HL Deb 13 July 1994 vol 556 cc1829-45

3.51 p.m.

Lord Wakeham

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Chancellor of the Duchy of Lancaster about the Civil Service White Paper. The Statement is as follows:

"With permission, Madam Speaker, I wish to make a Statement on the White Paper on the Civil Service, published today.

"It is nearly 150 years since the Northcote-Trevelyan Report first laid out the principles of a professional Civil Service, accountable through Ministers to Parliament, recruited on merit, politically impartial and dominated by a high ideal of the value of public service. Over the years since, the Civil Service has seen the demands laid upon it change in ways that could not have been imagined then. But the core principles established at that time have remained unaltered. They have served the country well: they continue to do so.

"So today's White Paper reaffirms those same fundamental principles. They help us to live in a decent society, but they have economic value too. No one should underestimate the advantage we get from the justified reputation we have as a country in which our public service is honest, competent, and apolitical.

"Nonetheless, no organisation can stand still in changing times. The public rightly expects to see continuing improvements in the standards of service in the public sector within the resources which can be afforded. That is why this Government has introduced a series of wide-ranging reforms, now brought together under the banner of the Citizen's Charter, aimed at delivering better service ever more efficiently. These include the Financial Management Initiative, the Next Steps Programme, the Efficiency reviews and the Competing for Quality programme.

"I believe this House should pay tribute to the way the Civil Service has handled these and other initiatives. They have already produced marked increases in both performance and efficiency. The size of the Civil Service is at its lowest level since the Second World War, and the new structures are showing considerable gains in efficiency. The White Paper published today sets out how the Government sees these reforms being taken forward, and draws together the implications for the future of the Civil Service.

"One central principle of management unites all these reforms; namely, that of delegation to and within properly accountable organisations. We should now take further steps in that same direction, building on what we know works, rather than going off in a new direction.

"But it is a fact that the most radical change so far has been in those parts of the Civil Service, much the largest in terms of numbers, which provide service directly to the public. The role of departmental headquarters and of the Cabinet Office and the Treasury now needs to change too. The central role should be to set tough targets, and to monitor performance on the basis of better information than we have at present. But staff throughout the Civil Service should be given the power to manage and operate in ways which best meet their particular tasks and needs, rather than within a single, central blueprint, adequate for all but well fitted to none.

"We therefore intend to carry the Next Steps process further.

"The Government propose that departments should take greater responsibility for deciding their organisational structures, the pay of their staff, and the best mix of efficiency measures to meet the never-ending pressure to raise standards within tight running costs. Departments themselves should judge, for example, how best to use privatisation, contracting out and market testing. Centrally-driven initiatives have shown in recent years how more competition and choice improves quality and reduces costs: departments themselves must now take these well-established policies forward if we are to see the full benefit from them. The central departments should continue to measure, monitor and report to Parliament but with less second guessing of departments' plans.

"To do this, we need better information systems and modern accounting practices. The Prime Minister has therefore asked the Efficiency Unit to conduct a scrutiny on management information systems and my right honourable friend the Chancellor of the Exchequer is publishing today a Green Paper on resource accounting and budgeting. The Green Paper paves the way for important reforms of the way we account for public money, and opens up the possibility of changes in the way the Government plan their spending, both of which will complement the changes I am proposing in this White Paper.

"Departments will be given the freedom to determine their own management structures at all levels matched to their own needs. We expect them to be tauter and flatter than now.

"The Government propose to extend the delegation of pay and grading—which at present covers around 60 per cent. of the Civil Service—to cover all civil servants, below the Senior Civil Service. I will return to pay arrangements for the latter in a moment.

"The Senior Civil Service needs to support both the collective responsibility of Government and the particular responsibilities of departments, and to underpin both policy-making and high quality service delivery. But it too cannot be immune from change. It needs changing qualities and skills to match its changing tasks. The Government published an Efficiency Unit report on these issues last winter, known as the Oughton Report, and this White Paper includes the Government's response. The Government accept the Efficiency Unit's main recommendations, but propose additional changes. Our main conclusions are as follows.

"To strengthen cohesiveness across the Civil Service and bring in all those with substantial management responsibilities, the Government propose to create a new Senior Civil Service including those broadly down to the present Grade 5 level. It will include up to three-and-a-half thousand people.

