Oral evidence: Civil Service Skills, HC 112Tuesday 25 November 2014

Oral evidence, 25 November 2014.

Witnesses

Rob O’Neill, Assistant General Secretary, First Division Association (FDA), Leslie Manasseh, Deputy General Secretary, Prospect, and Karen Foster, Learning and Education Officer, Public and Commercial Services Union (PCS), gave evidence.

Chair

May I welcome our first panel of three witnesses to this section on Civil Service skills? We are interested in hearing your views not just about the hard skills, the technical skills and the commercial skills, but also the soft skills, the leadership skills and the people skills that are required to improve the effectiveness of the Civil Service. Please can I ask you to identify yourselves for the record?

Karen Foster

Karen Foster, PCS.

Leslie Manasseh

Leslie Manasseh, Prospect.

Rob O’Neill

Rob O’Neill, from the FDA.

Chair

We have got three panels this morning. We are quite compressed for time. We are starting a bit late. Could I ask you to keep your answers as short and crisp as possible? We will endeavour to ask short and crisp questions.

Mr Turner

The Capabilities Plan focuses on four key skills. Is this likely to result in producing the right future leadership for the Civil Service?

Rob O’Neill

The key priorities have been determined by the annual skills review, where Departments have been looking at their own capability and where individuals have been looking at and self‑assessing their own competencies. As a result of that, those priorities that are in the Capability Plan have been assessed. We think that they are broadly the right priorities. There is clearly a need to develop digital skills within the Civil Service. There is clearly a need to do more about commercial skills and contracting skills. The focus is very much around that. We very much welcome some of the work that is being done at the moment. The DWP Digital Academy, we think, is a very good development. We are always in favour of building your own timber. We think that that will help. However, it may be that with some of those skills they will have to recruit externally in order to bring some of those skills in. As you know, the pay issue in the Civil Service is a big one, in terms of being able to recruit and attract the right type of skills and the right type of people to bring in to the Civil Service. Clearly, that needs to be addressed fairly soon as well.

Chair

Thank you for a full answer, but it was too long.

Rob O’Neill

Okay.

Chair

I am going to have to pull you up if we have long answers. I apologise for that.

Leslie Manasseh

We do not have a disagreement on focusing on those four areas, but we think the focus is rather narrow. Let us take procurement, for example. Procurement, I think, is better defined not as a skill, but as a function that requires a number of complementary skills to make it work effectively. It is very complicated in Government circles, as you know. Procurement in the Ministry of Defence, Department for Transport or whatever, requires not just procurement contract purchasing skills, but, sitting behind that, skills which make up what we call the “intelligent customer capability”. These are scientific and engineering skills that have to enable the procurement function to take place properly. You cannot have proper procurement in the defence industry unless you have an understanding of defence technologies. Our concern is that those complementary skills, scientists and engineers, are being hollowed out. That being the case, it makes those four top‑level skills more difficult to deliver the kind of Civil Service that we all want.

Karen Foster

Again, there is not a difficulty about the key areas, but it is the balance of the approach. When I was looking at the latest Civil Service Reform progress report, it showed that 5,200 civil servants completed courses in digital skills. I know that the digital ambitions weigh very heavily on civil servants having digital skills and, if you compare that, 47,000 completed training on commercial skills. The balance, to me, shows that the emphasis seems to be more on the commercial side than the digital skills, for where the core of the Civil Service lies.

Mr Turner

Is there sufficient focus on behaviour rather than simply skills?

Leslie Manasseh

Sorry, is there an overemphasis on behaviour?

Mr Turner

Is there a sufficient focus?

Leslie Manasseh

I think that is difficult to say. The competency framework focuses on behaviours. Clearly, we all recognise that you do need to focus on behaviours, but if you focus only or exclusively on behaviours then you are missing one of the key problems.

Mr Turner

Are people missing things or are you hitting that button?

Leslie Manasseh

We represent professionals and specialists. In my experience, the response of my members is that they think the focus on behaviours and soft skills does not help them do a better job. That is the problem. There is insufficient attention to specialist and professional skills, which, as I say, are being reduced. That is the difficulty. It is a question of balance and how people perceive the priorities.

Karen Foster

I have nothing further to add on that.

Rob O’Neill

I would just agree with Leslie that it is about balance. There has to be a balance between both. Whether there is too much emphasis being put on behaviours rather than on skills I think is a good question. Clearly, there needs to be a balance.

Mr Turner

What I would quite like is an answer. I recognise that it could be this and it could be that, but which do you prefer? Do you think it is over‑skilled or over‑behaviours?

Rob O’Neill

Our view at the moment is that there may be too much of an emphasis on behaviours. More should be put on people skills and developing those. As I say, there is some good work around that and we support that.

Chair

Can I just interpret one question? The Government talk more and more about creating a single, unified service, and the career paths of civil servants tend to be less vertical and more horizontal than they used to be. There also tends to be more movement; people tend to move around different areas, particularly in the senior Civil Service, and the Civil Service Fast Stream. We are creating more generalists and fewer specialists. To what extent is this strengthening or undermining the right skill sets that people need when they finish up leading Departments?

Leslie Manasseh

I am not sure people are moving as much as they should because I think there are obstacles in the way to movement around the Civil Service. That is a problem. For example, creating shared services has required bringing civil servants together from several Departments to focus on one single function. That has actually been beset with difficulties because, frankly, of the consequences of delegated authority, and, therefore, the terms and conditions and pay that people have. I think there is a problem about wasteful internal markets caused by pay problems. I would think there is a case for a much stronger focus, for example, on the professions. I am very attached to the notion of strong professional communities, which serve as career development, skills acquisition, mentoring and even pay bargaining arenas. While we have, I think, a half‑built platform in place, I do not see it being strengthened in the way that it should be. I think some professions are better than others, certainly. Of the 24, however, far too many are too weak in terms of advocacy, structure and understanding of their roles in terms of the challenges of the future.

Rob O’Neill

Again, I agree with Leslie on that. There is variability across the professions. A number of them are seeking to offer a central training offer for members of the profession. In one of the surveys we do, we have asked our members about whether they are engaging with their own professional group and if they know who the head of their profession is. More than 50% of those responding in that survey said that they were not engaging with their professional group. We think that is something that attention needs to be given to, because we certainly feel that there is scope for strengthening the professions, and the professions have a strong role in helping to develop career paths and people skills.

Mr Turner

The National School of Government has been closed. What do you think is the impact of that on the Civil Service to address those skills now?

Rob O’Neill

The feedback we have had from members, and we said this in our submission, is that members prized the ability to be away on residential courses and the quality of what they found there. I think the National School became a victim of what has been happening right across the public sector for the last four years, which were all about cost‑cutting. You wonder whether, in cutting costs and closing the National School of Government as part of that, that has been mainly about understanding cost but not understanding value. We think that it may have had an impact. There is now a move talking about making sure that people go through business schools. That may be a bit late in the day. There has been a bit of a gap since the National School of Government closed. I think we feel that it was not a particularly helpful step, but it has to be seen in the context of the cost containment that we have seen over the last few years.

Leslie Manasseh

I would agree with that. If you look at the results of the Civil Service people survey, they record a steady decline in satisfaction with the training provision from 2010. There has been a very slight recovery recently, but it has not reached the levels of satisfaction that it was in 2009. That seems to be directly related to the closure and the introduction of a much more generic kind of platform, Civil Service Learning, which has yet, I have to say, to establish a good reputation amongst our members.

Karen Foster

It is worth acknowledging that, on the people survey, with satisfaction in learning and development dropping so drastically, it coincided with the abolition of the School and Government skills, and the set‑up of Civil Service Learning. There was going to be a bedding‑in process anyway, but the increase has been very minor. Of the top 10 Departments, we are still sitting at, on average, less than 50% satisfaction. The results for this year’s people survey are not out yet, or I am certainly not aware of it. I do not know if there has been any further increase, but I think it is of great concern. The School of Government represented an opportunity and was a centre of excellence. With it not being there now, what we do is more inward-looking. I think that could, in actual fact, be linked to less movement between the Departments as well, because there is not that opportunity for cross‑fertilisation that there was.

Chair

In a word, what is wrong with Civil Service Learning?

Karen Foster

Selective.

Chair

It is selective; it is too narrow.

Karen Foster

Yes.

Leslie Manasseh

It focuses too much on generic problems with skills and behaviours, and does not have sufficient reputation.

Chair

Reputation?

Leslie Manasseh

Within the Civil Service amongst our members. They do not see it as something that benefits them.

Chair

It is not really an institution, is it? It does not have an identity. It might be one provider or another provider. It is not an institution.

Leslie Manasseh

No, but I think they have a view of Civil Service Learning, in the way they had a view of the college, possibly.

Chair

Who are “they”?

Leslie Manasseh

Certainly my members, when I speak to them.

Chair

Does the Cabinet Office have a coherent view of what Civil Service Learning should be, in your view?

Leslie Manasseh

I am not sure. I think you would have to ask them.

Chair

We will. We will.

Leslie Manasseh

I have asked them that question and I have not had a very good answer.

Rob O’Neill

I think the problem with Civil Service Learning is that it is both a provider and a broker. It determines what courses are available. Some Departments have had some frustrations with Civil Service Learning, where they feel that the courses on offer are not of sufficient quality and they want to do their own thing. They find Civil Service Learning a blocker.

