CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 97

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

PUBLIC ADMINISTRATION COMMITTEE

GOOD GOVERNMENT

Tuesday 16 December 2008

PROFESSOR COLIN TALBOT, MS NATALIE CEENEY, PROFESSOR CHRISTOPHER HOOD and MR TONY TRAVERS

Evidence heard in Public Questions 1 - 45

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Public Administration Committee

on Tuesday 16 December 2008

Members present

Paul Flynn

David Heyes

Kelvin Hopkins

Mr Ian Liddell-Grainger

Mr Gordon Prentice

Mr Charles Walker

In the absence of the Chairman, Paul Flynn was called to the Chair

________________

Witnesses: Professor Colin Talbot, Manchester Business School, Ms Natalie Ceeney, National Archives, Professor Christopher Hood, Gladstone Professor of Government and Fellow of All Souls College Oxford, and Mr Tony Travers, Director, Greater London Group, London School of Economics and Political Science, gave evidence.

Q238 Paul Flynn: Welcome. Thank you for your attendance here. We are extremely grateful for your coming along here today on this inquiry we are having into the portmanteau title of "Good Government". I apologise in advance if we are a bit like a French farce today in that members of the Committee will be coming and going because of the demands of parliamentary life; some will disappear and some will arrive late. Could we start by asking you what do you think the British Government does well and what do we do badly? Perhaps you would all like to contribute to this.

Professor Hood: I did put a one page paper in to this Committee which tells you what other people think the UK does well.[1] What that does is to show you 14 international indicators of governance or public services. The first column tells you how the UK or England, if it is separately identified, does against the rest of the world, insofar as that is captured in the survey. The fourth column tells you how the UK or England does relative to 13 other countries that I selected. I think broadly what you get from that brief account is that the UK does not come out top in any of these indicators. In the world ranking mostly it is in what you might call the Premier League. If you compare it: relative to 13 selected countries, which were basically advanced countries (I put in a number of Asian ones as well as European countries), the modal position is roughly in the middle third of that group. I think that is an indication of how others see us. As an academic I ought to say that there are all kinds of ways in which one should qualify this conclusion. This is not an exact science. We have to be very careful about the limits of measurement. We cannot be sure that these measures are reliable, but I thought as a way of starting the conversation it would at least show you how the UK is ranked on these indicators such as they are.

Q239 Paul Flynn: Would it be right to assume that the countries that come out top in these tables are generally the Nordic countries or not?

Professor Hood: I think that applies to a number of them, yes, but I did not select those for the 13 that I looked at (the group on the right).

Q240 Paul Flynn: What are the main failings? Why are we not top in these? How are other countries doing things in a superior way?

Professor Hood: There is some overlap among these indicators in the sense that these are the World Bank's government indicators, the ones that are very commonly used to measure quality of government, although they have numerous faults. The things that I think prevent the UK from being top are related to issues of transparency; it is certainly not top of that league. I think on voice and accountability it tends not to score so high, but I could give you detail of that if you want me to.[2] I have got them on my computer indeed if you want me to check that out for you.

Q241 Paul Flynn: Would the other witnesses like to suggest what we do well or what we do not?

Professor Talbot: I will chuck a couple of things in, one of which I do not think does appear in any of the lists that Christopher is referring to and it is what I would call universality, which is to what extent does a state actually regulate, control, tax and pay out benefits on a universal basis within, and provide services within, its territory. We have got some pretty good examples of failed states where that does not happen on a very large scale. The UK again actually falls somewhere around the middle third. It is probably slightly better on that in the sense that if you look at the best estimates for the size of the shadow economy across OECD countries, which is that level of unregulated activity that is taking place within society, we are running at about 12% of GDP and the OECD average is about 16% of GDP, and again the ones that do particularly well on that are the Nordic countries, Japan and, surprisingly, the USA, which has a very low level of shadow economic activity. Let me just give you some idea of what that means in practice. If it is about 12% in the UK, that is about £155 billion-worth of economic activity or about £50 billion-worth of missing taxes, which I think the PAC got wrong last week by the way. That is pretty fundamental. We are better than the OECD average, but there is still a major problem there about to what extent our state is capable of regulating what goes on in society.

Mr Travers: I would not disagree with anything my colleagues have said. I think in a sense the quality of the things that government does best in Britain are certainly related to a public capacity to take part in politics and government, but those things are also a challenge at the same time. One thing I would say is that there is something of a problem for a lot of the indicators - and Christopher did not say there was not - in that some of them are capable of being challenged because the way things are judged within one country will be very different to what goes on elsewhere and you can never quite escape in this country the implications and the effects of the media on how things are judged. I think I would be interested in unraveling, not now necessarily, to some degree the extent to which perceptions of what is well done and what is not done are influenced by the way issues are tackled by the media in one country compared with another.

Ms Ceeney: I am the non-academic member of this panel and, to be honest, this is one of the questions I think is probably best tackled by those with a strong evidence base rather than mine.

Q242 Paul Flynn: Could we look at a concrete example? The Regulatory Reform Act 2001 was an Act that went through Parliament and it was designed to enable provision to be made for the purpose of reforming legislation, but it had the effect of imposing burdens on persons in carrying out any activity to enable codes of practice and so on. Anyway, the Act was so incomprehensible that another Act had to be brought in called the Legislative and Regulatory Reform Act in 2006 to put it right and to explain what the previous Act was. Is this an area where you are critical of some of the legislation that goes awry and possibly other Acts that you can think of where we legislate to no purpose or to no good purpose?

Mr Travers: This is not something I have researched, but clearly the very large amount of legislation and secondary legislation that is passed these days and the speed with which some of it needs to be put through Parliament will and does provide challenges in both comprehensibility and interpretation, I would have thought, inevitably and certainly would distance the public from any capacity realistically to follow what was going on and, partly because of the historic way these things are done, to be able to understand a great deal of what is done through the passage of legislation. So both the scale of it, which is much larger than in the past, and in terms of the way it is done and the complicated processes I think must be a barrier to the kind of transparency and understanding that the people who are supposed to live within and abide by the laws concerned are always going to have difficulty, I would have thought, in a system that has grown in that way, especially given that expectations in the rest of society have moved in a different way. The desire to understand the capacity of institutions and bodies to explain things has grown significantly, whereas the process of making legislation and the scale of it has not.

Professor Talbot: Legislation is about implementing policy and really it is the policy making that comes before the legislative step which is absolutely crucial for clarity about what it is you are trying to achieve. One of the things that we have seen happen over the last decade or so was a great deal of interest at the beginning of the new Labour Government in evidence-based policy. The NAO and the Cabinet Office produced guidelines about what good policy making should look like in round about 2000/01 as the prior step before you get to legislation or programmes or whatever and then everybody quietly forgot about it and, as far I am aware, there has been no attempt to go back and evaluate at all whether or not that has been thoroughly implemented, which I do not think it has. Particularly of interest is the capability reviews which have been done on departments have had hardly any focus at all on the policy-making capabilities of departments. They looked at strategy and leadership and delivery, and the one thing that we have always boasted about in our senior Civil Service is supposed to be their policy making and advisory capacities and yet that was not included in the capability reviews.

Q243 Paul Flynn: Have you seen an increase in evidence-based policy?

Professor Talbot: No, I do not think so.

Q244 Paul Flynn: We have recently decided to reclassify cannabis from Class C to Class B on the basis that having reclassified it from B to C resulted in a reduction in cannabis use, and there was some evidence on which the Government based their policies and it was the 639 informed organisations and bodies who were asked for their view. Nineteen per cent agreed with the Government's policy of moving it from C to B, 44% were against and 19% wanted to see cannabis legalised. How do you see that as an example of evidence-based policy? Is that typical of what governments do, which is really adding policies that appear to be more evidence free policies?

Professor Hood: There are always going to be examples of that kind. It would be strange if you did not find examples of that type. All I would say is that over my professional lifetime - and I have been studying government for 35 years or so - actually much more data both about performance and about perceptions is available now than it was 35 years ago. Of course, how it is used when it gets into the system is different, but there is no question that there is more information available. Not all of it is of the best possible quality, of course, but the direction of travel has definitely been towards the collection of more information about performance and indeed public perceptions as well.

