shaping up: a whitehall for the future

8/8/2019 Shaping Up: A Whitehall for the future

http://slidepdf.com/reader/full/shaping-up-a-whitehall-for-the-future 1/134

Shaping Up 1

SHAPING UP: A Whitehall for the Future

Simon Parker, Akash Paun, Jonathan McClory and Kate Blatchford



Shaping Up 3

Acknowledgements 5

Whatwedid 6

ForewordfromSirMichaelBichard 7

Executivesummary 8

Introduction 12

1. Astrategiccentre 18

2. Betterboards 43

3. Moreeffectivecollaboration 73

Conclusion 98

Appendices 101

Bibliography 123

ListofAcronyms 130

Contents



4 INSTITUTE FOR GOVERNMENT



Shaping Up 5

Acknowledgements

Many people generously contributed time and expertise to this report. Wewould particularly like to thank the 61 senior civil servants who made thetime to be interviewed – without their support, this project would have beenimpossible. We very much hope that they will fnd their views airly reected inthe pages to come.

We are grateul to Paul Britton, Wendy Hirsh, Andrew Kakabadse, Liz McKeown,Sir Richard Mottram, Pauline Ngan, Jonathan Rees and Matt Robinson or

providing invaluable insight, comment and advice. Jane Milton and Heather Toddat the National School or Government kindly helped arrange interviews withnon-executive directors.

Almost everyone at the Institute or Government has played some part inmaking this report a reality, but a ew deserve particular thanks. David Halpern,Michael Hallsworth, Julian McCrae and Anne White all made signifcant analyticalcontributions. Nadine Smith’s help in fnalising the text or publication and

Suzanne Roy’s commitment in pulling it together were greatly appreciated.

Our colleagues Michael Hallsworth, Mike Brass, and Sir Ian Magee developed the

analysis o IT provision in government. Jill Rutter provided advice and commentwell beyond the call o duty. Katrin Glatzel provided important pieces o evidence,while Catherine Haddon gave us drating advice and a historical perspective.

Finally, we would like to acknowledge the support o our advisory group, whohave helped to shape this project at every stage o its development. They are:David Bennett, Natalie Ceeney, Diane French, Susie Gear, Rebecca George,Proessor Sue Richards and Bill Stow.

While we have received a great deal o support rom those listed above, theanalysis presented in this report is ultimately the responsibility o the Institute

or Government alone. Any inaccuracies, errors or omissions are the ault othe authors.




Whatwedid

The core research or this report consists o 61 structured interviews withsenior civil servants, most o them at director general level. The interviews otencovered multiple subjects, so many participants have contributed comments tomore than one section o the report.

The research team visited our countries – Canada, Finland, France and theNetherlands – to compare the UK’s current administrative arrangementswith other successul nations. We also looked at Australia and New Zealand in

our comparisons.

We conducted extensive literature and evidence reviews or each section, andcollated and analysed a range o departmental and international perormancedata. Much o the data we gathered can be ound in our interim report, TheState of the Service.

Below, we set out summaries o our methodology or each chapter:

Astrategiccentre.This chapter is based on interviews with 38 senior civilservants, nine o them working in either the Cabinet Ofce and the Treasury,

and the rest employed in line departments. In addition, the HR section o thereport is inormed by interviews with six experts rom outside the civil service.The IT section is a brie summary o the Institute’s Installing New Drivers report.

Betterboards.This chapter is based on interviews with 25 executive memberso Whitehall boards and depth interviews with 14 non-executive directors.To determine how boards ocused their eorts, we carried out an analysis oboard meeting minutes rom 2005 to 2008 or a sample o seven departments.This data was then compared to measures o board perormance to determinewhether there was any relationship between ocus and success as judged bycapability review leadership scores and sta confdence in senior leadership.

Finally, we observed three Whitehall board meetings.

Moreeffectivecollaboration.This chapter is based on interviews with 18senior civil servants responsible or cross-cutting public service agreements and12 interviews with ofcials representing cross-departmental government bodies,such as the Ofce or Criminal Justice Reorm, or working with cross-cuttingbudgetary arrangements. We also carried out a network analysis o joining upin Whitehall, examining how departments contributed to shared Public ServiceAgreement targets.



Shaping Up 7

Foreword

The challenges currently acing Britain’s public sector will require a wide-rangingreassessment o how Whitehall is governed. Over the last nine months, theInstitute has done exactly that. State of the Service, a benchmarking exercisepublished in July 2009, provided an initial assessment o Whitehall’s capabilityin an international context. The fndings o that interim report pointed to asignifcant challenge: a strategy gap exists at the heart o British government.

This publication builds on our interim report, moving rom a wide-angle view o

Whitehall capabilities, to an in-depth study o strategy, governance and cross-departmental coordination. Based on 61 interviews with senior civil servants,this report aims to address some o the crucial governance dilemmas thathinder public sector perormance, and ultimately lead to suboptimal outcomesor citizens.

We identiy three key challenges to building a better civil service and set outpotential solutions or discussion. First, government must increase strategiccapacity at the centre. Whitehall’s central departments have little capacity tocreate and maintain a ‘whole o government’ strategy that sets out prioritiesor an entire parliamentary term. Second, governance within departments

remains variable across the civil service. Many departmental boards have yetto develop a clear leadership and oversight role, which has invited intererencerom the centre. Third, mechanisms or coordinating policy and delivery betweendepartments are still dominated by siloed thinking, making it difcult to managecross-cutting policy issues.

All three challenges need to addressed together; ‘total government’ requiresa total solution. A strategy-ocused centre requires departments that are stillmore ocused on driving up their own perormance. But without eectivecoordination between departments, government will remain ill-equipped torealise the eectiveness, efciency and innovation that can ow rom ‘joining up’.

Our recommendations broadly outline an approach to reorming the centreo government that has the potential to improve implementation, reducebureaucratic duplication and provide clear strategic objectives across the publicsector. I hope we have been able to make some challenging suggestions, which,i implemented, will lead to a more coherent and eective system o governing.The overarching objective o the Institute is to inspire the best in governmentthrough considered analysis, learning and debate. I hope you fnd this report aworthy contribution to that mission.

Sir Michael Bichard

Executive Director, Institute or Government




Executivesummary

The ofce o the British Prime Minister holds a concentration o ormalpower greater than that o almost any other country in the developed world.In contrast, the ragmentation and lack o coordination at the centre o thecivil service – the Treasury, Number 10 and the Cabinet Ofce – leads to anadministrative centre that is relatively weak.1 This curious situation has created astrategic gap at the heart o British government, which inhibits the ability to setoverall government priorities and translate them into action.

The need to close this gap is especially pressing because o the current politicaland economic context. Whitehall aces a pivotal moment, standing at the

juncture o a general election, with the defcit at a historic level and increasingpublic expectations or better services. How can it meet these challenges whilepreserving its current strengths?

This report provides an ‘insider’s view’ o the challenges acing government,and sets out potential solutions. Based on our own analysis and more than 60anonymous interviews with senior civil servants, we identiy three key challenges:

•Thestrategychallenge:the centre (Cabinet Ofce and HM Treasury)

needs to reocus on its core value-adding role o coordinating strategyacross government.

•Thegovernancechallenge:a more strategiccentre requires departments

capable o holding themselves to account – a role that departmental boards

have yet to adequately deliver on.

•Thecollaborationchallenge: long-standing eorts to join up the work

o departments must move rom aspiration to reality through new

governance arrangements.

Astrategiccentre

O the director general level civil servants we interviewed, over hal elt theCabinet Ofce should be more active in providing strategic leadership on

joined-up issues. We defne ‘strategic leadership’ as the process o setting clearpriorities, linking those priorities to unding, collaborating with departments todraw up work plans, and perormance managing the most important goals.

We recommend that the Cabinet Ofce should support the Cabinet and PrimeMinister in developing and implementing a ‘whole o government’ ramework or

1 This case was made in our interim report, and in OECD research which shows that only the British and Australian Prime Ministers have the powerto set perormance targets. For more inormation, see Parker et al (2009), State of the Service and OECD (2008), ‘International budget p racticesand procedures database’



Shaping Up 9

each parliamentary term, which would set out no more than 20 key goals.The Treasury would reocus on the tight control o fnances and fscalconsolidation, while allowing departments space to innovate in order to achievegovernment’s priorities.

The government’s strategic goals would orm the basis o uture spendingallocations – with departments encouraged to bid jointly or any new spending– as well as the legislative programme and organisational development work.

Departments would create their own business plans setting out how they willmanage their responsibilities and spelling out clearly how their work aligns withthe government’s overall strategic ramework.

BetterGovernance

With direction set, each department needs to be well governed so that it canplay its part in achieving the government’s goals. Capability reviews and stasurveys show that the quality o leadership varies widely across Whitehall – atone end o the spectrum, less than 30% o sta at DEFRA think the departmentis well run, compared to two-thirds at DID.2 I departments can deliver stronger

governance through more eective boards, then the case or central micro-management diminishes.

Whitehall boards are at the heart o this leadership question. They bringtogether senior ofcials with external ‘non-executive directors’. Our researchshows that the best boards ocus heavily on perormance management andmeet regularly with ministers to shape joint strategy. We recommend thatall boards should place a greater emphasis on perormance and fnancialmanagement. Departments should also create a new strategy board: joining themanagement board and ministerial team, chaired by the Secretary o State, andocusing on policy and strategy development.

Deliveringjoinedupgovernment

Whitehall is not a unitary entity but a ederation o departments: it is designedpredominantly along departmental lines or the purposes o budget allocation,accountability and career development. This ragmentation is reproduced at thelocal level, replicating these problems at the rontline.

This means that vital, cross-cutting issues such as social exclusion or childhoodobesity can all through the gaps. The resulting duplication o eorts can wasteresources, and citizens can suer rom ragmented public services. These ‘wicked’

issues cost tax payers billions o pounds annually. For example, alcohol abusecosts the government £2.7 billion in health costs, £15 billion in policing andcrime costs and the wider economy £7.3 billion in productivity costs.3

The civil servants we interviewed told us that while government is gettingbetter at joining up, there remains a long way to go. We recommend that thegovernment should address this problem by: making changes to appraisal andline management arrangements to create stronger incentives to collaborate;acilitating the sharing o inormation and other resources; and appointing asmall number o Secretaries o State who are directly responsible or the mostimportant cross-cutting issues, sitting outside departments but with their own

pooled budgets. This last recommendation should not be used as a way to createmore ministers overall, nor should cross-cutting ministers necessarily be based

2 Parker et al (2009), State o the Service3 Balakrishnan et al (2009), ‘The burden o alcohol-related ill health in the United Kingdom’




in the Cabinet Ofce. We would also like to see the top Permanent Secretariesrom across Whitehall (perhaps through the Civil Service Steering Board) takegreater collective ownership or cross-cutting issues, including responsibility orthe delivery o the government’s top strategic goals.

Theroadahead

The uture we envisage requires that a complex set o balances be struck.The centre must do more to set out strategic priorities or government, butstep back rom micro-managing policy and delivery. It must keep control othe overall public fnances, while encouraging innovation within and acrossdepartments to fnd productivity improvements. The centre must also helpdepartments to strengthen their internal governance while encouraging andacilitating collaboration across boundaries.

Whitehall has already seen important positive reorms over the past decade.These include the advent o three-year spending reviews to extend timehorizons; capability reviews to increase sel-critical appraisal; increasinglysophisticated public service agreements to encourage cross-cutting working;

and innovations in the Cabinet Committee system such as the creation o theNational Economic Council.

As the government tackles the fscal challenge, the shape and size o Whitehallwill need to change even more prooundly over the coming years. Thepolitical, public and even a growing administrative consensus is or a shit toa signifcantly smaller civil service, with more devolution o power to markets,communities and individuals. Our recommendations are designed to helpprepare ministers and their ofcials or the tough times ahead.

ShapingUp:Blueprintforthefutureofgovernment

1) Astrongermorefocusedcentre

• The centre o government (Cabinet Ofce, HM Treasury and Number 10)

needs ewer ad hoc unctions to become smaller, more strategic and more

internally joined-up.

• With the support o the Cabinet Ofce and a new strategy directorate,

the Cabinet must develop a whole o government strategy, with no more

than 20 shared key outcome goals, which departments then incorporate

into their own business plans.

• The government’s strategy should be collectively owned by all permanent

secretaries, led by the Cabinet Secretary. A core group o the most senior

ofcials should orm a strategic board or the whole o government

(building on the existing ramework o the Civil Service Steering Board),

and should meet regularly to discuss and monitor the implementation o

the strategy.

• The Treasury will ocus on resource allocation, providing innovative

support and challenge to departments, and move away rom directinvolvement in policy development and delivery.



Shaping Up 11

2) Wellmanageddepartments

• Departments should be led by strategy boards, which will bring together

top ofcials, non-executive directors and the ministerial team to develop

policy and long-term strategy or departments. Strategy boards would be

chaired by the Secretary o State who should have the ability to challenge

the board on policy direction.

• Management boards, chaired by the permanent secretary, would ocus on

delivery, perormance management, fnance and corporate perormance.

• Independent non-executive directors should be given a thorough

induction when appointed and supplied with accurate inormation on

the perormance o the department. This will allow them to be used

eectively in evaluating and challenging policy implementation, as well as

participating in the perormance appraisals o senior ofcials.

• Boards should continue to improve their eectiveness through well

structured evaluation and development programmes.

3) Betterjoinedupgovernment

• Collaboration must be a priority o government, backed by the allocation

o budgets to cross-cutting goals, in particular to top priorities established

during the development o government’s strategic ramework.

• A small number o Secretaries o State should be appointed outside o the

departmental ramework and given ownership o top strategic goals, with

control o pooled budgets to support delivery.

• To reduce the transaction costs o collaboration, government should

increase standardisation o inormation and HR systems.

• To shit ofcials’ incentives away rom a ocus on narrow departmental

concerns, line management, appraisal systems and departmental capability

reviews should put more emphasis on collaborative behaviour.

• To increase the pressure on government to concentrate on cross-cutting

issues, Parliament should have more select committees that cut across

departmental boundaries, and the Public Accounts Committee in particularshould give more attention to cross-cutting themes.




Introduction

Prime Ministers are grappling with the same thing, which ishow you try to get some strategic direction to a government thatis run on a departmental basis in facing an external environment. We have not got the answer to that.

Tony Wright MP, chair of the Public Administration Select Committee, 2009 4

There is a gap at the centre o Whitehall – a conspicuous lack o a singlecoherent strategy or government as a whole. The central departments – No10, the Cabinet Ofce and Treasury5 – are run by powerul politicians, yetlack eective administrative tools to manage cross-government working.Departments are powerul, but the quality o their leadership is variable andcivil servants oten fnd it difcult to work across boundaries. This means theministries o state are not coordinated as eectively as they should be. Thedaunting fnancial and managerial challenges now acing British governmentheighten the need or change.

This report explores the options or improving Whitehall’s strategic leadership

and governance, by which we mean the process o setting clear priorities, linkingthose priorities to unding, collaborating with departments to draw up workplans, and perormance managing the most important goals. Drawing on 61interviews with the most senior civil servants in central government, we providea unique perspective on how to lead the great departments o state through thetough times ahead.

We do this by addressing the three key opportunities or improvementthat the Institute or Government identifed in The State of the Service, amajor benchmarking exercise o Whitehall’s perormance and prospects orimprovement published in 2009:6

• First, and most undamental, is the need to provide stronger leadership

rom the departments at the centre o government. Seen in international

comparison, Whitehall’s corporate centre is unexpectedly small and in some

respects surprisingly weak. Civil servants are oten unclear about how the

centre adds value to the work o line departments.

• The second challenge is to improve the leadership and governance o

departments themselves. Departments need to urther strengthen their

ability to manage their own perormance. Current governance

4 Wright (2009), Evidence to the Lords Constitution Committee’s Cabinet Oice Inquiry5 In this report, we generally use ‘the centre’ to reer speciically to Downing Street (or No 10), the Cabinet Oice and Treasury.6 Parker et al (2009), State of the Service



Shaping Up 13

arrangements – namely departmental boards – have yet to establish a clear

role in adding value to the work o their ministries.

• Finally, Whitehall must increase its capacity or joining up. Government

is primarily organised along departmental lines: targets, accountability

regimes and resource allocation mechanisms are largely designed

around siloed ways o working. This makes it harder to innovate across

organisational boundaries and to manage cross-cutting policy.

These challenges may seem like a trilemma – a problem where the best wecan ever hope to achieve is two out o three desirable goals. Stronger centraldepartments can obviously be combined with greater joining up, but can botho these things be combined with strong departmental governance? At the hearto our argument lies the conviction that greater strength or the centre neednot mean less power or weaker governance or departments. On the contrary,initiatives such as capability reviews show that high-perorming departmentsare more likely to emerge in the context o clear and coherent direction andleadership rom the centre.

Underpressure

In one sense, the above problems may seem esoteric – directly aecting a ewthousand London-based senior civil servants and politicians. But the way thatmembers o this group relate to one other, and the decisions they take, havemajor repercussions or public services and people across the country. Poorcoordination at the centre makes it hard or government to ocus on the manyproblems such as drug abuse that cross departmental boundaries. Silos at thecentre all too easily replicate themselves on the ground, while a single target setin Whitehall can turn into ten by the time it reaches the ront line.7

These problems are reason enough to reorm Whitehall governance, but thereare urther powerul pressures or change in the UK’s central state. Britainis currently witnessing a major, cross-party shit in attitudes towards publicservice reorm. The ‘command and control’ approach attributed to the Blairgovernments has allen out o avour as a result o both its own inherentlimitations and the pressures or smaller – or at least ‘smarter’ – governmentcreated by the country’s £90bn structural defcit.8

Politicians have reached a high-level consensus about three key aspects oreorm – although they disagree passionately about how best to implementthem. First, government will have to be cheaper.9 Whitehall aces calls orheadcount reductions, with Labour promising to cut the size o the senior civilservice and the Conservatives pledging to reduce the civil service as a whole bya third.10 Further down the delivery chain, local authorities are preparing or cutso up to 20% o their budgets.11

Second, political parties broadly agree on the need to empower citizens tohave more choice over, and greater responsibility or, the services they receivethrough mechanisms such as personal budgets in social care or payment byresults mechanisms in the NHS12 – although they clearly disagree about thedetails and aordability o such reorms. They also agree that many o the key

7 Micheli and Neely (orthcoming), ‘Perormance measurement in the public sector in England’8 McCrae and Myers (2009), Undertaking a Fiscal Consolidation9 See or instance HM Government (2009), Putting the Frontline First; and Hammond (2009), Doing More With Less10 HM Government (2009), Putting the Frontline First; and Osborne (2009), ‘We will lead the economy out o crisis’11 Ilman (2009), ‘Funding cuts dictate the agenda’12 For instance, Cameron (2009), ‘Ensuring the NHS delivers rising standards o healthcare’




challenges aced by society are ‘wicked problems’ – problems such as childobesity or social exclusion – that don’t ft tidily within the Victorian boundarieso government departments.

Finally, all the major parties are broadly agreed on the need or greaterdevolution to localities, though once again they dier in the detail o theiraccounts.13 All have a common narrative about moving decision-making closerto the ‘ront line’. This thinking is backed by public opinion, which points to a

desire to see more public sector employees at the coal ace, and a drasticallyreduced number o civil servants (see Figure 1).

This suggests a Whitehall that is smaller, more efcient, and ocused ondesigning markets and regulating a highly diverse and ragmented set o publicservice institutions. This in turn suggests that central government will need totake on a dierent role, with a dierent management style.

Figure1:Publicopiniononwhetherweneedmoreorfewerpublicsectoremployees

Nurses

Soldiers

Fireman

Police officers

Prison officers

Teachers

Waste collectors

Social workers

Train drivers

University professors

Doctors

Administrators

Civil servants

-60 -40 -20 0 20 40 60 80

Source: Policy Exchange research, 2009

Rather than ocusing on the management o ‘delivery’, as they have or mucho the last decade, Whitehall will have to grasp a new role as the guardian ocoherence, providing clear priorities and leadership to increasingly complex,ragmented and sometimes messy systems or delivery and co-production.

Thechallengeofstrategicleadership

Providing this kind o strategic leadership in Whitehall is remarkably difcult.Seen in an international context, the UK’s model o government emphasisesboth a strong Prime Minister and strong departments with wide-rangingautonomy to spend budgets, recruit employees and manage delivery systems.14 There are advantages to this model: the theory – sometimes realised in practice– is that high levels o reedom allow departments to be innovative and efcientunder the guidance o a strong central strategist.

13 For instance, Conservative local government policy can be ound here: www.conservatives.com/Policy/Where_we_stand/Local_Government.aspxaccessed 8/12/09, and Labour policy can be ound here: www.communities.gov.uk/speeches/corporate/rsaevent2009, accessed 22/12/09

14 Parker et al (2009), State of the Service



Shaping Up 15

But, as this report will show, the ipside o strong line ministries is a set ocentral institutions – No 10, the Cabinet Ofce and the Treasury – whichpossess ew tools beyond the brute orce o political edict to make sure that aragmented government adds up to more than the sum o its parts.

The incentives and accountability o civil servants exist principally at thedepartmental, rather than the ‘whole o government’, level. Ministries have anatural tendency to work as silos, competing against each other or authority

and unding. Permanent secretaries are primarily accountable to theirsecretary o state and when they appear beore parliament, it is in their role asdepartmental accounting ofcer.

Public service agreements, policed by the Prime Minister’s Delivery Unit, dooer a way or the central departments to hold ministries to account oroutputs but these targets are requently missed with little consequence or theofcials responsible.

This situation has been created by an incomplete process o civil servicereorm that has emphasised devolution o management and budget control to

departments. The new public management trend rom the 1980s onwards wasor the centre o government to trade control o inputs or control o outputsor outcomes. Bureaucrats would be held to account by ministers or meetingclear goals, and in return permanent secretaries would gain greater reedom tomanage as they saw ft.