Mr Evans

Looking at the website of your organisation, it says you “help members develop their professionalism and skills. We have programmes to help members achieve their potential and meet Civil Service Competency Framework requirements, to help them to further their careers”. Is it your organisation stepping in where you believe the Civil Service themselves are deficient?

Rob O’Neill

We are stepping in to help our members to progress and not just our members, actually. We are doing a lot of work with people who are not in the membership group that we represent to try to help them to develop and to get into the grades that FDA represents. There is a demand for more and better‑quality training. We do a lot of training around softer skills, which is very well received. In some respects, we are filling a gap that our members feel is not being adequately provided.

Mr Evans

What is that gap?

Rob O’Neill

I think in some respects it is providing training around some of the softer skills that they do not feel that they can adequately get from Civil Service Learning.

Mr Evans

Just for the record, what are those softer skills?

Rob O’Neill

We run courses about storytelling for leaders, on how you can inspire people within your team and how you can get them to understand the direction in which you feel that they should be going. There are a number of other courses like that that we do that are very popular and very well subscribed.

Chair

That brings us neatly on to the development and support for leadership, and the development of leaders. The Cabinet Office, in its written evidence, assures us that leaders are being equipped with the tools they need to deliver the changes they want to see made. This involves sending leaders on to business school leadership programmes before taking up an appointment. However, in the evidence we have from Professor Colin Talbot, he says, “We are probably the weakest country, certainly among the big OECD states, in terms of having a system for developing our senior public leaders, not just senior civil servants.” Do you agree?

Leslie Manasseh

I cannot talk about the business community, but I can talk about the Civil Service. I do think there is a view that it is simply a question of somehow getting people steeped in business and commercial skills, spending a spell in the private sector and then coming back, and then you can very simply apply those skills to a completely different organisation. I think that is a problem because the Civil Service is different from the private sector, in that sense. Of course, it needs leadership, but it is not exactly the same thing.

Chair

He is saying, for example, and I quote him again, that the British Civil Service is “heavily reliant on some fairly narrow approaches”. He says, “It is very unclear who the ‘guiding mind’ might be behind an effort at creating such a leadership development system”. What do you make of these comments?

Rob O’Neill

I have got to say, I think one of the problems, and this is from some of the feedback we get from our members, is not so much what is available, but whether they have the time and the resource to be able to take advantage of training that is available. Again, surveys of SCS members show that over 40% of our members do not feel they have adequate opportunity to enhance their skills or competencies, due to lack of time, and due to lack of resource. These are the people who are managing change right across the Civil Service, and have been over the last few years, managing the cutbacks that have been made, and quite often they feel that they do not have the time, or that there is not the recourse available, to allow them to do that.

Karen Foster

Leadership in change and management is one of the courses that PCS provides for a number of our members. It is very, very popular because they are not getting the opportunity to do that kind of learning in the workplace. The allocation of five days a year, when you go down to the lower grades, is very often used for business critical training. They do not have the chance to develop any leadership; they do not have a change to enhance any other skills or, in fact, there is no skills utilisation that gets developed from our members. We have thousands of members every year who we support into various forms of learning, education and training that enhance them in the workplace, but they are not getting that in the workplace. On the leadership part of that, I do not think the net is cast wide enough to look for the talent that is already in the Civil Service because we are not providing the learning and the opportunities for our lower‑graded members to do that.

Chair

Professor Talbot describes four types of learning in respect of leadership. One we will recognise immediately is “experiential learning”, which is learning on the job. “Conceptual learning” is being sent off to be taught things out of context, and we see the Civil Service doing that. The other two types of learning he describes are “reflective learning”, which is role‑playing in different scenarios and seeing what works or what does not work, or “experimental learning”, which is about actually trying different things in the job that you would not usually be encouraged to try to see what works and see what does not, and learning from your peer group. Do you recognise all four of these methods of leadership training being taught and understood in the Civil Service? Do you feel there is a broad understanding of the four types of learning in the Civil Service?

Rob O’Neill

Most of them, but I think the last one is problematic because of the pressure not to make mistakes, not to do things and then by perhaps taking risks and then making mistakes. The public focus that is on senior Civil Service leaders is such that it is an environment that makes it very difficult for them to experiment and potentially to make mistakes.

Chair

It is ironic that the one programme that Professor Talbot refers to where experimental learning has been run is in GCHQ, which is not exposed to as much public scrutiny as other parts of the Government.

Leslie Manasseh

I agree. I can see evidence of these taking place. However, as Rob pointed out, I think we are in a very risk‑averse arena and it is therefore difficult for people to push the envelope and push the boundaries in terms of acquiring leadership skills.

Chair

What about reflective practice? Do you see people being given much opportunity to role‑play and experiment outside the workplace?

Leslie Manasseh

I do not actually, because I see people who are so busy and who have such long working days, increasingly, that all their time is taken up on operational matters, and hardly any taken up on reflective practice.

Karen Foster

Yes, very much, with the pressure of work, there is not the opportunity within the workplace to take on any other opportunities to develop yourself, particularly the experiential. I cannot see that being something that is—

Chair

In your experience, how many civil servants are getting the five days’ training per year that the Government says they are entitled to?

Karen Foster

I cannot put a figure on it, but I do know that many members say that they cannot get the time off to train because of operational needs, deadlines and workloads.

Chair

Is that not self‑defeating? If you do not people give time off for training, does it not actually degrade the capability of your organisation? People will be busy being less effective.

Leslie Manasseh

Yes, but there is a conflict, is there not, between, if you like, the pressures and targets upon operational managers and what might be a centrally‑driven approach to upscale the Civil Service? If you do not have enough resources, you are going to be reluctant about letting people go.

Chair

Is this an attitude problem? If the Government and the leadership of the Civil Service place enough emphasis on the importance of training, people will go and do their training.

Rob O’Neill

I think so. We think that there needs to be more of an emphasis given to this, and almost making it mandatory for people.

Chair

So there is not enough of a training culture.

Rob O’Neill

No.

Leslie Manasseh

Can I just add one point? There is mandatory training and there is also a lot of online training. Again, amongst the members I deal with, neither of those has a very high reputation. It is a bit of a “tick in the box”. “We have to do this, and we have to sit in front of a screen for 40 minutes, so let’s make it as short as possible”. I think that does degrade the quality of the training as well.

Mr Evans

I am just wondering, if you are making comparisons between the public sector and the private sector, whether you believe the public sector are operating at a disadvantage on training and improving your skills, as compared to the private sector.

Leslie Manasseh

I believe that. I think one of the problems with the Civil Service Reform Plan is it is not based on a clear assessment of the future role of the Civil Service, the challenges it is going to face, and therefore the skills, organisation and structure it needs. Unless you have a clear idea of the skills you need and the resources you need, it is going to be very difficult, I think, to put in place a comprehensive training plan. In my experience, the private sector is a little better at foreseeing what it has to be able to do in a few years’ time.

Mr Evans

Is that because if the private sector do not get it right, they are out on their ear, whereas the public sector are always going to be there?

Leslie Manasseh

That may be a factor. I am not so sure about that. The mistakes are made in both sectors.

Mr Evans

In the private sector, you pay a bigger price. In the public sector, when they get a contract wrong it can cost hundreds of millions and it seems nobody pays a price apart from the taxpayer.

Leslie Manasseh

That is true. There is, within the private, sector a view, too, that you can buy in skills when you need them. It is easier to do that in the private sector. Indeed, one of the things the Civil Service suffers from is the pay gap between the private and the public sector, and therefore the leakage of skills.

Kelvin Hopkins

On the pay gap, apart from being demoralising and whatever, it also means that there is a shortage of skills. People are drawn away to the private sector, where they can earn more money. How much has the Civil Service been affected by the crude cutting of the headline numbers of civil servants at every level, over the last few years? The pay gap helps this, but would you like to comment on that?

Rob O’Neill

There have been some problems in recruitment over the last few years. When the Civil Service does go out and tries to bring in skills, it quite often finds that it cannot do so at the rates of pay that it wishes to recruit people into the Civil Service. Retention has not been so much of a problem for the Civil Service in recent years. We have recently been surveying HR managers across the Civil Service and they are quite clear that, as the economy picks up, their problems are going to rise and that we are going to start to see people leaving the Civil Service more. Indeed, as the Civil Service increasingly prioritises skills that are very prized in the private sector as well, especially digital and commercial skills, then you are competing in those markets and the current pay arrangements in the Civil Service are not sufficient to allow you to properly compete.

Kelvin Hopkins

How much has this been drawn to the attention of or emphasised to, Government? Is there a political appetite to address the problem?

Rob O’Neill

Constantly. It is not just us that are doing this. I am not sure if he is giving evidence here, but one of the directors of the Hay Group—which is a big consulting group that has got the most used job evaluation system in the UK and possibly across the world—has recently gone on record as saying that the Civil Service has the lowest‑paid leaders of any sector across the economy. He has actually given some figures of the gap that exists between the Civil Service and the private sector. The gap is huge and it gets greater as you go up the scale.

