A lecture given to the Audit Commission - Is Public Service Reform Delivering? by Sir Michael Bichard
A transcript from 13 July 2005 by Sir Michael Bichard of the University of the Arts London.
Polls taken during the recent election campaign
suggested that the public trusted the Government with the public services more
than they trusted the Opposition. And that is hardly surprising given the poor
perception of services in 1997 and the very considerable investment made since
1998/9.
From that time the annual real terms growth in total managed
services has ranged between 3 and 6%. That has translated into, for example, 77k
more nurses and 29k more teachers. And that in turn has translated into 27%
fewer deaths from heart disease; reduced waiting lists and improved standards of
literacy and numeracy. As significantly, perhaps, in doing this the Government
has shifted the political debate from one dominated by promised levels of tax
cuts to one primarily concerned with the promised levels of public service
investment. No mean achievement in itself.
So my starting point is that
investment has increased, improvements have been delivered and the political
debate has been redefined. But the question is whether this demonstrates that
public service reform is delivering and the answer to that rather depends upon
how ambitious were the original aspirations. For me the challenge was - and
still is - not merely to improve public services but to transform them. To
provide services that consistently deliver high quality and good value for money
and which are genuinely shaped by the clients and prospective clients; to change
the culture of those providing services for the public good so that it is
preoccupied with outcomes; and to offer the rest of the world a model of how
services delivered for the public good can provide a cornerstone for a fair and
just society. And, of course, these were not just my ambitions. As recently as
June last year the Prime Minister said in a speech at St Thomas's Hospital "Now
is the time to recast the 1945 welfare state, to end entirely the era of 'one
size fits all' services... now is the time to put an entirely different dynamic
in place to drive all public services; one where the service will be driven not
by the manager but by the user - the patient, the parent, the pupil, the
law-abiding citizen."
Expressed in these terms this is not an agenda
concerned primarily with reducing costs - impressive and necessary though Peter
Gershon's work has been - nor is it an agenda which is satisfied by managerial
enhancements. In fact it is not an agenda at all but rather a vision, capable of
providing the focus and the coherence which all change programmes need if a
sense of purpose and direction, is to be established. And it is judged against
these, admittedly, high aspirations that the reform programme is in my judgement
currently falling short. Falling short generally but falling short especially
for the most disadvantaged in our society for whom in some important respects
things have not improved at all (look for example at the achievements of looked
after children and children excluded from school; look at the achievements of
the lowest achieving children in schools).
I want to explore why
transformational reform is not yet in prospect. And I want to argue that it will
not come inevitably with the passing of time but will, instead, need some
radical shifts and actions beyond just further investment if it is to be
realised.
But let me make clear at the outset that my contribution is
not an attack on public service staff. The vast majority of these staff joined
the public service to make a positive difference to people's lives; the tragedy
is that too many of them have struggled to do that as a result of bad systems
and poor leadership. Last year the Serco Institute produced a rather good little
piece of research entitled 'Good people, good systems' which focuses on former
public servants speaking about delivering the same services but in the private
sector. What they have to say is perhaps surprisingly best captured in a quote
from Al Gore - you remember him! - 'The problem is not lazy or incompetent
people: it is red tape and regulations so suffocating that they stifle every
source of creativity. The Federal Government is filled with good people trapped
in bad systems: budget systems, personnel systems, procurement systems,
financial management systems, and information systems. When we blame the people
and impose more controls we make the systems worse!'
So if the commitment
is for transformation rather than improvement what needs to change? Where do we
begin? You will not be surprised if I say that it must be with the Civil Service
itself. Many seem now to accept the 'Yes Minister' representation of the
Service. It is populated with rather lovable, clever, slightly mischievous
mandarins who do no great harm or indeed any significant good - and probably
deserve to be made a protected species. The reality is rather different. In
reality the Civil Service is hugely powerful. It legislates; it regulates; it
sets targets; it intervenes (or not); it controls much that happens in the
private as well as the public sector; it facilitates, on occasions, and
obstructs more frequently; it devises and designs policies and procedures
systems and processes. It could be a source of creativity and energy to the
benefit of the nation. It could be the powerhouse of reform. But it is
not.