This shit towards greater reedom to manage continues to yield real beneftsor government, but in practice, the tough public accountability needed tobalance managerial exibility never materialised, and no convincing alternativewas developed.15 In crude terms, there has sometimes been a diusion oresponsibility such that, in true ‘Yes Minister’ style, those who lead departments

can claim accountability to everyone and no one.

It is important to draw a distinction between constitutional ormalities andpractical reality. Successive cabinet secretaries have tried to address the problemo accountability through ‘sot power’, using their personal authority to drivechange. The incumbent, Sir Gus O’Donnell, regularly appraises permanentsecretaries, assessing their perormance against departmental perormancetargets to determine their bonuses. His Capability Review programme hasdriven improvements in Whitehall management and created a sharper orm oaccountability to the centre.

But in many areas, the main orce that the centre can wield against the powero departments is the power to acilitate collective decision-making. As onesenior Cabinet Ofce ofcial told us: “Permanent secretaries have ought ora lot o devolution down to departments, so within that context I think theCabinet Ofce perorms pretty eectively. Do I think that’s the right model orthe civil service? No I don’t.”

15 Ibid




Thepoliticsofstrategicleadership

Eective strategic leadership in government cannot be achieved by civil servantsalone. Politicians have to want to behave strategically as well, but their spaceor considering the long term and cross-departmental is arguably limited by thedemands o an adversarial political system, the desire to make a quick impactbeore moving on to the next rung on the ministerial ladder, and the demandso the 24-hour news media.

That said, the last decade has seen a signifcant and somewhat successulattempt to bring strategic thinking into the centre o government. The mostobvious example o this was the evolution o the Prime Minister’s Strategy Unit,which provides orward-looking advice to the PM and has a mandate to ocus on‘the important rather than the urgent’. The other key innovation has been thedevelopment o medium-term target setting through spending reviews, with thecurrent 30 public service agreements themselves raming a strategy o sorts.

As we shall see, these innovations have some important limitations. But whilemarrying strategic, cross-cutting thinking with the short-term demands o

politics will always be a challenge, the evidence o the past decade suggeststhat progress can be made. An ambitious administration that values strategicthinking should be able to push urther. Perhaps the best argument or takingthe longer view in politics comes rom the ormer Strategy Unit director,Geo Mulgan:

Often being strategic rubs up against the pressure of events and personalities.But governments’ usual optical distortion is that they overestimate the impact of short-term measures and underestimate how much can be changed over the longer term, with well-judged policies informed by hard evidence.16

Addressingthechallenges

Using a broad international evidence base complemented by interviews with 61senior civil servants, this report makes recommendations that seek to addressthe challenges identifed above.

Chapter 1 sets out the case or reorming the Cabinet Ofce, highlighting a lacko clarity about its role in government and calling or it to be streamlined into a‘department or strategy and capability’. A revamped Cabinet Ofce would workcollaboratively with the Prime Minister, Cabinet and departments to help developand implement a whole o government strategic ramework. Such a rameworkwould set out the government’s 20 or so top priorities over a parliamentary term,

providing a basis or conversations with departments about allocating money,political capital and legislative time. The Cabinet Ofce should lead this process ina collaborative way, without imposing its will upon departments.

Chapter 2 sets out the case or more eective governance arrangements withindepartments themselves. We argue that many departmental boards have

yet to grasp a clear role in leading their ministries. They could be improvedthrough a greater ocus on perormance management and the creation onew, ministerially chaired, strategy boards to set direction and oversee theimplementation o policy.

16 Mulgan (2008), Art of Public Strategy



Shaping Up 17

Finally, Chapter 3 sets out the case or better joining up across departmentalboundaries. Progress has been made in this area, but there is still a long way togo. We identiy a range o barriers that raise the costs o cross-departmentalworking and ail to create strong enough incentives to prioritise collaborativeactivity. To overcome these barriers we suggest reorm to budgetary processesin Whitehall, including the creation o a small number o strategic programmeministers with responsibility or a pooled budget, a small sta and a high-prioritycross-cutting goal rather than a traditional ministry.

Thelimitsofthisreport

This report is ocused on the governance arrangements o Whitehall’s centralinstitutions. We believe that by improving these arrangements, a reorminggovernment will be able to improve the unctioning o the civil service.

We recognise that there are many other challenges that will have to beaddressed i the country is to retain a strong civil service during the testingtimes ahead, not least the questions o: how to manage a major expenditurereduction programme; how Whitehall should connect to the wider world o non-

departmental public bodies (NDPBs), agencies and localities; and how to developeective skills and workorce strategies to maintain a high-quality civil service ina period o likely headcount reductions.

There are also many challenges and questions o governance that lie wellbeyond the boundaries o Whitehall. These include the uture o local andcommunity governance; the potential o citizens to solve problems orthemselves through technology, markets and social innovations; and thechallenges aced by our political institutions and the parties that populate them.

That said, Whitehall remains a pivotal and relatively under-researched part o

our country’s governance structures. The Institute welcomes suggestions aboutwhat it should prioritise in uture projects.




Chapter1:Astrategiccentre

It can be argued that the centre has been weak in aspects of the functions only it can perform (ministerial appointments andtraining and development, government-wide strategy, resourceallocation, handling of cross-departmental issues) while over-

centralising in other respects (public service reform and micro-management of essentially departmental issues).

Sir Richard Mottram, former permanent secretary, 2009

17

The central departments o government are under pressure to change aspoliticians aim or a smaller, more strategic Whitehall. The Cabinet Ofce inparticular needs to clariy its value-adding role in relation to line ministries.Our interviews and analysis suggest that its role should be to set prioritiesand coordinate policy across government. We suggest that this might bestbe achieved through streamlining the Cabinet Ofce into a ‘department ostrategy and capability’ with a remit to work collaboratively with Cabinet anddepartments to set out a strategic ramework o high-level goals to guide thework o government and build the capability necessary to realise ministers’top priorities.

The central departments – 10 Downing Street, the Cabinet Ofce and theTreasury – are the commanding heights o government. It is rom these vantagepoints that the Prime Minister, chancellor and Cabinet take an overall view opolicy, goal setting and unding. However, as international surveys show, whilethe UK has a strong Prime Minister and Chancellor, the central departments aresmall and relatively weak, devolving a great deal o power to departments.18 In Whitehall’s highly decentralised management system, the capacity o thecentral departments is critical to ensuring that government as a whole is guided

by eective strategic leadership.But the centre is under pressure to change. Over the past decade, strong PrimeMinisters and chancellors have strengthened the Cabinet Ofce (CO) andTreasury (HMT) to provide a counterweight to a ragmented public sector,19 andto ensure that government priorities are ‘delivered’ on the ground. The result,according to many commentators, has been over-centralisation, with poorlycoordinated political demands rom the Prime Minister and chancellor squeezingthe space or collective leadership and departmental initiative.20

17 Mottram (2009), Written evidence to the Lords Constitution Committee, p.418 OECD (2008), ‘International budget practices and procedures database’ and Parker et al (2009), State o the Service19 Peters (2004), ‘Back to the centre?’20 For instance, the ormer cabinet secretary Lord Butler told the Spectator in 2004 that: “there is too much central control and there i s too little

o what I would describe as reasoned deliberation which brings in all the arguments.” See: www.guardian.co.uk/politics/2004/dec/10/uk.butler,accessed 22/12/09



Shaping Up 19

There is evidence to suggest that both the Treasury and Cabinet Ofce perormmany o their unctions well and that they are addressing areas o weakness,especially in building a stronger relationship with one another and in developinga more collaborative relationship with line departments.21 The question iswhether the centre’s structures and ways o working are ft or the uture.The key challenges acing the centre over the next fve years will be to securecoherence across government and the wider public sector in a context wherecentral government is likely to have less ormal control over those systems.

The central institutions are deeply interdependent – as we shall see, changes toone tend to have consequences or the others – but our interviewees clearly eltthat the Cabinet Ofce was the top priority or reorm. Downing Street’s rolewas seen as being defned by the political style o the Prime Minister, and therewas a general acceptance that it was largely inevitable and appropriate thatthis institution should respond to the character and demands o its occupant.Interviewees saw the Treasury as having a clear role in managing the economy,allocating budgets and controlling costs, which is largely accepted acrossWhitehall. Our interviewees had criticisms to make, particularly that HMT wastoo eager to micro-manage, but they understand how it adds value to the work

o departments.

By contrast, the value added by the Cabinet Ofce is less obvious – our analysissuggests that it is trying to do too much, with the result that its core policycoordination role has been diluted. Many ofcials told us that they want to seea Cabinet Ofce that ocuses on managing cross-departmental issues, becomingthe guardian o what one interviewee called ‘the common good’.

This chapter thereore sets out the case or a streamlined CO that providesstrategic leadership or government by working with the Prime Minister, Cabinetand departments to help develop and implement a whole o government

strategic ramework. Such a ramework would set out the government’s toppriorities over a parliamentary term, providing a basis or conversations withdepartments about how to align their work plans with the government’s strategy.A signifcant proportion o unding would be allocated to the government’sstrategic goals rather than to organisational silos, and perormance managementwould be ocused on the most important cross-cutting goals. Making thishappen is not just a job or the civil service – to be truly eective, this kind ostrategic leadership also requires political will and collective ownership o thegovernment’s strategy by Cabinet as a whole.

Our aim is a centre that ocuses on strategy rather than delivery. We echo the

Cabinet Ofce and Treasury joint stakeholder survey in concluding that “thecentre should take the lead on wider government priorities, but matters odelivery or business should all within the remit o departments”.22 Neither dowe argue or a larger centre; the Cabinet Ofce has accumulated a remarkablydiverse group o unctions over the past decade, and giving the centre greaterocus would probably mean shedding roles and sta. As one o our intervieweesput it, the aim should be “a smaller, stronger centre, not a smaller, weaker centre”.

Insearchofclarity

I Downing Street is a political hub, and the Treasury manages the economy

and public fnances, the Cabinet Ofce’s role might be described as “the critical

21 Cabinet Oice (2008), Cabinet Office22 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey , based on 29 depth interviews with senior civil servants




junction box o the central government system”.23 Its power comes rom itscentrality – as a secretariat, it operates and services all the complex machinery ocabinet government. In addition to this traditional unction, and its longstandingengagement in intelligence coordination, the Cabinet Ofce has in recent decadestaken up three other key roles: organising and managing the civil service,providing a base or units ocusing on particular policy issues (such as socialexclusion and the third sector), and providing a home or a number o ministerswithout specifc departmental portolios (see Figure 2).24

The traditional roles are uncontroversial, but the newer unctions – especiallyrecent attempts to use the centre to drive delivery o government priorities –have uelled debate about growing prime ministerial power and raised questionsabout the right role or the Cabinet Ofce in the 21st century.

Heath made the Cabinet Ofce a strategy hub with the creation o the CentralPolicy Review Sta, Thatcher turned it into the orce behind her efciency andnext steps agendas, and Major used it to drive public service reorm. Tony Blair’schie o sta, Jonathan Powell, amously promised a transition rom a ‘eudal’system o departmental baronies to a ‘Napoleonic’ system o central control.25

I Thatcher’s centre had relied on personal willpower to push through a radicaldeconstruction o the state, Blair wanted a centre that would give him morepersonal control over a ragmented public sector landscape.

Figure2:CurrentCabinetOfficefunctions

Source: Based on Cabinet Ofce organogram, available at: www.cabinetofce.gov.uk/media/120072/co_org_chart.pd, accessed 8/12/09

While Powell’s pledge was only partially ulflled, under Labour the pace ochange at the centre did accelerate signifcantly. The key changes at the Treasurywere more about style than structure. The comprehensive spending review cyclewas used to extend the chancellor’s policy control over departments, with eachreview including a number o cross-cutting reviews o particular spending areas

23 Hennessy (2001), Whitehall24 Lee et al (1998), At the Centre of Whitehall25 Quoted in Rentoul (2003), ‘Jonathan Powell’

Cabinet

Secretariats

Constitutional

units

Intelligence,

Security &

Resilience

Group

Intelligence

Assessment

& Intelligence

Analysis

Civil Service

Capability

Group

Government

Communications

Government

CIO

Public

Service

Reorm

Group

European &

Global Issues

Honours &

Appointments

Security &

Intelligence

Assessment

Sta

Civil Service

Workorce

Digital

Engagement

ICT Strategy

& Policy

Strategy Unit

Foreign &

Deence

Policy

Propriety &

Ethics &

Private

Ofces Group

Civil

Contingencies

Secretariat

Intelligence

Analysis

Proession

& Strategic

Horizons

Civil Service

Perormance

& Review

Directorate

Proessional

Development

IT Proession

& Cabinet

Ofce CIO

Public

Service Unit

National

Security

Historical

section

Civil Service

Leadership &

Talent

Civil Service

Governance &

Government

Communications

Chie

Technology

Ofcer

Social

Exclusion

Task Force

Economic &

Domestic

Aairs

(incl. National

EconomicCouncil)

Cabinet Ofce

Communications

Inormation

Assurance

Ofce o the

Third Sector



Shaping Up 21

and a suite o targets that departments would have to meet in return or theirunding. At the Cabinet Ofce, the structural innovation has been more ebrile –there have been our broad phases o change since 1997 (see Appendix 1.1):26

1.Phaseone(1998–2001):increasingcross-cuttingpolicycapacity

Sir Richard Wilson’s reorms aimed to give the Cabinet Ofce greatercapacity to intervene in policy across government. The Perormance andInnovation Unit (PIU) was established to provide analytical capacity at thecentre, while units or women, drugs, social exclusion and regulation, andthe new ‘e-envoy’, reected the PM’s policy priorities. Civil service HR wasalso brought into the Cabinet Ofce.

2.Phasetwo(2001–02):amoredirectivecentre

Immediately ollowing the 2001 election, the Cabinet Ofce and No10 were given strengthened capacity to develop ‘mainstream’ policy,moving it away rom its ocus on cross-cutting issues. This was mostclearly seen in the establishment o the Prime Minister’s Forward StrategyUnit (FSU) alongside the PIU.27 Two other important central units werealso set up under the control o the Deputy Prime Minister: the DeliveryUnit (PMDU) and Ofce o Public Service Reorm (OPSR). At the sametime, the capacity and involvement o the Treasury in mainstream policydevelopment continued to grow, creating an increasingly conusing rivalryin central policy direction within the centre.

3.Phasethree(2002–07):thedeliverycentre

The CO took on responsibility or improving the quality o governmentdepartments, via a scheme called perormance partnerships, which

evolved into the Capability Review programme. The department’s role wasdefned as: “to support the government’s delivery and reorm programme”.There was a signifcant shuing o central units, including the scrapping oOPSR and the evolution o the PIU and FSU into the Strategy Unit and thee-envoy into the transormational government unit.

4.Phasefour(2007–present):thecrisiscentre

The last three years have seen a number o small but signifcant reormsat the centre. PMDU has been transerred to the Treasury and a newpermanent secretary has been created in Downing Street. Perhaps most

signifcantly, the cabinet secretariat has grown to accommodate two new‘super-committees’, the National Economic Council and the DemocraticRenewal Council, set up in response to specifc ast-moving nationalcrises. These have a small sta o their own to provide independent policyanalysis rather than relying on departments to do all the heavy liting. TheCO’s role has become ‘making government work better’.

One o the results o these requent changes is a lack o clarity about the purposeo the Cabinet Ofce. This problem was highlighted by the 2008 stakeholdersurvey, which ound that many civil servants saw the Cabinet Ofce as being madeup o disparate units.28 This conusion is recognised within the centre itsel. One

interviewee rom the Cabinet Ofce told us that the department:

26 Adapted rom House o Commons Library (2005), The Centre of Government27 Halpern (2009), The Hidden Wealth of Nations28 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey




does have a clear role, but it’s very difcult to describe. It has a clear role in providing direction and coordinating a number of things. In other places it’s there to support. What’s very difcult for people in the centre and for departments outside the centre is to know what hat the centre is wearing at any given time.

While the Cabinet Ofce has made signifcant progress since 2007 in clariyingits role, our interviews suggest that there is urther to go:

WhatrolefortheCabinetOfce?

They’ve never really come out with a view of what the Cabinet Ofce is for.PermanentSecretary

The Cabinet Ofce has a number of roles and that’s part of its problem.DirectorGeneral

If I sat out in a department, which I’ve done for most of my career, I’d [say thatthe CO is] sometimes irrelevant – I’m vaguely aware they do some things but itdoesn’t matter to me. DirectorGeneral

It is surprising given the professionalism of the civil service how over thecenturies we have not gured out the centre of government playing the role itneeds to. It’s a little odd to me. DirectorGeneral

Working in the CO is like working in pre-Garibaldi Italy. It’s a set of principalitiesof varying quality and differing character and a very transient workforce.DirectorGeneral

I wouldn’t say there’s a very strong recognition of the CO driving theimprovement of the civil service. DirectorGeneral

TheroleoftheTreasury

“The only bit of machinery that matters is the one that controls resources.” 29

The Treasury’s role has changed signifcantly over the past decade, reectingthe demands o an unusually powerul chancellor. It has given up its controlover the setting o interest rates to the Bank o England, but acquired controlover tax policy rom HMRC, extended its inuence over social policy and,perhaps most signifcantly, become a spending department o sorts throughthe creation o tax credits.

In its spending control role the Treasury has, broadly speaking, stuck to the dealwith departments that emerged in the 1990s. It has loosened its grip on inputs,but become clearer about what outputs are expected. Detailed oversight obudgets diminished as the Treasury moved towards giving departments blockgrants and then managing the totals. HMT retains the power to veto detailedspending plans, but it has generally chosen not to use it.30

The chancellor has also developed greater inuence over policy-making. Threetools in particular have created this wider role. First are the policy reviews thatHMT carries out in the run-up to every new spending review – typically, there

are 6–15 reviews covering everything rom science to the voluntary sector.

29 Caulcott (2001)30 For a more detailed account, see Lipsey (2000), The Secret Treasury



Shaping Up 23

Second, the Treasury sets the public service agreement targets to whichevery department must commit in return or receiving its unding. Finally,the Treasury has taken on a leading role in managing public sector efciency,particularly ollowing the Gershon review.31

In institutional terms, these agendas have been supported by an expandingarray o agencies and units, with the Ofce or Government Commerceounded in 2000, and the Prime Minister’s Delivery Unit, which was ormally

transerred rom the Cabinet Ofce in 2007, although it had in practice beenlocated in the Treasury or some time beore this.

Civil servants tend to be cautiously positive about the Treasury. Thestakeholder survey suggests that they admire its analytical skills andintellectual rigour,32 but the ipside o this admiration is a certain amounto resentment o the perceived arrogance and alooness o Treasury sta,reinorced by the act that many HMT civil servants are seen to have littleexperience o working in spending departments. There are also signifcantconcerns that the Treasury’s expanding policy interests have led to too muchmeddling in departmental business. As one ormer permanent secretary

said: “The Treasury tends to slide into a parent–child relationship withdepartments… and in the last decade it got too much into policy, and notenough into fnancial management.”

The 2008 Stakeholder Survey shows that some civil servants “eel thatTreasury sta can try to become experts on issues that are the prerogativeo the department… Instead o utilising the expertise o departments, theTreasury can immerse themselves in an issue and then, rom the department’sperspective, take control o the issue.”33

The key challenge or the Treasury over the coming years will be to successully

manage a programme o public spending reduction – something that it hasnot had to do or more than 15 years. In the short term, this will require areocusing on the our core roles o public expenditure control, tax policy,securing a stable fscal and fnancial position, and overseeing the fnancialsystem. This may well come at the expense o its newer roles in policydevelopment and target setting. One o our interviewees suggested that the

years ahead would require the return o the traditional ‘hatchet-aced men’ othe Treasury.

In the longer run, a debate is likely to re-emerge about whether the Treasuryshould be split into a macro-economics ministry and a new public sector

management department to lead on budget allocation, corporate unctionssuch as HR and IT, and efciency. This would decisively get the Treasury out omajor domestic policy, but would also involve substantial costs and disruption.

31 House o Commons Library (2005), The Centre of Government32 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey 33 Ibid




Addingvaluethroughstrategicleadership

Like many commentators,34 the ofcials we interviewed believed that the centreo government has become signifcantly more powerul, but they doubt that thishas resulted in much better joining up o policy.

We asked our 38 interviewees to describe the ideal value-adding role the centreas a whole should play, and then asked what would need to change or thecentre to ulfl that role (Figure 3). Some 21 answered that the centre needed toprovide more active coordination and joining up o policy. By this, they typicallymeant that they wanted the centre to provide a clear view o the government’soverall priorities, and to help broker joint working between departments to meetthose priorities.

This echoes the 2008 stakeholder survey’s fnding that “there is almost universalagreement among respondents that it is not clear what the government’s prioritiesare”.35 It also chimes with the 2007 Cabinet Ofce stakeholder survey, whichshowed that “helping departments to look beyond their boundaries” and “buildingstrong relationships with departments and working together to address issues”

were seen as important weaknesses and urgent priorities or improvement.36

Figure3:InstituteforGovernmentsurveyof38topcivilservants

Source: IG interviews

Our interviewees were critical o the Cabinet Ofce’s ability to provide a wholeo government vision. One told us that the Cabinet Ofce should own andmanage the process o agreeing strategy across government, but that at present:

“insoar as it attempts to produce a cross-government strategy the process ordoing that is inadequate”. Several interviewees pointed to a gap in the centre’scapacity to turn strategic goals into reality, which oten means there is adisconnect between strategy and resource allocation. For instance, we were toldthat there was not always “a real link rom ‘this is the strategy, this is the costedplan’ to delivery, perormance and the outcomes we achieve”.