Kelvin Hopkins

Colin Talbot talked about other countries that compare with us unfavourably in many respects. Is there a case for having an approach like, say, France, where they recruit the best minds, retain them through their whole career and they have this enormously strong, powerful centre, the State. Even when governments collapse and fall apart, the government carry on because the State and public service are so strong.

Leslie Manasseh

I don’t think I would put it quite like that. It is well documented that there are significant recruitment problems across the Civil Service, both at senior levels and specialist professional levels, and clearly that is having an operational impact. There are an awful lot of sticking‑plaster solutions in place, in terms of the way people are trying to manage without having enough of the right skills across Departments. That is storing up enormous problems for the future. The Government have got ambitious plans for transport infrastructure, but I am clear that unless you have enough geo‑technologists, traffic modellers and the like in the Department for Transport, you are not going to be able to deliver that. It may be that the problems of a skills shortage now are not visible for some years. However, that does not make them any the less, and certainly it makes it more important that they are foreseen and mitigated now. Unless the pay gap is recognised and dealt with then I can see no way in which that problem is going to get better. It will get worse.

Kelvin Hopkins

What about recruiting career civil servants straight from universities? Given that we have got the City with enormous incomes, some of the best minds from universities must be tempted to go there rather than the Civil Service these days. The Civil Service, in my day certainly, used to recruit the very best graduates for the senior Civil Service. Is there a problem now with pay and recruiting the very best from universities?

Rob O’Neill

I think the pay that graduates enter the Fast Stream at is generally competitive. Increasingly—and we are being told this by our Fast Stream members—the problem is that they are coming in, they are developing their skills and they want to work in the public sector for a few years, but increasingly looking outside, and seeing the Civil Service as a stepping‑stone to being able to go off into the private sector and earn more. What they are also seeing and they are not happy about is the lack of respect that civil servants get quite often from politicians and certainly from the media. They feel that quite strongly, and feel that they would be valued more, perhaps, by working elsewhere. Those two forces are coming together and making a lot of these bright young Fast Streamers, who we really need to keep in the Civil Service, think very carefully about where their long‑term future is.

Kelvin Hopkins

It is a question of respect, by Government and the public, for civil servants, instead of being regarded as a burden and a cost on the taxpayer?

Rob O’Neill

Exactly. One of the things our members say constantly to us is that they are fed up with being praised in private and criticised in public.

Kelvin Hopkins

Would it not be much more sensible to find a way of retaining those people for life, once they have been recruited and once they have been trained, in the Civil Service, rather than seeing them float off into the private sector?

Rob O’Neill

Of course.

Leslie Manasseh

Yes, of course.

Chair

Very good. I think we are finished. Is there anything you want to add? Thank you very much indeed. That was a very helpful contribution to our inquiry. Examination of Witnesses

Witnesses

Clare Moriarty, Director General, Rail Executive, Department for Transport, and Bill Crothers, Chief Commercial Officer, Cabinet Office, gave evidence.

Chair

Welcome to you both. May I ask each of you to identify yourselves for the record, please?

Clare Moriarty

I am Clare Moriarty. I am the Director General for Rail Executive in the Department for Transport.

Bill Crothers

I am Bill Crothers. I am the Government’s Chief Commercial Officer, based in the Cabinet Office.

Chair

Again, I must invoke short answers to short questions, please. I will pull you up if I think you are going on too long because we are under pressure of time. Thank you for being with us. I want to do something rather unusual in this Select Committee. I do not want to dwell on what is going wrong and seek publicity for exposing that. I want to find out what you are learning from what has gone wrong, and therefore what is going right and what you are putting right.

Sheila Gilmore

This is particularly for Bill. Could you say briefly how successful you think you have been in addressing the commercial skills gap?

Bill Crothers

Mixed, I think, if it is an honest assessment. A lot has happened in the last three or four years and I could list some of it, but perhaps the one to mention is that, because of the deficit and the need for making savings and doing business better, commercial has come onto the agenda. Your last speakers were talking about respect. I think actually procurement and commercial has become more important; they are second or third‑class citizens. A lot of things have flowed from that. It is mixed. We have made some good progress. There is more to do, which I can talk about.

Sheila Gilmore

Some of the commentary around this has been to suggest that it is not just a question of skills, but also a question of culture. To what extent has there been a change in culture?

Bill Crothers

Often when I talk about what people need it is skills experience, judgment and then confidence. The key thing is being able to have the confidence to make judgments. I think that is the biggest cultural change we need, where people do not feel worried about being criticised in the press, criticised in Committees and criticised by politicians. If they were actually confident, they would use their judgment based on their experience. We have a way to go there. We have made some small people, who are not big enough to make judgments based on their experience.

Sheila Gilmore

Do you think you have identified the right skills gaps now?

Bill Crothers

I do think we are getting there. I heard you talk about training. I think it is actually a career model. We need to develop people’s careers all the way up, as a private sector organisation would do. I have been with John Kingman, the Treasury Permanent Secretary. We have been doing a review of commercial capability across each Department. In summary, what we have found is that at the experienced level we have probably got about half as many people as we need. At the junior, inexperienced level, we have got far too many people. We need fewer people with deeper experience and the confidence to be able to make proper business judgments.

Sheila Gilmore

Does that mean attracting external skills? How successful have you been in doing that?

Bill Crothers

It is quite a departure, I think, from how the Civil Service has developed specialists. I do not think there is a cross‑Department function, like commercial, that has been managed this way before. I think we need to recruit, absolutely, but hundreds not thousands. I also think we need to grow our own. This year, for the first time, we have got a commercial stream to the Fast Stream. We are actually recruiting top graduates coming in and they nominate that they want to specialise in commercial. We are also out building links with universities because this is a good time to pick up graduates. We need to grow our own and bring them in, really nurture them and develop them, and not just train but give them experience against a template, as well as recruit people. No doubt we will talk about remuneration, because that is a factor.

Sheila Gilmore

When you are recruiting graduates, and we have got a Fast Stream, is there any particular type of graduate you look for? Alternatively, do you see it as something you can train once you have recruited?

Bill Crothers

There is a saying that Richard Branson has, and that I believe, which is, “We recruit attitude and train skill.” I think there is a lot in that. In terms of my background, I was in Accenture for 25 years or so. In the private sector we prided ourselves in developing the very best. We would have people who were classicists, historians and English graduates, and within two months they were coding as if they were experts. If you recruit attitude, potential and capability, you can go a long way to train people to do the job.

Sheila Gilmore

To what extent is Civil Service Learning helping you in this training?

Bill Crothers

It is a component. Really, Civil Service Learning is just a platform. We develop the training courses. They deliver some of them online. The vast majority, something like 36,000 conducts, happened online in the last year. 2,000 or 3,000 happened face‑to‑face. I am much more focused on the face‑to‑face. That is not really Civil Service Learning. That is us to develop the content. There is a Major Projects Leadership Academy that typically DGs go through. I make sure I go up and spend two or three hours for every cohort talking about what Government spends and key commercial skills. We have got the commission academy that is face‑to‑face and going out to the wider public sector. We have now got a two‑day master class for commercial specialists. It is about developing the content. I think that is my responsibility. Civil Service Learning is a delivery platform. I think we need senior, experienced practitioners to be on the courses delivering them because you bring it to life with previous stories and experience.

Sheila Gilmore

Would you be able to sum up what you have taken away from your experience so far in your current role?

Bill Crothers

We have made good progress, but there is more to do. I think we are really very keen to take a look, over the next five years, to establish a proper career development model, growing our own, developing our own, and recruiting in against a proper set of standards. There is a tendency to recruit in and say, “Private sector good, public sector bad”. That is too simplistic. We should be developing a standard so that we assess people when we recruit them to see what relevant commercial skills they have. We probably need to develop a set of specialists, so a specialist grade in the Civil Service. We probably need to change our remuneration and it is not just a case of paying more. It is actually pretty hard for a civil servant to lose their job. If you are in the private sector you can lose your job pretty easily if you do not perform. That is the environment I lived in. We inch up the remuneration; we take away some of the tenure; we perhaps take away some of the things people who are coming in would not care about, like pensions. We assess them against a proper standard of relevant experience. Then, when they are in, we develop them.

Chair

You cannot do that at the moment, can you?

Bill Crothers

It is being discussed right at the top of the shop. Those conversations are happening more than I have seen in the last four years, Chair, and I am really hopeful.

Chair

Are the 16 jobs or so in the Ministry of Defence in that category now?

Bill Crothers

16 jobs?

Chair

After the failure of the GOCO, there was latitude given to the Ministry of Defence. Is that the kind of latitude that you have described?

Bill Crothers

Yes.

Chair

They have got that, so the precedent has been set.

Bill Crothers

Yes. They have got it and they are probably a little bit more advanced in my thinking because they have been given the freedoms before. We are looking at getting exactly the same. By the way, I do not think that it is a lot. If I picked a number, it is 500 or 600, outside of MOD, that we need of really deep commercial specialists.

Chair

What about the problem of what we call “tissue rejection”? Do these people suffer tissue rejection, where they get expelled by the system because they do not understand the culture of the system?