"There should be more interchange between this Senior Civil Service (and indeed the rest of the Civil Service too) and outside employees. Open com-petition should become a more normal part of the process for selecting people for senior appointments. It need not be used in every case, but it should be considered in every case. Such competitions must be superintended as now by the Civil Service Commissioners, independently of Ministers, to guard against the possibility of politicisation. I am publishing today, alongside the White Paper, a report on the future role of the Commissioners. I myself believe that if the Civil Service is as good as it should be at training and career development, most senior posts are likely still to be held by insiders, as they would be in most big firms; but we should set no targets one way or the other.

"Next, the Government propose to introduce explicit written employment contracts for members of the new Senior Civil Service. For the great majority they will provide for employment for an indefinite term, but with specified periods of notice. Fixed term and rolling contracts would also be used as appropriate.

"Madam Speaker, as figures in the White Paper show, it is a myth that the Civil Service is an organisation in which people serve as a matter of course until retiring age. Substantial numbers of senior staff have left early in recent years and this is likely to continue.

"Finally, the White Paper proposes that a new, more flexible pay system should be introduced for this group. There would be a range for permanent secretaries' pay, with the positions of individuals determined by a remuneration committee with a majority of non-Civil Service members. Below this, we propose a system of wider, overlapping pay bands broadly linked to levels of responsibility, with progression based on performance, giving more room for manoeuvre to departments to change their structure to fit their needs. As a first step, the Government will implement the wider pay ranges recommended by the Senior Salaries Review Body for the present Grades 2 and 3 and will ask the review body to recommend a pay range for permanent secretaries. These proposals will, in time, allow for greater differentiation in individuals' pay within the overall pay bill. No immediate pay increases are entailed.

"Madam Speaker, these proposals, for greater delegation to departments and reform of the Senior Civil Service, represent a considerable further challenge for the Civil Service. We are seeking to raise standards of service within tight control of running costs. Staff numbers will continue to fall, from 533,000 at present to significantly below 500,000, with reductions at all levels. Wherever possible, this will be achieved through natural wastage and by voluntary departures. From the autumn of this year, the Treasury will give special assistance to departments with any additional costs.

"The Government believe the Civil Service is fully capable of achieving what we have; asked of it. It will be helped to do this by the greater flexibilities and the management changes I have announced, against the background of the reaffirmation of the old strengths and values which underpin the Civil Service, which the Government have reaffirmed today, and with which, 1 believe, the whole House will concur. The Civil Service must continue to offer attractive and exciting careers to talented people who wish to serve their country in some of our most important and challenging jobs and it will be helped to do so by up-to-date organisations and structures.

"Madam Speaker, the Civil Service has a unique role maintaining our unwritten constitution. It does not belong to one government or party. The Government, therefore, plan to consult opposition parties as well as others with an interest in the proposals I have outlined today. And we will, of course, consider carefully the forthcoming report from the Treasury and Civil Service Select Committee.

"The Government's objective in publishing this White Paper is to map a way forward for the Civil Service to the end of the century and beyond. The result will be a smaller Civil Service, more flexible in organisation, better able to respond to changing tasks, properly rewarded on the basis of responsibilities and performance, and offering challenging careers for both staff and managers with a reaffirmed commitment to the unchanging principle of public service. I commend the White Paper to the House." My Lords, that concludes the Statement.

4.4 p.m.

Lord Richard

My Lords, we are grateful to the noble Lord the Leader of the House for repeating the Statement made in another place this afternoon. The House will appreciate that it is a complicated Statement about a somewhat complicated issue. Before I comment further on it, perhaps we can see how far at least we agree with some of the matters spoken of by the Leader of the House.

No doubt every one in this House agrees that our existing Civil Service, particularly at the higher levels, has an enviable reputation for certain qualities: its impartiality; its independence of advice, irrespective of who is in government and the nature of that government; its continuity; and, finally, its sheer professionalism. Any Member of this House who has served in any Ministry will agree that the quality of our civil servants at the topmost level is absolutely first class. Let me say at the outset that I hope that those qualities will survive this latest upheaval. But I am bound to say to the House and to the Government that I have my doubts about that.

What is the object of this exercise? What are the Government trying to achieve from the tumult that they will cause within the ranks of the Civil Service? Is it suggested that somehow or other it will make the Civil Service more impartial, more professional and more independent; or that the quality of its advice will somehow improve? I do not think so. There is not a word about that in the Statement, nor indeed in the White Paper, at which I have had no more than a glance. Introducing a competitive element for all senior jobs, for example, is hardly likely to help the objectivity of those who are already in the service, when the Government themselves, certainly in relation to the very senior jobs, will be the body which does the appointing. It certainly does not do much to foster independence of outlook or advice.