It is important to note that many interviewees elt highly ambivalentabout more assertive coordination rom the centre. While they wantedstronger leadership, they were also concerned about the potential or micro-management and poorly coordinated central initiatives. Perhaps the most

strident comment interviewees made was: “I think making the centre bigger

34 House o Commons Library (2005), The Centre of Government, p.335 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey , p.1736 Ipsos Mori (2007), Cabinet Office Stakeholder Research

0 5 10 15 20 25

More central direction on HR/change

Number of interviewees that wanted improvement in this area

Better joining up within centre(eg between CO and treasury)

More active coordination/joining up

More focus on prioritisation /setting key priorities for government



Shaping Up 25

would be a disastrous thing to do, because what that would do is mean that you’ve got a bigger problem to manage. At least keeping it small means there’sonly so much damage that can be done.”

The challenge then is clear: to create a centre that can actively manage cross-cutting issues, but which does less micro-management o departmental policyand delivery.

ThecaseforstrategicleadershipfromthecentreWho can promote ideas about joined-up working if not the Cabinet Ofce?That whole area of better cross-government working without machinery of government changes. That seems like something the Cabinet Ofce should be providing a lead on.DirectorGeneral

It should have more of a role in joining up government – more of a role in sayingwhat are the top ve priorities. PermanentSecretary

It is very helpful for government to say these are the main things we are going tobe focusing on; we are going to keep coming back to them and try and make a

difference on these things. If that can be communicated and followed throughand pursued consistently then that is immensely valuable. DirectorGeneral

What the Cabinet Ofce needs to do is be more comfortable at directing and ordering other departments how to join up and execute policy. There is a cultureagainst doing that, pandering too much to departments.DirectorGeneral

There’s clear value in coordination functions and that might be the area wherewe are weakest. Departments are very powerful. Director

Policy coordination. Things like Afghanistan, Pakistan… some others too, more policy coordination from the centre would be good.DirectorGeneral

They [the centre] need probably more power but with a very strong ruleof subsidiary… there are some things that very legitimately require cross- government working, and a more joined-up No 10 and Cabinet Ofce and amore efcient process of coordination and resolution.DirectorGeneral

The mechanisms for making trade-offs between things remain quite weak… TheCabinet Ofce should be much more effective at getting to an agreed strategy across government and ensuring that interdependencies get managed and ensuring that potential policy conicts get managed and resolved. It’s not at alleffective at those things.DirectorGeneral

I think something around fewer, but better and more joined-up policies drivenby the centre… it is this question of ownership and getting departments, ofcialsand ministers to own the solutions to really difcult wicked issues or whatever you want to call them and then having fewer policies. DirectorGeneral

I think actually pushing some of the other government departments to be joined up is important… [the centre] needs the willingness to do it, a bit more armtwisting would be great. DirectorGeneral




Strategicleadershipcapacityatthecentre

As the previous section suggests, the central departments currently possess alimited range o tools or strategic leadership across government. While therehas been a substantial eort to build up strategy unctions at the centre, theseadditions do not amount to a ull strategic planning system that sets clearpriorities linked to fnance and perormance management processes.

Constitutionally, the Cabinet system itsel is supposed to provide much o themissing strategic leadership. However, many commentators are sceptical thatCabinet currently works eectively as a decision-making body.37 It is certainlytrue that the number o Cabinet meetings and papers appears to have been indecline or some time (Figure 4).38 This reects the increasing use o Cabinetcommittees, which some deend as a necessary development39 given thecomplexity o many issues which Cabinet must consider; and the rise o whatcritics call ‘soa government’.40 Ultimately, the sheer weight and complexity ogovernment business now means that a great deal o policy development mustbe handled outside the cabinet system.41

Figure4:Cabinetmeetingssince1945

0

20

40

60

80

00

20

Number of meetings

1 9 4 5

1 9 4 7

1 9 4 9

1 9 5 1

1 9 5 3

1 9 5 5

1 9 5 7

1 9 5 9

1 9 6 1

1 9 6 3

1 9 6 5

1 9 6 7

1 9 6 9

1 9 7 1

1 9 7 3

1 9 7 5

1 9 7 7

1 9 7 9

1 9 8 1

1 9 8 3

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

2 0 0 7

2 0 0 9

Source: IG research

Some aspects o strategy work and policy brokering are managed through the

Cabinet secretariats – they are generally elt to perorm well, and many civilservants point to an improving and more collaborative relationship with thispart o the centre. But some claimed that the secretariats can tend towardsachieving compromises that may make departments happy, but are not the bestsolution strategically.42 Thus good ideas can become diluted. Stakeholders alsoeel that the secretariats are strongest when they are being reactive, rather thanleading proactively.

The Cabinet Ofce houses the Strategy Unit, a team o analysts that producereports on priority policy areas or the Prime Minister, oten working withdepartments to develop analysis. The unit has received widespread praise or

37 See, or example Foster (2004), ‘Cabinet government in the 20th century’38 IG analysis39 Powell (2009), House of Lords Constitution Committee Inquiry .40 See, or instance, Hastings (2006), ‘The soa government o Blairism has been an unmitigated disaster’41 For example, see the increase in the number o pages o legislation detailed in Lightbown and Smith (2009), Parliamentary Trends, p.742 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey



Shaping Up 27

the quality o its work, but while it has undoubtedly improved the quality ostrategic thinking at the centre and strengthened the Prime Minister’s position, ithas not been able to ulfl a genuine strategic leadership role. One reason or thiswas highlighted by an interviewee who described PMSU’s approach as “parachutingin, looking at an issue and then running o again” rather than providing longer-term support or delivery. Politically, the unit’s primary source o authority is thePrime Minister, and it has only limited purchase with other secretaries o state.

Over the past decade, the Treasury has also attempted to take on a much strongerrole in providing strategic leadership, reecting the preerences o a particularlypowerul chancellor. Through spending reviews and the public service agreementramework, chancellors have tried to create a degree o overall coherence to thework o ministries, although it should be noted that once the Treasury allocatesunding, departments have a great deal o reedom over how they spend it.43 The Comprehensive Spending Review process suers rom some by now amiliarproblems. Reviews are oten constructed through tough bilateral discussionsbetween the chancellor and line ministers, rather than being agreed collectivelyand connected to a clearly agreed strategic plan. This can limit departmentalbuy-in – indeed, the Treasury’s latest stakeholder survey raised concerns that its

ofcials sometimes take policy decisions almost by diktat.44

This approach might work i departments stuck to their PSA targets, but these arerequently missed with ew penalties or ailure. A department that ails to hit itstargets aces increased central monitoring through the Prime Minister’s DeliveryUnit, but there is little threat o a poorly perorming programme being cut, oro negative career consequences or the ofcials responsible. This relatively lighttouch regime makes the UK only the 16th toughest country in the developedworld, according to a survey o fnance ministries across the OECD 30 (Figure 5).

Figure5:Likelihoodofsanctionsforfailingtohitaperformancetarget

0

2

4

6

8

10

12

14

16

C z e c h R e p u b l i c

F r a n c e

G r e e c e

I c e l a n d

I r e l a n d

J a p a n

M e x i c o

P o r t u g a l

S p a i n

S w i t z e r l a n d

C a n a d a

N e t h e r l a n d s

B e l g i u m

H u n g a r y

U n i t e d K i n g d o m

N o r w a y

S w e d e n

U n i t e d S t a t e s

A u s t r i a

F i n l a n d

N e w

Z e a l a n d

G e r m a n y

S l o v a k R e p u b l i c

T u r k e y

A u s t r a l i a

L u x e m b o u r g

P o l a n d

I t a l y

D e n m a r k

K o r e a

The programme is eliminated

There is more intense monitoring of the programme in future

Negative consequences for budget of ministry

Negative consequences for pay of head of ministry

Negative consequences for future career of head of ministry

Source: Parker et al (2009), State of the Service. Note: Scores reect the likelihood that a particular sanction will be applied, with a score o 0 meaning it isalmost never applied, and a score o 4 indicating that it is almost always applied.

43 Parker et al (2009), State of the Service44 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey , p.13




Overall, this means that the UK has an incomplete and ragmented version othe overarching, integrated strategic planning unctions ound at the centres omany other OECD governments. This strategic planning role typically involvesthe ollowing activities:45

• Ensuring that the government’s deliberations on its strategic priorities

take place with the beneft o a broad assessment o the overall economic,

political and social situation;

• Ensuring that the strategic priorities are harmonised with other strategic

documents o the government, such as economic and fscal strategies, and

other key policy and reorm strategies;

• Ensuring that the budget preparation process takes account o, and reects,

strategic priorities;

• Ensuring that departmental work plans reect the government’s

strategic priorities;

• Ensuring that the Prime Minister is regularly brieed on new developments

aecting the strategic priorities and annual work plan, and possible

responses or adjustments where warranted.

This lack o strategic leadership capacity at the centre leads to at least twourther problems.

First is a lack o capacity or the Cabinet to collectively address pressing social,economic or environmental problems. The ormer Treasury permanent secretarySir Douglas Wass noted in the early 1980s that: “Ministers in Cabinet rarely look

at the totality o their responsibilities, at the balance o policy, at the progresso government towards its objectives as a whole.”46 There is little evidence tosuggest that this situation has greatly improved.

Ministers come to meetings with bries rom their departments whichreect that particular department’s view o a policy problem, rather than anoverarching view o the problem across government. While Cabinet committeesdo sometimes commission collective papers rom several departments, this isthe exception rather than the rule. PMSU sees its role as explicitly excludingproviding briefng to Cabinet or its committees. This arrangement does have theadvantage o ensuring that conicting positions are represented, but not that

they are resolved.

The second problem is the lack o a clear link between strategic goals andbudget allocation. Over the last decade, a period o relative fscal abundance,spending reviews have dealt primarily with allocating new money. This meansthat departments have oten been able to avoid hard choices about endingunderperorming programmes, and that there has been little collectivediscussion among ministers about where the government’s real prioritiesshould lie. As discussed in Chapter 3, this system is particularly poorly suitedto judgements about the relative efcacy o spending across departments orbetween them, such as innovative programmes that cut across budgets.

Other countries have tried to develop more thorough ways o linking goals

45 James and Ben-Gera (2004), A Comparative Analysis of Government Offices in OECD Countries, p.1946 James (1992), British Cabinet Government



Shaping Up 29

to budgets. In New Zealand, the government estimates have to set out thelink between each department’s unding, the expected outputs and a set ooverarching government strategic goals – or instance “reduce inequalities inhealth, education, employment and housing”.47 When ministers scrutinise newspending bids rom departments, they put an emphasis on demonstrating thatany new programme will also help to achieving government outcomes.

Canada’s Treasury Board Secretariat (TBS) is developing a system o

parliamentary reporting which requires departments to show how theirprogrammes align to a whole o government outcome ramework. This meanslinking each programme – or instance, “promoting cultural understanding” –to a departmental strategic outcome such as “Canadians live in an inclusivesociety”, which must then be linked to a whole o government outcome areasuch as “achieving a diverse society that promotes linguistic duality and socialinclusion”. Each department regularly reviews its programmes to check thatthey are eective and efcient, and they then develop proposals or reallocatingtheir money to better meet the government’s priorities.48

Civilservicemanagementfromthecentre

Since the 1980s the Cabinet Ofce has progressively become the centraldepartment or civil service management, with the posts o cabinet secretaryand head o the civil service being combined and the postholder developing anincreasingly broad set o responsibilities or managing permanent secretariesand ensuring the delivery o cross-government HR and IT. Cabinet secretarieshave acquired the right to perormance manage departments through theCapability Review programme, and they individually appraise each permanentsecretary twice a year based on a scorecard o data that includes departmentalperormance against capability reviews and public service agreement targets.This arguably represents a signifcant strengthening o the civil service

management role at the expense o some o the policy advice unctions o thetraditional cabinet secretary role.

However, as with so many unctions at the centre o government, the cabinetsecretary’s powers are somewhat inormal. He does not legally employpermanent secretaries – that is the secretary o state’s role – but he does havea very signifcant inuence over appointments and some ormal powers toreward and punish through biannual appraisals and his seat on the permanentsecretaries’ remuneration committee, which allocates perormance pay. In thosecases where a permanent secretary underperorms, it can be difcult to sackthem, but not because o a lack o power at the centre. Rather, it is because a

cabinet secretary who wants to be rid o a resistant permanent secretary mustfrst overcome departmental and ofcial politics, then ace the unpalatablechoice o oering a large pay-o or acing an employment tribunal.

This delicate balance between weak ormal powers and growing inormalauthority provides some o the personal accountability oten said to be lackingin the senior civil service – indeed some ormer permanent secretaries wouldsay that the current arrangements amount to line management in all but name.

Formalising this line management relationship in permanent secretary contractsmight help to clariy the relationship between the centre and departments. It

47 Kibblewhite and Ussher (2002), ‘Outcome ocused management in New Zealand’48 IG interviews with TBS oicials




could increase the cabinet secretary’s authority and shit the deault position oncross-government working to an assumption that line ministries will participatein Cabinet Ofce initiatives unless they can make a case or not doing so.A similar switch in emphasis may be necessary or human resources and ITmanagement. These are areas where some civil servants eel that the centre“could be more assertive at times, particularly on corporate issues where there isclear evidence o best practice to be ollowed”.49

StrategichumanresourcesHuman resource management is one o the core unctions o centres ogovernment in almost every developed country. At its most basic, the caseor central leadership revolves around the need to recruit, retain and developa talented group o senior civil servants with a common ramework or skills,perormance management and ethics, and to retain some control over the paybill. To this basic unction, the Cabinet Ofce adds a variety o extra duties,including the Capability Review programme, the ast stream and a role in settingout principles or pay and reward in the wider civil service.

The key HR body at the centre is the Cabinet Ofce’s Civil Service CapabilityGroup (CSCG), which several interviewees elt was doing a good job in verydifcult circumstances. CSCG can list many accomplishments, including thedevelopment o the ‘Top 200’ group o senior civil servants, the developmento the HR proession across government and better permanent secretaryperormance management through capability reviews.

Many aspects o a strategic leadership role are in place already. The CabinetOfce has invested a lot o energy in collegiate management o cross-government HR. The Normington50 review set out a vision or the senior civilservice, and the CO has created a people ramework setting out areas where

permanent secretaries will take collective action – including on improving thequality o leadership and promoting employee engagement.

However, some interviewees elt that Whitehall’s highly decentralised approachto HR might get in the way o urther progress. Departments currently haveone o the highest levels o autonomy in the OECD,51 creating the risk o alack o coherence and efciency. This concern is particularly orceul at a timewhen Whitehall urgently needs plans or managing headcount reductionswhile ensuring that the remaining sta have the skills needed to manage astreamlined, more regulatory state.

The senior civil servants we interviewed told us that:

We’re in the worst of all worlds. We should either let departments do their ownthing or take a more centralist approach.Director

We went along with the breakup of the big corporates. There was obviously some great guiding philosophy that was not very clever. Separate contracts, separate salary scales, that was just so mad. It doesn’t help you know, all those peopleissues being owned by departments. DirectorGeneral

49 Ipsos Mori (2008), HM Treasury and Cabinet Office Stakeholder Survey , p.1650 Normington (2008), Senior Civil Service Workforce and Reward Strategy 51 Parker et al (2009), State of the Service



Shaping Up 31

I don’t think the HR side is particularly broke, I just think it’s got some really difcult things to do and we’ve probably taken decisions in the past about the pay systems that we might regret now but are quite difcult to row back from .DirectorGeneral

If you were looking at running all departments as Civil Service PLC, and do wehave something which sets this all out at this level of clarity, then no we don’t.DirectorGeneral

These points were somewhat reected in the Cabinet Ofce’s Capability Reviewin 2008, which called or “more pace” in leading improvement across Whitehalland greater “clarity o vision” about the uture o the civil service.52 Ourinterviews and analysis identifed our areas where the Cabinet Ofce could gourther to deliver greater strategic leadership on HR:

• The Cabinet Ofce could set out more clearly its role on HR matters, and

what it expects o departments, including distinguishing between when

it is suggesting and when it is directing that departments do something.

Grievance procedures are one area where the centre should set clear policy

and then let departments implement it.

• Where departments are conused about particular HR issues, the Cabinet

Ofce could provide an authoritative voice and clear guidance about the

best way to proceed. For instance, when sta ound it hard to get to work

during the 2009 snowstorms, the Cabinet Ofce could have provided an

authoritative voice on whether this should be counted as working rom

home or extra leave.

• Similarly, where a common, cross-government approach on HR matters is

necessary or desirable, the Cabinet Ofce could lead on its development,or example by ormulating model policies on HR issues that aect all

departments (e.g. age discrimination). A key challenge here will be providing

strategic leadership or departments that need to cut their stafng costs.

• The Cabinet Ofce could establish mechanisms to identiy and share

good HR practice, and pinpoint where there is poor perormance to help

departments raise standards.

Civil servants we spoke to also blamed decentralised human resourcemanagement or a number o practical problems. Decentralisation means that

levels o pay or the same job can vary widely across departments. This canmake machinery o government changes complicated and potentially veryexpensive, as newly created departments inherit sta doing similar jobs ondierent rates, and generally have to level pay upwards. In one particularlyexpensive example, a department that was ormed in the early 2000s had tofnd at least £15m simply to resolve its dierential pay problems.53

Diering pay scales and perormance schemes can also hamper collaboration,because employees o particular departments may be reluctant to transer toa dierent department or joint unit to work on cross-cutting projects. Finally,departments oten duplicate eort to develop their own recruitment and paypolicies, leading to inefciencies.

52 Cabinet Oice (2008), Cabinet Office53 IG interviews




A recent National Audit Ofce report54 on civil service recruitment practices insix government departments highlighted this problem o inefciency. It oundthat more consistent procedures could make recruitment aster and cheaper– delivering potential efciency improvements o up to 68% by reducing theinternal sta cost o recruitment and the time taken to recruit new sta.

ITcapacity55

Public sector spending on IT was estimated at £16bn in 2007/08, whichrepresents 4.6% o total Whitehall spending.56 Getting better value or moneyrom this spend will be a key aim whoever wins the next elections, with therecent Operational Efciency Programme (OEP) claiming that 20% o publicsector IT spending could be cut, much o it through reducing the signifcant,unnecessary cost variations between departments, and through greater use othe collective buying power o government.57 IT has also been integral to publicservice reorm programmes, such as the ‘Transormational Government’ agenda’sgoal to reconstitute services around citizens, rather than departmental silos.

The nature o these challenges suggests that the centre could play a crucial

acilitating and coordinating role. The centre is oten best placed to tackle issueswhere the current use o IT inhibits government eectiveness: or example,to standardise the patchwork o systems that have grown up across centralgovernment, operating to dierent standards and requently unable to talk toeach other. This can seriously raise the transaction costs o joining up, sincethere is oten no easy way or colleagues in dierent departments to share and

jointly manage inormation (see Chapter 3). The Treasury Select Committeehas argued that the OEP’s efciencies “will require considerable cooperationbetween the departments”, but questioned “whether the necessary structuresare in place to acilitate such co-operation”.58

Attempts by the centre to promote cross-government IT-based transormationhave tended to ounder on a combination o line departments’ competingpriorities and the centre’s lack o inuence. As one senior Cabinet Ofce employeeexplained: “The department always has more troops on the ground… I thedepartment wants to argue, you are lost.” This is because the governance o IT iscurrently ‘collegial’: with power dispersed between departments, the centre cancoordinate only through persuasion and consensus rather than ormal mandates.

The Chie Inormation Ofcers’ Council, the main central decision-making body,has succeeded in sharing best practices across government and developingstrategy; the difculties arise with implementation. The Council has little

capacity or authority to enorce its decisions – even i they could signifcantlyimprove the efciency or eectiveness o government. As one interviewee put it:“So everyone agrees ‘in principle’ – but then what?” In other words, the currentarrangements are not sufcient to tackle the issues that are controversial,conict with departmental priorities, require initial unding, or whose beneftsdo not immediately accrue to the actors involved.

While the CIO Council leads on IT strategy, the Treasury also has a say inhow major IT-led business change projects are handled, through the GatewayReviews carried out by the Ofce or Government Commerce (OGC). Thesereviews are designed to assess the progress o major IT projects and highlight

54 NAO (2009c), Recruiting Civil Servants Efficiently , p.2555 This is a brie summary o the Institute’s report, Installing New Drivers: How to improve government’s use of IT , by Hallsworth et al (2009)56 HM Treasury (2009a), Operational Efficiency Programme, p.457 Ibid, pp.48, 55–5658 House o Commons Treasury Committee (2009), Evaluating the Efficiency Programme, p.3



Shaping Up 33

potential problems beore they escalate. But since they are not made public,their impact is difcult to assess. Nevertheless, the 31 Gateway Reviews on theNHS’s National Programme or IT alone make a case or the centre to exert moreinuence over major IT projects.59 The NAO estimates that the programme willcost £12.4bn in total, more than fve times the government’s original costing.60

It is clear that the programme managers did not sufciently heed warnings romtheir Gateway Reviews.61 OGC was asked to perorm only two reviews o the

programme as a whole, both at very early stages. The second was published inNovember 2004 and gave the overall status o ‘red’, with the review criticising“the lack o a coherent benefts realisation strategy and the absence o clarityregarding the organisational structure”.62

This case highlights two cogent points: frst, that a department was able tocontinue a ‘red’-rated project without making signifcant adjustments;63 second,that in practice OGC carries out Gateway Reviews only when requested. Itappears that the department’s position o power meant that it could respond tounwelcome news by ailing to request any more news at all.64 In sum, althoughGateway Reviews “can provide an eective challenge process… there is evidence

they are not always taken seriously”.65

In other words, they do not representa strong enough mechanism or the centre to inuence a department’smanagement o a contracted IT project, no matter how awed it may be.

Although the centre clearly has a role to play in overseeing and coordinating theuse o IT in government, it should intervene only when necessary. Interventionneeds to be selective, allowing departments reedom to innovate to achievebenefts in their policy areas, while insisting on savings where the evidenceis compelling. The ‘IT stack’ (Figure 6) may be a useul way o judging how tomatch the actions o the centre with the IT issue at stake, although it is notintended to be prescriptive.