Q245 Paul Flynn: Tony, you wrote a book on one of our acknowledged legislative atrocities and that was the poll tax. Do you think if people had learnt the lesson from the poll tax they could have avoided the 10p tax rate that was recently brought in, which was another one in that category?

Mr Travers: There is no question that the poll tax failed partly for reasons that are implied by your previous question and that is that, even though there was evidence available, it was decided not to react fully to the evidence and to carry on with the policy. Going back just for a second to your previous question, it seems to me that the notion of consultation includes two very different potential ideas, one of which is to consult people in order to find out what individuals and organisations believe and then to respond to it in a way that takes a balanced view based on that; and the other is to consult them about something the Government is going to do in order that they know the Government is going to do it come what may. I fear the poll tax fell more in the latter rather than the former category. So although there were a number of signals and warnings both from within the Civil Service and from external researchers about the potential impacts of the poll tax, the Government at the time was committed to it and got into a sort of "I've started so I'll finish" mode from which any amount of consultation and evidence would never have delivered them.

Q246 Paul Flynn: In both these cases I believe Mrs Thatcher said that nobody told her the effect and there seemed to be a similar position for Gordon Brown in the case of the 10p tax. Are they really living in a remote world where people are frightened to tell them?

Mr Travers: In fairness, the model of government we have in Britain, the notion of majority governments, preferably with sufficient majorities to deliver particular policies and to get things done, you will hear lots of debate about the aversion of Britain to coalition government as a weak government. In a sense buried in that model, whichever party or parties you support, does seem to me the idea of government taking office and to some degree delivering on its manifesto and doing what it said it would do or, if it did not say it would do it, delivering things that it wants to do, the notion of the U-turn being a bad thing in British politics. That does affect the way governments behave. Any amount of evidence, warning and caution from different quarters will to some degree will not work in some circumstances, particularly where a government has decided what it is going to do.

Ms Ceeney: I was just going to add to one aspect of this debate which we have not covered which is around the delivery of policy. I think where we also sometimes go wrong is, whatever evidence we have got for policy, we sometimes have a big disjoint between the policy for the motion and the delivery, assuming somehow that policy formation is a skill in itself that is somehow tinted by having to deliver it. In my experience that does not exist as much in the private sector where strategy formation and delivery are seen as a deliberately linked chain. I think we would also get better policy if policy-makers understood more about delivery and we did not have that stark divide between policy and delivery that I think we have too strongly in the Civil Service.

Professor Hood: The poll tax problem is not a new problem. I started my academic life studying Winston Churchill's betting tax of 1926 in which he managed to impose a tax on betting that cost more to collect than the revenue that it brought in, a spectacular failure. All the things that Tony said about the poll tax were exactly reproduced.

Q247 Mr Prentice: Tony, I allowed myself a little smile when I read your piece in Public Finance on 6 June where you said, "But it is almost impossible to imagine a Brown-led government increasing taxes for the better off," and that is just what has happened. Do you feel kind of chastened that you got it so badly wrong just a few months ago?

Mr Travers: I am sure the observation was right at the time it was made as it were. Things change, as you know, in politics. I do not need to say that across this room. As you will know, governments make decisions from time to time that we cannot predict. I certainly would not pretend to be a soothsayer. Let me trade you things I have got worse wrong than that: Giuliani versus Clinton for the American presidency. We all make mistakes!

Q248 Mr Prentice: The reality is that we spend a lot of time on this committee talking about governments being learning organisations and there is a long list, ever growing, of policy cock-ups going back to the CSA, tax credits and the 10p blunder. Will we ever get to a situation where governments genuinely do learn from mistakes and perhaps develop policy in a different way and deliver it more effectively?

Professor Talbot: I feel the situation is getting worse in our government at the moment on that. One of the great strengths of British public administration 30 or 40 years ago was that, whilst there was a great deal of velocity even then in the movement of senior civil servants and ministers, there were always files, there was always a way of going back and looking to see what had been done in the past and, frankly, that does not exist anymore. My experience from talking to people in Whitehall is that it suffers from organisational amnesia, not organisational learning. You can sit in a room with a group of people and their memory goes back as far the longest serving person in the room in that particular function and there is very little attempt to really build on learning. That is not just a problem for Whitehall itself, I think it spreads across. There have been one or two interesting attempts to try and do some retrospective learning, for example, the Public Accounts Committee report a couple of years ago which went back over their own reports around efficiency and waste issues over a number of years to try and draw out some of the lessons from that. The National Audit Office does not do that. It has got 500/600 value for money reports it has done over the last 15 years. It rarely, if ever, goes back over the ones that address a particular set of issues and says, "What have we actually learnt over the last ten or 15 years?"

Q249 Mr Prentice: Is this institutional memory you talk about inevitably going to erode as we move away from the career Civil Service, coming in the fast stream and ending up as a mandarin, instead just bringing so many people in from outside?

Professor Talbot: I think it is a combination of personnel and systems. We have a very high turnover in senior civil servants in particular functions, they move very rapidly from job to job, so the personnel memory evaporates very quickly. In the past, there were paper-based filing systems and departmental libraries and those sorts of things that collated all this information together and it was readily accessible. The electronic systems that have by and large replaced them mostly in government do not allow that sort of thing to happen.

Ms Ceeney: I have a slightly different analysis. I would agree with the problem. I think my diagnosis would be different. I worked in a professional services firm, in consultancy, where the average turnover was two years and we had brilliant organisational learning because the systems were there and the culture was there. So I am not convinced that having fast turnovers necessarily means you would lose institutional knowledge as long as you build the systems around it.

Q250 Mr Prentice: How would you compensate for that?

Ms Ceeney: You do need to make sure you document learnings. You need to have a culture where the first thing you do on taking on something new is find out who knows about it. I think that what we need to do is primarily cultural. I know what government record keeping looks like, it is one of my responsibilities. I think we are still keeping files. I think the problem is people are not necessarily starting by looking at them. So I think the issue is primarily cultural.

Professor Hood: It is all very well to keep files, but you have got to have human beings that know that those files exist and where to find them. I referred to Winston Churchill's betting tax of the 1920s when under Jim Callaghan's chancellorship in the 1960s we went back to betting taxes. None of those files were consulted and that was in the heyday of this paper-based system that Colin has been talking about.

Mr Travers: At the risk of in any sense weakening what my colleagues have said, again which I agree with, I doubt that this phenomenon is unique to government or government in Britain. If we just take a different sphere of endeavour, ie the regulation of banking, much in the news lately; everything that is happening in this problem and affecting banking today can all be read about in Galbraith's work having happened many times before in the past. One of the points Galbraith makes relentlessly is that people will again and again and again forget the last time all this happened and then it happens again and they say it will never happen again and it happens again. It would be wrong to believe that what you are describing only occurred in government. I am not saying that it should happen less in government and that memory and collective memory is important, but I do not think it is unique to government. You are not saying it is.

Q251 Mr Prentice: It is about minimising the chances of it happening again, is it not?

Mr Travers: Of course.

Q252 Mr Prentice: Natalie, your colleague Andrew Stott said that better information sharing among the public services could prevent tragedies like the Victoria Climbié and the Baby P deaths. This mismanagement of public sector information cost £21 billion a year, a staggering sum of money. What does this mismanagement that you talk about look like and what can we do to remedy it?

Ms Ceeney: I think in a way, stepping back a bit, we are in a very different era now than, say, just a decade ago in that, if you take the equivalent of paper files, protecting public data might have been physical locks and keys and security guards but now we are talking about IT security. We have got a population who expect to be able to get tax discs online and talk to government online. There is so much more information flowing out over the ether. I cannot think of a government service that does not run on information and that would not have been true a decade or two ago, and I do not think it just applies to government. We are in a different era requiring a different skill set and I think we - the public and private sector - are struggling with that skill set because it is not where civil servants grew up and that is not necessarily the traditional skills that were recruited. If you look at something like keeping records, the people you would have recruited two decades ago would have been filing clerks, but now we need people who understand IT security and have influencing skills and can persuade civil servants what to do with floppy discs or memory sticks, it is quite a different skill set. Essentially what Andrew and I have been saying is we need to build the capability to manage information as a core skill of government in a way we have never had to do before, but in the same way it is a core skill of government to manage money and we need to see managing information in that same way as managing money because, as your example showed, it is critical to prevent tragedy and it is also critical to manage information so that tragedies do not happen. For example, revealing data inappropriately could lead to very dangerous things.