Bill Crothers

Again, the easy answer is yes. The Autumn Statement will be coming out soon, with an emphasis on savings. Jeremy Heywood gave a conference call with the top 200 civil servants last week and priority number one was commercial skills, and getting commercial skills right because it is so important for the reputation of the Civil Service. The messages from the top are right. Therefore, Permanent Secretaries are beginning to see that deep specialists should be welcomed and can help in certain situations. We have enough examples now: the negotiations with Serco and G4S were us working closely with the Ministry of Justice. I could give other examples. I think it is turning. It would be too much to say it has turned, but I think it is turning.

Chair

I know other people want to come in, but is there enough emphasis on growing our own talent in‑house? I worked for Ford. If you look at really successful organisations—look at an organisation like Caterpillar—they have always grown their own talent from within. These are the most successful organisations we can see. The John Lewis Partnership hardly recruits from outside at all. Is it not an indication of internal failure if we have to recruit people from outside?

Bill Crothers

I am not sure, Chair, it is a failure. I do think we should do much, much more in growing our own, developing our own and moving specialists across Departments. We should do much more.

Chair

What is the leadership doing about that?

Bill Crothers

As a functional leader, as a leader of one of the key functions, commercial, I have been asked to work up, essentially, a proposal. The proposal is worked up. It is with the top of the shop, so Jeremy and John Manzoni as well.

Chair

What does that proposal recommend, if we are allowed to ask?

Bill Crothers

In summary, it says that we should develop a cadre of specialists.

Chair

Is that going to be trained from within or are we going to have more of this rather unsatisfactory Civil Service Learning modular training.

Bill Crothers

My recommendation is that you do both. You develop from within. You grow your own. You really nurture them. However, you also continue to keep it vibrant by recruiting from outside. It is a mix.

Chair

With the demise of the National School of Government, are you not lacking some institutional framework for this kind of institutional learning?

Bill Crothers

Part of the proposal is to set up a training academy. Let’s start with all new civil servants who are commercial specialists going through a standard training course, not for a day but perhaps for three or four weeks. We make it residential. You get a cultural bind and you get people who understand common experiences and so on. That is part of the proposal.

Chair

Forgive me for asking another question. Is the question of getting the Civil Service working together not more about sharing a culture rather than having particular skills? If you and your colleagues share an understanding of how you work in your institution, even if you have the wrong skills or are adapting your own skills to a different set of circumstances, if you share a culture, how does the Civil Service train that cultural affinity across disciplines in order to make the Civil Service work? Is it there?

Bill Crothers

There has been a traditional emphasis. At least in my experience since I have been a civil servant, the primary line has been the Departments. There has not always been a natural sharing across Departments. I think over the last few years I have seen it change.

Chair

Was the National School of Government not a cross‑departmental organisation?

Bill Crothers

Yes, it was.

Chair

How do you replace that capability?

Bill Crothers

We replace it by having a stronger function and by continuing to have training courses that people do not just do by e‑learning but physically attend, so they have common experiences.

Chair

Do we not need co‑operation between professions as well?

Bill Crothers

Yes.

Chair

Do the separate professions need to be in joint training courses?

Bill Crothers

Yes.

Chair

How is that delivered now?

Bill Crothers

For example, there is close working between commercial and finance, or commercial and legal. The functional leaders speak. Julian Kelly, who is finance, and I speak. Probably not as much, but a few times there have been joint courses, of people from—

Chair

I am genuinely not trying to trip you up here. I am trying to identify what kind of gap there exists in the broader institutional training of the Civil Service, because the Government are very keen on creating a more unified Civil Service. You are thinking about one profession, but how much have we actually addressed the cross‑profession and cross‑departmental institutional education, and education of leadership, of the Civil Service? Is there still a gap?

Bill Crothers

I can talk through my optic, if you like, and how I see it. I think John Manzoni’s appointment will make a big difference. From conversations so far, one way that John is tackling that job is to understand the importance of mature cross‑departmental functions, as he would have had in BP, I would have seen in Accenture and other places, and you would have seen in Ford, I think. He has got seven or eight functions. Again, these are standard corporate functions you would expect. He will have those functional leaders report directly to him. They will meet on a regular basis and he will set a common agenda for them so that he gets interaction between them. Then below that people will mix and interact and so on. I think we are at the very beginning of that, but that is the agenda that John is going to drive over the next few years. It is a difficult model to understand, because it is a model based on intra‑dependence and people working together, and it is not traditionally how most things have happened. The advantage we have is Chris Last, who is Head of HR, is ex‑Ford, so he knows exactly how it worked there.

Lindsay Roy

You said there had been a positive change in culture. How do you gauge that effectiveness?

Bill Crothers

Goodness—

Lindsay Roy

In two minutes.

Bill Crothers

You do not measure culture. That is not meant to be trite.

Lindsay Roy

What are the indicators?

Bill Crothers

You see the impact. I always think that you do not need to measure the wind‑speed to know wind is blowing. You see the trees bending. The way we would measure the impact is we will have fewer contractual failures. That is the key. We have too many contractual problems. We will have fewer contractual problems; we will see people naturally working across Departments; we will see MOD pick up the phone and say, “How can I help, Home Office?” and so on. They are the best indicators: people co‑operating, and us not being in the press for contract failures as often as we are. I think that is the measure.

Kelvin Hopkins

I am quoting you from January this year. You said that IT industry suppliers had behaved “appallingly”, and I will not do the full quote. Is it not the case that it is absolutely vital to develop in‑house, long‑term capability, with not just IT skills but actually commitment to a public service ethos as well? We are not going to get to grips with these industries that rip off the public purse until that happens?

Bill Crothers

Yes. The Government Digital Service, which is essentially another function, has recruited 200 or 300 people at the centre. GDS, and Mike Bracken as the functional leader, has now helped Departments recruit. The MOJ, I think, has now got a couple of hundred specialists in new digital IT techniques. We absolutely need to be developing our own capability, so I completely agree.

Kelvin Hopkins

Thank you.

Mr Evans

We have heard Mr O’Neill decrying the fact that civil servants are not held in high respect and I speak as a member of a profession that is highly regarded throughout the country. Do you think that it is part of what you are talking about, in as far as security of tenure really does the Civil Service no good whatsoever, that it would be far better if there was more fluidity within the organisation? We spoke in Washington about, “Surely more civil servants should get out into the private sector more often?”, but there was a fear that, if that happened, they would not come back. Just as there should be in‑training to bring the leaders up to scratch, but also bringing people from the outside into the Civil Service to breathe fresh air into this is how we do things, do you not believe that, basically, it may take a full review? It is not just pay; it is the whole gamut of Civil Service.

Chair

Thank you. Ask a question, please.

Mr Evans

That was it. That was the question.

Bill Crothers

I think that bringing people in and people going out is a good thing. It creates vibrancy; it stops stagnation. Actually, I take issue with one of your previous questioners when he said you would like to keep people a long time. If someone leaves, in some ways that is to be celebrated, because it means we have done really well. Why I am here is because it is very rewarding, very stimulating and very interesting work. It really is. Getting that message across to people is important. I think there is vibrancy. It works both ways. I think there should be stronger accountability, yes. I think there are consequences for not doing well, but not that everybody is on a knife edge and not a very aggressive American culture. However, I do think that if something goes wrong, you should take responsibility. But there is a flip side. If something goes really well, you should similarly get a reward. At the minute, there are not enough rewards and there are not enough consequences.

Mr Evans

I have a last question. In your opinion, have there have been too many failures within the Civil Service, which, of course, appear in the newspapers, where the buck does not stop anywhere?

Bill Crothers

I think there could be greater accountability, yes, Minister.

Chair

Thank you for that. Clare Moriarty, do you want to comment on anything that has been said so far, before we come to your bit?

Clare Moriarty

There is one particular thing about how we grow our own, because that is something that is certainly a preoccupation for us within Rail Executive. I would agree with all the things that Bill was saying. We have created within the Department for Transport our own commercial fast track, because actually one of the ways in which people learn best about commercial skills and capabilities is actually doing the job. If you look at the way that private sector organisations would train their commercial people, they would be sitting second seat in negotiations. They would be working on negotiations. They would then move into doing it more for themselves. What we are trying to do, therefore, is bring in a cadre of people who can take advantage of the huge variety of opportunities we have within the Department for Transport actually to be involved in commercial negotiations. We have started to bring in apprentices, and we are trying at each level. We bring people in at the graduate level, and pull through some of our people who have got a lot of experience to make sure they get exposure and they move through doing negotiator roles into doing project lead roles, and we grow our capability like that, as well as supplementing that with people who have got direct and recent external rail industry experience.

Chair

Very good. You were closely involved with the cancellation of the West Coast franchise competition, which went so badly wrong. We had the two reports. The Laidlaw report talked about deficiencies in organisational structure and resourcing, and how key skills were lost. We had generally rather more junior people in the Department dealing with much more experienced and senior people outside the Department. Then we had the report from Richard Brown, the chairman of Eurostar, who pointed out something more interesting. He talked about the need for people to “have the confidence to engage at senior level when appropriate”. Can I ask you to just comment on that? Why do you think that was his finding?

Clare Moriarty

At a simple level, franchise competitions in particular are very high‑value contracts for the rail industry. Each time we run a competition, on the bidding side they would be putting together senior teams with experienced people from around the industry. A lot of people move around industry. They specialise in bidding; they do not always work for the same company, but they will specialise in that area. They are significant senior people and we need people on our side who can really sit across the table and be credible negotiators with them.