Figure6:TheITstack

The technology “stack” Extent of Governance Possibleapplication issues approaches byacross the centregovernment

Specialised Allow greaterdepartment variance Assess

retropectively

Enorce greaterUbiquitous in standardisationgovernment Intervene prospectively

Clearcaseforspecialisation

Zoneofcontested

governance

ClearcaseforStandardisation

Specicspecialistuse(eg. Meteorological Ofce systems)

Policy-relatedtechnology(eg. ID cards, Connecting or Health)

Contestedcollaboration(eg.collaborative procurement)

Architecture(eg. greening IT)

Security(eg. codes o connection)

Source: IG research

59 These Gateway Reviews have been made public through Freedom o Inormation requests60 NAO (2006b), Department of Health61 See www.connectingorhealth.nhs.uk/about/oi and www.computing.co.uk/computing/comment/2244750/unheeded-warnings-highlight-

nhs-4731810, both accessed 18/12/0962 Oice o Government Commerce (2004), ‘NHS National Programme or IT’63 This is not an isolated instance. In 2006, the NAO recommended a review o “how ‘red’ reviews, and multiple ‘red’ reviews, are dealt with in

uture in terms o guidance to the senior responsible owner and bringing them to the attention o the Permanent Secretary”. See NAO (2006a),The Delays in Administering the 2005 Single Payment Scheme in England

64 Ipsos Mori conducted two annual surveys on the National Programme or IT that produced unwelcome results. No more reviews werecommissioned, although there may be no causal link. See: www.computerweekly.com/blogs/tony_collins/2009/06/16-key-points-in-gateway-revie.html, accessed 18/12/09

65 Public Accounts Committee (2009), Learning and Innovation in Government, p.10




Thecentreininternationalcontext

Having identifed a number o weaknesses in Whitehall’s strategic leadershipcapacity, we now compare the UK with a number o other high-perormingOECD countries by looking at their centres o government to understand whatthe UK might learn rom abroad. The countries we chose to study – Australia,Canada, Finland, France, the Netherlands and New Zealand – are broadlyrepresentative o a number o dierent traditions o administration, covering

Scandinavia, Western Europe and the Westminster systems.66

We examined how each o these countries structures fve key unctions ound atthe centre o almost every government (Figure 7):

• Managing the interace between politics and bureaucracy

(e.g. cabinet secretariats);

• Policy analysis and advice (e.g. policy and strategy units);

• HR and personnel unctions (e.g. the Civil Service Capability Group);

• Budget allocation to departments; and

• Economic analysis.67

Figure7:ArrangementofcentralfunctionsinsevenOECDcountries

Manage interacebetween politicsand bureaucracy

Policy analysisand advice

HR and personnel Budget andresourcemanagement

Economic analysis

UK

Australia

Canada

Finland

France

Netherlands

New Zealand

Cabinet Ofce

Finance Ministry

Department o the PM and Cabinet

Privy Council Ofce

Prime Minister’s Ofce

Ministry o General Aairs

Department o the PM and Cabinet

Treasury Board Secretariat

Budget, Civil Service and Public Accounts

Public Service

Commission

Interior ministry

State ServicesCommission

PMO PMO/President

Finance Ministry

Finance Ministry

Industry, Finance,Economics

Treasury

Treasury

Finance Ministry

Treasury

Source: IG research

Three actors clearly distinguish the structures o the UK centre rom those oother developed countries. First, only in the UK is the HR unction sited in theequivalent o the Cabinet Ofce. Every other country we examined either has astand-alone department such as New Zealand’s State Services Commission, orhouses HR in part o the Finance Ministry (as in France’s sprawling Ministry othe Budget, Public Accounts and the Civil Service).

Second, the UK Treasury’s remit is unusually broad or a developed Westminstersystem country. Canada and Australia both divide the Treasury’s unctions

between a ministry or economics and a department that helps to prepare thebudget and provides corporate management unctions like ICT and HR.66 All o these countries except France outperorm the UK on the World Bank Good Government Indicators and the Bertelsmann Sustainable

Governance Indicators67 Adapted rom Kelly (2009), Shaping a Strategic Centre



Shaping Up 35

Finally, the UK’s centre is large in absolute terms o the number o staemployed, but unusually small in relative terms, with the combination o No 10,Cabinet Ofce and Treasury making up little more than 0.5% o the civil service.The equivalent institutions are more than twice this size in every countrywe looked at except the Netherlands.68 This is not just a unction o the UK’sunusually centralised system o government – our centre also looks small whencompared with the population o the country as a whole (Figure 8).

Figure8:Sizeofinternationalcentrescomparedwithtotalpopulation

300

00 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

50

100

150

200

250

300

Size of the civil service (per 1 million people in population)

S i z e

o f t h e

c e n t

r e

( p e r 1 0 , 0

0 0

p e o p l e

i n p

o p u l a t i o n )

Size of the centre compared to size of the civil service

350

US

Sweden

Netherlands UK

Canada

DenmarkFrance

New Zealand

Finland

400

Source: IG survey o national governments

Central institutional design is inuenced by a complex set o historical, culturaland constitutional considerations. Looking across the countries we have

examined, three broad variations emerge. First is the antipodean Departmento the Prime Minister and Cabinet, second is the minimal centre ound in manyNorthern European countries, third are the departments o budget allocation andcivil service management that can be ound in Australia, Canada and the US.69

DepartmentforthePrimeMinisterandCabinet(DPM&C)

The Australian Commonwealth’s DPM&C has been described as “pre-eminentin terms o policy development”70 across government. Its organisational chartis strikingly dierent rom that o the UK Cabinet Ofce – there are no CIOs,human resources ofcers or government-wide communications unctions.

Instead, the department is structured almost entirely around policy divisionsdealing with domestic policy, strategic policy and implementation, and nationalsecurity and international policy.

With over 500 sta, DPM&C is involved in most high-profle policy issues, andhas a brie to evaluate and advise the Prime Minister and cabinet on the contento all major line ministry proposals. The department has the power to rejectadvice and analysis oered by ministries. The PM has around 40 sta, aroundhal o whom are policy advisors with the rest working in unctions such as pressand protocol.

68 IG analysis, based on inormation supplied by national governments and the World Bank Development Indicators 200869 Proiles based on IG interviews with oicials in each country, national government websites and country reports compiled or the Bertelsmann

Sustainable Governance Indicators, accessible at: www.sgi-network.org/, accessed 18/12/0970 Bertelsmann Stitung (2009), ‘Australia Report’




Australia’s fnance unctions are divided into a Treasury and a Finance ministry,with the latter ocusing on budget allocation and corporate unctions.Strategic human resources is largely carried out by the Australian Public ServiceCommission, although the fnance ministry and DPM&C also play a role.

Theminimalcentre

By contrast, the Dutch Ministry o General Aairs is an example o a highly

decentralised administrative and political tradition. General Aairs has just120 sta, although 50 o them work in the Prime Minister’s ofce providingpolicy advice. It also contains a delivery unit o about three people who chaseprogress on the government’s 74 targets and produce an annual progress reportor parliament and public consumption. In addition, the government has set 10cross-cutting goals with pooled budgets.

General Aairs is called upon when situations prove politically difcult orcoordination has become problematic. However, the PM’s authority largelycomes through ollowing up the delivery o the government’s coalitionagreement – he must rely on personality politics and persuasion rather than

ormal power to resolve policy deadlock.

The Department o the Interior has started to develop some o the unctionscommonly carried out by the centre in other countries – it is taking a lead oncivil service reorm, it employs and manages the top 800 civil servants, and it iscreating a central research team to support reorm across government.

OfcesofManagementandBudgetAllocation

Several countries have eectively divided their Treasury unctions into amacro-economic ministry and an ofce or budget allocation and government

management. In Canada, this latter role is perormed by the Treasury BoardSecretariat (TBS), a large department that initially developed to provideadministrative support to the Treasury Board, a committee o the Privy Council.

The existence o TBS means that the Canadian budget-setting process is manageddierently rom that in the UK. While the Department o Finance is responsible orsetting the overall public spending envelope and ormally presenting the budget toparliament, TBS supplies the initial guidance or that budget including reallocationoptions or spend as well as assessments o new programme business plans. Itis also responsible or monitoring and manages fscal discipline and fnancialperormance across government and in so doing, it monitors the eectiveness o

departmental programmes and makes recommendations or reallocating or cuttingspending rom those programmes. The Finance Minister sits on the Treasury Boarditsel, ensuring close connections between the two departments.

TBS is also responsible or the organisation and administration o Canada’spublic service. It sets employment and management policy across the civilservice, assessing compliance through its Management Assessment Framework.It also acts as a hub or reporting perormance to parliament. It has beennotably successul in encouraging take-up o e-government and advancedcustomer service techniques through its Service Canada initiative.



Shaping Up 37

Theproblemofpresidentialism

One o the most striking acts that emerges rom an international comparisono the UK’s centre o government is the way that it combines an exceptionallypowerul central political actor – the Prime Minister – with relatively weak ofcialtools and techniques or cross-government leadership and relatively neglectedinstitutional practices or the resolution o conicts between the main actors.

The power o the centre, and o the Prime Minister in particular, partly reectsthe size o their party’s majority in the commons and the PM’s personalstanding within his or her party – hence the particular strength o Thatcher andBlair. O course, it also reects their standing in Cabinet, where the presence o apowerul rival can eectively create a multi-headed executive.

This central political power is oten said to be reected in the growing size oNo 10, which has doubled to nearly 200 sta since 1997, and in the role thePM plays in setting targets. According to an international survey o fnanceministries, the UK is one o only two OECD countries where the Prime Ministercan in practice set targets or departments, and one o only our that grant this

power to the chancellor. In 40% o OECD countries, target setting is in practicethe job o the line minister.71

This creates an inherent tension at the centre o government, with strong PrimeMinisters looking or ways to enorce their will that work around the traditionalmechanisms o government, rather than working through them. The result ismanagement by prime ministerial activism, targetry and announcements, withthe PM oten said to be clumsily intervening in a departmental system designedor collective rather than individual leadership. One obvious way to resolve thisimbalance between political and administrative mechanisms would be throughthe creation o a much stronger centre, which would be able to match the PM’s

political clout with administrative oversight o departmental policy-making anddelivery arrangements.

However, there is a great deal o scepticism about such a move, as illustrated inthe debate about the increasingly ‘presidential’ power o the Prime Minister since1997.72 Indeed, some critics argue that the Cabinet Ofce is already in the processo becoming a de acto Prime Minister’s department.73 This argument can easilydominate any discussion about an eective and appropriate role or the centreo government – more power or the centre is seen as a loss o autonomy ordepartments and a contribution to the decline o cabinet government.

Those who worry about presidentialism have a strong case to make. As wehave already noted, there is signifcant evidence that the role o Cabinet asa ormal decision-making body has been in decline since the war; and thepolitical personality o the PM is increasingly important. To give just oneexample, the Economist newspaper made 415 mentions o Clement Attleeduring his premiership, and over 1000 mentions o his chancellors. By the 1980sthe relative standing o Prime Minister and chancellor had reversed sharply –Margaret Thatcher was mentioned more than 4500 times compared with 1033mentions or her chancellors.74

71 IG analysis o OECD 2007/08, ‘International budget practices and procedures database’72 See, or instance, Kershaw (2007), quoted in ‘How will history judge Blair?’73 See or instance, Bogdanor (2000), ‘Why the PM will never be president’74 IG analysis o the Economist archive




It is a mistake to attach too much o the blame or this situation to any singlepolitical personality – the presidentalism debate is at least 40 years old, and it iscommon to every developed Westminster system country.75 While strong primeministerial leadership is a reality, it is easy to overstate its practical impact. ThePrime Minister can in theory intervene in any policy area they choose, but inpractice they are limited by time, attention span and resources. And the lastdecade o debate about ‘delivery’ in the UK has demonstrated conclusively that,while Prime Ministers may be able to make demands across government, they

have only a very limited ability to impose their will on the ground.

In act, rom the point o view o the ofceholder, the position o PrimeMinister oten seems underpowered. One recent academic examination o thepresidentialism debate concludes that “the continuous reorm o the Britishcentre paradoxically speaks o the ailure, not success, o coordination”.76 Thecombination o the Prime Minister’s delivery and strategy units has certainlyincreased the PM’s reach across government, but the Cabinet Ofce is a longway rom becoming a ully edged premier’s department.

The current system probably does not satisy anyone – being neither presidential

nor collegiate enough to manage departments eectively. Strengthening theCabinet Ofce’s role as strategic leader provides a way to address this problem,allowing it to support Cabinet to develop a shared strategy, but also providingthe PM with a clear role that even the most traditional commentators wouldaccept as legitimate: “promoting the collective strategies o the party andgovernment, and keeping individual ministers to that strategy”.77

Recommendations:adepartmentofstrategyandcapability

In this chapter we have identifed fve challenges or the centre o governmentthat any reorm will need to address:

• Developing a clearer sense o government’s key priorities and objectives,

with corresponding clarity about what the centre will leave to departments

and other levels o government;

• Defning – explicitly – a new relationship between the centre

and departments;

• Creating a more rational and eective system or matching resources

to priorities;

• Promoting enhanced ‘joined-up’ models o delivery where departmentalsilos ail to map onto strategic challenges and the needs o citizens;

• Setting out a clearer vision or the centre’s role in managing corporate

services such as HR and ICT.

We have already developed a clear sense o how the centre can best add value.The priority should be to improve the strategic capacity o the Cabinet Ofce.This means strengthening the Cabinet Ofce’s ability to coordinate the work odepartments to address cross-departmental policy issues, including setting

75 Rhodes et al (2009), Comparing Westminster , p.8176 Ibid, p.9777 Lee et al (1998), At the Centre of Whitehall



Shaping Up 39

objectives or the whole o government, helping to manage those objectiveswhere they are genuinely cross-departmental, and building capability to helpdepartments deliver. There are a number o ways in which this could be done.Our suggestion is that the next government should turn the Cabinet Ofce into a‘department o strategy and capability’. This could involve the ollowing key steps:

1.Setawholeofgovernmentstrategy. The Cabinet would agree a whole

o government strategy – produced jointly with a new chie strategy

ofcer – setting out the key strategic outcomes ministers want toachieve over the coming parliament. These should be a small number o

high-level, cross-cutting outcome goals – perhaps 20 – that orm the

basis or steering Whitehall and wider delivery systems. The government

strategy document would orm the basis or conversations between the

PM and secretaries o state – supported by discussions between the

Cabinet Secretary and permanent secretaries – about how the work o each

department aligns with and contributes to the government’s overall strategy.

2. Createmechanismsfor sharedownershipofstrategy. The strategy

would need to be collectively owned by all permanent secretaries,

and would naturally be a subject or regular discussion at Permanent

Secretaries Management Group (PSMG) meetings. But in addition, a

smaller core group o permanent secretaries should be convened into a

strategic board to discuss and monitor the ongoing implementation o the

strategy. This could take the orm o a new sub-group o PSMG, and would

build upon the work o the existing Civil Service Steering Board, which

comprises eight senior ofcials and is chaired by the Cabinet Secretary.

To ensure better alignment between political priorities and administrative

action, an alternative option would be or the new body to be chaired by asenior minister, or even the PM.

3.ReshapetheCabinetOfceintoastrategyhub.The Cabinet Ofce

would become the guardian o the strategy, with PMSU, PMDU and the

secretariats consolidated into a new strategy directorate under a chie

strategy ofcer, whose job would be to actively support the delivery o the

strategy across government, including by acting as secretariat to the new

strategic board or government. Strategy and perormance management

work would ocus primarily on supporting departments to work together

on the government’s strategic goals. The chie strategy ofcer would

report directly to the Cabinet Secretary.

4.Committojointdistributionofresources.The Treasury should use the

government strategy as a transparent basis or resource allocation. Given

the state o the public fnances, this will probably mean targeting spending

cuts in a way that preserves or reocuses the parts o government most

critical to delivering the government’s strategy. Money must be linked

to the government’s strategy and departments would be required to bid

jointly – setting out how they will work together to deliver the best valueor money – unless there is a compelling case or silo-based delivery. In

a ew cases, where the government wishes to place particular emphasis




on a cross-cutting problem, it should create pooled budgets outside

departments with dedicated ministers to commission work rom across

Whitehall and beyond. We develop this recommendation more ully in

Chapter 3.

5.FocusonbuildingcapabilityandaccountabilityacrossWhitehall.

Capability building would remain a core aim o the Cabinet Ofce, with

the whole o government strategy including a number o long-term

development goals or the civil service based on high-quality horizon

scanning and workorce planning, and backed up by capability reviews.

The Cabinet Ofce should help departments to access organisational

development and change management support to realise these

development goals.

6.Publishdepartmentalbusinessplans.Departments should be required

to publish a three-year business plan that aligns with the government’s

joint strategy plan, and makes provisions or cross-departmental working

on key issues. Business plans should be created by strategy boards,including the ministerial team and the ull departmental board. Each

department’s plan would be signed o by the secretary o state and the

board, presented to parliament and made publicly available. The plan

would provide a ramework, against which the board – and parliament

– would assess the department’s perormance. Business plans should be

reviewed annually, and on the appointment o a new secretary o state.

In the longer term, uture governments should consider more ully whetherthe current structures at the centre are ft or purpose. Figure 9 sets out our

scenarios or dierent central structures. The obvious options to consider areeither changing the Cabinet Ofce into a ully edged Department o thePrime Minister and Cabinet, or to revisit the idea o splitting the Treasuryinto an economics ministry and an Ofce o Management and Budget similarto the Canadian Treasury Board Secretariat. This latter option merits urtherconsideration. International experience suggests that – by combining undingallocation with corporate unctions such as HR and ICT – budget ministries candrive a tighter ocus on government efciency and customer ocus.

Future governments should also watch closely the model o governmentorganisation currently being pioneered in Scotland, where departments are

abolished completely and policy teams are organised around the government’sstrategic goals. O course, Scottish government is smaller and less complexthan that or the UK as a whole, but that does not mean that Whitehallshould not seek to learn rom this ascinating experiment. As Proessor DennisKavanagh provocatively put it in his evidence to the House o Lords ConstitutionCommittee: “I you were starting rom now, you probably would start o with apowerul Prime Minister’s department and probably short-term departments.”78

78 Kavanagh (2009), ‘Oral evidence to the Lords Constitution Committee’



Shaping Up 41

Figure9:Long-termalternativescenariosforthecentre

The centre goes ‘back to basics’. The Cabinet Office is

stripped down to the secretariats and a small strategy

function. HR and capability are hived off or devolved

entirely to departments. The Treasury returns to being

a small finance ministry, with it’s primary focus on

managing down cost.

Traditional centre

Closest to current arrangements – the centre of

government is essentially a consultancy providing

advice and support to line departments in hitting their

goals and improving their capacity. CSCG is expanded

to include a broader range of specialist skills in areas

such as HR, finance and change.

Change

consultancy

The centre is charged with ensuring that the cabinet’s

agreed priorities are delivered in practice, but the

machinery of delivery and capability is at arm’s lengthfrom the PM. An Office of Management and Budget

manages budget allocation, HR, performance

management and capability building, turning the

Treasury into a macro-economics ministry.

Office of

management

and budget

The Cabinet Office becomes a Prime Minister’s

Department, with policy and delivery teams shadowing

each line department and playing a major role in most

big policy announcements. The delivery teams have to

approve each department’s budget submission before itgoes to Treasury. No 10 is merged into the new DPMC.

Capability is handled by a semi-independent head of

the home civil service.

Department of

the Prime Minister

and Cabinet

Source: IG analysis

Managinggovernmentbystrategy:theScottishcase79

In 2007, the new minority nationalist government presented Scottish civilservants with a single piece o A4 paper setting out the new administration’s

overarching purpose and the fve key outcomes it wanted to achieve. Thechallenge or the ofcials was to translate that sheet o paper into a systemo government that could turn strategic objectives such as ‘smarter’, ‘greener’and ‘healthier’ into change or Scottish citizens. The reorms they introducedcan be summarised in fve key stages:

1. Restructuringgovernment

Civil service management was restructured to reect the government’sfve priorities, with a director general responsible or leading onthe delivery o each goal, supported by a team o directors. The old

departments were eectively abolished, making directorates the basic

79 This is a brie summary o Lusk (2009), The Scottish Government




building block o government. For example, the housing and regenerationdirectorate sits within the health and wellbeing portolio to support

joined-up working.

2. Thelegislativeprogramme

The government’s frst legislative programme in 2007 was built aroundthe government’s fve priorities, with only 11 items o legislation. This

also reected the act that the SNP were a minority government.

3. TheScottishspendingreviewandthenationalperformanceframework

Government spending was explicitly geared towards meeting theadministration’s fve key outcomes. Perormance management wouldbe achieved through a two-page document that turned the nationalist’sfve strategic objectives into 15 national outcomes and 45 measurementindicators.

4. ScotlandPerforms

Scotland Perorms provides live perormance inormation on each o thegovernment’s goals, providing a ‘line o sight’ rom high-level strategicobjective to individual indicators. The emphasis is on how Scotland isperorming as a country, rather than specifcally on how the governmentitsel is doing.

5. SingleOutcomeAgreements

The government established a new relationship with local authorities,oering them less ringencing in return or signing up to an outcomeagreement committing the councils to ocus on the national priorities in

a way that reects local need. Local authorities were invited to preparetheir own outcome agreements reecting local circumstances, but clearlycontributing to the overall national purpose.

It is too early to assess whether the Scottish experiment is a success,or indeed whether it could be easily applied to Whitehall. The Scottishgovernment is a single department with clear leadership rom a seniorpermanent secretary, and it is also much smaller than the UK government asa whole. This undoubtedly makes it easier to carry out radical reorm.

That said, elements o the Scottish model probably are portable – there is

no obvious reason why Whitehall could not use a similar strategic planningprocess. The sheer size and heterogeneity o the UK government make ithard to envisage a Whitehall in which departments are abolished completely,but that does not exclude ar more eective cross-cutting working aroundstrategic goals. And it is possible that the Scottish model will make itsgreatest impact within individual Whitehall departments – Dera alreadyoperates a system in which DGs are responsible or outcomes and directorswork on cross-cutting projects.