There is much about it that should be protected or even celebrated.
In addition to the talented people it has shown itself to be honest and
apolitical: It has commitment: It is at its best when faced with procedural
crises and has strong intellectual and analytical skills. Its people can deal
with extraordinary levels of complexity and often work unbelievably hard. But it
is in need of major reform without which the transformation of public services
will not happen.
Of course my erstwhile mandarin colleagues argue
persuasively that reform is underway - as they have for many years. They also
argue persuasively that to stray beyond the authorised reform programme (ie
their own) will inevitably undermine all that is good about the Service to the
great detriment of the national interest. Neither, of course, is fully
justified. There have been some changes. An increase in the number of external
recruits as well as Lyons, Gershon and the reform programmes sponsored by
successive Cabinet Secretaries. The problem is that little real change is
evident because the real weaknesses have not yet been addressed. What are these
weaknesses? Well, for me they include:
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A continuing lack of accountability at personal and organisational (or departmental) level - exacerbated by the failure of the NAO and the PAC to hold the machine effectively to account. It is odd to read pre-election ODPM literature celebrating the improved performance of local government: 'The evidence from our research shows very clearly that much of the impetus for improvement in recent years has come from central government policies (sic) and (external) inspection.' It goes on without a hint of irony to say, 'In our view individual authorities and the local government community as a whole must therefore develop a greater capacity for self criticism, self regulation and improvement from within.' Well, if so much has been achieved by inspection and external assessment, it is odd to see so little evidence that the Government is prepared to apply similar methodologies to the Civil Service. Of course, internally more is now done to set and measure targets and I applaud the work of Michael Barber and his delivery unit. But there is still no external independent dimension, no external accountability. And the refusal to allow independent audit of Gershon savings underlines the point. Even the internal reformers seem to baulk at the prospect of external scrutiny.
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The culture of the service, which to the best of my observations, remains risk averse and counter creative at a time when innovation and initiative are the keys to effective government. At a time when complex fast moving social problems need new answers the Service appears unable to build the kind of climate which encourages/supports creativity; it is not good at managing risk; it consumes rather than creates energy and continues to protect the culture of the written word; and it opposes attempts to develop a more informal style less dominated by hierarchies and status.
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Poorly developed political skills which are the root cause of the criticisms one hears regularly from Ministers - at least when out of the hearing of their Permanent Secretaries. Too many civil servants seemed to me to be unsympathetic to the political process and politicians partly because they had not been exposed to the political process early enough in their careers to feel comfortable with it. At an intellectual level they can recognise the political dimension of an issue but they do not seem to be able to progress beyond that and fully appreciate the political implications of alternative handling strategies. They find it difficult to get inside the skin of their political masters - all of which actually inhibits their capacity when necessary to say 'no' in a way that commands respect. They take pride in their willingness to speak 'truth unto power' but some seem to do it all of the time and with such evident glee!
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In spite of the increased level of external recruitment there seems to be a continuing deficit of leadership, management and procurement skills. In truth you cannot just import these skills. They need to be developed in house amongst existing staff and not solely via formal training and development programmes. A requirement a decade ago that all candidates for the senior civil service should have had real operational experience would have gone some way to ensuring that there were, for example, people at the centre of departments capable of setting stretching, achievable outcome focused, measurable targets. It might have ensured that we had more people capable of specifying and managing contracts. And front line experience would also help develop a fit for purpose culture. Currently the search for perfection in all systems procedures and processes leads to the creation of - to take one example - appraisal systems which come close to bringing departments to their knees.
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A continuing inability to join up policy or delivery routinely. I say routinely because I do acknowledge the contribution made by cross cutting reviews and other initiatives, for example, those focused on children and families. There remains nonetheless a tendency to work in isolation because all of the incentives and rewards encourage civil servants (and Ministers) to build their departmental power base at the expense of addressing effectively pan Government issues such as an ageing population, obesity - or even respect.