Chair

So this was not about internal engagement.

Clare Moriarty

I do not think it is about internal engagement.

Chair

I misread it, because later the Permanent Secretary, in his response to the Laidlaw and Brown reports in February this year, and I will quote the whole paragraph, if I may, said, “A culture of open and honest exchange by staff at all levels with senior managers is fundamental to the way the Department does business. The Department recognises that senior leaders and managers have a vital role in demonstrating in action that honesty is welcomed and that nobody is later penalised for raising issues that their colleagues may find uncomfortable or challenging. In parallel, we have endeavoured to change the tone of dialogue with the rail industry to something that is more open”. This is a very unusual thing for a Permanent Secretary to have said. This looks like, to me, quite a big change in culture. Could you say something about this?

Clare Moriarty

Certainly. I think, as you say, what happened on the West Coast competition cancellation is well documented. Certainly, in terms of the leadership that I have offered to the Rail team since I took over at the beginning of last year, it has been very much about creating an environment in which people can move forward and move on. I think there was a sense, rightly or wrongly, that people did not feel as able, or had not felt, that raising concerns was necessarily the most welcome thing to do. I spent a lot of time, very visibly and almost theatrically, saying to people, “Please do raise your concerns. I want to hear; I want to know”. There is a constant balance to be struck between actually getting on and delivering things, and making sure that everybody feels comfortable about them. An awful lot of my time was spent making that judgment and making sure that nobody felt there was a concern that had been brushed under the carpet, but equally being clear about where the responsibility for holding risk sat. A lot of the time I was receiving risks from people, making sure that they understood that it was welcome, and that I was really grateful for them to have raised it. Actually, then, it was for me, the Permanent Secretary, and the senior team, to hold that risk and to make a judgment about when we should proceed and when we should go back round the loop again.

Chair

At the time that all this broke, there was a great deal of public opprobrium heaped upon individuals at a relatively junior level in the Department. To what extent are you now saying that that was a bit unfair?

Clare Moriarty

We went through a very thorough process in the Department to look at everything that had happened. We looked at both Sam Laidlaw’s inquiry, which established the facts, and we had an HR investigation that sat alongside that that interviewed 30 or 40 people. Everybody who had been in any way involved in the competition, including the whole executive team, was interviewed and reviewed as part of that process. In a sense, what plays out in the media is always going to be a small slice of what is going on. It is right that Departments should not be conducting HR investigations in full public, but that process did go on in a very thorough fashion.

Chair

Of course, and I am very anxious not to intrude on anything that should not be in the public domain in this cross‑examination. Usually the public sector just says, “Let’s just move on. It is all over. It has died down; let’s just move on.” To what extent did the system find it novel to have this kind of investigation that you conducted?

Clare Moriarty

I cannot answer for what has or has not happened in other Departments. What I do know is that within the Department for Transport, we felt that it was very important that we did look seriously, thoroughly and comprehensively at what had happened, and conduct an absolutely comprehensive review so that we were able to understand and follow the normal processes that exist.

Chair

What do you think the key lesson in the DfT has been for how the Department is led?

Clare Moriarty

I think there have been all sorts of lessons. It was a deeply, deeply traumatising experience for the Department.

Chair

It was and I am sorry to be raising it all again.

Clare Moriarty

I think it is something from which we all can learn and we all should learn. Certainly, I know to some extent that the external perception was that this was about a very small number of people. I can certainly assure the Committee that we went through a very thorough process, both in terms of understanding what had happened, but also in looking from top to bottom at the things that the Department needed to do. One of the things that we came out with was a response to Sam Laidlaw’s report, which was published when it came out. We boiled that down into something we called the Laidlaw prescription, which we have got printed on little cards, which people carry around with them. That had five elements: clear process, clear responsibility, adequate resourcing, openness to challenge, and escalation and honesty about risk. I think all of those five themes have then been translated into some quite specific action. We have documented and clarified our processes. We have reviewed a lot of our governance. We have created clarity around the responsibilities, particularly of the people leading projects—SROs, as they are called. We went through a very thorough process of looking at how we needed to resource not just the franchising programme, although that was a big area, but across all of our significant projects. As you quoted, we also put a very strong emphasis on making sure that not only were we as the senior team open to challenge but that people knew that. It is one thing to be open to challenge, but if people do not recognise that, it does not achieve anything.

Chair

So one of the key skills gaps in the Civil Service is perhaps on that card, about being open to challenge and being prepared to escalate concerns and risks. Very often we have heard that the Civil Service is not a very easy place to do that.

Clare Moriarty

I would hope, personally, that it always is possible to do that. I think there is sometimes a question about whether people’s perception in a world where you have to deliver—

Chair

Let us ask Bill Crothers. Do your senior leaders and their people carry that card in their pockets?

Bill Crothers

No.

Chair

Should they?

Bill Crothers

Yes. Good idea.

Chair

How is the learning carried from one Department to another? This seems to me a really good, positive lesson to learn.

Bill Crothers

The problem is that there are too many of them. I do have a group who work for me who read any old PAC, PASC, etc., reports that concern commercial, which they try to abstract, distil and send around to people. That one I missed. I did read the Laidlaw report; I just did not distil those five points.

Chair

Does this not underline again that there is an institutional gap, or capability gap, in the Civil Service? There is no institution to share learning and experience of this kind across the whole of the Civil Service.

Bill Crothers

Yes. I might express it differently, which is that there is not a thirst for people seeking it. In other words, if you push it out and say, “I am going to share”, people get bombarded with material. If you are hungry to get it and seek it, that would be a better cultural change.

Mr Evans

I catch that train from time to time. I have to say, as a Member of Parliament for 23 years, I have experienced a few shambles in Government. Clearly the West Coast mainline counts as one of them. Was an estimate ever made as to the financial cost of the irregularities that took place during that bidding process?

Clare Moriarty

The cost was mainly that we refunded the bidders’ costs, and that was in the region of £40 million to £45 million.

Chair

I have to say, this is not what I want to really dwell on at this stage because it has all been done before. This has all been done before.

Mr Evans

No. I am just going to carry on.

Chair

You are entitled. I cannot stop you.

Mr Evans

I do not want to get involved in the blame culture, as such. However, it goes back to what was said earlier on. Did anybody pay a price for that?

Clare Moriarty

As I was saying to the Chair, we went through a very thorough investigative process, at the end of which there were disciplinary proceedings.

Mr Evans

Would these have been similar to what happens in the private sector?

Clare Moriarty

The Civil Service has its own procedures, but they were certainly thorough proceedings.

Chair

The question I would ask is about the people who were publicly identified at the time. If they were not working in a culture where it was possible, or they were encouraged, to escalate risks and be open and honest, how much are they really to blame for what occurred? Is it not much more of a systemic cultural failure that led to this incident? You seem to be addressing this. What does accountability mean when nobody really feels accountable because they are not encouraged to be accountable by raising the risks and escalating the concerns?

Clare Moriarty

I think people within the Department for Transport are very, very conscious of personal accountability. I do not think there is any doubt about that. Indeed, to some extent, as I was saying, my job has been to make sure that people feel accountability at the right level, because it is possible for everyone to feel they are personally accountable for making sure nothing goes wrong and actually that can result in a situation where nothing ever happens. I have been holding for my organisation, for the last best part of two years, the requirement to be able to say, “We need to move on. I hear what you are saying.” Sometimes, when people have raised risks, I have gone back and we have revisited a process that has already been through in order for people to feel more comfortable about it. There have been times when, again very visibly, the senior team, the Investment and Commercial Committee for the Department as a whole, has said, “We see that risk, and we are making the decision that we are going to take that risk”. They have been very clear with people that people have individual accountabilities. They are accountable for making sure that their job is done properly, and they are accountable for making sure that risks are escalated to the right level. If they bring a risk to me that I do not think they should be burdened with, then I have almost physically taken it from them. At the moment, I think it is a natural reaction to the trauma the Department went through. People feel very accountable and they feel anxious about the consequences of that accountability.

Chair

In a way, the key accountability is that you feel accountable for their level of accountability.

Clare Moriarty

Yes.

Mr Evans

When we go through the bidding process again, which we will do, are you absolutely assured now that the changes that have been made, because of the lessons learned, will mean that we will not go through similar problems?

Clare Moriarty

I am absolutely as sure as I can possibly be. We have a very, very different process. I think one of the lessons was that we simply did not have the dedicated resource working on these competitions that we needed. Every single franchise competition now has a franchise project team leader at a senior level. We have fully staffed and dedicated teams for each franchise competition. We have our financial, legal and technical advisers in place. We have processes that just make sure that we do things really, really thoroughly. The first franchise that we let following the West Coast was the Thameslink/Southern/Great Northern contract, and that project just last week won The Commercial Award at the Civil Service Awards. I think we have come a huge long way. I am absolutely not complacent. Every time we go through one of these processes, they are very high risk. There are so many things that can go wrong when you are letting a £9 billion contract. I am very conscious of my role and accountability. Our Managing Director of Rail Passenger Services is very conscious. I cannot guarantee nothing will ever go wrong, sorry.