Shaping Up 43

Chapter2:Betterboards

If management is about running the business,governance is about seeing that it is run properly

Professor Robert Tricker

The development o corporate management boards in Whitehall departmentsis one o the more unique reorms o the civil service in the last 20 years.The origins o this movement began in the early 1990s, but did not becomemandatory until 2005. The trend is certainly a positive one, with boards bringingthe potential benefts o corporate working, joint ownership o departmentalpriorities and independent challenge rom non-executive directors (NEDs).The research discussed in this chapter, however, fnds that boards have not yetreached their potential as mechanisms o departmental oversight and strategicleadership. Our analysis shows that board perormance is highly variable, andthat the very role o boards remains ill defned across Whitehall. This chapterargues that higher perorming boards tend to spend more o their time onperormance management, thereby taking an active role in the delivery opolicy. We also identiy a number o barriers to board eectiveness, including

engaging with ministers, the level o challenge in board discussions, theeective use o NEDs and accountability arrangements. We make a number orecommendations aimed at improving board eectiveness, most importantly:creating a joint strategy board to be chaired by the secretary o state,strengthening the role o NEDs, empowering fnance directors, and establishinga comprehensive evaluation and development programme or boards.

One o the dominant eatures o British government over the past decadehas been the trend towards ever greater central intervention in departmentaloperations. This was most evident in the rise o a host o central units answeringto the Prime Minister in the wake o the 2001 election, including the secretiveForward Strategy Unit (FSU); the Prime Minister’s Delivery Unit (PMDU); andthe Ofce o Public Service Reorm (OPSR). At the same time, the Treasury wasstrengthening and expanding its role beyond the control o money and into thedetailed workings o policy (see Chapter 1).

There were two basic drivers to this expansion in the role o the centre, andneither was especially welcomed by departments. The frst was the growingdesire o the Prime Minister, and to some extent the chancellor, to exert astronger steer on the undamental direction o policy. Whether airly or not,by the end o his frst term in ofce, Blair had become rustrated with what he

saw as the timidity o policy thinking coming out o departments, and lookedto his newly created FSU, OPSR and personally appointed advisors such as John Birt to come up with more radical options. The second driver was a sensethat even when policy and objectives were agreed, departments were slow or




even indierent about their delivery. These issues have already been discussedin some detail in relation to the role o the centre (Chapter 1), but they poseparallel challenges to the role and governance o departments.

The case or a strategic or directional role at the centre is relatively straightorward,and indeed there is a historical precedent or such a role. However, the idea thatthe centre should be involved in chasing or directing ‘delivery’ is much morecontentious. The establishment o the Prime Minister’s Delivery Unit – designed

to scrutinise, assist and improve the delivery o key government priorities – wasarguably the most interventionist maniestation o this centralisation trend. Thecentre’s increasing involvement in departmental aairs was born o both thePrime Minister’s desire to give priority to our big issues: crime, transport, healthand education, and the perception that departmental governance alone could notensure the delivery o government priorities.

I we are to shit to a more strategic – less interventionist – centre, thendepartments will need stronger governance arrangements to drive eectivedelivery rom within their own boundaries. Line departments must be capable ooverseeing perormance and holding their senior management team to account

on the delivery o policy priorities. As the pinnacle o departmental leadershipand oversight, boards have a particularly crucial role to play in the drive orbetter governance, and are thereore the primary ocus o this chapter.

This does not negate the case made in previous Institute reports or much morewidespread reorms o departments.80 Indeed, eective governance will drivereorms, be they the roll-out o individual budgets in service provision or thetighter perormance management o top public servants.

Ourapproach

Government departments are very diverse organisations, and their boards reectthis – they vary immensely in role, unction, structure, processes and, perhapsmost importantly, perormance. But one uniying principle is clear: the role othe board sets the tone or its culture, behaviour, processes and eectiveness.Boards that lack a clear role in leading the department have a marginal impact,unctioning more as advisory panels or the permanent secretary, with the realdecisions made in the executive team or simply by the permanent secretary.

By contrast, our research shows that the best boards have a clear remit totake corporate decisions about the running o their ministry, and to managedepartmental perormance, capability, risk and mission-critical projects. An

analysis o board minutes undertaken or this project shows a strong linkbetween the proportion o time ocused on perormance management and theoverall perormance o the board – as measured by capability review leadershipscores and sta survey results.

Our research suggests that even the best boards can ace a number oimportant challenges, including variable ministerial engagement, inconsistentevaluation and development processes, an imbalance o power on the board, alack o constructive challenge to senior management, and under-utilised NEDs.Moreover, the question o accountability in the relationship between minister,permanent secretary and the board remains unresolved. The way that the

boardand minister work together is crucial in the development o strategy, but thisrelationship remains at best uncodifed and at worst cloudy in most departments.

80 See, or example, Parker et al (2009), State of the Service (2009) and Gash et al (2008), Performance Art



Shaping Up 45

This chapter builds on evidence collected rom 25 interviews with directorsgeneral rom 15 Whitehall departments, our group interviews with non-executives, a statistical analysis o board minutes, and observations o our boardmeetings (see appendices or more detail). To understand best practice, we setmuch o the above data against measures or board perormance. Because itis difcult to compare the perormance o departments – or instance, DWPhas very dierent goals to CLG – we have used proxy measures that ocus onthe quality o the board itsel. The frst is a ‘top down’ average o the Cabinet

Ofce’s capability review leadership scores, which includes a judgement on theeectiveness o each department’s board. The second ‘bottom up’ measure istaken rom sta survey questions on departmental leadership. We are aware o thelimitations o these measures, but confdent that when used together, they providea strong measurement o the relative level o board perormance.

Our conclusion is that board structures and composition do not aectperormance, but behaviours and processes do. We recommend that boardsshould urther strengthen their ocus on perormance management, and thatthey should commit to continually improving the quality o the board throughmore intensive evaluation and development work. We also suggest the creation

alongside existing management boards o a new departmental strategy board,chaired by the secretary o state.

Theriseofboards

The introduction o Next Steps agencies 20 years ago accelerated an ongoingtrend o introducing private sector-style governance arrangements or executiveagencies, NDPBs and, most recently, central government departments.81 Commentators point to two explanations or the development o public sectorboards. The frst suggests that the reorm o public sector accounting practicesand the proessionalisation o fnance roles in the public sector created a need

or new reporting structures, which ultimately developed into the public sectorboard.82 The second line o argument views the introduction o departmentalboards as a late owering o new public management, the logical conclusion o amovement to incorporate private sector practices into the public sector.83

In reality, the introduction o boards to Whitehall departments – and therationale behind it – has been piecemeal and varied across departments.The Department o Social Security was among the frst to establish a boardwith non-executive directors in 1990. The Department or Employment andEducation established a ull board in the mid 1990s. In contrast, or example, theDepartment or Transport did not establish a ull board until 2002.

At present, all boards are chaired by the permanent secretary, and compriseanywhere rom six to 14 members – with the average board having nine. Alldepartments have at least one non-executive director, and on most boardsNEDs make up close to a third o the overall membership. HM Revenue andCustoms is the one exception, having restructured its board early in 2009. TheHMRC board is the only major Whitehall department with an independent, non-executive chairman and a majority o non-executive directors.

81 Wilks (2007), ‘Boardization and corporate governance in the UK as a response to depoliticization and ailing accountability’82 Ibid83 Rhodes (1996), ‘The new governance’



Shaping Up 47

driving up central government’s capability to meet uture challenges.89 Thereviews judged each department’s capability in delivery, leadership and strategy,concentrating on the senior management team.

This ocus on top leadership within departments has solidifed the centralposition o boards in the current civil service reorm agenda. Boards are requiredby the Cabinet Ofce to lead the response to their departmental review, and itis notable that many o them started by trying to put their own houses in order.

The frst round o reviews was critical o a number o departmental boards,spurring them on to improve. As a result, nine departments “gave their non-executive directors more inuence and greater responsibility or challengingmanagerial decisions and perormance and fve departments have streamlinedtheir boards”.90 The Home Ofce was emblematic o this drive to streamlineand proessionalise boards. The department received the worst leadershipscore in round one, and a new permanent secretary reshued the seniormanagement team and pushed the board to improve its processes, behavioursand perormance. As a result, the department’s leadership score doubled in itssecond review.

Departmental boards coexist, sometimes uneasily, with executive committees– these are essentially a short weekly meeting o the permanent secretaryand their DGs that provides quick checks on progress and risks. In principle,an eective departmental board should have a number o advantages over anexecutive team. Boards should oster collegiate decision-making, encouragingthe leaders o dierent directorates to think about the needs o the organisationas a whole. By bringing in NEDs, boards should also create a more challengingculture among the senior leadership team, ensuring that programmes andprojects are thoroughly thought out beore they are implemented. Finally, non-executives can bring in specialist skills and insight that the department mightotherwise fnd difcult to access. Interviewees were divided over the extent towhich these benefts have been ully realised, but the theoretical arguments ornon-executives and departmental boards were broadly accepted.

While the implementation o boards was driven rom within the civil service,the idea secured buy-in rom the then Prime Minister in 2006.91 Conservatives,too, support the concept o departmental boards, announcing plans to enhancetheir role during the 2009 party conerence – though with some adjustments.92 The near universal support or boards, in both political and ofcial circles, shouldguarantee their uture as a eature o Whitehall’s governance structures.93

Anunclearrole

Departmental boards may be here to stay, but that does not mean that they arecurrently ulflling their potential. The piecemeal development o boards meansthat no clear consensus on their value-adding role has been reached. Interviewswith directors general revealed a striking lack o consensus around the role odepartmental boards (Figure 10). Giving unprompted answers to the question,‘What is the role o the departmental board?’ DGs’ responses could be groupedinto fve categories:

89 NAO (2009a), Assessment of the Capability Review Programme90 Ibid, p.891 Timms (2006), ‘Back risk-taking civil servants, says PM’92 Maude (2009), ‘Ready to deliver change’93 Kirkup (2009), ‘Whitehall mandarins ace sacking threat under Conservative plans’




1. Develop the department’s capability;

2. No real role, all decisions are taken at the executive committee level;

3. Manage the department;

4. Support the permanent secretary in his/her role as accounting ofcer (AO);

5. Set the overall direction o the department.

There are some obvious actors that might account or the variation in viewsbetween departments, including the personal style o the permanent secretary,and the act that a large delivery department like DWP probably needs adierent style o governance rom a policy department like the FCO. TheTreasury implicitly recognised the need or variation in its 2005 code, whichessentially asked departments to ‘comply with the guidance or explain whynot’. But what is striking is the act that there is oten a lack o clarity withindepartments about the board’s role. In other words, even among members othe same board, we ound they oten ailed to agree on a clear role. This wastrue in six o the ten departments where we interviewed at least two executive

board members.

This matters because our research suggests that the basic underpinning o aneective board is a clear purpose, with a remit to take decisions as a groupand a sense o shared ownership o departmental priorities and risks. The waythat a board rames its role will subsequently shape its culture, characteristics,structure and processes.

Figure10:Percentageofdirectorsgeneralgivingtheprimaryroleoftheirboard

Ensure capability

Set direction

Manage dept

None

Advise perm sec

0% 5% 10% 15% 20% 25% 30%

What is the role of the board?

35%

Source: IG interviews o directors general, N = 23

Underlying these diering responses are two undamentally dierent viewso the role o their board (see Figure 11): those boards that tend to deerfnal decisions to the permanent secretary and the executive team (‘advisory’

boards); and those that take ull responsibility or departmental oversight(‘decisive’ boards). A third group o boards are in the midst o transition betweenadvisory and decisive roles:



Shaping Up 49

1. Advisoryboard – operates more as a committee than a board (lack o

corporate decision-making/shared ownership o departmental oversight);

2. Decisiveboard – acts more like a private sector board, with obvious

dierences in structure and accountability (remit includes collective

decision-making and a strong emphasis on perormance management);

3. Transitionboard – boards that are moving rom advisory boards towards

decision-making boards.94

Figure11:IfGsimpletypologyofWhitehallboards

Advisory board Decision-making board Transition board

Role/unctions Supports the Perm Sec as AO Sets the direction and prioritieso department

Beginning to take on sharedownership o departmentalpriorities

Behaviours/process Dominated by Perm Sec, verylittle challenge or in-depthdiscussions

All members engaged, eectiveagendas, high levels o opennessand challenge

Developing better processes,improving relationships

Key decisions Key decisions made in executivecommittee, not by the board

Major decisions are taken atboard level in a corporate way

Resource allocation signed o,but not ull ownership omanagement issues

Engagement with ministers None at board level, donebilaterally

Well-structured, joint working onstrategy and policy

Variable

Source: IG research

Focusingonperformance

Given the piecemeal development o boards, and the Treasury’s ‘comply orexplain’ guidelines, it is not surprising that we ound high levels o variation, not

just in the role o boards, but in their composition, characteristics, structures andprocesses. In the absence o a clear defnition o what actors underpin success,departments have had to ollow their own instincts about what works. We hopethat this research will help policy-makers develop a more confdent account owhat good perormance looks and eels like.

One important question that we wanted to test was how the basic structureand composition o boards relates to their perormance and eectiveness. Wegathered data on the size o boards, the number o committees, the proportiono NEDs and their proessional backgrounds, which can be ound in ull inAppendix 2.1. In general, we ound no link between a board’s composition andits perormance. However, there was some evidence o a relationship between

the ratio o NEDs to insiders, with the highest perormers having around a thirdo their members as NEDs. The causality here is not clear – it may be that goodpermanent secretaries tend to want more challenge or that greater challengedrives higher perormance.

The lack o a simple relationship between board structures and perormancesuggests that – at least within the bands o variation generally seen in Whitehall– it is less the basic structural characteristics o boards that aect perormance,but more the nature o unctions, quality o processes and ocus o agendaitems that truly drive board perormance. This broad result tallies with the mostrecent research on private sector governance, which eschews the structural and

emphasises the link between behaviour and board perormance.95

94 Following the irst round o capability reviews, a number o boards have taken steps to improve their boards, and in doing so are moving awayrom behaving like advisory boards and adopting the traits o decision-making boards

95 Sonneneld (2002), ‘What makes great boards great?’




Boardprocessesandfocus

To determine how boards ocused their eorts, we carried out an analysis oboard meeting minutes rom 2005 to 2008 or a sample o seven departments.In total, our dataset o board meeting minutes includes 218 observations.96 Agenda items were coded according to 12 categories, based on a previousstudy on NHS Trust boards (the categories can be ound in Appendix 2.2).97 While we would have liked to measure agenda items based on the amount o

time apportioned to each, this proved impossible, as most departments do notrecord this inormation. Our measure is thereore the frequency with which agiven type o agenda item is discussed. In addition, the research team directlyattended and observed our board meetings and was able to compare thesewith the minutes. Although we cannot be sure that all meetings ollow the samepattern o minuting, a comparison o our direct observations with minutes madeus more confdent that the minutes do give a reasonable sense o the types oissues covered by boards.98

We ound that the ocus o boardroom discussion was very dierent acrossWhitehall. This variation is clearly shown in Figures 12 and 13, which show the

distribution o agenda items or two dierent boards averaged over a our-yearperiod. The frst is a high perorming decisive board, the second an advisory board.

Figure12:Averagedistributionofagendaitemsforahigh-performingdecision-makingboardfrom2005to2008

High Performing Decision Making Board

2% Governance3% Corporate Services

14% Strategy

12% Risk

18% Finance Report

1% Business PlanPerformanceManagement

35%

Capability Reviews 3%

Communications 0%

Stakeholder Management 0%

HR 11%Policy 1%

Source: IG analysis o departmental board meeting minutes

96 It should be noted that all o our data on boards is reported anonymously. The goal o our research was not to create a departmental leaguetable o board eectiveness, but to identiy the actors that inluence the perormance o these management boards. Moreover, somedepartments sharing data with our research team would only do so under a condition o anonymous reporting o analysis.

97 Peck (1995), ‘The perormance o an NHS Trust board’98 The obvious critique o our method is that board minutes – o boards that we did not attend – selectively exclude reerence to certain activities.

Such a pattern would have been likely to suppress any signiicant results in our data, and it is diicult to see how such an explanation wouldaccount or the relatively clear patterns that are reported here.



Shaping Up 51

Figure13:Averagedistributionofagendaitemsforalow-performingadvisoryboardfrom2005to2008

Low Performing Advisory Board

Business Plan 18%

Risk 4%

Finance Report 7%

Capability Reviews 2%

Communications 2%

Performance Management 6%

8% HR

Stakeholder Management5%

10% Category

Governance 0%

27%

DepartmentalCorporate Services

11% Strategy

Source: IG analysis o departmental board meeting minutes

Having coded the board meeting minutes, we compared the data with twoindependent measures o board perormance: capability review leadershipscores and sta survey results. In essence, we tested or whether there wasany relationship between what boards discussed and the impact they seemedto have. We ound that the amount o board ocus on some issues, suchas corporate services, risk, governance, communications and stakeholder

management seemed to have little relationship to overall eectiveness. Onthe other hand, we ound some clear patterns. In particular, o the 12 agendacode categories, ‘perormance management’ showed the strongest positiveassociation with our two independent measures o impact.99 We ound that, inour sample o Whitehall boards, the top perormers dedicated at least 35% otheir agenda items to perormance management. This ell to less than 15% orthe lower-perorming boards.

Plotting the data gives a visual representation o the relationship between therequency o perormance management agenda items and the perormanceo the board; Figures 14 and 15 show these relationships.100 It should be

noted that agenda items coded as ‘perormance management’ encompasscorporate perormance, departmental strategic objectives (DSOs), Public ServiceAgreements (PSAs) and progress updates on the delivery o specifc policyinitiatives or programmes. Financial perormance issues are not included here,but in a separate category or all fnancial agenda items.

99 A total o 218 observations were analysed using simple bivariate correlations. The relationship was ound to be positive and statisticallysigniicant at the 0.001 level or both capability review leadership score and sta conidence in senior leadership.

100 As a condition o access to both board meeting minutes (or some departments) and sta survey results, we agreed to anonymise all o our data.




Figure14:Impactofagendafocusonperformancemanagementonboardperformance

0

0 5% 10% 15% 20% 25% 30% 35% 40% 45%

0.5

1

1.5

2

2.5

3

3.5

Percentage of Agenda Items on Performance Management 2007-2008

2 n d R o u n d C a p a b i l i t y R e v i e w

L e a d e r s h i p S c o r e

Leadership Scores and Performance Management

Source: IG analysis o departmental board minutes and departmental capability reviews

Figure15:Agendafocusonperformancemanagementandstaffconfidenceinmanagement

0

0 5% 10% 15% 20% 25% 30% 35% 40% 45%

10

20

30

40

50

60

70

Percentage of Agenda Items on Performance Management 2007-2008

% o

f s t a f f b e l i e v i n g d e p a r t m e n t i s

w e l l m

a n a g e d ( 2 0 0 8 )

Staff Survey Results and Performance Management


In other words, our analysis ound that higher-achieving boards tended to spenda greater proportion o their time on perormance management, meaning theboard was actively involved in managing the perormance o the department

and the delivery o policy.

In contrast, we ound that boards rated as underperorming dedicated agreater proportion o their agenda to dealing with capability reviews, fnanceand strategy. The frst two o these fndings are easy to explain. A departmentthat gets a poor capability review will probably spend more o its time tryingto improve its score. Similarly, a department that has fnancial managementproblems will probably not get very high capability review scores or good stasurvey results.



Shaping Up 53

Figure16:Relationshipbetweenagendafocusonstrategyandstaffconfidenceinmanagement

0

0 5% 10% 15% 20% 25% 30%

10

20

30

40

50

60

70

Percentage of Agenda Items on Strategy 2008

% o

f s t a f f b e l i e v i n g d e

p a r t m e n t i s

w e l l m a n a g e d ( 2

0 0 8 )

Staff Survey Results and Strategy


It is harder to explain why time spent on strategy should correlate to poorperormance, as shown in Figure 16. Our qualitative work leads us to suspectthat boards may fnd it difcult to develop long-term strategy in the absenceo ministers. Thus, the development o strategy hinges on the board’s collectiveengagement with its ministerial team, and or some departments this collectiveengagement is ineective, or non-existent. In crude terms, the combination oour qualitative and quantitative work suggests that some o the less eectiveboards end up spending quite a bit o time discussing strategy without clarityrom ministers, or instead o ocusing on whether the strategy was actuallybeing delivered.

Having explored the relationship between board ocus and perormance throughsimple (or bivariate) correlations, which report the strength and direction orelationships, we ran a series o regression analyses. These enable us to controlor, or examine, several variables at the same time.

The results o the regressions confrmed the strong relationship between theproportion o agenda items dedicated to perormance management and overallboard perormance.101 Even when several other actors were entered at the sametime, such as ocus on fnance and risk, these actors became non-signifcantonce ocus on perormance management was included in the regression model.

This held or both sta survey data and capability review scores. In short, theregression analysis showed that the more time a board spends on perormancemanagement, the better its perormance.

The only other notable result rom regression analysis was that in some modelswe ound that a ocus on ‘strategy’ actually had a negative relationship witheectiveness once ocus on perormance management was taken into account.This reinorced the sense that some underachieving boards were spending timediscussing strategy when what they really needed to do was roll up their sleevesand manage the department, or perhaps go back to ministers and alter strategy.A detailed explanation and regression table results can be ound in Appendix 2.3.

101 In the regression equation, the perormance management variable had a beta coeicient o 0.483 and was statistically signiicant at the 0.01level. The R square or the model was 0.243.