As I understand the position—as I said, it is quite complicated—the Civil Service is broadly to be split. People will move from their previous grade in the present structure to Grade 5 and then join the newly labelled body called the Senior Civil Service, which I gather will contain about 3,000 people. I presume that entry into the Civil Service prior to Grade 5—for example, from the universities—will be as it is at the moment; in other words, there will be a competitive examination and if the candidate successfully passes that Civil Service examination he or she becomes a civil servant at the lower grade. He will then work his way up gradually to Grade 5 and then jump that hurdle to become a senior civil servant. Do the grades then disappear? Who is responsible for deciding who gets what promotion and on what basis is that judged? Not only that, how is one to know who has got the promotion and the basis on which it was awarded?

I understand that the contracts of service at that level will in effect now be an open-ended contract of service but with breaks; in other words, the traditional guarantee to the civil servant that if he (or she) came into the Civil Service at an early age, worked his way up, was competent at his job and preserved his independence and impartiality, then subject to cataclysms he had a job until he was 60. It seems that that guarantee now goes. I am not sure whether that is extremely helpful so far as the independence and objectivity of the Civil Service is concerned.

It is said in the Statement that: Open competition should become a more normal part of the process for selecting people for senior appointments". I am not very happy with that. It seems to me that, given the nature of the Civil Service, particularly at the topmost level—it is designed to provide impartial and independent advice to government—the onus should be the other way round; in other words, that prima facie the civil servant should be entitled to be considered first, but if in fact there is good reason, then perhaps there could be an open competition with people from outside.

The proposal seems to us to be a menu for accelerated privatisation of the Civil Service. Certainly there will be considerable job losses. The Statement itself mentions figures somewhere in the region of 50,000. It is a concept that is somewhat difficult to accept. I am not sure whether the abolition of the existing structure of pay bargaining will achieve what the Government believe it will achieve. Do we really wish to see each department negotiating its own pay contracts for the civil servants within the department? Do we believe that a civil servant in the department of education should be paid more or less, as the case may be, than a civil servant in the department of health? What will that do so far as concerns transfer from one department to another? The difficulties I foresee in relation to that part of the policy are legion.

What about quangos? Will the quangos be subject to those rigorous new conditions? Or perhaps, having been appointed, they will go ahead independently, in their own sweet way, with just a general accountability to Ministers and thereby, it is said, by some sort of osmotic or almost mystical process also be accountable to Parliament? If there is concern about the quality of the public service in this country at the moment, I can say to the Government that there is much more concern about the way in which more and more power is being given to quangos, which by definition are unelected, unresponsive and unaccountable, than there is about the operation of the topmost ranks of our Civil Service. Will the conditions of people employed by quangos come under the new system or will they be left where they are?

Two specific matters in the Statement cause me to raise my eyebrows. First, on page 2, the Government say, The central departments should continue to measure, monitor, and report to Parliament but with less second guessing of departments' plans". What does that mean? Which are the central departments? Is it the Treasury and the Cabinet Office? Are the Government really saying—if so it will be welcome and I shall be delighted to hear it spelt out —that if a specific department wishes to pursue a specific policy then the central department—namely the Treasury—will not second guess that department's plans? If it means anything, that appears to be what it means. I shall be grateful to the Leader of the House if he can tell us what it means. If it means what I think it means and what I said it may mean, then I welcome it.

Secondly, is it seriously suggested that permanent secretaries should be paid different rates depending on the ministry in which they happen to be permanent secretaries? I find that an astonishing proposition. If one is in a Ministry which controls a large budget and which must take unpopular decisions, will the permanent secretaries be paid less—or more as the case may be —than the permanent secretary of the Foreign Office or one of the permanent secretaries of the Treasury? I do not see how one can differentiate between civil servants at the permanent secretary level in the way in which the White Paper appears to do.

Finally, I return to where I started. What is the aim and object of the exercise? On the whole, the Civil Service in this country has served the country well for a long period of time. Why are we fiddling with it in the way in which the Government appear to be doing in the White Paper? If somebody can tell me what the vision is, then perhaps the details may fit into place. At the moment, all I see is a degree of interference which causes me to have grave doubts as to the continuing efficiency of the Civil Service.

Baroness Seear

My Lords, we on these Benches also wish to thank the Leader of the House for repeating the Statement. While we agree with some of the points made by the noble Lord, Lord Richard, we certainly do not take so overwhelmingly conservative a view of the Civil Service as he does.