Chair

Sorry, we are getting very long‑winded. I do apologise. Do you think you also lay sufficient emphasis on contract management and the franchise management after the franchise has been let?

Clare Moriarty

We have always had very good teams doing contract management within the Department for Transport. We have dedicated teams who are responsible for making sure we realise the benefits from each of those contracts when they have been looked at. In particular, in the recent review of the Serco contracts, they were given a very clean bill of health.

Chair

Now is not really the opportunity to raise it, but many of my constituents travelling in on the Great Eastern Main Line would beg to differ. I just put that on the record, not to press you on it.

Greg Mulholland

I have just a slightly wider question following on from Nigel’s question. This was a debacle, clearly. It has not been the only one; there have been major errors. A few years ago we had the NHS IT fiasco and the extraordinary cost of that. There have been several huge, high profile disasters of this nature. It is good to hear that you do not think it can happen again. You obviously accept the damage it does when tabloid newspapers then attack the very basis of the Civil Service, the professionalism of staff. Has there really been a change in how such projects are dealt with? Are you also, as well as dealing with them internally, sufficiently robust in saying to politicians, when they are asking you to do things that actually you do not believe are necessarily achievable, to think again to avoid such situations?

Bill Crothers

About a year ago, following the electronic tagging episode in the Ministry of Justice, one of the things I was asked to do by the Minister for the Cabinet Office was to review all contracts—as it happened, all Serco and G4S contracts—and how they were being managed across all Departments, and then to extrapolate from that. I came up with a report and some advice. We are now following up, reviewing each Department and seeing how they are implementing that. One of the findings is that there are three stages of commercial, in a simplified view. There is working with policy, with the market, and with suppliers before you start procurement. There is then running a procurement. Then there is post‑contract contract management. Those are the three stages. The 4,000 people who are called “commercial specialists” typically spend all their time in the procurement function. They typically have not spent their time in pre‑procurement, and they have not spent sufficient time in contract management. Actually, in this regulated system, all the relative value is in pre‑procurement—working with policy, saying to Ministers, “That is not the way to do it”, and getting the market to maximise competition—or in contract management. Traditionally, and it is a bit of a generalisation, the Commercial team have spent their time in exactly the wrong place. What’s more, 75% of those 4,000 people are either SEO, band 7 or below. They are actually relatively junior. A big junior cadre, a not sufficiently experienced bunch of people, have all been working in the wrong thing. The report said we should fix that. The report focused on contract management. DfT actually reacted very, very well to West Coast, and I think they are in a good place. That might be the kiss of death for their next contract, but other Departments need to improve and they are embracing it. It is not process; it is culture. Some Departments have responded as a process response, and that is difficult to have a conversation with, because they can show you how they have done tick lists. It is actually a cultural response to the problems. I am not sure if that answers it, but we are trying very hard.

Chair

It is a very good answer.

Greg Mulholland

No, Thank you. I have a final question, if I may, very quickly. Is the timetable for the Universal Credit realistic? Will it be achieved? If not, have you told Ministers?

Bill Crothers

It does not sound like that is one for Clare. I don’t have the details; I really don’t. I don’t have anything meaningful to say to you. We believe it is realistic. I know the Department is giving a lot of time to it. At certain milestones, it is reviewed by MPA. I take part in those reviews. However, I am not current on it, I am afraid.

Chair

You may not be current on it, but do you think there has been learning from the Universal Credit experience? In some respects, the first two years of attempted implementation do seem to reflect the same lack of transparency, openness and honesty. There must have been people in DWP who knew it could not be achieved on the original timetable, but it took an awful long time for the leadership to find out.

Bill Crothers

I have been a civil servant for seven years. I do see a big contrast today with seven years ago. Maybe that is just because now I am in the Cabinet Office and I see it more. Only this morning, I was talking about a situation in a completely different Department, and I was drawing a parallel with Universal Credit, and saying, “We really need to learn from that and not do the same thing again”. I do not know whether it is systemic, but I think there was a lot of learning from Universal Credit.

Chair

We want the learning to be systemic.

Bill Crothers

Of course. I understand. I am just saying that I am not sure many people do that.

Chair

Universal Credit people should be carrying Clare’s card in their pockets.

Bill Crothers

I am going to take the card and send it around. I will write to you and tell you I have done it.

Chair

Can you send it to us as well, please, if it is not a classified document?

Clare Moriarty

It is certainly not.

Bill Crothers

Learning is not always public. I do think that DWP have learnt a lot from Universal Credit and the same people, if they were doing it again, would do it differently. I feel pretty confident on that.

Chair

How can we make sure we do not have to go on learning the same lessons over and over again? That is what these questions are really about. How can we do that?

Clare Moriarty

I think the MPLA, which Bill referred to, is a really important space for cross‑departmental learning at the level where it really matters. We have had nine people from Rail Executive who have gone through the MPLA. They are our directors and are deputy directors, so these are people who are leading our franchise projects and leading our major projects. It is a safe space. It is a place where, certainly, people are able to talk about their experiences. Some of my people who have been through the West Coast experience have talked to their peers. It is different types of environment for different moments, but I think we do have some of the right mechanisms to do that.

Bill Crothers

I would briefly add—and maybe this will be as interesting to you as Clare’s card—that we created a team called the Complex Transactions Team. It is essentially a big deal team.

Chair

This is within the Cabinet Office?

Bill Crothers

Yes. It is within my group, so it is within the commercial function. Chris Hall, the chap who runs it, is sitting behind me. He has extremely deep commercial expertise. Essentially, what we have done is mimic what the large suppliers do. The large suppliers who are selling to a Department have the same team who then go to the next Department, and the next Department. Typically, it was often the case that the civil servants who were buying a big deal were doing it for the first time. It was a battle of unequals. We have a team about 50 people now who essentially move around from deals, either disputes, negotiations or procurements. They pop up in one Department and then another Department. When they are dealing with a supplier who is bidding in one Department, it is the same people who then pop up in the next. That is a straight copy from what the big suppliers do. They have a big deal team. We now have our own big deal team; we just do not call it a big deal team. We call it the Complex Transactions Team, comprising 50 people who have been recruited with deep expertise. Actually, if you went across and were to ask a number of Permanent Secretaries and DGs, that team is getting a lot of plaudits, because they are carrying experience. Typically, one of the most powerful things that someone can say is, “This is how we did it in that Department; this is not”, because it means they have got experience. That is one small mechanism. Actually, 50 people can make quite an impact in the pond.

Kelvin Hopkins

Is the overwhelming problem of the whole concept of franchising that it was dumped on the Department for Transport by politicians, and the Department for Transport just had to cope with it? Would it not be much more sensible to have all of the railways integrated under a national railway authority accountable to Parliament? In that case, we would then start to reduce costs both to passenger and to taxpayer, and perhaps perform as well as—

Chair

I think that is a policy question. You can decline to answer.

Kelvin Hopkins

I think it is an important question. It is the elephant in the room and it has to be asked.

Clare Moriarty

I do not want to take too much of the Committee’s time on a policy question, but franchising has been a very successful model. We have twice as many people using the railways as passengers as we did 20 years ago.

Kelvin Hopkins

Excuse me for interrupting, but that is coincidental. It is not a cause and effect.

Chair

I am going to stop this. We have not got time for this, I am afraid.

Paul Flynn

In assessing which way the wind is blowing, you described your epiphany moment, where you seemed to smile at the idea that although these foul‑ups cause enormous disruption to millions of families, they do have the advantage of acting as a form of adult learning for senior civil servants. Is that a justification for the foul‑ups?

Bill Crothers

You mean for the contract failures?

Paul Flynn

All the contracts. It has happened with all Governments.

Bill Crothers

Experience comes through failure, ultimately. If people do learn, then that is good, but it is not desirable that we have those failures. I am not sure I get your point.

Paul Flynn

The point is that one would expect the Civil Service to deliver, without going on a learning exercise, fouling up and then learning from their mistakes. The cost of the mistakes is enormous, not just in financial terms, but in things like what is happening with benefits now. The turmoil is very intense.

Bill Crothers

I completely agree. When I gave the answer to “What is the indicators?”, the indicators are we have fewer failures. We are stopping those things earlier or not even embarking on the road. The way you stop them is not through lots of people raising potential problems. It is through deep specialists who have been there before and who can use their judgment, and be confident to speak up and say, “This will not work, Minister.”

Paul Flynn

Is there some kind of disaster index among Governments? I have been around this place for 27 years and the disasters always occur. I saw the beatific smile on your face when you said, “Well, at least we learnt something. We are better human beings. We are more educated. Of course, it was chaos outside; we lost billions. But civil servants are better people as a result.” Is that joy—

Bill Crothers

No. My strong goal is to stop those failures.

Chair

Are we aware of any organisation on Earth that does not make mistakes?

Bill Crothers

No. The Minister for the Cabinet Office last week at the Civil Service Awards instigated a new award. Essentially, it was for the best failure. He would like civil servants to recognise failure faster, stop, learn, and not happen again.

Chair

So we want more talking about failure.

Paul Flynn

Finally on that, 40 years ago, a commentator said that the overriding ethic of the Civil Service was the “unimportance of being right”. Foul‑ups take place; people warn about it and the people who warn and say this is going to go wrong, their careers wither, but those who go along with the accepted foolishness of the Department with the Ministers and are collaborators in the disasters succeed and prosper. Is that still the situation?