But the problems do not stop there. There is, I think,
a failure at the most senior levels to behave in any way corporately, focusing
on the Government's key business priorities. Of course, things may have changed
but the Wednesday morning meetings of Permanent Secretaries contrasted sharply
with the corporate management boards I chaired in local authorities twenty years
ago where there was a shared responsibility for Council objectives.
There is also an insufficient connection between the Service and its
clients and communities a connection which is essential for successful policy
development and effective implementation; there is a growing disconnection
between policy and delivery which can diminish both and which the decision to
establish separate professionals streams could make worse; and sadly there is a
falling level of public trust - notwithstanding the general apathy - which has
been exacerbated by an apparent reluctance within the Service to make
information available - unless required to do so.
All these weaknesses
seriously impact on the ability of the Service to meet the challenges of the
21st Century and to progress the public services reform agenda. The future
demands a Service which is radically different.
We need a Service which
is:
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comfortable with greater external accountability and transparency
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genuinely committed to personal accountability in its ranks
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creative, innovative and energised
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effectively delivering results and outcomes
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skilled in procurement and supplier management as the delivery of government business is increasingly delivered on a contractual basis
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politically aware, sensitive, empathetic, astute but not aligned!
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explicitly focused on issues rather than departments; on clients rather than process and on value rather than cost
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imaginative in its use of e-government to deliver services and enhance what Demos are now calling 'everyday democracy'.
Achieving this is
no easy task but perhaps the greatest danger is that it will just be left to a
further internal reform programme. I would suggest instead that:
1. We
enhance external accountability by (a) reforming the NAO so that it focuses
better and systematically on the quality of performance management and policy
development and so that it is more independent of departments (no longer, for
example, having to negotiate the terms of its reports with departments; (b)
introduce a system of Comprehensive Performance Assessments of Departments
undertaken by a thoroughly independent body such as the Audit Commission coupled
with the transparent independent measurement of performance against targets (to
include Gershon savings). These reforms would of course have implications for
Ministers perhaps holding them more publicly accountable for policy and
delivery. I believe, however, that the process could be designed and managed in
a way that did not unreasonably expose Ministers - and if it did to some extent
increase their accountability then maybe given the public's current mood that
would be no bad thing.
2. Establish a Public rather than a Civil Service
so that all those who are employed to provide public services form part of one
system - from which pool staff can be routinely recruited, promoted, transferred
and for which pool integrated training and development can be
provided.
3. Enhance the personal accountability of senior civil servants
extending the definition of accounting officers beyond the Permanent
Secretary.
4. Introduce more formal outsourcing of policy development and
analysis so that the monopoly currently enjoyed by the Service is broken. Many
excellent policy initiatives have already been conceived outside of the Service
in recent years - so let's look at how we could further develop and involve
alternative policy providers.
5. Review and revitalise Select Committees
to enhance their role in holding officials to account by, for example,
increasing the support available to them; and giving them the power to use
NAO/PAC reports to examine civil servant witnesses.
6. Insist on all
civil (public) servants serving some time in operation/management posts before
even being considered for senior jobs.
Most important of all is the
introduction of some degree of external accountability to provide the stimulus
for change as it has in other parts of the public service. In truth the debate
should be focused around these issues of reform rather than the need for some
kind of Civil Service Act to protect the Civil Service in its current form. The
current threat to the Civil Service is not in my judgement a threat to its
integrity and impartiality posed by Ministers and special advisers - it is the
threat to its relevance and reputation for competence.
But what should
be the priorities of this reformed Civil Service in respect of public service
reform? Well, primarily to help Ministers articulate a coherent vision of reform
which is consistently applied across the public service. At the moment we have a
potpourri of strategies applied without any obvious rationale which have - and I
put it no higher - some apparent scope for policy conflict.
On the one
hand we have choice. According to the Cabinet Office publication 'Putting people
at the heart of public services' choice is not being offered as an alternative
to 'a good local service' but as a means of helping to secure it. 'It means
offering people' a real say over the type of services (they) want, as well as
where, when, how and from whom they receive them. "To achieve that 'real
alternatives need to be in place' allowing new providers from the public,
private, voluntary and community sectors to put forward new ideas and challenge
the existing way of doing things."