Q253 Mr Prentice: Is there not a very big downside about data sharing on the scale that you are inferring is necessary?

Ms Ceeney: I think there are big risks of doing and big risks of not doing and I think the challenge is balancing that. The ends of the spectrum are very easy to illustrate. We all know that if we have got a dangerous prisoner in one prison the police force need to know when they are going to be released or they need to share information between agencies, say, on terrorism. I think that end of the spectrum is very clear. On the other end of the spectrum, someone's health data needs to be kept private and we all get that. The challenge is the middle of the spectrum. Let me give an example that was highlighted by David Varney in a report about a year and a half ago. At the moment in Britain if a relative dies you have to notify on average about 44 different bits of government with the same information. That is not very good for the citizen and it is not particularly efficient for government. That starts to lead you to think, "Wouldn't it be more sensible if, with consent, government could act once on that bereavement notification and help you?" Another similar example is free school meals. Someone could be registered for benefits and yet have to wait nine months for an application for free school meals to be processed. You can see some advantages. What we have got to do is put the protection around the management of that information to make sure that the benefits do outweigh the risks.

Q254 Mr Prentice: I understand all that. If you are going to personalise public services you need a huge amount of data on individuals that lots of people can access. We know from the data loss that happens regularly that people do not have confidence that the state can keep information which they would consider to be very personal to them under lock and key. This is the big problem, is it not. There is a flaw in this whole personalisation argument, the information could just seep out?

Ms Ceeney: I think it is a skill set we are building up as opposed to a flaw in the argument and it is competency we have to get. I do not think the private sector is any better. Equally, we hear stories in the press of private sector retailers or banks or building societies releasing data. I think the challenge is the world has moved so fast in terms of technology we have not all got the skills to manage it, but we need to build those skills urgently. There are various things going on to try and build those skills. In the last 12 months I have been in the Civil Service I have watched a phenomenal amount happening, but we started from a lower base than any of us would like, I think because of the speed of this change. I do not think citizens would want to go back to the point where you have to tell government 100 times every time you do something or you have to go back to the post office to do a tax disc rather than do it online.

Q255 Mr Walker: Do you think government should ban the phrase "lessons learned" from everyday language? Whenever there is a cock-up - and there will always be cock-ups, government is an enormous undertaking - we have permanent secretaries here, we have ministers and they say it is important that lessons are learned. It is a fairly hollow sort of phrase, would you not agree?

Professor Talbot: I think lessons being implemented would be a more useful phrase. I was struck by Sir Michael Bichard's inquiry after the Soham events where he took the opportunity to leave the inquiry open after he had written his 'supposedly' final report, but it was not actually the final report, and said that they would reconvene six months later or a year later and see what had actually been done in terms of implementation. That was quite a novel innovation and from my understanding, talking to people in Whitehall, it had quite an impact because it was different from the normal situation where committees of inquiry like that meet, produce a set of recommendations, they get distributed around Whitehall to the relevant departments and disappear without trace in many cases. In the case of the Bichard Inquiry, departments were forced to set up units to think about how we are going to justify in 12 months' time to Sir Michael that we have done something. It seems to me that some mechanisms like that might help when there are cases like this, rather than having an inquiry and then forgetting about it. I was on the Prison Service inquiry after the Derek Lewis affair and we reviewed about 20-years' worth of inquiries into mistakes and errors and major calamities in the Prison Service, and the lessons were exactly the same every time and none of them has been implemented because they come along, have an inquiry and that is the end of the matter.

Mr Travers: I think there is a difficulty in government in the sense that politicians who are in charge at any one point will always move on and always with the presumption that moving on wipes the slate clean. If you look back through great political disasters of recent times, the poll tax has been mentioned, rail privatisation, the Underground, PPP, the 10p tax thing, the Child Support Agency, it is difficult to think of politicians particularly taking a hit as a result of that but civil servants may have done. In the end there is a sense that these things happen in politics so it would not particularly damage any politician's reputation and anyway, they move on. Why should the new politicians not assume the rules would be the same for them when they get to the top of government?

Professor Hood: I do not think you can legislate for the use of language, but, after all, you are the legislators so perhaps you can. I would only want to say two things in response to your question. One is that sometimes a fiasco can be an opportunity for the executive machine of government to put something onto the agenda that it otherwise would not get onto the agenda, and I have come across many examples of that where actually the problem, whether it is dog bites or something else, gives a window, as they say in politics, for thinking that has been developing inside the government machine to be translated into action. I am not sure whether you would call that learning, but it does offer an opportunity to put something onto the agenda which otherwise would not find their way on to people's agendas. The other thing that I wanted to say is that I think individuals learn, but I am not sure that it is so easy to speak about organisations learning. I think opportunities for real learning to occur in British politics come fairly rarely because in order to learn from your mistakes you need to have had both a bad experience and a second chance to try again with a different kind of approach. In recent years we have had very long lived governments and that means that by the time a party comes back into office much of the experience of what it might have done wrong in the past has disappeared. A quite rare example of a case where you did see real learning, I believe, was when you went from the Heath Conservative Government to the Thatcher Conservative Government with only five years or so between them and with a large overlap in the Cabinets of those two systems. There I think you did see learning, but I think that happens very rarely.

Q256 Paul Flynn: Natalie, you have slightly different experience to everyone else. Is there any real difference between the public sector and the Government? We suggest the governments tend to start from the year zero.

Ms Ceeney: Could I give maybe a perspective on the previous question and come back to that? I have got a slightly different take. Hindsight is a wonderful thing. We can look at what went wrong with hindsight, but maybe some of those ideas were driven from motivation at the time that might have been based on some evidence, it just did not work. The reason I say that is the one area - coming from outside the Civil Service - I think the Civil Service is weak at is innovation. The problem with innovation is some things will go wrong. I think we have to be careful on that balance between what risks we are prepared to accept. If we are going to scrutinise everything that ever goes wrong and say "How could we have prevented it?" we are also going to prevent innovation that could be good and that would be something that is very different in the Civil Service. I think you have got the level of ministerial direction and political scrutiny versus, say, the private sector, but that would be something we have got to keep a careful balance on.

Q257 David Heyes: I think all of you in different ways have criticised the over-centralised nature of British Government and you have each come up with slightly varying formulas for what we ought to be doing about that. My personal experience for many years was in local government, I guess that is true of lots of other MPs, and I still have good memories of working with some excellent people, people I still work alongside now who are constantly frustrated by the poor performance of central government, by the lack of coherence in the policy, the constantly changing agenda, short-termism, "the Whitehall knows best" idea, which clearly is not the case. I just want you to try and get a feel for those things that are best done centrally - clearly some things are - and those where we ought to be devolving and decentralising. I would like to hear your views on that.

Mr Travers: There is no doubt that the United Kingdom is, despite the frame of Scottish and Welsh devolution, a centralised country and it is best measured in some ways by the degree of tax taken by various levels of government. OECD figures exist for this and they show very clearly that, if you look at the state plus local proportion raised in different major democracies, Britain is right at the bottom of the list. The only ones that are down there with it, there are smaller countries such as the Netherlands and Ireland, but of the bigger countries and certainly the federal countries, the UK even within the bigger unitary countries is a huge outlier.

Professor Hood: Australia is close.

Mr Travers: Possibly. This being the case, that inevitably centralises decision making and creates, particularly in England, the decision making that has been devolved to some degree to England and Wales in a new way, but certainly in England creates a position where the Prime Minister and senior Cabinet members are seen as being absolutely responsible for an array of things which, frankly, in any good government system they would not have been. Let me use an example that has been touched on already. I find it unusual that when the Prime Minister is in Washington at a financial summit he is put under pressure to talk about, however serious and important they are, the issues back in Haringey and that happened recently and it is a measure of how centralised the UK is. I doubt Mrs Merkel is put under equivalent pressure for problems that occur in local government in Germany. It is simply a measure of the centralised nature of the state, and I think it hints at the fact that a lot of decisions are made or are forced to be made towards the top of government, which in most rational systems and good government systems would be made further down.