Barrierstoeffectiveness

Our interviews with directors general and non-executive board membersbroadly support the results o our statistical analysis. It seems that decision-making boards do spend more time on perormance management because theboard has taken ownership o the department’s priorities and responsibilityor overseeing delivery. They aren’t ‘just talking’, but are clear about what theyhave to do and are ocused on making it happen. The higher proportion o time

they spend on perormance management reects the board’s active role inoverseeing the department and delivery o policy.

Our interviews also highlighted the major barriers to eectiveness boards currentlyace. The problems most commonly raised included engaging with ministers, thelevel o challenge in board discussions, the eective use o NEDs, accountabilityarrangements and the level o proessionalisation in the boardroom.

Ministerialengagement

Ministerial engagement with the board is crucial in the ormation o

departmental strategy and policy. For delivery departments, it is hard toseparate policy and long-term departmental strategy, so the board’s abilityto develop strategy hinges on the eectiveness with which it can engage theministerial team. For many departments, engagement with the ministerial teamhappens exclusively through bilateral meetings between ministers and executiveboard members. An over-reliance on bilateral engagement can reinorce siloedoperating. In contrast, ministerial engagement with the whole board shouldpromote a more corporate approach to developing departmental strategy, aswell as providing ministers with a source o non-executive challenge.

Responding to the question, ‘Is your board’s engagement with the ministerial

team eective?’ more than a third o the 25 DGs interviewed answered ‘notvery’ or ‘not at all’.102 Interviewees also raised the lack o contact betweenNEDs and ministers as a weak link. One director general commented that“[Engagement with ministers] is very intermittent, and the relationship betweenNEDs and the ministers is ineective”.103

Poor engagement with the ministerial team can result in a disconnectionbetween the ambitions o ministers and the board’s vision o departmentalpriorities. One interviewee said o the state o engagement in his department: “Idon’t think we get on well with the ministers. We try and understand what theyare ater and hopeully they think we’re trying to do it or them.” But even when

structures or engagement are in place, ministers may choose not to use them,and an approach that worked or one minister will not necessarily work or thenext. As one DG put it: “We have had joint meetings, but so much o how youdeal with the board and ministers depends on the minister’s preerence; that’sthe issue we struggle with.”104

The eects o poor ministerial engagement were borne out in our analysis oboard ocus. High-perorming boards engage regularly with their ministerialteam in away day settings, developing strategy outside o normal boardroommeetings. Underperorming boards tend to do this less, leaving the board todevelop strategy in the absence o ministers.

102 While one-third may not sound like a large number, interviews with board members in all sectors usually have a strong positive bias, withrespondents tending to overplay the success o their board.

103 Interview with Whitehall director general104 Interview with Whitehall director general



Shaping Up 55

This is not to say ministers should not engage bilaterally with executive boardmembers – indeed, these are vital to the eective management o governmentdepartments – but they are no substitute or eective corporate engagementwith the ull board.

Ministerialengagement

A key role for the board is – or should be – to engage the ministerial team and get them to think corporately. DirectorGeneral

[Engagement] is not great. It would be good to have a clearer relationshipbetween the minister and the board. DirectorGeneral

Too often, other departments are worried about how to ‘handle ministers’. Mostdon’t engage them openly and honestly. DirectorGeneral

There is not much engagement, and what there is is not effective. It depends onthe minister in power. There is no NED/minister engagement. DirectorGeneral

We only meet ministers at cocktail parties when they want to meet us, so it is

not part of normal board business. Non-executiveDirector

So much of how you deal with boards and ministers depends on the ministers’ preference; that’s the issue, particularly, the non-executive members strugglewith.DirectorGeneral

It’s difcult when the ministerial team is constantly changing. The new teamcomes in, we will have one session on priorities and that is it. DirectorGeneral

Challenge

One o the key attributes o an eective board is the quality and depth odiscussion, which is largely dependent on the level o challenge. Previousresearch in the corporate context has suggested that an eective boardroomdynamic emerges rom trusting, open relationships that acilitate constructivechallenge and generate constructive criticism rom both executive and non-executive board members.105 Our interviewees identifed several actors thathelped to improve the level o challenge: the clarity, ocus and ordering o theagenda; the quality o inormation provided to board members; the amounto time allotted or discussion; and the chairman’s ability and willingness toacilitate a challenging discussion.

However, it is easy to stie challenge. For example, a deensive permanentsecretary may structure the agenda in such a way so as to limit time ordiscussion. One interviewee described board discussions thus: “Our meetingstend to be more receiving inormation rather than engaging in a meaningulway that will impact departmental action.”106 The importance o the permanentsecretary’s leadership in acilitating a challenging discussion was highlightedby some DGs who elt the depth o discussion was limited by the chair. As onetold us: “There’s a limit to the chair’s appetite or how much he wants to bechallenged.” It is the chairman’s responsibility to set the tone or a challengingboardroom dynamic, but they do not do this eectively in all Whitehalldepartments. An interviewee told us: “The role o the chairman is to manage the

board and hold the executive to account, and that is simply not the case here…there is not the required challenge.”

105 Kakabadse and Myers (1996), ‘Boardroom skills or Europe’106 Interview with Whitehall director general




One fnal actor that was raised as a potential inhibitor o challengingboard discussions was the presence o observers at board meetings. Somedepartments, including Dera, FCO and DCSF, allow a small number o starom the department to sit in on board meetings. The Ministry o Justiceis particularly open and oers up to 20 places or observers at some boardmeetings. Most interviewees elt a small number o observers was acceptableand did not alter the dynamic o board meetings. However, some DGs raisedconcerns about allowing observers into the boardroom. As one interviewee said:

“Sometimes you need to have one board member saying to another ‘you havegot it completely wrong’, and I don’t think you should do that in ront o a loto people.”107 There is a strong temptation to use observers as a communicationtool or the board, but departments need to assess the trade-o between boardvisibility and a challenging boardroom atmosphere.

In terms o boardroom dynamic, decision-making boards showed a commitmentto open, challenging discussion at meetings. Figures 17 and 18 detail the resultso two board meetings observed by the research team. The meetings were codedin real time, classiying each interjection rom a board member according totone and purpose into 11 categories, e.g. questioning, challenging or criticising.

The charts below report the percentage o interjection by type, i.e. time is not aactor and each utterance was counted equally regardless o length. The ull listo code categories can be ound in Appendix 2.4.

Providingadequatechallenge

There’s a limit to the chair’s appetite for how much he wants to be challenged.DirectorGeneral

Discussions on performance are carefully managed, and we tend to ‘talk timeout’ on presentations to avoid challenge. DirectorGeneral

There is no trust [among board members], no open real discussion and only ritual challenge. DirectorGeneral

There is not enough challenge at the board meetings in my view.You only seethat in the executive team meetings, not the full board. DirectorGeneral

I would not say there is a culture of challenge. You need to have constructively challenging relationships not just challenge to score points.DirectorGeneral

107 Interview with Whitehall director general



Shaping Up 57

Figure17:Proportionofboardmeetinginterjectionsaccordingtotoneandpurpose

LowPerformingBoardAgreeing

4%

Criticizing 0%

Disagreeing 0%

27% Giving information

16% Questioning

Praising 2%Suggesting Action 10%

Relating experience 2%

Challenging 3%

Summarizing 8%

Giving opinion

28%

Source: IG observation o board meeting

Figure18:Proportionofboardmeetinginterjectionsaccordingtotoneandpurpose

HighPerformingBoard

Agreeing

3% 1% Disagreeing

17% Giving information

5% Questioning

Praising 6%

Suggesting Action 26%

Criticizing 1%

Relating experience 2% 11% Challenging

3% Summarizing

Giving opinion 25%

Source: IG observation o board meeting

Figure 17 shows the discussions at an ‘advisory’ board, while Figure 18 reportsthe observations or a decisive board. As they illustrate, there is a signifcantdierence in the amount o ‘challenging’, ‘disagreeing’ and ‘criticising’interjections. In the high-perorming decisive board, around 11% o comments

were o a more challenging nature. In contrast, in the low-perorming boardmeeting only 3% o comments could be described as challenging or critical – adierence o nearly fve-old.




The meetings also show a signifcant dierence in the amount o ‘actionsuggested’. The high-perorming board members expressed almost twice asmany comments suggesting actions (26%) as the low-perorming board (10%).The low-perorming board instead spent proportionately more time in the saer,but perhaps less productive, space o ‘giving inormation’, ‘actual questioning’and ‘giving opinions’.

Obviously, with such a small number o observations, we cannot extrapolate

too much rom the data above. However, our discussions with members othese boards suggest that the meetings observed were airly typical in tone. Itwas striking that even with a limited number o observations, we can pick out amarked dierence in ocus between the high and low perormers.

Criticism and challenge, even in their constructive orms, can be difcult orboard members to take. As one non-executive explained, “I think with all boardsi it ends up being a battle ground then it does nobody any good; there is afne balance to strike between being on somebody’s side and being that criticalriend.” This principle holds true or executive members as well. Many careersenior civil servants will not have had experience o boards, and while they

may receive some management training, there is currently no programme todevelop key board member skills or newly appointed DGs. I boards are to bethe central component o departmental governance, they will need memberswho understand how to be an eective contributor to the board, and a sharedunderstanding o the appropriate balance between challenge and support.

Effectiveuseofnon-executivedirectors

Non-executives are undamental to a well-unctioning board – their presenceis one o the primary dierences between a corporate board and an executivemanagement team, and they should bring independence, experience and

specialist skills to the table.

Eective use o NEDs requires a clearly defned role or them on the board,eective engagement by the permanent secretary, both in the meetingitsel and in between sessions, and the quality o inormation provided tonon-executives. Again, the capability reviews have pointed to the need orimprovement in the way non-executives are used, especially in relation tounderperorming departments. To take the example o a (now much improved)department that was described by its own minister as ‘not ft or purpose’: “thelevel o external scrutiny and challenge rom non-executive directors needs tobe urther developed or the scale and importance o the business in which the

Home Ofce is engaged”.108

The diverse experience o non-executive directors should be an asset in solvingchallenging problems.109 One DG said that i she could change one thing abouther board she would “make [the board’s composition] more diverse, in skills andbackground, because it creates a much richer discussion”. An over-reliance onany one sector can be detrimental to the board dynamic, and risks groupthink,which the presence o NEDs is designed to counter. This problem o groupthinkalso raises a question about whether senior civil servants should be sittingon multiple boards as NEDs. This is a relatively rare practice, and it was notidentifed by interviewees as a problem, but it could be argued that it runs

108 Cabinet Oice (2006), Capability Review of the Home Office109 Mellahi (2005), ‘The dynamics o boards o directors in ailing organizations’, p.263



Shaping Up 59

counter to the idea that non-executives should act as a source o independentchallenge and outsider perspective. On the other hand, NEDs sitting on multipleboards could be used as a tool or collaborating on cross-cutting challenges.Future research on Whitehall boards should look at this practice and its impacton joining up departments.

Figure 19 sets out the proessional background o NEDs across departments. Justover hal come rom a public sector or local authority background, a little under

hal rom the private sector, with the remainder coming rom the third sector.There is a growing political debate about whether a higher proportion o NEDsshould be drawn rom the private sector,110 but this has to be balanced againstthe benefts o having operational experience rom the public service ‘ront-line’and representation o delivery partners on the board.

Above all, departments should take care when making new NED appointments,developing a role profle that identifes the background, skills and personalitytype the board needs rom a new non-executive.

The current appointment process or NEDs varies considerably by department.

Ultimately, the permanent secretary has the authority to appoint non-executivedirectors, and can do so unilaterally, which is not necessarily the norm, butnot without precedent. At present there is no real oversight or how NEDs arerecruited. Treasury guidance on the appointment process calls or an open andtransparent process, but establishes no oversight or ratifcation process or NEDappointments.

EffectiveuseofNEDs

NEDs are not used well, I don’t think they are clear about what they are there todo, and it’s a failing of the chair to be clear about what their roles are.

DirectorGeneral

No, they were not used effectively. I don’t know if we didn’t get them theright information, but we couldn’t get much challenge out of them.DirectorGeneral

I think we could go a bit further than we have on the NEDs being used outsidethe board room.DirectorGeneral

When NEDs do challenge the executive team, we tend to get defensive and ‘circle the wagons’, which makes them reluctant to do so. DirectorGeneral

The level of collective experience and knowledge NEDs share is completely taken for granted by the Cabinet Ofce.WhitehallNon-executiveDirector

110 The Opposition has recently proposed that at least three-quarters o NEDs should have a private sector background.




Figure19:ProfessionalbackgroundofWhitehallNEDsbysector

NEDsbySector

Private 44%

3rd sector 5% 9% Local Authority Chief Exec

42% Public

Source: IG interviews o directors general and departmental websites

NEDs are commonly appointed based on their specifc experience or skill set bypermanent secretaries. However, some o the NEDs we interviewed raised theissue o being over-used outside o the boardroom, beyond their contractualobligation. “It is a dilemma i you are a non-executive and you spend too muchtime [working with executives], independence goes out o the window.” SomeNEDs elt they were being used more as consultants or little or no pay. Onetold us that: “We are supposed to be taking a more proactive role or audit andfnancial inormation… that means we have got to spend more time on that, so

we have said, ‘okay but it’s going to cost you some money’, but there has beenno response.”

In GCHQ, this practice has become so commonplace that they do now paytheir NEDs a consulting ee i special projects exceed the number o daysspecifed in non-executive director contracts. This is not to say the only roleor NEDs is inside the boardroom. On the contrary, NEDs have a crucial role inmentoring and advising executive members. Moreover, private sector researchshows that boards that require non-executive directors to take up ‘specifcportolios’ o the organisation oten perorm better than boards that keep theirNEDs at arm’s length.111

Non-executives participating in our ocus groups described a highly variableinduction process across Whitehall. The majority o NEDs we intervieweddescribed their experience o getting to grips with their departments as moredependent on their own initiative, rather than being taken through a well-structured induction programme. Even high-perorming boards seem to lack awell-rehearsed process or acclimatising their NEDs. As one non-executive toldus: “My induction would best be described as patchy. I got sent to the NationalSchool or two days. That was quite good, but there was nothing ater that.”

The importance o having a detailed understanding o the department was

widely trumpeted by interviewees – as one non-executive put it: “You have to

111 Interview with Andrew Kakabadse



Shaping Up 61

go out and put time into understanding how the business operates.” Based onthe 12 NEDs we interviewed, no department has quite got its induction processright. Boards looking to improve the value-add o non-executives’ contributionneed to develop a comprehensive induction process, which should seek to“clariy the role o the board and agree success criteria, maximize the role o thenon-executive, spend time building relationships between members, set asidetime to review board perormance against your own success criteria”.112 Indeed,private sector companies generally have well-structured non-executive director

induction programmes that should be emulated in Whitehall.113

The fnal, and perhaps most undamental, point is that it is not clear exactlywhom Whitehall non-executives represent. In a corporate context, the NED istypically there to represent the shareholders’ interests. One could argue thatthe closest equivalent in the public sector is the citizen or taxpayer. Yet mostministers would see themselves as representing this interest. The NED thereore,is arguably being cast in a very dierent and perhaps unclear role – to providea challenging, independent viewpoint, but not necessarily backed by any realauthority. This issue is made potentially more complicated i ministers are toplay a bigger role in boards.

Accountabilityandcorporatebehaviour

Commentators oten cite accountability as a persistent, unresolved issue orthe whole o the civil service.114 The dual-track leadership o departments,headed by both a secretary o state and permanent secretary, results in a lack oclarity about who leads on given areas, and where exactly responsibility lies orany given issue. The introduction o boards has added another element to theunresolved question o accountability in Whitehall.

Ministers are accountable to parliament or policy, which – combined with an

adversarial political system and 24-hour news cycle – results in an emphasison short-term policy outcomes and little ocus on long-term departmentalcapability. Moreover, the relationship between ministers and the board remainsill defned. As one Whitehall non-executive said:

I think one of the challenges in comparison to a private sector organisation is about using ministers and management boards. Who is accountable for deciding which programmes and policies to adopt? I don’t think there is clarity on that.

The accountability issue is not unique to boards, however. It is a culturalproblem that permeates much o the civil service. One non-executive weinterviewed derided the entire civil service culture o accountability:

Once I got inside the bureaucracy, I was able to realise how truly awful these things were… what I observed was an absence of accountability. There was a culture where mistakes were covered up… I only discovered that by being within the organisation, things going wrong and nobody wanting to take accountability for it. The problem for me was that no one was learning because of it; if you don’t learn from history you are bound to repeat it.

This culture o blame avoidance has consequences or decision-making at thetop o departments, as another non-executive told us:

112 Cray (1994), ‘Inducting non-executive directors o trust boards’, p.31113 For example see BHP Billiton (2007), ‘Non-executive director induction programme’114 Lodge and Rogers (2006), Whitehall’s Black Box




I put it down to a lack of individual accountability. Decisions only seem to be made if you get total buy in, I could not believe how much buy in you need,by [a private sector] yardstick you would have been down the track a long time ago.

The current constitutional arrangements ail to address the collectiveaccountability o boards, with the doctrine o ministerial responsibility meaningthat ministers and, to a much lesser extent, permanent secretaries, are the onlyfgures held publicly accountable or results. The accounting ofcer principle,

which holds the permanent secretary solely to account or money spent by thedepartment, leads to an unbalanced power dynamic on boards. One DG toldus that “when you combine [the ofce o] chairman, chie exec and fnancedirector together you have an incredibly powerul position and concentration opower in a single person [permanent secretary]”. This imbalance is compoundedby the relatively small proportion o NEDs on departmental boards.

A board’s ability to operate as an eective corporate group requires not justclear roles and accountability, but strong relationships. A number o DGsexpressed concerns around the corporate working o the board. As one DGexplained: “the board’s eectiveness depends on the personalities around thetable, and currently they’re all interested in protecting their own fedoms.”Boards were established – at least in part – to break down the silos withindepartments, but this has not happened across Whitehall. Another DG explainedthat it can be difcult to work corporately:

Unfortunately, when you are a board member, half of your head is thinking about your directorate responsibility and the other half is thinking about the corporate responsibility and this can lead to suboptimal group working.

Financialcapability

There has been a major drive to improve the proessionalism o the civil serviceover the last decade, with initiatives such as Proessional Skills or Governmentsetting out what is expected rom the senior civil service. In particular, therehas been a drive to ensure that all fnance directors have a proessional fnancebackground, a condition that was fnally met in 2009. This has led to an increasein the number o outside appointments in senior civil service positions to flloperational and commercial roles – as o 2007, 42% o DG appointments havebeen external.115 However, some o the fnance directors we interviewed eltthat the benefts o this skills drive had not yet been realised at board level.

Seventy-fve per cent o the fnance directors we interviewed elt that they were

not able to make a ull contribution to their department’s strategy and decision-making. Some elt more like scorekeepers than key players in the taking o bigdecisions. One fnance director we spoke to observed that “fnance is moreabout where we have been, rather than where we are going and we should beusing fnancial tools to take better decisions”.116

In some departments, including Dera, DT and DECC, fnance directors are notull board members,117 which would seem both to betray the drive or greaterproessionalisation and to hamstring the board’s fnancial capability. Given thedifcult fscal situation aced by government in the coming years, there is astrong case or FDs to be more empowered in their roles, not marginalised in

the boardroom.115 House o Commons Public Administration Select Committee (2009), Outside Appointments to the Senior Civil Service116 Interview with Whitehall Director General or Finance117 These departments have a catch-all DG or corporate services with responsibility or IT, HR, Finance, and in some cases communications. The

inance director post is held by a director level civil servant and this person is not a ull board member, though they may attend meetings.



Shaping Up 63

The fnance gap at the top o departments is symptomatic o a wider culturalweakness around fnancial capability in government. The lack o an explicitconnection between PSAs and spending allocations is one such example o thecurrent disconnect between fnance and strategy in government. Giving FDsa greater role on departmental boards would be a step towards closing thisfnance gap, at least at the departmental level. As discussed earlier in the reportand urther in Chapter 3, additional action may be needed to more closelyconnect budgets to cross-departmental objectives.

Although the issue was not raised by any o our interviewees, discussions withprivate sector experts and academics stressed the importance o having an HRdirector on the board.

Boardbestpractice

As with the descriptive statistics o boards’ structure, composition andperormance, the qualitative data gathered rom DG and non-executiveinterviews was highly varied, reecting the diverse nature o departmentalboards. Having identifed the above barriers to eectiveness, this section

captures the positive side o the story, highlighting examples o best practiceuncovered in our interviews.

Roleandremit

An eective board begins with a clear role to manage and oversee thedepartment, building its structures and processes around a strong, shared senseo common purpose. Decision-making boards exhibit this clarity o purpose,typically seeing the role o the board as:

Setting strategy for the department – in partnership with the ministerial team, determining the policy priorities, how resources should be allocated to meet those priorities, monitoring delivery against those priorities, managing risk and ensuring capability to deliver on priorities.118

This is not to say that all boards must share a standardised remit, but it is crucialor boards to establish clear ownership o the department’s priorities, based ontheir specifc context and requirements.

Engagementwithministers

The high-perorming decision-making boards hold regular joint sessions betweenthe ull board, including NEDs, and the ministerial team. DCSF, FCO and BIS, or

example, use biannual away days between the ull board and ministerial teamto deal with strategy and policy issues. Again, it is worth pointing out that theeectiveness o ministerial engagement on strategic issues also depends on theminister o the day. One DG said o the away days:

We recognised that we weren’t giving quite enough time to the broader strategic discussions and making a landing on whether real policy priorities were within the strategy. You clearly need to engage with ministers on that.We have away days with ministers: we had two with [the ministerial team] and you need to do that then in order to take the discussion further within the board.

118 Interview with Whitehall Director General




The Department or International Development holds more regular, inormalmeetings with the secretary o state, as one DID DG told us: “I think themeetings with him [the secretary o state] are terrifc; they are ast paced, verysubstantive and totally honest.”

Decision-making board members do discuss strategy, but they generally do itoutside o the ormal monthly meeting – opting or away day strategy sessions.