We welcome the degree of decentralisation proposed in relation to the great mass of civil servants below the new Senior Civil Service group which is described in the White Paper. We believe that greater flexibility in the management of what are in many cases straightforward executive jobs carried out by the department—jobs very different in kind in different departments—is highly desirable. There should be more decentralisation and more flexibility. If that means of course, as I think it must—I believe that the noble 'Lord, Lord Richard, was hoping it would—less rigid Treasury control over what is to be done in different departments, that surely is something which the whole House must welcome. There cannot be a single person in the Chamber—certainly not on the Labour Benches—who has not been critical of the iron hand of the Treasury holding back developments which we all recognise to be entirely desirable. We therefore do not decry all the changes put forward in the White Paper.

I want to say particularly that I agree with the noble Lord, Lord Richard, on one point. If we are to obtain this greater degree of flexibility and accountability in relation to what goes on in the Civil Service, who is appointed to jobs and how jobs are obtained, there must be a cost funding way of approaching the work done by the quangos. As I am sure the Leader of the House recognises, it is becoming a positive scandal that so much work, which is comparable to the work being done by civil servants in their respective departments, is undertaken by people who are appointed without any competition so far as we are aware, without any availability for people to apply for the jobs and with the public quite unaware of what are the terms and conditions of payment for people in the quangos. The Government must tell us why, when what is sauce for the goose is sauce for the: gander, what is good for the Civil Service is not also good for the quangos.

As I said, we are not totally critical of the proposals in the White Paper. In fact, I should particularly like to welcome one aspect. It is suggested that the Senior Civil Service will bring in all those with substantial management responsibilities. When I had the privilege of serving on the McGaw Committee for the pay of industrial civil servants, one factor which was most noticeable and most disadvantageous, we felt, from the point of view of the competent running of the Civil Service was the way in which people throughout the country who had big management responsibilities in running huge departments, spending large amounts of money, did not have anything like the same status, career opportunities or pay as the people in the policy-making departments. If the change means that the people who are responsible for those important jobs will be in the same rank and receive the same promotion opportunities and pay as people in the policy-making department, that is a development which we would welcome.

When one looks at what is being proposed for the Senior Civil Service a number of questions arise. Management has been the flavour not only of the month, alas, but of months. Of course we all welcome good management. But management is a tool; it is a means to an end. It is not a purpose and end in itself. So often in proposals put forward by the Government, and in today's proposals, one has the impression that they are thinking that, if they obtain not necessarily the right but the most fashionable and up-to-date management system, that will be the end of their problems. I repeat, management is only a tool. My old managing director used to say that accountants are extremely good servants but damn bad masters. Sometimes it would be a good idea for that old-fashioned view to be brought forward again.

As the Statement said, the object is to maintain the principles of the Civil Service. In that regard I agree with the noble Lord, Lord Richard. If we are to have a Senior Civil Service which, without fear or favour, gives opinions to Ministers which they may not like, how will that reflect on their opportunities to have their contract renewed or to obtain advancement? That is something which we cannot sacrifice. If using the most fashionable management tools to assess performance in higher level jobs means that we lose the objectivity, the courage to stand up and say what needs to be said to Ministers when they follow some foolish will-o'-the-wisp—as Ministers are not unknown to do—that is too high a price to pay. And, as we are reforming the Civil Service, have the Government thought that the Civil Service, which gives such excellent advice to the Government most of the time, might in some small measure be made available to give advice to Opposition parties?

Lord Wakeham

My Lords, I am not quite sure that I can give an on-the-spot answer to the noble Baroness's last question. But, when I was a departmental Minister I always believed that it was very much in my interests to be as helpful as I could to Opposition spokesmen, particularly in providing them with the information and the other things that were necessary for them to make their own judgments. I am not too sure about advice, but it is an interesting point which I shall think about.

I start with some hesitation in view of the noble Baroness's strictures on accountants. I stand here as an accountant, but I shall nevertheless try as a humble accountant to give the best answers I can to the extremely large number of points which were made in the two contributions we have just had. I am grateful to the noble Lord, Lord Richard, for some parts of what he said and to the noble Baroness, Lady Seear, for rather more of her points. She found more to satisfy her than did the noble Lord.

The White Paper strongly reaffirms the Government's commitment to a first-class Civil Service based upon the fundamental principles of honesty, dedication and impartiality. But that is not enough. It also has to map a way forward for the Civil Service beyond the end of the century. The Civil Service cannot be immune from change and the public has a right to expect continuing improvements in public sector standards without increasing taxes.