Q258 David Heyes: I think that is a good criticism and I would like to hear what the other panel members have got to say about it but also with some comment on what we ought to be doing about it. It is okay to criticise it and I think you would get universal agreement on the criticism that Tony has just made, but what ought we to be doing to address it?

Professor Talbot: I would add a couple of things to that. I think the financial centralisation is the absolutely crucial one, I think Tony is completely correct about that, but there are a couple of other bits of the UK system which I think make the situation worse. The first is that there are a number of functions which are run directly by central government which in quite a lot of other advanced OECD countries are not. I am thinking of things like prisons, even tax collection, benefits payments, those sorts of things which we insist on running as centralised functions. We do have separate prison services in Scotland and Northern Ireland and the world does not fall apart as a result. There is no reason why we have to have a prison service for the whole of Wales and England, which is a fairly mammoth institution. There are a number of areas around that and that would also help to shift the balance between central and local. The other thing which I think is striking in the UK compared to most of the other jurisdictions in the OECD countries is the degree of separation between the Civil Service and the rest of the public service with one or two exceptions like health and, to a certain extent, criminal justice. The separation between people who work in the centre of government and spend most of their careers there and/or popping in and out to the private sector occasionally and people who work in the rest of the public service is very, very strong. In the last ten or fifteen years I think we have had about two or three at most permanent secretaries who have come from other parts of the public service, for example, and that simply would not be the case in most other countries. There would have been much greater interchange between senior people right across the public sector. I think it is one of the things that leads to the insularity in Whitehall and lack of understanding of some of the implementational problems that we were talking about earlier.

Professor Hood: I would not disagree with that. I think that compared, say, with Germany the difference that you find with the central Civil Service is that in the highest directorate you do not have the equivalent of the political civil servants - I am not talking about special advisers - large number of political Civil Servants who act in the topmost directorate in the German Civil Service and the same thing applies to many other Civil Service systems. So it really is quite difficult to make a comparison taking that element out and allowing for it. You may be getting on to issues that are constitutional as it were. If you think of the parallel with Germany and how the state (Land) elements feed into policy making at the central level, that tends to work through the Upper House of Parliament where the states are represented. We have no equivalent to that in the United Kingdom. So to the extent that it happens, it happens either through party channels during those times, for example, when the party that holds government in Westminster is also dominant at the local government system, which happens some of the time but not all of the time, or it comes in through the policy-making process that Colin spoke about in which sometimes - and I have seen examples of this - you do have effective local government input into the way that White Papers are written and so on. To the extent that you can fix it without constitutional reform, you would have to look to those kinds of policy kind of processes and attempt to improve those.

Q259 David Heyes: Natalie, is this your area?

Ms Ceeney: I am not sure I have the answer on how to fix it but I would argue it is kind of imperative we do. I think the challenge we have is that the problems we need to address in Britain today really do require citizen focused solutions which mitigate against 'silo-based, down from one department out' and everyone should do the same approaches. Where I have seen bits of policy really work is because an awful lot of agencies joined up and that has got to be locally driven. As an agency Chief Executive I am rather biased on this subject, but I think you do get more innovation if you are running locally tailored customer driven services than necessarily if you are sitting on a central Whitehall policy team. So I think we have got to find a way through. I do not really have anything by solution set to add to what my colleagues have said.

Q260 Mr Walker: What does that mean in English?

Ms Ceeney: I will make it very practical. I run an organisation of 650 staff. We serve 250,000 people who walk through our doors every year. As a Chief Executive I see customers everyday. If I am thinking of what my organisation needs to do, I can walk down and chat with frontline staff who know. I can spend a day every now and then sitting in the reading rooms and hear from my customers what they think. It makes policy formation really real. I have got a really good insight into what the customer does. It means I can work on the ground, for example, if the customer is using my service, and also work with other bits of government services and they do in the information area. You can make that pretty local, but it is local. The solution we might come up with in London would be different from another city and would be different from a rural solution. I think the more that can be practically done in terms of providing citizen services locally to the customer and understanding the customer will mean you will get locally tailored customer solutions. The inherent problem there is if ministers are going to be accountable and feel accountable for everything I do, understandably they are going to want a very high degree of centralised control, and there is the tension, but I think you get better delivery if you can make it local.

Q261 Paul Flynn: You would regard the creation of the Next Step agency as an unquestioned success, would you?

Ms Ceeney: Largely a success. I think there were challenges. I have worked with a lot of colleagues in agencies and I have seen some very, very good people run agencies who have come in from outside the Civil Service because they are attracted by the idea of really making a difference in running something who probably would never have come into a policy role. I have seen huge amounts of innovation. I sit on the Board of the Agency Chief Executive Association and see huge amounts of innovation happening. I think the challenge is we have still got to learn how to do the governance around that. In my experience either things are quite central or they are quite devolved. There is a governance set of thinking which really needs to develop, which is a debate that is happening in the wider world at the moment, about regulation and governance more generally, because if things go wrong inevitably a minister is going to feel completely accountable for it and if they have not got a level of governance and transparency that gives them confidence about what is happening in that agency, albeit at arm's length, it is not going to derail them, but inevitably the tendency if something goes wrong is going to be to pull it back. I would argue the devolved agency model has been a success. What we have not quite cracked yet is the governance that gives confidence to the centre: political and Civil Service.

Professor Talbot: My best estimates are that at one point we had about 85% of the Civil Service working in executive agencies. I think we are down to about 50% now. At one point we had the five largest agencies employing about two-thirds of the civil servants working in agencies. That is down to three agencies now and one of those probably is not an agency, Job Centre Plus effectively, it is just a vertical structure within DWP. The agency's programme has been rolled back quite substantially, very quietly but through a series of amalgamations, mergers and various things being taken back into government departments. Agencies are nothing like as important a part of the mechanism in central government as they were ten years ago.

Q262 Paul Flynn: Can I warn the witnesses that our next inquiry is into bad language, which is the sort of language of jargon, acronym and management speak, so we are very hot on the use of jargon here!

Mr Travers: Just briefly, to rise to Mr Heyes' challenge, to put it bluntly, it is all very well to come along and criticise things ---

Q263 David Heyes: I was going to come back and criticise all of you on that. You can all respond to it.

Mr Travers: It gives me an opportunity to make a point I was going to make in the previous set of exchanges. Of all the examples one can think of where politicians of all parties did learn a lesson from a policy failure, local government finance is one where they did, and the impact of the community charge has had a profound impact on certainly Conservative and Labour politicians probably for a generation and that is, it has made them very, very conservative in dealing with the whole question of local government finance or indeed ever introducing any tax that people noticed. The 10p tax problem was in a sense something that snuck under the Government's understanding otherwise they would not have done that either. What it points to, it makes it difficult to reform local government finance or indeed tax policy at all to change the situation that we are in, partly because politicians of all parties have learned that if you reform local taxation and produce a number of losers it is unpopular, so they have really, really learned that and now they cannot make reforms.

Q264 Kelvin Hopkins: I am fascinated by international comparisons and government. I do believe that Britain is markedly different from other countries in Europe. Averages do not tell you very much. You could have a situation where half the population live in luxury and half are starving but the standard of living is average. We have certainly got that in education where the OECD figures show that we are in the top ten per cent, we are amongst the best in the world, and the bottom ten per cent, that is, we are in amongst the worst in the OECD nations. These comparisons will have to be looked at much more carefully, would you not agree?

Professor Hood: I agree fully. I gave you one page because I did not want to tax your time too much, but you are right. However, the OECD's data does now allow you to say that which you would not have been able to do 30 years ago. If you look at the way that the OECD is developing in its indicators of government, it is going in the direction that your remarks implied that you would like to see in that in its latest thinking it is developing a very large number of indicators, it is called "Government at a Glance", but when you see the document you will see that it is about this thick, so it will take you quite some time to glance through it! That is precisely designed to give you indicators that are sometimes described as "tin openers" rather than dials. They can show you how you look on things like tax or the economy, the point that Tony Travers was talking about, and many other indicators as well. The notion is that these kinds of indicators can fruitfully be used as intelligence, as a series of background data against which you can look for patterns in the information, but without coming to instant rankings on the basis of superficially understood data, and I do believe that the OECD is moving in that direction.