Few could argue with the concept of
choice. It is, after all, one of the cornerstones of our democratic society. But
here it is being proposed as a primary strategy for improving public services.
The term may have been used more 'flexibly' of late but if it does involve
offering 'real alternatives' it must require that you build capacity so that
users can choose one delivery option rather than another. And if you build
capacity you must to some extent be in conflict with another key public service
reform strategy - achieving the Gershon efficiencies.
As the report from
the Public Administration Select Committee observed correctly, whereas
efficiencies derive from targeting slack or unnecessary (not just undesirable)
capacity, choice (of provider) requires some slack for its very existence.
Leaving aside the question of whether it is 'choice' of provider or control of
provision that users most want, and leaving aside even the conflict between
choice and efficiency, there must be serious questions about whether inevitably
limited resources are best used to produce slack rather than improve first the
quality of existing provision. In some sectors there are even questions about
whether it is possible to build capacity - take the potential shortages of
medical staff. The Government's response to date has been that the margin of
extra capacity needed to permit contestability is likely to be small - and that
- if there are efficiency losses that arise from these causes they may have to
be accepted in order to reap the gains in efficiency. I am not sure what
research underpins that assertion. I agree with the Public Administration
Committee that there is the potential for conflict between these two central
planks of government policy and that some much clearer articulation of choice is
needed if we are to avoid a myriad of initiatives many of which will do little
to improve the quality of service.
Others have spotted potential
conflicts between plans for the future of local governance and the efficiency
agenda. The ODPM five-year plan and its key policy papers 'Citizen Engagement
and Public Services' and 'Vibrant Local Leadership' contain commitments to
devolve power to communities and to small very local neighbourhoods (including,
for example, delegating budgets to Ward councillors and giving communities
ownership of local assets). The problem is that in order to achieve the level of
savings recommended in Gershon you actually need to aggregate procurement not
disaggregate it further. And whilst on the subject of local government there is
the danger of further confusion arising from the different definitions of new
localism in different government departments - so we have local area agreements
but we also have civic pioneers and we have neighbourhood management. None of
which reassures local authorities that the Government has a single vision for
the future.
The issues of contestability and choice have also to some
extent become confused. Contestability - or the greater involvement of the
commercial, not for profit or voluntary sector to provide services for the
public good - is a pre-requisite for greater choice at least in the foreseeable
future. But contestability can also be justified as a more direct route to
increased efficiency simply by exposing public services to competition. Here
again, the Government's current position leaves room for confusion. It is true
that the private sector now provides very significant levels of what, in the
past, would have been defined as public services. Some companies, such as
Capita, Serco and VT, have made a success of this; others including Jarvis and W
S Atkins have encountered serious problems. But the majority of their work has
been in providing support services of one kind or another. There has been
relatively little front line service provision opened up for competition. Two of
the most significant spenders and suppliers are, of course, the Department of
Work and Pensions and the Department for Education and Skills. The former is
responsible for tens of billions of pounds of services provided by Jobseekers
Plus which alone has an administrative budget of £ 4bn. Of this very little is
currently the responsibility of the private sector. And whereas there has been
much talk of the private sector creaming off the easier cases it is the more
difficult client areas here which have been outsourced (employment zones, lone
parents and Action Area Teams). I am aware that I have an interest here in that
I was - but am not now - a non-executive director of one of the companies
involved in providing services under the contract - Reeds. But I have to say
that in that role I was not entirely convinced that the Government did want to
introduce genuine competition given the very slow pace at which the private
sector share was allowed to grow and given the apparent resistance to offering
mainstream Job Centre Plus business on a contract basis. The private sector can
easily find itself competing for at best an unchanged market share confined to
the more difficult segments of the market and managed on a contract basis by
people with little experience of contract management or procurement. It is not a
very attractive option.
