Cutting Whitehall

Jeremy Heywood, the Cabinet secretary, does not like making news. He prefers to remain behind the scenes. In March, Heywood caused a public stir at an Institute for Government meeting when he suggested that government might outsource some policy thinking to external bodies. He quickly said that this was just an idea, and would not affect core policymaking, but it was “a perfectly legitimate challenge.” Heywood’s modest kite-flying hinted at a wider, largely hidden debate that is now underway in Whitehall, and that asks: what is the purpose of the civil service now?

Whitehall has faced upheavals and cuts before, but current changes are the largest for over 60 years. The number of civil servants has fallen by a tenth in 18 months (Margaret Thatcher took four years to make such a reduction.) The plan is to cut administrative budgets by between a third and a half, meaning that we are at most a fifth of the way through a seven-year programme of cuts. The coalition has also passed a series of reforms—to health, schools, higher education, immigration, welfare and policing—that change how the state operates, encouraging more private, mutual and voluntary provision.

The result is an uneasy civil service. Many feel beleaguered and underappreciated, because of reductions in pay and pensions—and fear that improvements in skills and performance have been overlooked. The May 2010 transition and the creation of the coalition were well managed by Gus O’Donnell and Heywood. But David Cameron is impatient with the pace of implementation. Francis Maude, the minister for the Cabinet Office, has been the enforcer in driving down headcount and costs, and has sought to improve financial and project management. Most previous Cabinet Office ministers had an ill-defined role and made little impact. But Maude has a very specific brief to make government work better and in conjunction with John Browne, the former chief executive of BP, he has introduced private sector non-executive directors (Neds) onto departmental boards. Many permanent secretaries were sceptical, if not hostile to what they saw as an imposition. But they have predictably adjusted and are enlisting the Neds as allies.

The civil service now has dual leaders—Heywood and Bob Kerslake, head of the civil service, whose background is in local government. Along with Francis Maude, they are involved in drafting a reform plan to be published by the early summer. This triumvirate is intended to dispel any impression that there are separate civil service and ministerial approaches. There are, of course, different priorities, as expressed by Steve Hilton, the prime minister’s long-term adviser (now leaving to spend a year in California.) Hilton favours a drastically smaller civil service in a commissioning role, while ideas and implementation come from outside. Even if Cameron is more cautious, Hilton’s iconoclasm has opened up the debate.

Relations between ministers and officials have not always been easy. David Bell, who had been tipped for the top in Whitehall, has left the education department to become vice-chancellor of Reading University. Other senior officials have also quit. There were differences of style and approach with Michael Gove, who has preferred to work with special advisers and ideologically sympathetic Neds.

At the same time, permanent secretaries complain about the increased demands of parliament and the pressure for greater civil service disclosure as a result of the Freedom of Information Act. The Public Accounts Committee, chaired by the former Labour minister Margaret Hodge, has been very aggressive. The decision to force a lawyer from HMRC to swear an oath in giving evidence to the committee prompted a rare, blunt exchange of letters between Hodge and O’Donnell. Helen Ghosh, Home Office permanent secretary, was summoned to explain her handling of the troubled Rural Payments Agency in her previous post. But this went against the Whitehall convention that accountability is through the post not the person. There is now much soul searching about whether, and how far, individual civil servants should be accountable, and how their policy advice to ministers can remain confidential.

Civil service reform is currently depicted as being about efficiency and costs. But it is also about what we want the civil service to do in a smaller, reshaped state. Even if policy decisions are not outsourced, the civil service long ago lost its quasi-monopoly on policy advice to the think tanks and commentators. But it is still needed to co-ordinate this advice—and Whitehall has a long way to go to improve the way policy is made. Even if much provision is now contracted out, the civil service still has to oversee commissioning and regulation, and the management of big projects.

Unless the new Whitehall leadership and ministers get this right, the risk is of a downward spiral of cuts, inadequate services and a demoralised civil service.