Perhaps I may answer the noble Lord, Lord Richard, directly as to why the Government are proposing the White Paper at the present time. I can do no better than to quote from Sir Robin Butler's foreword to the paper which will be sent to the staff of the Civil Service: I welcome the Government's decision to publish this White Paper. It confirms the Government's commitment to a key role for the Civil Service in supporting Ministers in policy work and in managing and delivering public services. It stresses the continuing importance of the values on which the Civil Service has been built". That is the basic position from which we start and that is why we have published the White Paper at the present time.

The noble Lord asked about entry to the Civil Service. There is no intention of moving away from recruitment and promotion on merit. All recruitment must be fair and open, with selection on merit. The White Paper makes that clear. It also makes clear that decisions for promotion are for permanent secretaries and not for Ministers.

The noble Lord also asked whether civil servants could reasonably expect to continue in their careers until they reached retirement age. I have to say to the noble Lord that he is thinking about a world which has long since gone. The position is not that now. Some 50 per cent. of those leaving the top three grades of the Civil Service in the past seven years retired for one reason or another early. Seventy per cent. of those who retired early did so through some form of management action.

On the influx of outsiders into top positions, it is not as if the White Paper produces a revolutionary idea. At present two-thirds of the heads of all the executive agency posts have been filled by open competition. Eight out of the 35 permanent secretaries have been recruited directly from the outside. The Civil Service greatly benefits from their skills and expertise. As each vacancy arises departments and agencies will be required to ask themselves whether it is appropriate to have an open competition. But this will not be a political appointment. It is very important to stress that any appointments from outside the Civil Service will be subject to the scrutiny of the Civil Service Commissioners. The White Paper stresses that no government own the Civil Service and it strengthens the independent safeguards against political interference.

The noble Lord suggested that this is somehow a smokescreen for privatisation. That is not so. There is nothing in the White Paper to support that view. The White Paper reaffirms on many occasions our belief in a strong Civil Service with the basic principles which we have had in this country for a long time and with which we shall continue.

The noble Lord did not quite appreciate how much change has been taking place. The reductions in the size of the Civil Service have been going on right from the days when the noble Lord's party was in government. The peak of the Civil Service, at 748,000, was in 1976. In 1994 the figure is 540,000. We envisage a reduction of some 50,000 over the next four years, which is not a huge increase in the rate when one recognises that some 33,000 have left the Civil Service over the past 15 months.

The noble Lord asked about central pay and the advantages of a delegated system. The experience of the Civil Service has shown that there are many advantages to a delegated system. Central systems are no longer judged to be flexible enough for a Civil Service which carries out a huge number of tasks and covers a wide variety of services. The noble Baroness recognised that. We believe that there is a strong case for delegated systems to encourage a clear link between an individual's pay and the contribution he makes, and therefore a much less rigid approach, giving greater opportunities for rewards for good performance, but within a system which has tight control of running expenses.

The noble Lord asked about second guessing and I think he had the Treasury in mind. I do not have a list of what are the central departments but the noble Lord mentioned both the Treasury and the Cabinet Office. Most of those who have had experience of government would include both the Treasury and the Cabinet Office in their list of central bodies which might from time to time carry out an element of second guessing. The noble Lord is quite right. What we wish to see is less second guessing by the Treasury—and he welcomes that—and less second guessing by the Cabinet Office. We want to see efficiency plans prepared by departments and reviewed by the centre so that there is less need for detailed oversight. That gives more scope for management initiatives within the departments. But we shall of course expect there to be tight control over running costs. We see that as a means of achieving increased efficiency.

The noble Lord asked me about quangos. The White Paper does not formally cover non-departmental public bodies, but many of the principles that we expect to see —and that we do see—in the existing Civil Service we expect to see also in quangos. I have with me the guidance which the Treasury sent to public bodies in June of this year. It is a note of the guidance as regards the code of conduct and the code of accountability for National Health Service boards which the Secretary of State for Health issued in April. We are determined to maintain high standards in quangos. Ministers remain responsible and accountable for them. We believe in that system.

The noble Lord also asked me about pay for permanent secretaries. Permanent secretaries are on spot rates which do not allow flexibility to reflect the respective responsibilities of individual posts. The Government think it right to change the system to take that into account. What the new system will mean for individuals will depend upon the Government's decision on the extent of the range on which we are seeking advice and on how in practice individuals are placed within it. I should have thought that it would require only a few minutes' consideration of the problems to recognise that the degree of responsibility of the permanent secretary at, for example, the Treasury is probably higher and greater than that of a permanent secretary in a relatively small department. We need to reflect that in the pay structure.

