the other? Is there not perhaps a necessary link between the two? Would my noble friend be prepared to say that further consideration will be given to restoring the 1968 situation in toto and to putting the whole management of the Civil Service back in the Treasury? The only other question I want to ask is whether my noble friend has any comment to make on the fact that the substance of this Statement appeared in the press this morning, and is there some indication of a leak?

Baroness Young

My Lords, I should like to thank my noble friend Lord Boyd-Carpenter for his support, especially in view of the fact that he speaks from experience of working in the Treasury when the two departments were combined there. He asked me why there was this division between those parts going to the Treasury and those parts which will remain in the department of Manpower and Personnel. I hoped that I had given an answer to this question earlier on. I do not think I have anything further to add except to reiterate that my right honourable friend the Prime Minister believes that it is very important to have as a separate department the promotion of efficiency in the Civil Service, and she believes that this will best be achieved by the present division of responsibilities. There is no further consideration being given to restoring the situation to as it was in 1968. This would obviously be for consideration, if at all, on another occasion. It is of course a matter of deep regret when these matters come out in the press before the Statement has been made in Parliament.

Lord Houghton of Sowerby

My Lords, time is pressing and there is a long debate to follow. It is very unfortunate that this important matter comes just at this moment. Can the noble Baroness assure us that we will have an opportunity to debate this on whatever occasion presents itself to do so? This is far more important than can be dealt with by question and answer across the Floor of the House. May I ask the noble Baroness to give assurances on this point, which will spare me the duty of asking a few more questions about the situation? But I do say that this Marks and Spencer's demolition job is one which will create deep dismay in the Civil Service and stir up the embers of discontent which are now lying about as a result of the recent pay dispute.

Baroness Young

My Lords, I certainly take the point made by the noble Lord, Lord Houghton, and made by the noble Lord, Lord Peart, about the possibility of a debate, and I think this would be a matter for the usual channels. I should like to thank the noble Baroness, Lady Wootton, for her intervention. She is absolutely correct, and she has drawn the attention of the House to an important point, that remarks following Statements should be questions and not a debate. I am most grateful to her for making this point. I would have thought that it was now for the convenience of the House that we might return to the debate on the Address in reply to the gracious Speech.