Professor Talbot: Comparisons obviously are difficult and different countries count these things in slightly different ways. There are major issues about exactly how you do it. There is one bit of caution I would throw into that. When it comes to discussions about performance in what you could broadly call social policy areas, we seem to be attempting to achieve a level of stringency which we do not apply to things like economic areas, for example, and how people count inflation in different countries. Generally speaking, we accept how people count GDP in different countries. There are some international standards but they are not rigidly adhered to all the time. There are all sorts of differences. Even if you take counting inflation in this country, the basket of things we use to count inflation changes from year to year and yet we all accept that, broadly speaking, the inflation figures tell us something useful. When it comes to talking about performance in education, criminal justice, health and so on, we seem to be attempting to apply rules of stringency which are of a higher standard in some cases than when we talk about inflation or unemployment levels or GDP growth. Having said that, we do need to go through those things fairly carefully. Christopher Pollitt has made this point. In specific sectoral areas, there is quite a lot of progress being made around things like international comparisons on education and health. I am, with him, slightly more sceptical about these broader indicators like the world governance indicators from the World Bank because there is quite a large element of subjectivity in some of those. We are making progress. The important point about performance information, whether it is in the national archives or a country, is it allows you to ask questions about what is going on. Any information is better than none at all.

Professor Hood: There is something I did not include on the one page because I did not have room for it. If you look at the Euro barometer - that is, the European Union's survey data on trust in government statistics - the last time they did that in 2007 the UK came lowest of all the European Union countries with only about 33% expressing trust in government statistics. I might have to correct that but it is around that. That is something that we and, if I may say so, you as the Public Administration Select Committee, need to worry about.

Q265 Kelvin Hopkins: One big difference between Britain and many of the continental countries was expressed to me very simply by a Scandinavian politician who said, "You have a strong government and a weak Parliament. We are the other way round." When you have centralisation of power, my very strong view is that that has increased immensely under the Governments of Thatcher and Blair and that the power, instead of being just in government, is now in Downing Street. Opposition has been stripped out of the parties, of Parliament, of the Civil Service, and power has been focused. That makes us very different from continental countries.

Mr Travers: I am not sure I am aware of international research that I have noticed that would test that.

Professor Talbot: There is international comparative research on the role of parliaments. It is quite clear that our Parliament does have a weaker role than most of the OECD countries. That goes back to some of the fundamental issues of the financial balance between central and local government and, on the issue of financing and the central decision making in the UK, we have one of the very few Parliaments which does not effectively vote on the details of budgets rather than simply nodding it through, which is what we have come to do. It is interesting in that respect that, if there had been a vote on the 10p tax in the last Budget in March, it would have been quite precedent setting. In the last 20 years I think there has only been one other occasion where there has been a vote on an amendment on a budget in Parliament. That is partly Parliament's fault. There is no law that says Parliament cannot ----

Q266 Paul Flynn: There were debates on the 10p tax. The view was entirely hostile to it.

Professor Talbot: If there had been a vote, it would have been precedent setting in the sense that Parliament does not vote on these things.

Q267 Kelvin Hopkins: There was a vote. Six Labour MPs voted against and I was one of those six.

Professor Talbot: I have done some research on introducing this performance information about what government departments are doing, particularly around public service agreements. According to the Government, its intention was to change the way in which government held itself accountable to Parliament. All that performance information has been presented to Parliament, as have things like the departmental capability reviews. The reaction of select committees by and large has been fairly weak in terms of taking that information up and using it effectively. We did a study two years ago. We went through three years' worth of committee reports for eight departmental select committees, yourselves and the Committee of Public Accounts. You have done some work on it with your report on performance but most of the departmental select committees have done hardly any work at all on using the information which was being made available to them. Mostly it was ammunition being handed to them on a plate to scrutinise government departments, which they simply were not using.

Q268 Kelvin Hopkins: One factor in British Government is the reluctance of central government leadership to give away power. We have been lobbying for a long time for a Civil Service Act which would set some rules, not quite in tablets of stone but which would establish the Civil Service more formally and which would take a little more power away from Downing Street so that it cannot be so arbitrary in future. In other areas, we have made reports on the ethical regulators. The ethical regulators are appointed by central government. We want that to be arm's length from central government, perhaps run by Parliament rather than by government. All of these things the Government resists very very strongly because they do not want their power taken away; whereas in other countries they accept the need for checks and balances in a way that we do not. Is that a fair comparison?

Mr Travers: In a slightly post modern way. I work for a select committee as an adviser, as Colin I think does. I think, I would wish to say that the scale of the challenge faced by select committees in dealing with government on the scale it is, with the extraordinary individual benefits it has is, committees can get a very long way by going at particular items of expenditure or looking at the way in which the Government presents its annual report and expenditure. Because government is government, it keeps changing the way it does things. As an adviser to another committee looking at government expenditure, the thing that is most difficult to keep in view is the fact that the Government can keep changing the presentation of what it is putting in these reports and of course the objectives and aims that the departments have change. To try to monitor all of that and then to comment on the restructuring of all the tables is not exactly an unequal struggle but I have a great deal of sympathy with parliamentarians, if I may say so, in attempting to do that given that government has such a vastly greater capacity. Of course, as Colin said, Parliament could extend its own capacity in this regard.

Q269 Kelvin Hopkins: Because our parties are so centralised as well as government being so centralised, they can control the internal workings of the parties such that they can resist any challenge. For example, select committees. Governments do not terribly like select committees. They make uncomfortable reports which they do not always enjoy. We have done it on two or three occasions recently. We will probably do some more, I am glad to say. Certainly from 1997, the membership of select committees was very tightly controlled by the Whips. They made sure that certain people did not get on certain committees because they did not want trouble. It is much more relaxed now because I think they are finding it difficult to get people to get on select committees, but nevertheless that was the way it was. Is that degree of control found on the continent of Europe or do the parliaments decide these things for themselves?

Professor Talbot: Parliaments are much stronger and by and large parliaments and Congress in the United States have much greater capacity in terms of administrative resources and research resources. Take the United States as an outlier in the opposite direction. You have the Congressional Budget Office which does all the budget scrutiny work for the Appropriations Committee in Congress. You have the General Accountability Office which works for all of the Appropriations Committees in Congress, not just for the PAC, the way the NAO does here. We started the very small scale process of enhancing that with things like the Scrutiny Unit in Parliament and the NAO doing a bit more work with other select committees, but I think there is a great deal of scope for expanding that. That is true across most democracies. I visited the Japanese Parliament a couple of years ago. They sent along a small delegation of their committee staff from one of the committees and there were more people than there are in this room who came along, so I am making your Committee staff feel quite jealous by comparison.

Professor Hood: If you are wanting to make overseas comparisons that might give you pointers to ways in which decentralisation of government might make a difference, again the difference between the UK central Government and the German federal Government is that in the German federal government each department is autonomous. It has responsibility for managing itself. In the UK, you have a single department responsible for the management of the Civil Service. That is one way in which this Government is centralised institutionally in ways that do not always apply elsewhere. Secondly, there is the point we already discussed about centralised tax collection. If you want to see an example of a country that has moved away from that, look at Mexico since the early nineties, a very radical move away from very centralised tax control to a much lesser one. The third one is the fact that in this country the various regulators and overseers etc. of the public and private sector are creatures of the executive government. If you look at the Taiwanese system, which itself is indirectly derived from the 1931 Four-Power Chinese Constitution, you find that all those actors are collected together into a different branch of government and that too would give you another kind of model you could think of for decentralisation and breaking these systems up.

Q270 Kelvin Hopkins: Would you think we could have better government in Britain if government built systems which enabled legitimate criticism to be made and acknowledged, rather than trying almost obsessively to reject criticism and reject countervailing forces in politics?