However, based on our interviews and the ephemeral nature o ministers, we donot believe the engagement strategies with ministers or even the best boardsgo ar enough. I corporate working is to permeate departments and the wholeo government, it must happen at the highest level. A joint strategy board,comprising the ull board and the ministerial team would address this issue.

This would require ministers and the departmental board to develop strategy,set policy priorities and address key delivery issues in corporately. Thisarrangement would allow ministers to engage with the board in meaningul way.Moreover, a strategy board would give the secretary o state a orum to alignthe priorities o the ministerial and senior management teams, while allowing

the separate departmental management board to ocus on the details odelivery. Non-executive directors could add value on both boards, challenging onboth strategic direction and the delivery o policy. The confguration o strategyboards would dier between delivery and policy departments, but the uniyingpurpose, aligning ministerial and departmental strategy, would remain constant.

Much o the data provided in this chapter produces a snapshot o boards, lookingat specifc moments in time and comparing them with corresponding measuresor perormance. However, we would be remiss i we neglected one o the moretroublesome aspects o British politics: the rapid turnover o ministers. Theuidity with which ministers come and go is clearly a problem or departments.

Figure 2 plots the length o tenure or a secretary o state against the capabilityreview leadership score or their department. As the scatter plot makes clear,another one o the characteristics o more eective departments appears tobe that their ministers tend to stay in place or longer.119 Longer ministerialterms will naturally allow the board and the minister to build a deeper workingrelationship, as well as allowing the minister to build expertise in the area.

119 O course, it is possible to argue that Prime Ministers are apt to ‘let sleeping dogs lie’ – leaving departments that are working well alone whenit comes to reshules. This means that some o the causality could go rom eective departments to long-serving ministers, rather than theother way around.



Shaping Up 65

Figure20:Lengthoftenureforsecretaryofstate(blue)andpermanentsecretary(red)vsdepartmentalleadership

0

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

0.5

1

1.5

2

2.5

3

3.5

Number of Years Served by Current SoS (blue) and Perm Sec (red)

2 n d R o u n d C a p a b i l i t y R e v i e w

L e a d e r s h i p

S c o r e

Source: Cabinet Ofce capability reviews and www.dodonline.co.ukNote: 11 data points overlap, N = 15

DepartmentalBoards:AMinisterialPerspectiveOne o the major themes to come out o the interviews with senior civilservants was the importance o engagement between the board and theministerial team. Since our qualitative research was based predominantly oninterviews with executive and non-executive directors, we conducted onefnal interview with ormer Cabinet Minister David Blunkett MP in order togain a ministerial perspective on departmental boards. While we cannot drawconclusions rom a single interview, we would be remiss not to include thepoints raised.

ResponsibilityandAccountabilityFrom Mr Blunkett’s perspective, establishing clear lines o responsibility indepartments was a perennial struggle. “Ideally, the secretary o state is meantto be responsible or policy direction. The permanent secretary is responsibleor the management o the department and the board should be responsibleor delivery. But the lines are never drawn that clearly.” However, with asolid relationship and understanding between the secretary o state and thepermanent secretary, “departments can get to grips with the overlappingresponsibilities”.

BoardEffectivenessIn terms o overall eectiveness o boards, Mr Blunkett was generally positive:“boards helped at the margins, in terms o getting people to see a commonpurpose, either in prioritisation, where resources are concerned or reallocationo time or manpower, or in understanding the coherence o a cross-departmental approach to the bigger macro issues”.

As secretary o state or education and employment, Blunkett took a veryhands-on approach to engagement with his board. Unusually, he electedto chair every other meeting, something which no minister currently does.

Mr Blunkett argued that this arrangement “helped senior ofcials in thedepartment understand what [ministerial] thinking was on issues, and [helpedministers] understand what ofcials were concerned with.”




CorporateBehaviour

One o the principal theoretical benefts o boards is corporate behaviour atthe top o organisations. Mr Blunkett agreed with the premise, but warnedthat it takes work. “As ar as the board was concerned, we didn’t get [corporatebehaviour] right at the beginning when I was home secretary, but as wedeveloped these meetings, it created a greater collegial approach between allo us. It’s much more difcult when you have shared a meeting like that to

end up more divided on an issue, because everyone has had a chance toexpress themselves.”

Non-ExecutiveDirectors

Mr Blunkett elt non-executive directors were crucial “in developing goodleadership, in bringing a breath o resh air as to what was happeningelsewhere, in opposing the syndrome o ‘I’m sorry we’ve always done it thisway’, or ‘we can’t do it that way’, or ‘it’s too difcult’. The NEDs were thereto actually reinorce that change was necessary, that it could be achieved andthat things that were happening outside could be brought in and happen in a

dierent environment”. However, Mr Blunkett was quick to point out that notall NEDs are eective, and that the appointment process – specifcally, thatpermanent secretaries hold sole responsibility or appointing NEDs – is in needo reorm. Namely, Mr Blunkett argued that there should be some ministerialinput in appointments.

AdviceforMinisters

Asked what advice he would give to incoming ministers or running an eectiveboard, Mr Blunkett oered the ollowing:

• Regular joint meetings between the ull board and ministerial team,chaired by the secretary o state;

• A clear understanding between secretary o state and permanent secretary

on responsibilities and accountability;

• A clear sense o the role o NEDs and how to use them eectively;

• Outcome measures to monitor what happens in those meetings to prevent

them rom becoming talking shops or rom getting bogged down in trivia.

Evaluationanddevelopment

In the private sector, the best chairmen know that boards cannot betransormed overnight. These chairmen generally recognise the need to developthemselves and their ellow directors, individually and collectively.120 Becominga ully unctioning decision-making board requires a considerable amount oeort: interviewees rom high-perorming boards stressed the amount o workthat has gone into improving their boards’ perormance.

A DG rom a transition-type board explained: “Getting to where we are has beena product o three years o work, and certainly when I joined the board, we werenot at all eective.” Sel-evaluation is the frst step towards better governanceand a mainstay o high-perorming boards in Whitehall.

120 Kakabadse and Kakabadse (2008), Leading the Board



Shaping Up 67

Evaluation and development should include a two-pronged approach,encompassing both spot sel-assessments and annual perormance appraisals. Ina small number o departments (including Dera and the Home Ofce), a shortperiod o sel-reection led by one board member ollows every meeting. Thisencourages immediate improvements in the operation o the board and can beused to support a well-structured annual evaluation o collective and individualperormance. O the boards running such an evaluation, most do so as aninternal process. The Department or International Development is an exception,

having gone through two external appraisal processes in the last fve years.

In terms o development, a particularly interesting and promising practice wenoted was that o employing an external coach to help build better processesand relationships, and improve the quality o board discussion. The HomeOfce’s use o a board coach was central to the sizeable steps the departmenthas taken to improve its leadership and governance. One DG rom the HomeOfce insisted: “our board coach did really help.” Recognising the need toimprove its board, the Department or Culture, Media and Sport has recentlybegun working with a board coach as well. Each department will have specifcdevelopment needs, but implementing an evaluation programme should be

universally required. Newly appointed executive board members should alsobe given training on how to be an eective board member – currently no suchprogramme exists.121

Boardprocesses

A well-constructed agenda was highlighted by both NEDs and DGs asessential or an eective board meeting. In addition, the quality and brevityo perormance inormation and board papers was identifed as a urtherprecondition or productive board discussions. The wider research literaturesupports the same conclusion: providing too much or too little inormation

to the board hinders meaningul discussion.122 DWP and the Home Ofcewere identifed in interviews as having worked hard to get their perormanceinormation or the board to a high standard. The extent to which a board isable to produce disciplined agendas and concise perormance inormation isdetermined by the quality o its secretariat.

Decisive boards generally have adroit board secretariats capable o cajolingaction rom board members, and ensuring the timely delivery o inormativeand concise board papers. One interviewee claimed that “the key to a goodboard is a strong board secretariat, which should be linked to [a] perormancemanagement unction”.

Several departments have recently taken to strengthening their board secretariat.The Home Ofce was frst among a small number o departments (includingthe Department or Energy and Climate Change and the Department o Health)to make the role o board secretary a senior civil service position. The result othis change has been hailed among Home Ofce board members: “The current[grade 5] board secretary has added enormous value to the board just in termso questioning people and making sure things get done.” A DG rom a decision-making board told us: “You need a heavyweight in that role… our board secretariatperorms well and is very good at ollowing through on action points.”

121 One option could be to combine this with the support and development programmes or NEDs122 Mellahi (2005), ‘The dynamics o boards o directors in ailing organizations’




Accountabilitycasestudy

While there are obviously accountability-related problems in somedepartments, not all boards suer rom an aversion to accountability. Forsome departments, boards are themselves a mechanism or accountability– used to assess the perormance not just o the department, but breakingdown the perormance o directorates and holding both DGs and directors toaccount or their units.

The Department or International Development is governed by a highlyregarded management board. DID consistently receives top sta surveyresults on its leadership, and the Cabinet Ofce Capability Review rates DIDleadership as the best among Whitehall departments. In many ways DID’sboard exhibits best practice or structures and process.

DID’s management board has made perormance management a priority.Along with quarterly perormance management meetings that coverthe department as a whole, the board carries out annual perormanceassessments on individual directorates within the department. Every year

director level civil servants are brought to the board to give an accounto their division’s perormance. The primary concern or the board is theperormance o the division in question, but the director responsible isheld to account by the board. The board members structure their questionsaround a core o key themes or the wider department and can supplementthese with division-specifc questions. Should the division be ound to beunderperorming in a given area, action points will be drated up, or both thedivision to deliver on, and or the management board to carry out in orderto support the director and the division to deliver better perormance. At thenext review meeting, 6 months later, the director must demonstrate that theactions to correct any perormance shortcomings were undertaken.

The practice o involving the board in this level o perormance managementis unique among Whitehall departments, in that the board is not just holdingits own executive members to account, but the management sta belowthem. It provides an interesting model or boards across Whitehall to considerin driving better perormance rom their senior civil servants and ensuringaction is taken should perormance be ound to be lacking.

Relationships

Even the best board processes can be rendered ineective i the board is notbuilt on solid relationships. Well-unctioning boards tend to have a chemistrythat cannot be easily quantifed, but this does not mean it cannot be improved.One DG rom a decisive board told us: “We have a very stable board thatgets on very well together and I think that’s been a big actor in our success.”Another DG emphasised the work that goes into building a good dynamic: “Ourrelationships are quite strong and you do not get that very oten, but then wehave actually worked hard at it.” Good relationships build a ‘virtuous circle’ orboards, where one good quality builds on another.123

In building better relationships, a board coach can be helpul, but the onus is

really on the members o the board. Simple eorts like meeting socially, orholding an inormal dinner the night beore a board meeting can go a long wayin improving the quality o board discussions. DCSF regularly runs such dinners

123 Sonneneld (2002), ‘What makes great boards great?’



Shaping Up 69

with the board, oten inviting chie executives rom delivery bodies as well. Onenon-executive told us that a ormer permanent secretary used inormal dinnersand social gatherings to transorm a contentious relationship with his NEDs intoa trusting partnership.

While improving relationships and calling or more social outings might sound likea strange approach to improving departmental governance, boards that ignore theimportance o the human element in their task do so at their own peril.

Recommendations

In this chapter we have described the current state o departmental boards,detailed the barriers to eectiveness, and produced a high-level model or aneective board. Based on our assessment o departmental boards, we havedeveloped a typology, classiying them as advisory, decisive or transitional. Weeel this typology accurately captures a snapshot o boards today.

As a frst principle, boards should be the ocal point or perormancemanagement and ensure the delivery o mission-critical projects. Boards addthe most value when they are eectively overseeing the perormance o theirdepartment. A key outcome o reorming Whitehall governance should beimproving the ability o departments to manage their own perormance andcapability. Building on the above barriers to eectiveness and the synthesiso best practice, the ollowing recommendations are aimed at improving theperormance o Whitehall boards:

Nearly hal o interviewees identifed problemswiththelevelofengagementbetweentheboardandtheministerialteam. The lack o clarity around therelationships between the secretary o state and the board must be addressed toensure engagement is relevant, regular and eective.

1.Departmentsshouldcreatestrategyboards.The dual-track system

o departmental leadership in Whitehall results in a disconnect between

strategy and operation. Strategy must be developed jointly with

ministers and ofcials, but the current governance arrangements are not

bridging the gap between strategy and delivery. To ensure this happens,

departments should create a strategy board comprising the ministerial

team and ull management board, which could be chaired by the secretary

o state. These sessions would ocus primarily on developing departmental

strategy and priorities. Strategy boards would be required to publish

departmental business plans, and assess the headline perormance o thedepartment against the plan. This new practice would allow the ministerial

team to engage where most appropriate, while allowing the management

board to ocus regular monthly meetings on perormance management

and operational issues. This structure would ensure continuity between

strategy and delivery, as the management board members (including

NEDs) would attend both the strategy board and management board

meetings. Meetings would be regular, and should be supported by

away day sessions. Immediately ollowing elections and reshues, it is

recommended that these joint meetings with ministers be more requent.

Owing to the accounting ofcer principle, the current structure o departmentalboards leads to a concentration o power in one role. Theresultisdisempowered




nancedirectorsandacontinuationofthedisconnectbetweennanceandstrategy. Finance directors need the clout to bring fnancial insight to the ore.

2. Financedirectorstohavefullboardmembership. Given the imminent

fscal consolidation acing departments, the role o the fnance director will

be increasingly important. To ensure the fnance capability o boards, improve

the balance o power, and encourage more fnancial input into strategy

decisions, fnance directors should be a DG level position, and hold ull board

membership (which they do not have in all departments). The government

should also consider giving FDs the same kind o power to reeze spending

that is granted to local authority fnance ofcials under section 114 o the

1972 Local Government Act. This would give FDs more leverage on the board,

strengthen the demand or top-quality fnance proessionals in Whitehall,

and promote the role o fnance in decision-making.

Non-executive directors are the source o independent challenge on boards,and should have a clear value-adding role in the Whitehall governance model.But, a number o issues were raised by both executive and non-executive

board members. Anappointmentsprocessunilaterallydominatedbythepermanentsecretary,defensiveposturingoftheexecutiveteam,andaninadequateinductionprocessallhindertheabilityofNEDstohaveapositiveimpactondepartmentalgovernance.

3.NEDstositonbothmanagementandstrategyboards.To maintain

continuity o strategy and operation, non-executive directors should

attend and have a clear role on both boards, challenging on issues o

policy and delivery.

4.NEDsshouldhaveaclearlinetotheCabinetOfceiftheyhaveconcerns. The Cabinet Ofce has a role to play in strengthening the role

o NEDs. There should be a single point o contact in the Cabinet Ofce,

with whom all non-executive directors can raise issues and concerns.

This ofce should have direct access to the cabinet secretary, allowing

serious concerns to be agged at the highest level o government.

The Cabinet Ofce should also take responsibility or part o the NED

induction process, ensuring that all NEDs have an understanding o the

government’s cross-Whitehall strategy.

5.MinisterialinvolvementinNEDappointments,butwithindependentsign-off.When appointing a new non-executive director, boards should

ollow a transparent process and orm an appointments committee,

which would include the secretary o state. The secretary o state

needs confdence in the talents and instincts o the board when they

are not present. But new appointments should be ratifed by a central

appointments body, such as the civil service commissioners. Under

such an arrangement, boards would be required to account or their

appointments to an independent body.

6.ClearNEDroleinperformanceappraisalofotherboardmembers.

NEDs should take an active role in perormance appraisals o the permanent



Shaping Up 71

secretary and all members o the executive team. They should also be

involved in the decision to renew the contracts o the permanent secretary.

7.StrongerinductionofNEDsandcommunicationoftheirrole. Boards

should be required to develop a well-structured induction process or

NEDs, which is subject to central appraisal. This induction process would

be supplemented by a central programme aimed at communicating

the role o NEDs, expectations or the role, lines o accountability, and

programme on the whole o government strategy.

An eective board must be supported by a high-perorming board secretariat,capable o driving efcient agendas and ollowing up action points and decisions.I boards are to take a greater role in overseeing departmental perormance, theymustbesuppliedwithtimely,relevantandaccurateinformation.

8.Powerfulboardsecretary. Board secretaries need to have ample

authority and clout to enorce action points and ensure timely reports

and/or inormation rom DGs. In some cases, this may require a senior

civil service appointment to fll the post. Additionally, there should be astronger link between perormance management and the board secretary

unction. The goal o this would be to improve the quality o perormance

inormation provided to the board, thereby improving departmental

oversight o perormance.

The importance o board improvement is largely overlooked in Whitehall,with too many boards relying on capability reviews alone to steer governanceimprovements.Anintegratedapproachtocollectiveboardevaluationanddevelopmentisnotuniversallyfollowed,andtrainingforboardmembersis

virtuallynon-existent.

9.Formalperformancemanagementofboardmembers.As part o their

appraisal ramework, executive members o boards should be assessed on

their perormance as an eective board member and their ability to work

corporately with other DGs. This should incorporate 360-degree eedback

rom all board members. A proportion o board members’ perormance-

related pay should be linked to this assessment.

10. Annualboardappraisal . Boards should be required to undertake an annual

evaluation, assessing the perormance o individuals and the collectiveboard. In the uture, these evaluations could be carried out externally.

11. Skillsdevelopmentforchairs. I ministers are to chair the joint

strategy boards, they should receive development support on how to

be eective chairs and acilitators. This would include an induction

programme, workshops in strategic leadership and consensus building,

and skills or understanding group dynamics and interpreting behaviour.

12. Learninganddevelopmentforboards.This should begin with

establishing a collective competence o the board. From this ramework,executive board members should be required to receive training and

development on being an eective board member. Most DGs receive

management or leadership training, but there is seldom any development




done to improve the eectiveness o DGs in their role as board members.

To acilitate joint board development, departments should consider

employing an external board coach.

Furtheroptions

Having identifed concerns around the level o challenge and the ability opermanent secretaries to engage all members o the board in acilitating in-

depth discussions, there is a case to be made or an independent, non-executivechairman or departmental boards. In 2008, HMRC underwent a ull-scalegovernance restructuring, appointing a new board with a majority o non-executives and an independent, non-executive chairman. It is still too early toassess how these governance changes have aected perormance, and whetheror not HMRC’s reorms are transerable to other departments, particularlyas HMRC is a non-ministerial department. However, uture governmentsshould explore a non-executive chairman as a potential option or increasingindependence, ensuring challenge and marshalling eective perormancemanagement at the top o departments.

There are clearly more radical options that could be considered around thegovernance and accountability arrangements o departments. For example, thecase has been made in relation to many public sector bodies that members othe public could be appointed to represent the public or user interest.124 Our

judgement is that most boards should start using tried and tested methods toimprove their perormance, beore looking at more radical options.

Conclusion

Within the British constitution and style o government, departmentshave enormous power and considerable autonomy. Yet their governance

arrangements are a classic British udge. Power and accountability is diused,and conused, between ministers, the permanent secretary and now with otherboard members too.

This chapter brings together – we think or the frst time – a detailed empiricalanalysis o how departmental boards have begun to operate. Our conclusionsare broadly positive. The emergence o boards represents an important practicalinnovation in British government. They are working increasingly well in a numbero departments. However, we also conclude that some departments have a longway to go. In those departments where both capability reviews and sta surveysidentiy weaknesses in the leadership o the department, and where boards

generally remain purely ‘advisory’, action is needed to catch up with current bestpractice in governance.

At the heart o the issue is the relationship between ministers and mandarins.We believe that specifc refnements to the operation and structure o boardscan improve the governance o departments and adequately respect ourconstitutional conventions.

There is no doubt that there are many other improvements in how departments,and the public services and unctions that they oversee, can be identifed.But ultimately we want institutions that are able to drive and improve their

unctioning or themselves. For this, they need good internal governance. Idepartments can get this right, then more than hal the battle is already won.

124 See or example debates around NICE and the National Lottery, both o which have sought to incorporate direct public representation ontotheir boards.



Shaping Up 73

Chapter3:Moreeffectivecollaboration

One more peculiarity in the Civil Service remains to be noticed.It is what might be called its fragmentary character… Each man’sexperience, interests, hopes, and fears are limited to the specialbranch of service in which he is himself engaged. The effect

naturally is, to cramp the energies of the whole body, to encouragethe growth of narrow views and departmental prejudices…

Northcote–Trevelyan Report, 1854

125

Many pressing challenges acing the country do not ft neatly within theremit o any single government department or agency. Collaboration acrossinstitutional boundaries is necessary or any government that wants to makepolicy and deliver services to the public in a coherent and eective ashion.Making government more ‘joined up’ has been an ambition o governmentor many years, but has become a particular priority in the past decade.Whitehall has utilised a range o initiatives to enhance collaborative working,rom shared targets to joint programme boards and cross-Whitehall networks.Evidence suggests that progress has been made, but most ofcials think thereis a long way still to go. Our research identifes a range o barriers that raisethe costs o cross-departmental working and ail to create strong enoughincentives to prioritise collaborative activity. To overcome these barriers wesuggest reorm to budgetary processes in Whitehall, including a greater useo pooled budgets tied to government’s strategic priorities, with these undscontrolled by senior ministers with roaming cross-departmental bries.

The challenge o coordinating the work o dierent parts o government is asold as government itsel. Overcoming the ‘ragmentary character’ o Whitehallhas been an objective o many modernising governments over the years, but

progress has oten been slow, patchy or simply too difcult to assess (Figure 21).In the previous chapters o this report, we have made the case or a centre ogovernment that acilitates the development o a whole o government strategicramework to which all parts o Whitehall should contribute. We also argued ora strengthening o boards to ensure strong departmental governance.

The danger o strengthening governance both at the centre and withindepartments is that a ‘hub and spoke’ system will emerge, where departmentshave strong and clear relationships with the centre, but weak horizontal linkageswith one another. This chapter ocuses on how departments can develop theselateral connections, without which government will be unable to turn a strategic

vision into reality.