Equally in education although there has been a
great deal of press and, of course, Union interest in Academy Schools and
Specialist Colleges but the provision of teaching in the classroom by private
providers has been minimal. I chair a small company called Artis which is doing
just this for performing arts and the response from schools and head teachers
has been very positive. If the vision of the policy is really about services
driven by the user with more choice and diversity of delivery then we need to
see more encouragement for these kinds of initiatives. We certainly need a
clearer exposition of the strategy and how it relates to the main service areas
of health, education, local government and work and pensions. In each case what
do we mean by choice and contestability. What is the future place for inspection
assessment and targets, what is the role of providers from outside of the public
sector? Are we really committed to using competition as a way of driving up the
standards of services provided for the public good.
At this point let me
turn for a moment to the role of the Voluntary and Community Sector in public
service delivery and reform. As some of you will know I was until recently
Chairman of the Compact which seeks to provide a framework for the relationship
between the statutory and non-statutory sectors. I also chair a National
Training Charity and as David Milliband said in his first speech as an ODPM
Minister "I (too) believe in the power of collective action. I am convinced that
voluntary and community organisations must be active partners of central and
local government. The third sector reaches parts that we (Government) simply
cannot reach."
I believe that the Government has done much to create
opportunities for a new relationship between the statutory and not for profit
sectors not least as a result of the Treasury Cross cutting review and the
establishment of the Future Builders fund. As the NCVO said in its excellent
recent report 'The Reform of Public Services: the role of the Voluntary Sector'
- "the current relationship with Government is the most favourable the sector
has experienced".
However, this is a sector which can as the recent NAO
report "Working with the Third Sector," remarked "connect with clients who are
difficult to reach or distrustful of the state; has great expertise in
specialist areas and can develop and pilot innovative solutions". So it is
surprising that it still accounts for only 0.5% of all central government
expenditure. The NAO concludes that this is in part because departments tend to
underrate the sector's professionalism and its ability to deliver and need to
develop their capacity to work with the sector. I would agree with that. I would
also agree that the four Gershon principles of long term funding; an appropriate
balance of risk between Government and the Sector; full cost recovery and
proportionate monitoring have not yet been achieved. So whilst progress has been
made in involving the Sector in delivering a great deal more could be done to
the benefit of public services. The same NAO report makes a number of worthwhile
recommendations but I am convinced that they will not succeed unless Ministers
and the most senior civil servants take a greater interest in and show greater
trust in the Sector. Too many of the current Departmental Champions lack real
top-level support and consequently lack 'clout'.
But there is another
opportunity which is currently being missed and that is the genuine involvement
of VCOs not just in the delivery of service for public good but in the design
and development of those services. Most now accept that VCOs are often closer to
citizens than any part of government local or central. They are often most
trusted and therefore privy to people's real feelings. They can and, to the best
of their abilities, do provide communities with a voice. They play a crucial
role in advocacy, campaigning, advice and information. They offer a genuine way
of putting the voice of the user or the citizen at the heart of the public
service and as the NCVO report concludes the issue of voice is at least as
important as the issue of choice because, and I quote "The voice agenda
recognises that many service users, or communities do not want the choice of
services or providers, they do not want the option of exit, they simply want to
know that their opinions and concerns are taken into account from the outset,
when designing a service and not just through a complaints procedure if it goes
wrong."
But at the moment this role seems to be too little understood
across Government, certainly at official level. And even politically we have not
yet reached a level of maturity such that VCOs campaigning role is welcomed as a
contribution to the policy process - even or especially when it involves
opposing current or proposed Government policy. The regular involvement of
senior Government officials in meetings with those VCOs relevant to their
Department's responsibilities to discuss policy design and development as well
as delivery would help. So will the stronger emphasis on the strength of the
relationship between local government and the sector locally now being proposed
by the Audit Commission. Of course, the sector is conscious of the dangers which
a closer policy relationship can pose for its independence but the future should
not be defined by defending this independence through maintaining distance. It
should be about both parties developing new kinds of relationships which benefit
the clients through better policy. I am convinced that a more imaginative
engagement of Government and local government with the VCO is key to better
public services.