I am grateful to the noble Baroness. I believe that I have answered her specific points. She is right to stress the benefits of decentralisation. She is also right to make the point that management systems are not the be-all and end-all. The policy is the responsibility of the Government. The Civil Service plays a big part in working out the management systems, but that is not the same thing as getting the policy right.

A moment ago I quoted some figures about numbers in the Civil Service. Our view is that, as present plans develop, the numbers are expected to fall significantly below 500,000 over the four-year period, although the White Paper does not set out a target figure. Indeed, we do not believe that the right way to run these matters is by setting targets for numbers. We believe in efficiency in running costs and in leaving a great deal more flexibility to individual managers so that they can determine the number and level of staff that they need to deliver their responsibilities.

4.34 p.m.

Lord Boyd-Carpenter

My Lords, first, can my noble friend say something about the reduction in numbers to which he referred, which, as I understand it, is quite substantial, going up to 50,000'' Is it the intention that some work that is now done by civil servants will be moved from the Civil Service to secure that reduction or is it intended that the existing Civil Service staff will have to do rather more work? In other words, is it intended to shed some responsibilities to secure that reduction or is it intended simply to concentrate more work on those in the service?

Secondly, I was glad to hear my noble friend speak about flexibility in pay a moment ago. I am sure that there is a great deal to be said for a difference in the reward that is appropriate for a permanent secretary in one of the major departments as compared with one of the smaller departments. However, with whom will the decision about the pay of major permanent secretaries lie? Will it be with the Permanent Secretary to the Treasury or with the Chancellor?

Lord Wakeham

My Lords, the answer to my noble friend's last question is that it will lie with a remuneration committee on which there will be a majority of non-civil servants. It will not be a decision for Ministers. It will be decided partly by senior civil servants and partly by non-executive outsiders who are brought in to advise on this matter.

The changes that are occurring in the Civil Service will mean that the process of having a smaller number of staff in the Civil Service, which started in 1976, will continue. Our target is not to reduce the numbers; it is to achieve better efficiency within the Civil Service. Therefore, we shall seek to run those functions which remain within the Civil Service more efficiently at last. There is also a policy of market testing—that is, of testing to see whether significant savings can be made. It should be remembered that in many cases where we have indulged in market testing, the Civil Service operation has been demonstrated to be the most efficient. That is a very good thing. Therefore, the answer is that it will be both of the alternatives which my noble friend mentioned rather than one or the other.

Lord Barnett

My Lords, perhaps I may speak as one humble accountant to another. I am sure that the noble Lord will correct me if I am wrong, but his central argument appeared to be that because the Civil Service is 150 years old it must therefore be changed. Why, if it is working well? The noble Lord accepts—I doubt whether anybody would deny—that our Civil Service is the envy of the world both for its impartiality and for its incorruptibility. In those circumstances, what is the noble Lord's central case?

Is the noble Lord aware that I would accept that in certain circumstances the contracting out of work can be both helpful and efficient? I do not deny that for a minute. My noble friend the Leader of the Opposition related some of this to the way in which quangos work. I have not had an opportunity to read the White Paper, but the noble Lord told us that the bodies concerned would not relate to quangos. However, when he repeated the Statement he said that they would be, as he put it, "properly accountable". Can the noble Lord spell that out? How will they be "properly accountable"? Quangos are certainly not properly accountable, but the noble Lord said that this does not relate to quangos. How will those bodies be properly accountable to Parliament?

I turn finally to the question of pay. The noble Lord said that there would be a committee to decide levels of pay—presumably at all levels—on which there would not be a majority of civil servants. Can the noble Lord give us any kind of assurance that the levels of pay for the chairmen of some of the quangos will not be on the same scale as the pay of, say, the chairmen of the electricity or water boards?

Lord Wakeham

My Lords, I think that I can answer some of the noble Lord's questions but I am not sure that I am in a position to answer them all. The central point that I am seeking to make is that this is not change for change's sake. The central point that the Statement was seeking to make was the Government's reaffirmation of the central principles of the Civil Service which has served us well for so long; and to set out how we intend to keep those central values intact and, indeed, to build upon them. This is not change for change's sake; it is to conserve what we believe to be fundamentally right and valuable. However, it is naive in the extreme —I know that the noble Lord will not mind me using that expression as one humble accountant to another —to suggest that the Civil Service is still performing the same function now as it performed 150 years ago.