Professor Talbot: Yes. That should apply before decisions are taken, not just afterwards. For example, the point your Committee has made about trying to get government to consult with Parliament and have a proper discussion before they go through these often quite crazy departmental reorganisations that take place purely on the basis of what ministers want. That has happened in all governments in the last 30 years or so. That is a major issue which ought to be considered properly and carefully in advance before you suddenly start chucking around tens of thousands of civil servants and amalgamating, introducing huge amounts of disruption and cost very often for very, very little gain at all and quite often reversing the process five years later.

Q271 Mr Liddell-Grainger: Christopher, you tantalised us in one of your papers about the Greens, Praed Cymru and the Ulster Unionists taking over the Government of the UK in 2010 which is almost tempting. The serious part of it was that you were saying, until the political elite get out of the way, the change is never going to happen. Am I being unfair to you or is that what you are saying in the article? To let the Civil Service change and blossom under - you used the word "tsars" and various other words - that is not going to happen until we are out of the way.

Professor Hood: You are referring to something that I published on a website. It is not a peer reviewed article.

Q272 Mr Liddell-Grainger: No, but it is yours.

Professor Hood: I should stress that it was pointing to what I call Civil Service reform syndrome. What I am pointing to is a recurrent system which again I do not think is peculiar to one party or another, in which we go through changes in the executive machine in government through a process that involves excessive hype from the centre, selective filtering at the extremities and what I call attention deficit syndrome at the top, so that we do not get follow through and we do not get continuity. What I am saying in that paper is, to the extent that that is indeed the experience of the recent past, I consider two possibilities. One, maybe it could be different with what I call one more heave in which we see attempts to do the same thing under the same rules only with wiser people doing it better. I cannot rule out the possibility that that might work, but I do not think I have seen it yet. The alternative that I am discussing at the end of a very brief paper is that it might need some constitutional or quasi-constitutional changes to get away from that. I think the jury is out on that question.

Q273 Mr Liddell-Grainger: Tony, in one of your statements, you say that Brown, David Cameron and Nick Clegg have not yet come up with any radically different approach to public provision. You are arguing the same sort of thing. Would you agree that we need to have a fundamental rethink at a constitutional level?

Mr Travers: Unhelpfully, yes and no. A constitutional rethink would provide a marvellous example to right all ills. However, I am aware that it is a very, very unlikely thing to happen.

Q274 Mr Liddell-Grainger: Should it happen in an ideal world?

Mr Travers: In an ideal world, yes. I do not want to be academic in the wrong sense and wish for things that are never going to happen. Therefore, I do think it is important to look for second best solutions in the medium term because the efforts to generate a constitution would prove back breaking given the flexibilities that politicians, particularly in government or who think they might get into government, want. It is unlikely to happen soon and therefore I do think looking for second best solutions which involve parts of the existing machinery - the House of Commons or the House of Lords - in a more constitutionally aware role has a much greater chance of happening, frankly. Asking Members of either House to enhance their powers is I think a short term, more likely thing to happen than asking for a constitution.

Professor Talbot: I agree with Tony about what is possible and what is not possible. You always have to add the word "today" to those sorts of discussions because some things have changed which many of us thought were not possible 10 or 15 years ago in our constitutional arrangements and we have moved on those, so it is not impossible. One of the crucial issues about the relationship between the Civil Service and the executive, is that we are again an outlier in the sense that we have such a close symbiotic relationship between a professional senior Civil Service, not a politically appointed one, and the government of the day which I have said to this Committee before is serial monogamy. In any other parts of public service, in local government or in the Scottish and Welsh Assemblies, civil servants or public servants do not have the same relationship with the executive as they have here. It is more like the relationship you have in a number of continental countries and the USA for that matter. My criticism of the draft Civil Service Act which you produced as a committee would have been that it largely codified the existing situation rather than challenging it, saying that the only way to really start to free up the situation would be to make the Civil Service more directly accountable to Parliament as well as to the executive and open up that whole nexus around things like rules and all these other things, and getting rid of all of that, some of which has fallen into disuse effectively. We have never formally dealt with it as an issue. That is to some extent constitutional. I have said this before I think to this Committee and certainly to the Treasury Select Committee. There are opportunities for changing the way in which Parliament relates to the big decision making processes, particularly around things like budgets and spending decisions which Parliament could push a lot harder on, particularly around the idea where we now have spending reviews which take place every two or three years, depending on the whim of the Government. At least it is every two or three years. You could quite easily push for more open debate in advance of those decisions being taken. The Scottish Parliament and the Welsh Assembly manage to do it on an annual basis. They put out draft budgets for consultation and have discussions before they eventually get decided upon by the executive in both bodies. There is no reason why Parliament could not be pushing for opening up that process a bit more as well.

Q275 Mr Liddell-Grainger: Can I take up an article you wrote, "An Unholy Mess" It is fascinating. You wrote about what you called the annus horribilis of Whitehall. It is all about catastrophes on two sides of A4. We have seen public spending go up at an unprecedented level in the last ten years. We have seen disasters going up almost to extreme levels. A couple of days ago we had the paperless government department collapse as an IT project, costing us millions and we have seen public bodies who are trying to cut money but it has cost us more money. It is broke. You all say that, but yet the disasters continue. Where are we getting it wrong and who should we be firing? Is it ourselves or is it them? Somebody has got this wrong. Where do we go from here? You just look at your article and it is horrific reading it. There is so much of it.

Professor Talbot: There is. I find it amusing that we still manage to project around the world, despite what the surveys say, the general perception - I do a lot of international visits - that we have a Rolls Royce Civil Service in the UK and we are very good at all this stuff, mainly because a lot of these stories do not seem to travel beyond these shores. I agree with Tony. I do not think it is one great leap and we will be free. There is a series of changes that could be made to begin to address some of these problems, changes to civil service recruitment, training and particularly interchange between the senior civil service and the senior public service, so that people in Whitehall begin to understand better how the system actually works outside of Whitehall. Few of them even have experience of running executive agencies, never mind anything else outside the Civil Service. Also, changes to their accountability regime in terms of improving the way in which Parliament holds them to account. There is a whole series of things like that which I think could be done, which would not be particularly revolutionary and would not necessarily take away the power of the executive but would open up all of these things for inspection. Your Committee in various reports has made many of those suggestions as well.

Professor Hood: It is only fair to say that it is a matter of academic debate and not a settled question as to whether the UK really is worse than other advanced democracies as a group in the incidence of these policy fiascos. There are certainly some academics who assert that to be the case but others who deny it. We do not have very good evidence on that and often, when you do travel and talk to people from the Netherlands for example and you start getting their stories about government failures, more and more of this sort of stuff comes out. I just feel it is my duty as an academic to say that we do not actually have very good data on which we could say that this impressive catalogue that Colin has produced is out of line with what happens in other systems.

Ms Ceeney: I think there is one other dimension to this. We often focus on what went wrong as opposed to how do we learn from what went right. For every failure there will be ten successes. The reason I say that is not just to celebrate the successes. What good commercial organisations do is make sure their successes are taken and replicated and you learn from that, as opposed to just looking at the failure. It comes back almost to the debate we were having about organisational learning. If we were more successful at saying, "They got that right. How do we make sure everyone does it like that?" and equally, "That person got that right. How do we make sure we put them in charge of bigger things", that might be another way of tackling the issue.

Q276 Mr Liddell-Grainger: Somerset did a PFI agreement with IBM. It has been an unmitigated disaster and has cost half a billion pounds. It is a catastrophe. They should never have done it because they had no experience of doing it, which is basically what you have all said. Their executives did not. Yet, central government cannot get involved. It is not their responsibility. We have to break this cycle. How do we break the cycle? Yes, you are academics, so think outside the box. You are the guys who have to give us the ammunition to make the bullets to put in the gun. How do we stop the disasters and use what is good, because there are examples of good in this.