But UK public services have other challenges. The UK is
40% less productive than its major competitors and is falling behind the US,
France and Germany. The service sector which makes up three quarters of the UK
economy is a third less productive than manufacturing (according to data
produced by the ESRC in September last year) and public sector productivity is
worse than the private sector. McKinsey's recently estimated that the public
sector's productivity remained almost flat from 1987-1994 and the recent
increase in investment has perversely reduced productivity still further.
McKinsey's suggest that if the public sector could halve the estimated gap with
the private sector government productivity would be 5-15% higher with no
additional investment.
The question is again whether the current reform
agenda with its emphasis on investment, accountability, targets, skills and
behaviour, will effectively address this issue of productivity. And again the
answer is probably 'only in part' because investing more in poorly designed
services will ultimately fail however many targets you set. We need at the same
time to develop the capacity to design and redesign services. Service design
starts with a true understanding of the real market needs - the requirements of
the consumer - and it recognises information technology not as a tool for
increasing process efficiency but as the new infrastructure for a service
society. It uses tools to articulate needs, to generate fresh solutions and to
analyse the alternative options - and it has been shown to work in practical
settings.
The problem is that although the Government and the Prime
Minister have rightly identified the importance of meeting citizen aspirations
via the provision of personalised services no one seems to be taking seriously
the need to develop a body of skills capable of turning this laudable objective
into a reality. Even business education still concentrates more on the design
manufacture and distribution of widgets - alongside the rational allocation of
capital and resources and shows little interest in how to design and deliver
services. One practical, far sighted step which the Government could take to
help transform our public services is to establish a School of Public Service
Design with the objective of creating a cadre of senior managers with an
understanding of the subject, a cadre of practitioners capable of applying the
methodology and a framework within which the issues could be addressed.
The fact that the success of service design depends upon the integration
of IT as a business tool reinforces the key part which technology has to play in
public service reform. In one sense the Government's public service reform
programme has the great advantage of coinciding with the availability of
technology capable of facilitating huge improvements. And there are some
encouraging signs not least the appointment of a head of e.government in Ian
Whatmore and most recently the announcement of an academy to oversee the
development of IT skills in government. But in spite of some notable successes
the contribution of IT to improving public service delivery has been
disappointing to date. That is often blamed on the poor project management of
specific initiatives and there has been some of that. There has also been a
strong tendency to over specify systems seeking to achieve perfection when fit
for purpose would have sufficed - and been deliverable. But for me the major
reason for under achievement has been this failure to integrate IT; to combine
it with the business process and to ensure that major IT projects were business
led. Not only is that the way to achieve cost effective IT development but it is
also the way to achieve the ownership of staff which is essential if the
potential of the system is to be realised. I am not an expert in the detail of
NPFIT but I am struck at the moment not just by its complexity but also by the
apparent lack of ownership by those on whom its success depends - and the way in
which it seems that business needs are being belatedly attached to the
technology. This is the largest of the current IT projects but at the moment
NPFIT, IMPACT (the Police National Intelligence System I recommended following
the Soham Inquiry) and the National Children's Databases are all in development.
Together they could produce huge improvements to our key services in the next
3-5 years but only if well managed and rooted in business needs. And only if
there is close working between them.
Let me conclude. In preparing this
speech I was often conscious that to accept an invitation to speak on such a
massive subject was little short of arrogant. None of us here tonight has the
breadth of knowledge at any one time to talk about the full canvas of public
service reform. All we can do - and I have done - is to give our personal
perspective and to develop some personal thoughts. My conclusion is that
progress has been made on the back of genuine commitment from many officials,
officers, politicians, the voluntary sector and the private. But we have not yet
achieved the transformation our various client groups need. If that is to happen
it will I think need us to:
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Reform the Civil Service
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Develop a coherent and convincing reform vision
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Offer significant opportunities for private sector involvement in front line delivery
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Fully engage with the voluntary and community sector
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Develop a capacity for service design
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Realise the potential of IT for service improvement by ensuring that it is business led.
You will want to add to this list. You will almost certainly want to argue with some of it. As I say this has just been one perspective!