Bill Crothers

I honestly think that is an unfair stereotype. My observation is, as I said, the deficit, the focus on savings, the focus on efficiency. Francis Maude has made a change in some of the culture. I think there are more voices speaking up against things going wrong now than there were perhaps five years ago. Perhaps there are not enough; perhaps more are needed, but it is more acceptable today.

Paul Flynn

However the wind is blowing, could you not look at your evidence and question whether you have reinforced that stereotype this morning?

Bill Crothers

Okay.

Clare Moriarty

I have been a civil servant for a long time. I hear what you say. It is not something I recognise. It is certainly not something that is part of the current Civil Service culture. For the avoidance of doubt, I personally, and all my colleagues as well, profoundly regret what happened on West Coast. I would not have wished, personally, organisationally, for the public and the taxpayer to have gone through that. Given that we did go through that, we have at least made sure that we have learnt from it and learnt from it not just in terms of our own business in franchising, but also more broadly across the Department and more broadly across Whitehall. We do not tolerate failure as a means of making sure that we improve.

Chair

Thank you. We have had a really interesting session with you. It has been a pleasure to talk about learning and improvement. I personally think that you and your Permanent Secretary have set a wonderful example of how to prevent large‑scale failure by learning from this particular failure. I am very encouraged also to learn that there is enthusiasm to learn across the whole of Government. Thank you. Examination of Witnesses

Witnesses

Dominic Cummings, former Special Adviser to Michael Gove MP, Paul Grant, former Senior Lecturer, National School of Government, and Dr Adam Steinhouse, former Head of the School for European Studies, National School of Government, gave evidence.

Chair

It is a slightly unusual panel; you may have never met each other, but could I ask each of you to identify yourselves for the record, please?

Dominic Cummings

Dominic Cummings

Chair

And you are?

Dominic Cummings

Unemployed.

Chair

Unemployed. A former special adviser, yes?

Dominic Cummings

I am a former special adviser to Michael Gove in the Department for Education, yes.

Paul Grant

I am Paul Grant. I describe myself as an independent trainer in Parliament and Government. I was on the staff of the National School of Government for 20 years as a member of the teaching staff, until its closure a couple of years ago. I should just also mention I work as an associate of Capita, delivering some of the Fast Stream training programmes that Civil Service Learning offer.

Chair

That might provoke one or two questions.

Dr Steinhouse

My name is Adam Steinhouse. Like Paul, I was also at the National School of Government. I was part of the European team, giving training on EU matters to British civil servants. I am now an independent consultant, but I do not work with Capita.

Chair

Again, we will ask short questions. It is the deal if you give us short answers, and we will get far more in. Can I start by asking about leading change? Mr Cummings, you have been listening to the previous session. Do you think the Civil Service leadership have a full understanding, or to what extent do they have an understanding of the real skills gaps? It is easy to talk about technical skills gaps or hard skills, but what about the leadership skills and the people skills?

Dominic Cummings

No, I do not think they do. Some people get it. Unfortunately most people who I know who do understand the problems are leaving. There are obviously some changes going on. The scale of some of the failures has meant that people are doing some things, but a lot of it is a Potemkin exercise. You do not know what you do not know. A lot of the senior civil servants themselves do not know what is wrong with their Departments. I have not got very much confidence in the process I do not think. Also, the key civil servants themselves know that none of the three party leaders actually care about this issue. So I do not think there is really any drive to actually deal with the fundamental problems. They know that they have made some terrible cock-ups and they know that some things have got into the public domain and the media. Some small number of people know we have got to get procurement sorted out; we have got to get more people in who can understand contracts. There are some small steps being taken by some Departments to deal with that, but I think systemically there is no grasp of that. At the heart of the problem is incentives. You have got a permanent Civil Service, in which is extremely hard to fire anybody. People are not incentivised to learn, and you do not see any of the systems that you have in place in the scientific world, or in effective commercial markets like Silicon Valley, that deal with these problems.

Chair

In the Department for Education, how did you feel that this manifested itself?

Dominic Cummings

The Department for Education, when Michael and I arrived in 2010, was a complete and utter basket case. Everything that could go wrong did go wrong. Contracts blew up left, right and centre. Procurements blew up left, right and centre. You get legal advice saying, “This procurement has blown up. If you go ahead you will be judicially reviewed and lose. If you stop you will be judicially reviewed and lose. Whatever you do you are going to be judicially reviewed and lose. It makes no difference. You’re screwed”. Also there is a culture in which no one cares. It is normal: “We have lost 50 million quid on another capital decision”. “Yes, well, that is life. These things happen”. “Are you going to fire the guy in charge?” “Are you mad? Of course we’re not going to fire the guy in charge. What on earth do you think you are doing suggesting we fire the man in charge?” You have a really, really dysfunctional system in which it is in nobody’s interests really to speak up about the truth. The MPs do not want to speak up about the truth, because anything could happen and they will just make enemies. The senior officials themselves have got a very comfortable life, a lot of them knocking off at four o’clock whatever the shambles on TV is. They do not care. They are very well paid. There is not really any incentive for anyone to do things. There is one classic example, which I think puts a lot of this into perspective. Look at an industry that works extraordinarily well in terms of major failure: airlines. Why? Because the pilot goes down with the plane. What did they do from the 1950s? They developed checklists. How many planes in the western world now crash? Very small. Major failure is extremely rare in that industry. What happened in surgery to deal with the same problem? Doctors fought checklists for the last 60, 70 years. It is only now starting to change. Now that medicine and surgery have changed culture and has adopted checklists you see that sweeping through the world, not just the West but also the East and all over Asia. Millions of people’s lives have been saved, a completely different culture regarding failure. Look at the Civil Service: nothing remotely like that kind of culture change that you need. That is because the incentives are fundamentally misaligned.

Chair

You identify both aviation and medicine. In aviation, it is the honesty and openness that allows the exchange of information to take place so that people learn from what goes wrong and they correct each other. That is coming into medical practice as well now.

Dominic Cummings

Exactly.

Chair

Is the culture of fearless openness and honesty what you are really looking for, and a checklist is just a means to that end?

Dominic Cummings

Exactly, but why does it happen in those industries? It happened in the airline industry because the pilot dies with the plane, so he is very strongly incentivised to develop a culture of openness and face errors. If you do not face reality, then you die. In places like the Department for Education if you do not face reality, who cares? You get promoted. It is just the same.

Chair

How should the Civil Service leadership manage this change in culture when the political leadership comes and goes on this question? Let’s put it charitably?

Dominic Cummings

I agree it is very hard for the Civil Service to get to grips with this when the political masters have got no interest.

Chair

Is that not the challenge for the leadership of the Civil Service?

Dominic Cummings

It is a challenge for the leadership of the Civil Service.

Chair

How should they address it, rather than just saying, “It’s very hard”? How would you advise the Cabinet Secretary and the Permanent Secretaries to get this kind of cultural change?

Dominic Cummings

As I said before, I think it is fundamentally impossible with the concept of a permanent Civil Service. The concept of a permanent Civil Service is a concept that should be binned. It itself is the problem. The idea that the senior civil servants are going to sit around and say, “You know what? After 150 years since Northcote‑Trevelyan, we have actually got to go in a different direction” is pie in the sky. Turkeys do not vote for Christmas and the senior Civil Service are not going to ditch that.

Chair

We have just been to Washington and looked at the American system. Yes, they have 6,300 appointments that take up a huge amount of time, and, yes, there is a huge loss of corporate memory when there is a change of administration. However, the same relationship between the political appointees and a permanent structure exists, just a couple of levels down. They have to cope with transient political leadership. In our view, from our visit, they cope much better with transient political leadership than our permanent and impartial Civil Service does at the moment over here. Why do you think just replacing one layer of permanent officials with appointees is going to resolve the problem? That is a structural change. How will it change behaviour?

Dominic Cummings

I do not think that by itself will solve the problem.

Chair

What will solve the problem?

Dominic Cummings

There are a whole set of different things that I think you need to do. First of all, I would divide off the role of the Permanent Secretary. The Permanent Secretary role itself is a problem. This is because Permanent Secretaries are supposedly chief policy advisers. They are also supposedly chief executives of the building and they are also chief fixers to make everything move around in Whitehall. You are asking people to fulfil three roles, which is a very hard thing to do. So I would separate it off. I would have a chief policy adviser, who is a permanent character, but has no responsibility whatsoever for management and implementation. They would also be in charge of things like libraries. There has been an appalling destruction of libraries in Whitehall: the DfE library was destroyed, the Foreign Office library was destroyed. You have got a system that is parochial not just about the outside world, but about its own past. I would have a system of a chief policy adviser, which is a permanent role, but with a very small team. They would be in charge of things like that institutional memory and record‑keeping and libraries, but I would separate that off from implementation and the management side of things. Secondly, all these organisations are far too big. We roughly halved the Department for Education. We cut the press office from something like 250 people to about 50 people. We cut the comms budget by 99%. Everyone told us, “The whole thing will fall apart if you do that”. In fact, everything got better because we did that. A lot of these organisations are simply too big. Thirdly, you have got to change the whole human resources culture. A fundamental part of the problem is no one cares. No one fears being fired. Ministers have no say over hiring, firing, training or promotion of the people. Senior civil servants do not fear being fired. I disagree with what the lady before said. At the heart of the process, you have a very, very strong culture in which the Civil Service promotes people who are “do not rock the boat” types, and who are going to protect the system mentality. It very ruthlessly weeds out people with a different attitude. You have a whole human resources system in Whitehall designed explicitly to weed out the characteristics that make great entrepreneurs and make great scientists who actually solve hard problems in the world. It is no surprise if people then turn around and say, “Oh God, we have got no one who can solve hard problems”. It is no surprise because you have got the whole human recourses system that is designed to stop that happening. Hiring, firing, promotion: that whole system needs to be swept away.