The Civil Service cannot have the idea that it does not have to change, does not have to bring in new expertise, and does not, on occasions, have to recognise that it needs outside skills and that in some cases there is no way that the Civil Service can do some of the jobs —for example, in the information technology world— better than outside bodies. Our proposals are designed to manage that inevitable change.

With regard to pay, Civil Service pay will not be determined totally by outside bodies. There will be negotiations with the unions and all the things that exist now. The Civil Service management will determine the bulk of the pay of most civil servants, but there are some civil servants at the top, in particular permanent secretaries, and it will not be frightfully easy for them to determine their own pay, for obvious reasons. At that level we will have the remuneration committee to assist in determining the appropriate remuneration.

As the White Paper made clear, we are not tied down to every detail of every point. While recognising the central thrust of what we are doing, which I should have thought was self-evidently right, there are points where the wisdom of the noble Lord, with his great experience, and of others, will be valuable in determining the way forward.

Lord Allen of Abbeydale

My Lords, I learnt, naturally with some slight regret, that the present system of filling senior posts in the Civil Service is not thought to be very satisfactory. I must confess that there have been moments in my career when I wondered why anyone from outside would want to be, say, the Permanent Under-Secretary of State for the Home Department. Nor incidentally would I think it "frightfully" easy—to use the noble Lord's word—for outsiders to assess the pay for that post, and some others I have in mind.

I have just one question. Where does the Foreign and Commonwealth Office fit into all this? The Statement, I think, was silent on that point. Is it in the same position as all the other departments? Will it have to consider whether its top posts should be advertised, and so forth?

For the rest, the Statement raises questions of some importance which it is impossible to discuss in the few minutes left to us. I wonder whether the Government are contemplating allowing some time for a debate on the White Paper and the associated reports. As it happens, I have down a No Day Named Motion on the Civil Service, but there is not an abundance of time available for Cross-Bench debates, even if my colleagues thought that that was a good idea. I hope that some government time will be made available for a debate upon what is an important issue.

Lord Wakeham

My Lords, I am grateful to the noble Lord for his contribution and questions. He is right, we shall have to find the best way for there to be a debate on this matter, if for no other reason than that it will enable the noble Lord and others, with their great experience, to express their views at greater length than they can through questions. I am happy to discuss that matter in the normal way through the usual channels. I hope that I did not say that I was dissatisfied with the appointment of heads of departments. I pointed out that two-thirds of the heads of executive agencies are filled at the moment through open competition; that eight of the 35 permanent secretaries have been recruited directly from outside. That is an indication that the Civil Service has already moved substantially in that direction. We seek to recognise that with a more formal structure.

The question will not be decided by Ministers; it will be decided by each department. Each department, as a vacancy arises, will ask itself whether it is appropriate to have an open competition. That decision will be supervised by the Civil Service Commission and not by Ministers. The noble Lord asked me a question about the Foreign Office. The position of the Foreign Office is covered in the White Paper which states: The Diplomatic Service is a separate branch of the public service with its own particular needs and structures. The Secretary of State for Foreign and Commonwealth affairs will be putting parallel action in hand to cover the areas considered in the White Paper

Lord Hailsham of Saint Marylebone

My Lords, perhaps I may just ask my noble friend for information. There is an important but small element in different departments of the Civil Service which has to be legally qualified with specialised knowledge with a specialised career structure and methods of recruitment and selection. Is there anything in the White Paper, or does my noble friend know anything, about whether there is any change in those posts, and, if there is, in what way?

Lord Wakeham

My Lords, such people will be covered by the broad thrust of the White Paper. There are no proposals in the White Paper for wide-ranging reform of those posts, or, in particular, as my noble and learned friend is aware, of the highly specialised experts whom the Government value greatly, especially at this time of the year. I refer of course to those who draft the Bills and the amendments to them.

Lord Bonham-Carter

My Lords, I am grateful to the noble Lord the Leader of the House for what he has said, about which I should like to ask one or two questions. It is a pity that the White Paper does not cover quangos, because they have proliferated and now form a major part of this country's public service. How much of the diminution in the number of civil servants is a result of people who have merely been transferred to quangos?