Ms Ceeney: One of the things I touched on a bit earlier and something we have not talked about up to now is people management and governance. That is something we could focus more on. One observation coming from outside the Civil Service and from the wider public sector as well is we tolerate performance in the Civil Service that frankly I do not think other bits of the wider public sector or certainly the private sector would tolerate. We are getting better but very slowly. Equally, governance of arm's length bodies sometimes is not quite as robust as it could be. If we were stronger in the way we manage people, rewarding the good and putting them in charge of bigger things and equally dealing with people who are not in the right jobs or are not dealing with the right issues, I think it would be better. There are good things going on. The movement over the last three years to professionalise finance in government has been a good example. Three and a bit years ago when I joined the Civil Service, virtually no department had a professional accountant running their finances and they do now. I think there are examples of where we can do that, but I would argue getting the right people in the right place is going to be quite core to fixing some of this.

Professor Hood: I fear you will not like this response but in part I think the solution may lie with you and people like you. I remember a German civil servant who told me, "If we do something really good and it results in a 0.0005 per cent increase in GDP, nobody notices. We create a fiasco and it is remembered for ten years." Why is that? It is because of the political pressures that are playing on those people. They are subject to asymmetric rewards. I think this applies in local government as well, if I may say so. I do not think it is peculiar to the Civil Service. Part of the problem lies with the political direction of the Civil Service. If select committees such as yourselves were more inclined to look at successes as well as failures - and I recognise that that is what you are aiming to do today - then you might help to correct that. It is known as "negativity bias" in the jargon. That is deeply entrenched in the incentive structure of public servants, not just civil servants. I think it comes from the political environment that they are exposed to.

Q277 Mr Liddell-Grainger: Are we getting the balance wrong? We are relying on professional civil servants. Should we be depending more on the high paid corporate executive coming in, dare I say cutting out the dead wood, or is that too simplistic an approach?

Mr Travers: I still think one cannot get away from the fact that in the end, whatever the advice from civil servants and all the things they do, it is the Minister who has to take responsibility and the accounting officer obviously for the use of money, but the Secretary of State will take responsibility for all the actions of the department. If you take some long running computer disaster - we will have one to discuss in the near future no doubt - whoever goes back to the Minister who was the Secretary of State at the point the decision was made, does it damage their career? I do not think it does, partly because either they have left government or left politics. It is very difficult for it to work through to the individuals who will next be in that position, I would argue. I really do think that that is an element in this problem.

Q278 David Heyes: One of the routes into committees like this becoming more assertive and challenging is through the use of the departmental capability reviews. Last week we had the Cabinet Secretary here and his recent Cabinet Office capability review which had a lot of good stuff in and a lot of achievement, but lots that you could criticise. We got maybe five minutes to pick one point out of it and it was very much a wasted opportunity. If I can link this in to what Tony was saying and again refer back to local government, one of the things that is universally accepted is that the best performing local authorities are those where there is clear, strong political leadership, competent officer cohort and a good working relationship between the two. That characterises almost every good local authority. That features in the comprehensive performance assessment of local authorities. We are not shy of having criticism of the quality of the political leadership as part of the local government CPA, but we are very shy about putting it into the departmental capability review. The short termism, the fact that politicians are not held to account, does not feature in the capability reviews and therefore does not give us an opportunity to challenge whereas there are lots of other things to challenge in there. That is a statement not a question but I would welcome your comments on it.

Professor Talbot: One of the things that I have been concerned about is that we now produce lots of information about how well government departments are doing or not, but nobody is bringing that together and looking at the picture in the round. If you take departmental capability reviews, Sir Gus O'Donnell trumpeted them as being equivalent to CPA for central government. They were nothing like CPA. The Comprehensive Performance Assessment for local government included crucially the actual results that were achieved as well as the capabilities of local authorities to deliver them. Capability reviews simply looked at capability with no relationship whatsoever to the Public Service Agreements and the actual performance that was being produced. There are a number of other measures of actual performance of government departments like the efficiency savings targets and what they have achieved against them and so on. There is no attempt at the moment by anybody, whether it is the National Audit Office or Parliament or the Executive, to pull that sort of information together and say, "Let us have a serious discussion for each department about what we are spending money on, what is it achieving and what are the capabilities of the department in transforming money into achievements?" A lot of the bits of the jigsaw are there but we do not do this in the way that for example they do in the USA, Canada or one or two of the European countries. Either the executive itself or the audit bodies or Parliament produces that sort of comprehensive assessment of what is going on in the centre. Although we have all the information or a lot of what we need, we simply do not use it at the moment.

Mr Travers: There is no doubt that the Comprehensive Performance Assessment process worked as you described. It was simple to understand. The outcome was easily understood and it did not include a target. It included an implied direction of change and that also is important. Better is better than worse, rather than a target. It worked rather well. The capability reviews lack all of these elements. There is no question that local elected members, leaderships and their senior officers do not wish to be downgraded through CPA or not get the best possible measure through the CPA process. I doubt anything like those pressures come out of the much more woolly capability review.

Professor Hood: Negativity bias raises its head in these local government performance assessments as well, in the sense that you have some quite interesting research coming out of the academic community which shows that the political incumbents in local authorities that perform very poorly in CPA tend to be heavily punished by the voters. Those that do very well are not correspondingly rewarded. That is negativity bias again and the incentives are to be mediocre.

Q279 Mr Walker: Some of you have talked about the transfer of skills between the private and the public sector and the lessons that can be learned from the public sector through the private sector which suggests that, to some including myself, the public sector is bad and the private sector is good. Let us look at the private sector. Let us look at the banking sector. There has just been total disaster. We have had a senior banker come and give evidence to us and I think he was chair of the Lords Appointment Commission. He has presided over the collapse of the fourth largest clearing bank in the United Kingdom, HBOS, all full of gravitas. What lessons could he possibly teach the public sector? It is not hard to find a litany of disasters in the private sector. Should we just not accept that large organisations are prone to human failure? We may not like it. We may try and avoid it, but when you have 28 million people in employment you have a huge number of opportunities for systemic failure to creep into the system.

Ms Ceeney: If I speak as a practitioner, I started my career in the NHS. I went into McKinsey and worked with a lot of private sector companies and then came to the Civil Service. When I worked first of all in the NHS, what we constantly heard as NHS managers was, "The private sector is far better than you." My experience is the best public sector managers are as good as the best managers anywhere. To manage well in the public sector, we have multiple stakeholders. It is not just about one target; it is about many targets. You cannot say, "I will serve this group of customers and not that group." You have to serve everyone. To be good in the public sector, you have to be really good. I have met some brilliant managers in the public sector. I have met some really bad ones. I have met some bad ones in the private sector. I would agree with your analysis. I would not necessarily think the skill set is always the same. I have watched private sector people coming into public sector organisations and fail, often because they have not understood the political dimension, the ministerial context or how to manage unions or work with multiple stakeholders. Similarly, I have seen the reverse. I think there are some differences but I would largely agree with your analysis.

Professor Talbot: We have had waves of attempts to bring private sector managers into the public sector. You can go back to the early 1980s in the NHS and back even before then. The results have always been very mixed for very good reasons. Yes, private sector managers can bring some things into the public sector, some skill sets which do not exist very well in the public sector, but there are quite strong limits to that. The public sector is different. That is why it is the public sector. My point I was trying to make - I am sorry if it was misunderstood - was that in Whitehall we have a particular problem. Only ten per cent of public servants in the UK work for Whitehall. The interconnections and transfer of senior managers between the 90% of the public service which is outside Whitehall and the ten per cent which is inside is extremely low in the UK compared to just about any other jurisdiction. I think that is reflected in some of the bad policy making and the bad delivery that we get from Whitehall, because people simply do not understand. We still have in professional skills for government a system of apartheid with, on the one hand, people who are good at policy and, on the other, people who are supposedly good at operations and management. As an agency chief executive said to the report that was done on Next Step agencies about five years ago, one of the permanent secretaries commenting to the people doing the review - I am not sure if it made it into the report - said, "Those that can do policy and those that cannot run agencies." That is the general attitude still amongst far too many senior civil servants. That is just within the Civil Service, never mind thinking about police chiefs, hospital chief executives and local authority chief executives who have immense experience in delivering services, who could contribute an awful lot more in Whitehall if they were given the opportunity.