Chair

I think I need to challenge: how does the human resources system filter these people out?

Dominic Cummings

It is because of the whole appointments system. Who has control over appointments? The inner workings of the Civil Service. The Civil Service decide who gets practically all appointments. The number that you can affect formally is absolutely tiny. Even the number you can affect informally and by devious methods is pretty small as well. You have these panels that are created internally, and who do you think gets promoted by them? Is it the person that says, “The Department for Education has completely cocked this up, capital is a disaster, Building Schools for the Future is a disaster, the people responsible should be fired. We should change how we operate”? Are they the people who get promoted? Of course they are not. The people who get promoted are the people who know, “Old boy, our job here is to sweep this under the carpet and make sure that the Civil Service does not get the blame for anything”. Of course, this is not a universal thing. It is not a uniform thing. There are odd people here and there, but I have been very struck by the fact that if you look at the big debacles that have happened in the Department for Education, the people who are most responsible for them all got promoted and got gongs and pay rises and fat pensions. Normally what happens is some poor schlep down the food chain, if it gets into the media, is the one who ends up getting fired. That happens over and over again.

Chair

Is what is rather impressive about what happened in the aftermath of the West Coast Main Line that Clare Moriarty was part of a process that made sure that whatever happened at the beginning of that disaster was not the long-term outcome.

Dominic Cummings

Which senior people in the Department for Transport got binned?

Chair

It was a difficult Department because it went through four Permanent Secretaries in rather a short period, one of whom died incidentally. So there was a problem in the leadership of that Department in terms of continuity and depth of understanding.

Dominic Cummings

Did any Director General level person get fired?

Chair

The problem is how do you make sure you have sufficient expertise at the top of Departments if you are going to replace them every time there is a change of Government?

Dominic Cummings

I do not understand the question. You can separate out certain kinds of specialist ability, like contracting and procurement.

Chair

What about leadership?

Dominic Cummings

What do you mean leadership? Leadership of what?

Chair

Leadership as a skill.

Dominic Cummings

I do not see much leadership as a skill in the Civil Service. If you got rid of most of the senior people now, what leadership would you be losing? You have got the blind leading the blind at the moment. The MPs have not got priorities and the senior civil servants do not know how to manage processes. I do not think you would lose very much.

Chair

What we found in Washington is that the leadership of the public service, the permanent public service, is actually quite capable, but they are adapted to changing political leadership within each of their Departments. Our system does not seem to be so adaptable. It is not because the top people are changed all the time that makes the leadership of the permanent Civil Service in the United States capable. It is that they have made themselves capable to deal with that change of leadership. You are just recommending a change of leadership in a far more numerous quantity and at a lower level, but the same problems will replicate themselves.

Dominic Cummings

No, I am saying you need to divide things out. You need some specialist capability, particularly in things like contracting, procurement, legal stuff, all of which in the DfE was a nightmare. I suppose I am making a slightly different point, which is the Permanent Secretaries themselves are not incentivised to care about these things. Which Permanent Secretary gets binned because a whole set of contracting things like that go wrong? The Permanent Secretaries know that that is not what they are promoted on. You have to look at what their incentives in the system are. What does Jeremy Heywood care about most? He does not care about whether the DfE’s capital programme loses billions of quid. So is that what Chris Wormald cares about most? No it is not.

Chair

He might dispute that, but we will ask him.

Mr Evans

You paint an incredibly depressing picture as to what is happening at the moment, and you do not give much hope either, Dominic, that things are going to get any better whatsoever. You have said some of the things that you think should happen. How do you think that is going to be effected or do you think this is what should happen but it is never going to happen?

Dominic Cummings

Of course it is always possible that a system can generate some internal force that wants to change it. It is possible that a group of people at the top of the Civil Service would say, “Enough is enough, we have got to change” and they come up with their own plan and they persuade the politicians. Though historically, as a matter of obvious fact, that sort of thing happens extremely rarely. It is technically possible, but I would not hold my breath on it. What is more likely is that one of the parties says, “We have got to change things, and here are some key ways in which we are going to alter it” and they push that through. Normally, historically, the way that these things happen is via crises. Things blow and that is how bureaucracies change. After Pearl Harbor the whole national security establishment changed radically in Washington. That is generally how things change. One thing, for example, could be if you use the current Civil Service model for operating plus the Treasury system for doing a spending review, whoever comes in next year and tries to do a spending review, it is going to blow sky high. It cannot possibly cope with it. Of course that would depend on people looking ahead for a few months, which is itself extremely unlikely. Something like that on the horizon could force people to say, “Okay, we have really got to change how we do things or else we are all going to go down in a sinking ship”. The spending review next year will be horrible for whoever is in. The processes there are designed to fail. They cannot do anything other than failure. All the Departments are in competition with the Treasury. The Departments all hide money. They hide money from their Ministers, down the back of the sofa, and then the Ministers hide money from the Treasury because there is no collective agreement on what the priorities of the Government are and therefore how to save money. The whole process is designed to fail from the start. Before, there was so much low-hanging fruit and there was so much massive waste in the system that they could do that easily. In fact, in my opinion, contrary to most, I still think there is massive fat in the system and lots of low-hanging fruit. But conventional wisdom is that that is not the case and very hard things are going to have to be tipped to be cut. So that is one obvious way in which that could happen. Another obvious way is some kind of security disaster. If things blow up again, people will start challenging the whole basis on how the Human Rights Act, ECHR, judicial review works. That is something else I will just come back to that was not mentioned before. A lot of these problems are treated in silos, but in fact you have to look at how they are all connected. The contracts and procurements process is not just a contracts and procurements process. Duff legal advice comes in on what that is. Then if you try to correct the problems that you were told by the duff legal advice, you are then told, “Oh well, it will be judicial reviewed if you try and stop this procurement now or if you alter how this procurement works”. “Oh God, what? Is that right?” You then go and hire some external advice. You find out two weeks later that that was not the case at all, because you have hired an expert and the expert tells you that the advice of the Cabinet Office was complete rubbish. “Okay, well now stop that that we were doing”. Then you have the Civil Service human resources problem of incentives laid on top of that. You have all of these connected issues, the judicial review, Europe on top of everything else, the Civil Service human resources problem, which disincentivises people from facing reality. All these things interact.

Chair

Why is it not in the interests of the politicians to start directing that this should be sorted out?

Dominic Cummings

It has become so complicated very few of the politicians are really capable of getting to grips with it. Also, it is hard to do. No one apart from the Prime Minister can fundamentally do this. One of the core problems of dealing with the Civil Service is all the senior Ministers know that the Prime Minister has zero interest in this issue. Therefore, all of them know that they cannot really push very hard in terms of dealing with their own specific problems because there is no support. Francis Maude is trying very hard, but everyone knows that Francis Maude does not have support from the Prime Minister. So because of the nature of how the British system works, the Cabinet Secretary and the Prime Minister have extreme power. If the Prime Minister says, “I agree with the senior Civil Service. There is nothing really wrong with the system; everyone is jolly polite to me”, then nothing really fundamental changes.

Kelvin Hopkins

Just briefly, I have a profound disagreement, because I think you gloss over or ignore what human nature is like. You have a view of human beings in which, it seems to me—correct me if I am wrong—that we are all deeply ingrained with original sin. We are all only driven by force, and power, and threat, and fear, and actually conscience, commitment to public service, intelligence, all of that counts for nothing. When it comes to it, you have got to bully people and force them to do what they want on fear of death.

Dominic Cummings

I totally disagree. Part of my whole point is that if you look how very high functioning teams work, they work because there is extreme motivation. People trust each other. There is a willingness inside the team to face responsibility, to face errors, fundamentally to face reality, because “nature cannot be fooled”, as Richard Feynman said. You see that all the time in great teams. You see very positive working cultures in which people enjoy what they are doing, they love coming to work and they work very hard. My point is everything in Whitehall now conspires to the opposite. We have disaster after disaster where we are leading the news at 15.30 and you see the guy in charge slinking home in the lift. Why? Because he does not care, it makes no difference to him. The answer to that is not fear. It is not fear and whacking people. It is because the whole incentive structure has gone wrong.

Chair

So why do you suppose that individual feels so disengaged from the leadership of the Department that, as you say, he is slinking home at four o’clock?

Dominic Cummings

Because it is totally widespread. It is normal. Failure is totally normal.

Chair

Yes, but why is he so totally disengaged?

Dominic Cummings

Most of them are disengaged. It is not him. It is not an aberration. My point is that is a normal thing.