Waging a more efficient war

As the civil service wages war on waste in an effort to meet ever tighter spending constraints, Whitehall’s cash-cutting command is split into three separate power bases. The cabinet secretary can be seen as an equivalent of the air force, offering an overview of the situation and reconnaissance on what’s to come; the head of the civil service is the infantry, plugging away in the muddy trenches; and the Treasury is the navy, controlling supplies to allies and enemies.

Currently, these commands aren’t sufficiently coordinated, according to a report published today by the Institute for Government. “Despite repeated emphasis on building stronger corporate leadership by the cabinet secretary and head of the civil service, this remains a key weakness at the heart of the civil service,” it says. The think tank calls on the Treasury’s permanent secretary – “the missing third player” – to start taking a more active role and to encourage longer-term planning. However, it says: “There is no signal from the Treasury that anything significant is going to change ahead of 2015, or that there is space for planning ahead and thinking differently about how to offer up the best options for whoever comes into government.”

Yet longer-term thinking is vital – and it must start immediately, the report argues. The civil service has been battling resolutely for years, and its troops are weary. Without greater strategic thinking and coordination, it may not be able to cope with the challenges to come.

There are seven key challenges for which Whitehall must be ready, the report says. First, officials have already made the easiest cuts, so further savings are going to be tricky. Second, some cuts that have been made aren’t going to be sustainable, with reverses likely. Third, the level of risk taken by the civil service since 2010 has been high – often involving huge projects such as Universal Credit – and is likely to remain elevated. Fourth, outsourcing has created a need for far greater commercial skills than currently exist in government. Fifth, it’s going to be extremely tricky to keep “critical stakeholders” such as the police, judiciary, teachers and nurses on side. Sixth, staff morale is likely to be a problem as downsizing and job cuts continue. Finally, maintaining productive relationships between ministers and civil servants “will get even tougher as decisions become more politically painful.”

There’s a risk of greater tension between politicians and civil servants because “the relationships between ministers and their departments revolve around ministerial priorities, and whether the department is geared up to support that,” explains Jonathan Pearson, co-author of the IfG’s report. As budgets tighten, “you’re going to have to get into a situation where you pick and choose a lot more between competing priorities.” Bernard Jenkin MP, chair of the Public Administration Select Committee, agrees that “further problems between ministers and civil servants are likely”.

Officials’ morale is also a concern: “In a lot of the departments that we’ve observed, change fatigue is a big problem,” Pearson says. “It’s the pressures of being squeezed, headcounts going down, having a very similar amount of work to do, and looking at new ways of working.” Keeping engagement high is important because happier staff make for a more productive and better performing organisation, he says. Further, organisations with more engaged staff have slower turnover, which is important for organisations undergoing big changes.

Some departments are in better shape to cope with what’s to come than others. Of the departments the IfG has worked with, it sees the Ministry of Defence, Department for Education and Foreign Office as the best prepared for further challenges, with the strongest relations between ministers and officials. This is because they’ve had strong internal discussions about the future shape of the department, Pearson says, and have prioritised internal change programmes. “The day to day pressures of government mean that departmental reform gets prioritised over civil service reform, so the departments where the pieces of civil service reform have the most traction are those where they neatly dovetail with what the department’s trying to do internally,” he comments.

However, the report warns that efforts to find cuts could prompt departments to reinforce silos, as they focus on their core business and become more inward-looking. “You have an awful lot of change going on with not a lot of coordination,” Pearson says. “If you are in a department and charged with taking something out of your administrative savings, your first look is not externally but internally at what you can do to minimise the costs imposed on you.” Departments have already found many of the easiest internal savings, the think tank warns, and so should work together to find savings by improving inter-departmental coordination and sharing. Some have already done so as – such as the departments with overseas presences that have pooled their estates and IT costs – but this kind of work is still patchy.

The centre of government therefore needs to step up and start driving more cross-government change, the IfG says – especially when it comes to identifying savings after 2015. “More savings will have to be found, but we don’t see sufficient discussion on the planning of the future shape [of the civil service],” Pearson says. “The risk is that roughly 66,000 people have come out of Whitehall so far; you’ve got approximately another 32,000 to go.” Further reforms are essential to ensure that departments remain resilient, he argues: “Can departments handle unexpected shocks and problems?” A strategy for how the civil service will look over the next five years will “help immensely” with this, Pearson adds, because “at the minute there’s a lot of uncertainty around what is to come.”

“Weak” corporate leadership is a serious problem for the civil service, the IfG report says, and Bernard Jenkin agrees: “There’s no coordinating narrative for the civil service to lock into; I totally agree with that,” he says, “it’s quite harsh when it says there is a lack of effective corporate leadership, but that is something that ministers and officials have got to address together.”

The Treasury needs to play a greater role, Pearson says, because “it’s a leader that can galvanise or block other parts of civil service reform”, and “the Treasury putting its weight behind an agenda would help implement changes when some departments tend to prioritise what’s happening within themselves.”

The civil service board also needs to up its game (see box for membership); the IfG thinks it should hire a coach to help it improve its effectiveness as a leadership team. Currently, it acts more like a set of individuals rather than a cohesive unit, Pearson believes. The members of the board should spend an extended period of time together focussing on cross-Whitehall needs, the report says – perhaps drawing further on advice from non-executive directors about how to lead change.

The IfG’s report could be read as a direct criticism of Sir Bob Kerslake, the head of the civil service. After all, he’s responsible for corporate leadership across the civil service, and tasked with getting traction on civil service reform. But Pearson believes that the problems go far beyond one individual: they’re structural, not personal. “Historically, the leadership core at the heart of the civil service has been fragmented, and there are historic weaknesses in the corporate leadership of the civil service,” he says. “What we’re recommending in the report is a way of increasing the collective capacity of the leaders of the centre. What’s required is not just strong corporate leadership tied up in one individual, but strong collective leadership.”

So all permanent secretaries should be rallying their departmental battalions and working more closely together to reform and refresh. The Treasury in particular, though, is seen by the IfG as a vital force that needs to play a greater role. Currently, it’s a little like a submarine lurking just below the surface; but it needs to be an invasion armada, with aircraft carriers and troop ships so that it can help its air force and army colleagues to gain the upper hand in Whitehall’s long war on waste.