Mr Travers: To comment on the particular example of the banker who was obviously welcomed to the Committee, it seems to me that what the bankers have accidentally shown us - and indeed themselves - is the clear need for those at the top of an institution to understand what is going on in it and what the people within it are doing. There are plenty of good, private businesses that do that, ones that are solvent and trading and will continue to be solvent and trading. That is because the people at the top understood what the people within their organisations are doing. I think that was the point Natalie was alluding to before. That being the case, in a sense that is a transferable lesson across the public and private sector, but I agree with what my colleagues have said. It is easy to imagine that people who are really good at running private businesses and know how to make them function will automatically bring lessons into government. Whilst some of them undoubtedly will, they will need a new set of complicated understandings which are about public accountability, transparency and the way things are done in the public sector. They are very different. It is not to say that they cannot be used, but they have to be carefully moved. I have no doubt that it could have advantages for people moving the other way as well, but I do think we have learned from the bankers that it is as well to understand what your organisation and everybody in it is broadly doing.

Professor Hood: I do not think the private sector necessarily has all the answers. I do not think I said that at any point. There can sometimes inevitably be a point in the dynamic at which governments do bring in private sector figures because they think they have the necessary clout. There is nothing new about that. Lloyd George did it when he brought in Sir Eric Geddes to preside over a committee of public expenditure because the Treasury was not coming up with the level of cuts that he needed at that time. That I confidently predict will continue. I also think that sometimes the Civil Service from its own permanent staff simply does not have the kind of expertise that it needs to have to do a job effectively. When I looked at Oftel, the telecoms regulator ten years ago, it was quite clear that if that had been run only by permanent civil servants, it simply would not have had the legal expertise or the industry expertise or the technical expertise to keep pace with a fast moving telecoms world. One might debate on how well it did that job. All I can say is I do not think you could have done it at all just with career civil servants. When the job changes as in World War One and World War Two, government is absolutely dependent on bringing in people from the private sector to run those systems, some of whom were by the way very successful.

Kelvin Hopkins: To turn to the problem of centralisation of power, because we have a first past the post system we tend to have governments which are made up of parties having total power. Inside parties, it is important that there are checks and balances as well as in the political system in general. Robin Cook pointed out shortly before he died that a major change inside the Labour Party was the way the leader was elected by the membership effectively rather than by parliamentarians which meant that the leader no longer had to pay particular attention to parliamentarians. He could appoint who he liked in his own image. If you contrast what used to be in the past a Callaghan or Wilson government, ranging from Roy Jenkins to Tony Benn from Denis Healey to Barbara Castle, with what we have now which is a slavish, loyal, docile Cabinet government under complete control of the leader, is that not part of what has gone wrong with British government?

Q280 Paul Flynn: Leaving aside the problems of the Labour Party, would you all make one contribution on what you think is the most important thing we need to put in this report? A number of you proposed that we need stronger, independent checks on government to get away from the politicians' need for immediate political gratification with immediate news. We have just seen a train crash on this over the last few days on the Government having set up the wonderfully independent national statistics body and sabotaged its work in the way that happened. You made these criticisms, quite rightly, of select committees. Who looks at the select committees and the work we do and measures our efficiency? Do you think there is a need to establish a national performance office that would look at these things that are not checked or measured at the moment - nobody makes any criticism of them - in order to improve our efficiency and in particular not just in government but amongst Parliament itself?

Mr Travers: There is undoubtedly room for new machinery. Colin mentioned the idea of a budget office which a number of outside organisations could rely upon, the idea of something independent of government that an array of institutions could rely on and not just at the national level. I have certainly proposed this for the London Government model as a way of making it possible to get a grip on what is going on in the budgets that are set by mayors. Creating new machinery, particularly if it is to oversee everything else that is overseeing everything else, would have to be done with great care, personally. I do not think there is a shortage of machinery. I think it is the way it all operates and particularly - as the point has been made many times today - the relationship between the executive and the legislature which is not formally separated in the way it might be in another system; and also the point that Mr Hopkins made, the question of the relationship between political parties and the legislature and the executive, which is not something in the end I think that could ever be legislated for in the way that would stop it having an influence on Parliament and government. Nor should it. Party politics is an integral element in making the system operate. My hunch is that making more of the existing institutions work better would be a better ground than going for a huge number of new ones, but I would not personally be opposed to some kind of office of budgets.

Professor Talbot: There is a political reform issue. One of the things that has frustrated me over the last ten years or so has been the lack of joined up thinking in terms of the proposed constitutional reforms. We have had discussion about Lords reform going on over there and then a discussion about electoral reform for the Commons going on over there and so on. It seems to me that if you are going to rebalance those elements you need to look at them all together and think more carefully about how you balance those things. Specifically on this issue about some sort of performance office, I would argue quite strongly that the obvious thing to do is to change the remit of the National Audit Office. The National Audit Office at the moment is prevented from criticising policy because of the way the legislation was framed which set it up, which seems to me to be rather peculiar given that it is an office which reports to Parliament and Parliament is perfectly entitled to criticise government policy. That restriction ought to be removed from the NAO and that would then give it the opportunity to do some of the sorts of things that we have been talking about in terms of providing better scrutiny of budgets and of performance. It would give it a much bigger role. It would be a role more similar to that of the General Accounting Office in the United States. That would be the easiest way of doing it without setting up a completely new institution.

Professor Hood: I think I may have been misunderstood when I talked about possible constitutional changes. What I meant by that were changes that went beyond the current configuration in terms of the way the Civil Service is managed by the prerogative power as it currently exists. I did not necessarily mean that we should have a Philadelphia style constitution or convention and write it all down ab initio. I simply think that you could move along each of the dimensions I described - i.e. towards more fiscal autonomy for lower levels of government - towards less centralised control of the Civil Service and towards moving more regulatory, overseer type agencies out of the executive government sphere and under the control of Parliament. That does not have to happen all at once. You can imagine it happening by steps. More generally, I think we need to have systems that build more intelligence into our policy making in various ways. Most of what we have been talking about today are ways in which we could try to achieve that.

Ms Ceeney: If I could say one thing, it would be around that link between policy and delivery. If we want policy that is going to work, we have to inform it by understanding the customer and the citizen and the people who are responsible for delivering on the ground. If we could join that up, I think the Civil Service would become a lot more effective.

Paul Flynn: Are there any final points you would like to make on how we are going to make this report worthwhile?

Q281 Mr Walker: I wish we had discussed at greater length - we did not have the time but I would love to see you all again - the role of Parliament, because we have a Parliament I believe that is just very short on self-confidence. I would like the chance to chat about that.

Mr Travers: I have felt this afternoon that there were a number of occasions when - not that I think it should all be done privately, but it is a public event - lecturing Members of Parliament on how they should strengthen themselves in their battle with the executive feels a bit difficult. I certainly felt at one level great sympathy with you in the desire to do that, but I was trying not to say that only you can decide to do it. That was the thing I was resisting saying. We can of course talk about how best it can be achieved, what new mechanisms could be invented or differently used, but I thought I would in a sense come out and report that feeling I had on two or three occasions.

Professor Talbot: Linking together the bigger, constitutional issues and these issues about scrutiny and so on, I think some thought is going to have to be given to what is the role of the second chamber in scrutinising the executive if we end up with a directly elected second chamber. That means this House thinking carefully about what role it wants to have. Is it the case that for example you have a joint Public Administration Committee between both Houses in the future or is it, as in some other jurisdictions, that some of those scrutiny functions actually transfer to the second chamber because it is less dependent on party politics? It is less controlled by Whips and there is more ability to use that scrutiny in a second chamber. Those issues are going to come up in the next 10 or 15 years.

Q282 Mr Walker: This country cannot afford two poodles to the executive.

Professor Talbot: No. I quite agree.

Paul Flynn: I think Lloyd George had something to say about the way we went about the reform of the House of Lords. He said it was foolish to try to cross a chasm in two leaps, which is just about what we did in the House of Lords in a number of reforms we tried. We are very grateful to you for the way you have prepared the documents for us and the way you have been generous with your time and your expertise. I am sure this is something we hope to do justice to when we prepare our final report. Thank you very much.

[1] GG 17

[2] Note from witness: It is generally true that the UK's score on the WBI governance indicators is lower than those of the major Scandinavian countries, but not greatly so. The area in which the UK most notably falls behind the regional average in the latest WBI indicators is that of perceptions of political stability.