The reluctant managers

Reforming Whitehall is a necessary pre-condition for improving public sector performance. Britain is at a stage in the political and economic cycle where resistance is building to getting more public sector outputs solely by pumping in more inputs.

Improving efficiency requires management. According to Peter Drucker, the manager is “the life-giving element.” Yet go to Whitehall and ask: “Who manages?”

It’s not the politicians. But neither is it Whitehall’s permanent secretaries, who lack the fundamental attributes required of the manager – delegated authority for which they are personally accountable.

Whitehall is unmanaged. It is not realistic to expect the rest of the public sector to adopt modern management structures and incentives while the public sector’s core is governed by constitutional conventions which emerged in the middle of the 19th century within structures established at the beginning of the 20th – well before the management revolution that swept the private sector.

The need for civil servants to become managers was recognised by Oliver Franks after the second world war. It was formally articulated in the Fulton Committee report of 1968: “The principles of accountable management should be applied to the organisation of the work of the departments.” These principles were not implemented after the chancellor, Roy Jenkins, argued against taking action.

The next attempt at serious reform had to wait 20 years and the Next Steps initiative. It resulted in much activity but set up forces to roll it back. In doing so, it revealed two antithetical models of the civil service:

  • The management model is about management and delivery of services to users of public services. It is crisp and results-oriented. Line managers should be accountable and have authority to manage. This requires delineation of responsibility, focus on delivering objectives and a system of incentives designed to reward delivery of those objectives.
  • The traditionalist model is about ethos and service to ministers as policy advisers. It is amorphous, collectivist and anonymous; more concerned about culture and values than results. Responsibility is shared rather than delegated.

The Whitehall traditionalist model exhibits characteristics of a rigid organisation and an insider culture protected by its monopoly position:

  • institutionalised risk aversion.
  • resistance to having clear, specific objectives and priorities.
  • time treated as a free good.
  • an administrative/political mentality, where status and influence are seen as being a function of proximity to ministers and the core competence remains briefing ministers.
  • weak policy analysis and design, reflecting the absence of a strong tradition of micro-economic analysis.

The fundamental lacuna in Whitehall’s self-analysis is the failure to make the link between incentives and behaviour. To change behaviour, you have to change incentives to promote that behaviour.

A consistent theme of previous attempts at reforming Whitehall is the success of proponents of the traditionalist model to put reform of the 19th century constitutional convention of ministerial responsibility off-limits. This doctrine is based on the fiction that ministers are accountable for everything done in their name – officials being anonymous agents of ministerial will. It is behind the veil of ministerial responsibility that the traditionalist model seeks refuge.

A necessary first step if Whitehall is to make the transition from administration to management is to recast this doctrine and intelligently allocate responsibility between ministers and those who should manage government departments. Just as with giving the Bank of England operational responsibility for monetary policy, this should be done openly and confirmed by an Act of Parliament.