Re:Shuffle – an open letter to Rt Hon Darren Jones MP, Chancellor of the Duchy of Lancaster
Directory of Strategy
Dear Darren,
Congratulations on your appointment as CDL and Chief Secretary to the Prime Minister! Number 10 and the Cabinet Office holds the levers of power to reshape Government and rewire the State.
But different leaders have used the Cabinet Office in different ways, and over time it has grown into a large and complex organisation, dragging Ministers in different directions and leaving its staff confused about its true purpose. And as you’ll know from your time as Chief Secretary to the Treasury, many of the most important drivers for efficiency and effectiveness require the kind of cross-government leadership that the Cabinet Office could provide, but only if it can be reformed.
You are inheriting a legacy of half-delivered plans for Whitehall reform, and the responsibility for resetting the Government’s delivery agenda. It’s impossible to do one without the other. By not making Whitehall more effective at delivering (and devolving), the state capacity won’t be there to deliver the transformations the Government needs. A Cabinet Office whose objectives can be ignored by the rest of government is not strong enough for the task.
Here are three priorities from us at Re:State on the issues which need your involvement:
- Public bodies review
Arm’s-length bodies, which operate outside the direct control of ministers, are responsible for around 60 per cent of day-to-day spending, and manage some of the most complex and high-risk parts of the State. They are the vital delivery vehicles for the Government’s priorities around growth, security, migration and public services.
The Government’s public bodies review will fail if it’s left to departments to review and decide whether or not to reform the public bodies they are responsible for. That same logic has contributed to the proliferation of public bodies, confusion of their aims, and poor accountability under previous governments.
Because despite the importance of these functions, and the fact that public bodies employ nearly 400,000 people, independence is confused with unaccountability and scrutiny is woefully inadequate. We catalogued these challenges in our paper Quangocracy earlier this year. Recent, high-profile failures of public bodies such as the Care Quality Commission and HS2 Ltd, and egregious examples of infrastructure being blocked or absurd additional costs being added, demonstrates the need for urgent action – and the Government has committed to taking it.
The decision to bring NHS England back in house is the right one, as we wrote about last year. The ongoing review is vital to ensuring public bodies become more accountable to the Government and Parliament, and it must be driven from the centre.
- Civil service workforce reform
The civil service has grown out of control, and with no accountability from senior leaders for the use of public money in employing more than 549,000 people across the country. It has become too big and too expensive.
The Government is right to want to reduce the size of the civil service, with the 15 per cent cuts announced in March a key part of the Spending Review you helped lead at the Treasury. Bigger has not been better for the civil service, and despite record growth over the years since 2019, performance in most key areas has worsened.
To get back in control of the workforce, it’s vital that the Cabinet Office uses its upcoming strategic workforce plan to make several big shifts:
A) Tackling repeat poor performance. This is endemic in Whitehall, and goes unchecked in a system which would prefer to let poor performers move around between jobs rather than manage them and remove them if necessary. We wrote about the drivers last year, and from our Alternative People Survey of 1,265 civil servants this year it’s clear that little has changed. 79 per cent of civil servants we surveyed disagreed with the statement “the civil service in general manages poor performance well”. The key challenge is how little appetite there is to remove repeat poor performers – putting the burden on coping with them on their colleagues and managers. For example, DfT and HMT, the only departments which keep a record of dismissals, dismiss on average fewer than 0.4 per cent of employees for poor performance per year.
B) Creating pathways for talent to rise to the top. Many bright and capable people come to Whitehall to serve their country, but struggle to stay, or reach the positions where they can have the most impact. More pay flexibility, particularly at the mid-career stage, is essential to retaining people. But it’s also essential to bring in more talent at that stage. We’ve argued the case for setting up a Mid-Career Fast Stream to be a future pipeline into the senior civil service – the current earlier career Fast Stream should also be overhauled, and stop trying to complete too many contradictory objectives.
C) Stopping the reliance on Voluntary Exit Schemes (VES) to cut the size of the civil service. VES are the worst way to control the size of your workforce. We’ve written about how they incentivise good people to leave, and bad people to stay. It’s clear that many of the controls which should be in place to stop that happening aren’t actually being practiced. These schemes might feel easier for civil service leaders, but they’re worse for the country. Until poor performance is properly managed, the continuation of VES schemes will reduce the level of average talent in Whitehall.
- Be a better buyer
The State spends £400 billion on procuring goods and services from the private sector. Any drive for efficiency and savings has to grapple with the large amounts of waste and failure in commercial delivery. The Government Commercial Function is one of the most professionalised parts of the civil service, and the Procurement Act clarifies lots of the ambiguity in the system which predates it. But the Government should think much more radically about how it shapes procurement markets – allowing more scope for innovative start-ups and scale-ups to work in government, and cutting the red tape that stops them. More on this soon...
This is the moment to “rewire the State”, and the Cabinet Office has a vital role to play in driving that change. Many of these issues are long-running, and it’s vital to act now before current plans become another chapter in the history of attempts at Whitehall reform.
We wish you the best of luck,
Joe Hill
Policy Director, Re:State