Secondly, the noble Lord pointed out, quite rightly, that one of the great virtues of the Civil Service tradition has been its political impartiality. We have seen in answer to Questions tabled in this House that the appointment of people to quangos is highly politicised. What steps are to be taken to deal with that question? It is a grave defect of the White Paper that it does not deal with how people are appointed to quangos. Will the noble Lord please tell us whether any steps will be taken to ensure that quangos are not overwhelmingly politicised, as they have been shown to be up to date?

Lord Wakeham

My Lords, I do not accept the premise behind the noble Lord's question—that the appointment of people to quangos has been over-politicised. What is important is that they should operate to high standards. Government departments responsible, plus the Treasury, have been active in assuring that standards within quangos are improved. Of course accountability for quangos is with Ministers in this House and another place. I believe that that is how it should continue to be.

Lord Bruce of Donington

My Lords, I have a leading question to ask the noble Lord the Leader of the House, if he does not mind. It has been in my mind ever since he first started the Statement this afternoon. Have the Government any reason for self-doubt in these matters? Have the Government considered whether they themselves have the intellectual competence and administrative competence to make decisions of this kind? I ask the question because, over the past few years, as indeed has been revealed by the National Audit Office, the Government have spent £500 million on consulting outside consultants. These are questions of grave public principle of the utmost importance to the nation as a whole. They are about public standards during a time when, under the leadership of the Government, there has been an abysmal decline in those standards.

The Government have spent £0.5 billion on outside consultants. The remarks made by the noble Lord today, in particular those about market testing—although I do not know what relevance market testing has to the composition of the Civil Service—are trotted out in the words of management consultants' reports. In fact, the noble Lord's whole speech reeked of it; it completely lacked originality.

I put it to the noble Lord, who is an accountant like myself, that it would be far better to take the whole proposal back to the Cabinet and to say to them, in as friendly and chummy a manner as possible over the Cabinet table, "Do we really know what we are talking about or have we merely taken the words of consultants, dressed them up in gloss and presented them to an admiring public?".

I cannot help believing that the noble Lord, being as intellectually honest as he is, will not have the slightest hesitation in taking that course, in particular in view of the fact that, on all public counts, all accountability and all means of measure, this Government are probably the most incompetent since that of Lord North and the departure of the American colonies.

Lord Wakeham

My Lords, of course, the whole House enjoys the noble Lord's contributions. I realised that the time was moving towards 20 minutes but I did not want to stop him in full flow, not that I had any intention of doing so. However, I am not too sure that there is much for me to answer. I believe that the charges are wild and unsubstantiated, and I refute them absolutely and completely. The noble Lord appears to have missed the essential points of the Statement. I recognise that perhaps it came a little quickly for him and I suggest that he reads it and studies it a little more carefully.

The noble Lord said that the Government are arrogant—he used other phrases which trip off his tongue like everything else—and that they spent £0.5 billion on outside advice because they did not know the answers to the questions. Those ideas do not hang together; one cannot be arrogant and then say that one does not know the answer. The fact of the matter is that a great proportion of those consultancy fees was spent on trying to obtain management consultancy advice on acquiring information technology systems and computer systems for social security and so forth. The Government freely admit that. There is no one in the Civil Service who knows as much about those systems as those in the outside world, where there is a great deal of expertise. The Government should be congratulated on seeking expertise where that exists. We must bear in mind that the Government's annual bill for information technology is approximately £2.2 billion per year. A government who have been in office for however long they have—and are likely to be in office much longer —need to spend a great deal of money on information technology and I should have thought that they would be congratulated on trying to do the job properly.

Lord Simon of Glaisdale

My Lords, has consideration been given to a two-way movement between the Civil Service and outside bodies, such as industry and commerce? If so, how is that to be monitored? Is it borne in mind that that approach was valuable during the war and that its value subsisted afterwards? In particular, could that not be applied to the point mentioned by my noble and learned friend Lord Hailsham, for which the American system might be a model?

Lord Wakeham

My Lords, I agree with a great deal of the noble and learned Lord's question. There is a considerable amount of interchange between the private and public sectors. I would wish to encourage that as much as possible, which is a view that goes right through Whitehall.

I have doubt about the final part of the noble and learned Lord's question. I am not attracted to too many fixed-term contracts in the pattern that one sees in the United States, although they have a part to play. It imposes upon the Government and the Civil Service pressures of the kind which are totally undesirable in the nature of attempts to become political. I am in favour of two-way exchanges at all levels of the Civil Service and would like to see that encouraged. However, other than in special circumstances, I am not in favour of fixed-term contracts. They have a part to play but we should not encourage too many of them.