125 Northcote and Trevelyan (1854), Report on the Organisation of the Permanent Civil Service




We try to avoid assuming that collaboration implies neat and tidy organisationalstructures and processes, or that it depends upon ormal coordinationmachinery. Indeed, our research clearly shows that the real value o eective

joining-up mechanisms lies in their ability to oster new kinds o conversationsand relationships between key players in government. These relationships cannotbe over-engineered – eective problem-solving may sometimes come, at leastin theory, rom competition, conict and even a little chaos at the margin.

The past decade has seen perhaps the most extensive attempt yet to solveWhitehall’s collaboration challenge, which can be summed up as “how to alignincentives, cultures and structures o authority to ft critical tasks that cutacross organisational boundaries”.126 When government ails this challenge,the implications are elt ar rom the corridors o Whitehall, at the level ocommunities and individual service users. For instance, one study o amiliesat risk in deprived Shefeld wards highlights the bewildering complexity odierent teams and services, constrained by local, regional and national targetsand reporting to three central departments, the local Jobcentre Plus and thegovernment regional ofce.127

The ragmentation o Whitehall also hampers problem-solving at a morestrategic level. Policy areas that are oten cited as having been held back by alack o departmental collaboration include social exclusion; tackling substanceabuse; troubled youth; security; and civic renewal, to name but a ew. Bettercollaboration at central government level will not solve these problems entirely,but it would certainly help.

Our research shows that there has been real improvement in joined-up workingover the past 10 years, but also that perormance remains variable and lessonsare not systematically learnt and incorporated into uture reorms. As a result,signifcant barriers between departments remain. These include:

• Diering departmental cultures;

• The division o budgets into separate departmental pots;

• Incompatibility o systems and other restrictions on sharing inormation

across departmental boundaries;

• Incentive and accountability structures (or both ofcials and ministers)

that reward a ocus on narrow departmental concerns;

• Limited shared evidence bases to inorm collaborative decision-making.

As a result o these barriers, government can appear to be what one intervieweedescribed as a ‘consortium’ rather than ‘an integrated joint venture’. Thisis a problem or whoever wins the next election: complex, boundary-spanning problems are simply a act o modern government, and any utureadministration will need ways to address them, whether or not this includes theuse o centrally set targets.

In this chapter, we argue that government needs to be more radical i itreally wants to challenge the limitations that departmental silos place on

efciency and eectiveness. Most signifcantly, we recommend that politicaland fnancial capital should be pooled or a handul o key political priorities.

126 Mulgan (2005), ‘Joined-up government: past’, p.176127 See Megson (orthcoming), Developing the Whole Household Model



Shaping Up 75

This would eectively mean creating a handul o secretaries o state withouta department, holding responsibility or a cross-cutting problem and a pooledcommissioning budget to spend across Whitehall.

Our fndings are based on a series o semi-structured interviews with seniorofcials in Whitehall involved in making joined-up government work. Inparticular, we spoke to 18 o the senior responsible owners o cross-cuttingPublic Service Agreement (PSA) targets – or in a ew cases, ofcials working

with them in making the PSA machinery work. We also conducted interviewswith 12 representatives o cross-departmental policy bodies such as the Ofceor Criminal Justice Reorm and ofcials working with cross-cutting budgets.The conclusions o this chapter also draw heavily on previous Institute orGovernment research in this area.128

Figure21:Timelineofselectedjoining-upinitiativesinWhitehall

1950 1960 1970 1980 1990 2000 2010

Creation of CivilService Department

Appointment of‘Ministerial Overlords’

Senior Civil Service founded

Fully Cross-Cutting PSA setcomes into effect

Creation of

‘Super Ministries’

Central Policy

Review Staff

Joint Approach to

Social Policy

Citizen’s Charter

Civil Service Steering Boardand Top 200 group created

Social ExclusionUnit formed

First ComprehensiveSpending Review

Source: IG researchNote: For more detail see Appendix 3.1

Whyjoinup?

Improving ‘joined up government’ lay at the centre o the frst Blairgovernment’s public service modernisation agenda. The objective was toovercome Whitehall’s traditional malaise o ‘departmentalism’ as well as themore recent ragmentation associated with the agencifcation and privatisationo the Conservative ancien régime.129 From Labour’s perspective, the ragmentednature o the state they inherited tended to “inhibit the tackling o problemsand issues which cross departmental boundaries”.130 These issues included toppriorities such as social exclusion and neighbourhood breakdown.

The ocus on collaboration did not last, and as the government’s agenda shitedtowards ‘delivery’ in Labour’s second term, so joined-up government declinedrom being ‘the big thing’ to merely ‘a good thing’.131 But the idea o a more

joined-up Whitehall has recently risen back up the agenda under the alternativelabels o ‘collaboration’ or ‘partnership working’. This is reected in particular bythe 2007 set o PSA targets, almost all o which are jointly owned by more than

one department.128 Gash et al (2008), Performance Art, pp.89–90129 See Kavanagh and Richards (2001), ‘Departmentalism and joined-up government’130 Perormance and Innovation Unit (2000), Wiring it Up, p.6131 Page (2005), ‘Joined-up government and the civil service’, p.139




It is unrealistic to expect to attain in ull the ‘administrative holy grail’132 operectly joined-up or holistic government, with no tensions or inconsistenciesbetween departments whatsoever. In most areas, it will be most eectiveor departments to retain an undisturbed ocus on the areas in which theyspecialise, since joint working has costs as well as benefts – in the orm odelays, administrative costs and more complex accountability relationships.

Government should thereore concentrate on overcoming barriers to

interdepartmental collaboration that are particularly harmul, while allowing orlooser orms o interaction in other areas.133 In some contexts, where the overlapbetween departmental remits is low, mere consultation will sufce. Elsewhere,competition between departments will be the best orm o interaction, as thiscan spur innovation and learning.

In short, the complexity o government and the challenges it aces meansthat there can be no ‘one size fts all’ approach to the management ointerdepartmental relations and issues. The evidence, however, is that despite adecade o activity and some signifcant improvements, government has not yetachieved the right balance.

Particular types o problem that emerged rom our interviews with senior civilservants included the classic coordination challenges o redundancy, inconsistency and lacunae.134 For instance, one ‘completely mad’ case o redundancy, orduplication, we heard about was the lack o joint case management betweenagencies in the criminal justice system, which raises costs and slowsdown processes.

Our interviewees cited numerous examples o policy inconsistency. Someo these can be taken as a sign o healthy debate between departmentsrepresenting dierent stakeholder groups and worldviews. But when these

tensions are let unresolved, they can undermine the eectiveness and credibilityo government action.

One senior ofcial painted the ollowing picture:

Lots of different departments are trying to inuence organisational [and business] behaviour, so GEO [Government Equalities Ofce] are saying it’s really important you treat your people well, diversity etc and now BIS are saying it’s all about skills. DH and DWP are saying no, it’s all about health and wellbeing, BIS used to say it’s all about exible working, DECC says it’s all about climate change, and I could go on and on. So you have got all these different departments, which for perfectly understandable reasons are

saying, ‘no I’m the most important,’ but what you end up with is messages just getting lost in the noise. I mean, there is no real attempt to coordinate or prioritise messages.

Lacunae, where issues ‘all into the gaps’ between departments, were theprincipal reason or Labour’s early ocus on multiaceted problems like socialexclusion. More recently, cross-cutting PSAs and Local Area Agreements havebeen designed to remedy this issue, by creating a shared ocus on outcomesrunning rom the centre to localities. But ministers and ofcials still appear tobe driven in large part by their own department’s particular objectives, leavingWhitehall a long way rom the vision o policies shaped around problems rather

than institutional boundaries.132 Peters (1998), Managing Horizontal Government, p.1133 Broadly speaking, we might speak o a scale o interaction as ollows: collaboration, cooperation, coordination, consultation, communication,

competition. With thanks to Winston Sutherland or the idea o this scale.134 Hood (2005), ‘The idea o joined-up government’, p.27



Shaping Up 77

For instance, while there is a range o mechanisms or ensuring coherence opolicy relating to children (see Figure 25), the equivalent machinery or othercitizen groups such as the disabled or the elderly is ar less well developed.This increases the possibility o poorly designed services or lower-profle (andoten vulnerable) groups. For example, the NAO recently ound that the lack ocoordination within the tax and benefts system between local authorities, DWPand HMRC has led to 1.5 million older people overpaying £250 million in tax,while also increasing the administrative burden alling on those the system is

designed to beneft.135

Certain problems or groups may be overlooked, in particular where actiontaken by one department has ‘spillover’ eects or other parts o government.For example, spending on drug-abuse treatment programmes in the NHS cangenerate large savings, but mostly in the orm o reduced crime rates, whichmeans that the Department o Health may not have a strong incentive to spendon this activity (Figure 22, and see Appendix 3.2). This reects the point madeby Geo Mulgan and others that “vertical organisation by its nature skewsgovernment eorts away rom certain activities, such as prevention – since thebenefts o preventive action oten come to another department”.136

Collective goods also risk being underproduced. In one interview we were toldo a minister going around Whitehall ‘with a collecting tin’ to try to amasssufcient unding rom individual departmental contributions or a joint R&Dproject which was widely supported and which would attract additional EUinvestment. This is a classic ree rider problem, where other departments hopedto beneft rom the project without actually contributing to its unding.

Whynow

O course, these problems are not new, but there are a number o specifc

actors that justiy re-examining the problem today:

• First is the nature o the policy priorities o both major parties. The

government’s 2007 PSA targets are all ormally cross-cutting, covering such

issues as climate change, obesity, child poverty and equal opportunities.

Tackling pressing economic concerns such as entrenched worklessness

also necessitates cross-departmental collaboration. The Conservatives,

meanwhile, have emphasised the importance o ‘broken society’ issues such

as drug addiction, amily and neighbourhood breakdown. These are all so-

called ‘wicked’ problems, “whose causes are so complex, and whose solutions

are so multi-actorial, that they require a multi-agency response”.137

• Second is the looming fscal crunch. On the one hand, better coordination

can deliver efciency savings by eliminating waste. But there is a danger

that when budgets are tight, departments will ace incentives to retrench to

what they see as their core business at the expense o collaborative activities

that may ultimately deliver greater beneft in the uture or or other parts o

the public sector (Figure 22).138 Some interviewees, or instance, expressed

concern that the Department o Health might seek to shore up core unding

135 NAO (2009b), Dealing with the Tax Obligations of Older People, p.5136 Mulgan (2005), ‘Joined-up government’, p.177137 Ling (2002), ‘Delivering joined-up government in the UK’, p.622138 A similar point is made in Peters (1998), Managing Horizontal Government, pp.39–40




or healthcare providers at the expense o preventative activities such as

anti-obesity campaigns or spillover activities such as drug treatment.

• Third, all parties have become committed to greater devolution and

enhancing local autonomy, but in the context o our current institutions

such devolution may risk even greater ragmentation. Local institutions

reect the deep silos o a generation o Whitehall divisions, and simply

‘letting go’ may leave this local ragmentation in place i no additionalaction is taken to ensure that joining-up also occurs.

• Fourth, the wide range o recent initiatives in this area oers a rich and

largely untapped seam o lessons about how to acilitate collaboration

between departments.139 With a general election approaching, an incoming

government o either main party is likely to revamp its coordination

machinery, so an evidence-based analysis o past attempts to join up

should help to inorm this process.

• Finally, there is strong evidence that senior ofcials in Whitehall themselvesconsider collaboration a priority area or improvement. For instance, our

survey o senior responsible owners o cross-cutting PSAs shows that while

a large majority believed there had been improvement in joint working over

the past fve years, almost hal elt that Whitehall is still ‘not very’ or ‘not at

all’ joined up, and a clear majority elt that there remains a long way to go

(see Figure 23).

Figure22:Estimatedannualcostsofselected‘wickedissues’

Public spending: £12 billion

Below average employment rate and earnings: £13 billion

Childhood

poverty

NHS costs: £1 billion

UK economy: £2.6 billion

Childhood

obesity

Crime costs: £13.9 billion

Health & other costs: £1.5 billion

Drug abuse

Productivity costs: £7.3 billion

Health costs: £2.7 billion

Alcohol

abuse

Crime/Policing costs: £15 billion

Sources: Hirsch (2008), Estimating the Costs of Child Poverty; Comptroller and Auditor General (2006), Tackling Child Obesity ; Singleton et al (2004–05),Measuring Different Aspects of Problem Drug Use , p.41; Balakrishnan et al (2009), ‘The burden o alcohol-related ill health in the United Kingdom’

139 This seam o lessons is o course not entirely untapped. Previous studies that cover some similar ground include Gash et al (2008),Performance Art; and Sorabji (2008), Changing Whitehall’s DNA



Shaping Up 79

Figure23:Whitehallisgettingbetteratjoiningup

0% 20% 40% 60% 80%

A lot

How much improvement has there been in the past five years?

A fair amount

None at all

Not much

…butmostofcialsthinkthereisalongwaytogo.

0% 20% 40% 60% 80%

How joined up is Whitehall? How close is Whitehall to where it should be?

Very

Not very / Not at all

Quite

Source: IG interviews with owners o cross-cutting PSAs, August–September 2009, N = 17

Machineryofgovernmentchange:ablindalley?

Machinery o government change is a powerul but blunt instrument that PrimeMinisters can use to improve joining up. One approach is to bring togetherclosely connected policy domains in order to manage the tradeos betweenthem. This is the stated logic behind most machinery o government changes,including the recent creation o the Department or Energy and Climate Change(DECC), and the 1997 establishment o DETR, a super-department unitingenvironment, transport and planning policy. Similarly, departments can beormed to join up policy and services around a particular citizen or stakeholdergroup. The Department or Children, Schools and Families (DCSF), or instance,was created in 2007 to develop a cross-Whitehall Children’s Strategy, whilethe Government Equalities Ofce was ormed to join up policy around theequalities agenda.

Major machinery o government changes o this type may bring advantages inthe orm o more coherent policy-making and economies o scale. The creationo DECC was seen by many as a sensible step given the crucial role o energypolicy in enabling the government to meet its high-profle climate changeobjectives, and the difculties aced by Dera (as the previous lead department)

in driving coordination across Whitehall.As one interviewee put it: “Dera could not by itsel [push the climate changeagenda orward] because it either did not have the capability or it did not




have the consensus.” DCSF, too, at least according to senior ofcials within thedepartment, has been eective at promoting a more coherent child-centredapproach across a range o policy areas, particularly through its leadership o theEvery Child Matters strategy.

However, the creation o new departments and the division o old ones is alwaysdisruptive in the short term. For example, when the Department or Innovation,Universities and Skills (DIUS) was created in 2007, it was estimated by one

insider that it took at least 6 months or the department to start operating to ullcapacity, and that the initial start-up costs o the department totalled at least£15m (not including the costs o disruption to delivery and policy development).

As a mechanism or enhancing collaboration, then, the creation or disbandingo new departments is not a decision that should be taken lightly. The kind oregular changes introduced since 1997 (Figure 24) can lead to internal andexternal conusion and hamper attempts to create a sense o identity.

Figure24:Increasingfrequencyofgovernmentreorganisationssince1997

-3

-1

1

3

5

7

9

1 9 7 8

1 9 7 9

Net departments

Number of departments affected

1 9 8 0

1 9 8 1

1 9 8 2

1 9 8 3

1 9 8 4

1 9 8 5

1 9 8 6

1 9 8 7

1 9 8 8

1 9 8 9

1 9 9 0

1 9 9 1

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

Source: With thanks to Anne White or this chart, which was created as part o an ongoing IG project on machinery o government changes

Moreover, machinery o government changes do not erase the boundariesbetween departments – they merely shit them.140 As a previous analysis o thisissue argued:

Just as the functional separation of state agencies is a necessary part of managing complexity and is a characteristic feature of the modern state […],so too is the development of strategies to deal with the problems this creates.141

Thus, in 2007, or instance, a round o changes that was designed to givegreater coherence to business policy through the creation o BIS resulted in the

ragmentation o responsibility or urther education and apprenticeships.140 In Scotland, reorms to the civil service in 2007 have been described as marking the ‘abolition o departments’. They have been replaced by

a network o smaller policy directorates which collaborate lexibly on particular issues (see page 9. Future IG work will consider whetherelements o this more radical approach could be transplanted to the ar larger and more complex environment o Whitehall.

141 Ling (2002), ‘Delivering joined-up government in the UK’, p.617



Shaping Up 81

Similarly, the creation o DECC may have united climate change and energypolicy but created a new requirement to cooperate across departmentalboundaries to ensure that land-use planning and agriculture policy – which werelet behind in Dera – take into account the climate impact.

Indeed, or challenges as complex as climate change, it is not easible or allrelevant policy areas (which would include transport, housing and aspects ooreign policy) to be brought under one departmental roo. DCSF has coped

with this problem by becoming a ‘networked department’, working closely withothers to deliver progress on the children’s agenda (Figure 25).

Figure25:DepartmentforChildren,SchoolsandFamilies:a‘networked’department

Children’s healthand obesity

Drugs and alcohol

Child SafetyChild Poverty

Y o u t h J u s t i c e

E d u c a t i o

n &

S k i l l s

Soc ia l E xc lus ion

BIS

DWPHMT

DCMS

DH

CO

HO

MoJ

DCSF

CLG

DfT

DCSF-led PSA(s)

Other PSA(s)

Joint Unit

Central Unit

Cross cutting minister

Joint budget management

(or ‘dual key’) implemented or planned

Source: IG researchNote: Selected policy areas and linkages only




The2007PSAsystem:anexperimentinpooledaccountability

Perhaps the most ambitious attempt o recent years to reengineer governmentalong more collaborative lines has been the development o perormancetargets shared by more than one department. In early PSA iterations, mosttargets were narrowly ocused and confned to a single department, but asthe regime has developed it has taken on an ever-broader ocus on cross-departmental outcomes. In 1998, there were just three cross-cutting PSAs – or

drugs, criminal justice and SureStart – but by 2004 this had increased to 20 outo the government’s suite o 100 PSA targets (o these 20, just seven were ullymet).142 By 2007 all PSA targets were shared.

The 2007 Comprehensive Spending Review set out 30 goals, each with a leadministry and a cross-departmental delivery agreement setting out how otherdepartments will contribute. The new PSA system implies, and to some extenthas created, a web o connectivity across Whitehall (Figure 26), with key ‘hub’departments including DCSF (as noted above), BIS, CLG and the Home Ofce,due to their participation in a wide range o joint PSAs.

Each PSA is led by a senior responsible owner – usually at director general level– supported by a secretariat and a cross-departmental delivery board, whichtypically meets quarterly. Progress is assessed by the Prime Minister’s DeliveryUnit (PMDU), which sits on each board and provides biannual progress checks.

Figure26:WebofconnectionsbetweendepartmentsviaPSAsystem(simplified)

CO DfT MOJ

DCMS DCSF BIS HMT

2 links

3-4 links

5 or more links

CLG HO DH DWP

Source: Parker et al (2009), State of the ServiceNote: Lines between departments represent the number o PSAs led by one or other department in which the other is a major participant. The colour indicates

the number o such links: Grey = 2, Amber = 3–4, Red = 5 or more. Departments with no amber or red links are not shown here.

142 See Parker et al (2009), State of the Service, p.20



Shaping Up 83

Our interviews paint a mixed picture o the eectiveness o the new PSAstructure. The simple act o setting collectively owned targets with jointboards sitting above them was seen as helpul by most ofcials (see Figure 27).Interviewees told us that the boards create “a pretty strong mechanism oraligning dierent departments, making sure there is an escalation mechanism ithere are problems or i I, as an SRO [senior responsible owner], am not gettingwhat I need rom another department”.

The boards also create social networks that acilitate joint working. As one SROtold us: “What it does do is give you the contacts, so when there is a big issue you can phone up the other DGs.”

Figure27:EffectivenessofPSAsanddeliveryboardsaccordingtoSROs

0% 20% 40% 60% 80%

Very

How effective are PSAs as a mechanism for improving joint working between departments?

How effective do you consider your delivery board to be?

Quite

None at all

Not very

Source: IG interviews with owners o cross-cutting PSAs, August–September 2009, N = 17

Theaccountabilitygap

While there was a general sense that the PSA system had improved the wayWhitehall works across boundaries, a number o actors have limited its impactin quite signifcant ways. First o all, the complex and multi-causal nature omany o the problems being addressed means that departments need a rigorousshared evidence base to inorm collective discussions about priorities or action.As several o our interviews showed, this was oten lacking:

When you are setting up PSAs [you have to think] about data sources and continuity and the robustness of that data. Clearly in many PSAs that had not been done rigorously.

Many SROs have interpreted their role as persuading departments to collateand present evidence about the contribution they were making to the sharedgoal. Ideally, this would enable the SRO to inuence other departments’activities and to acilitate debate across departmental boundaries about how todevelop a more coherent approach to the problem at hand. But SRO inuenceis undermined by the lack o hard accountability mechanisms in the system. Asnoted in Chapter 1 (see Figure 5), international evidence suggests that the UKimposes relatively weak sanctions on departments or ailing to hit targets.

For instance, linking bonuses or pay to PSA perormance was reportedlyconsidered but ultimately rejected due to the severe difculties in attributing

success or ailure to the actions o individual ofcials, or even to governmentas a whole. Many o the SROs themselves nonetheless report eeling a strongdegree o responsibility, but this is not universal. One told us that:




I feel bits of accountability, so it’s not very good if you are going to continually get amber red or red ratings [from PMDU], but actually nothing ever really happens.

And below the top level, these accountability problems become worse,particularly in that ofcials in contributing (i.e. non-lead) departments did notnecessarily eel a strong stake in shared targets, which can make it difcult orthe SRO to inuence behaviour. One SRO was matter-o-act about this:

There are a set of issues to do with day-to-day pressures on people.Their prime line of accountability is to their own ministers and that obviously denes their priorities.

Thenancegap

The weak accountability ramework or cross-cutting issues is linked closely tothe lack o connection between budgets and cross-cutting objectives. As theNational Audit Ofce noted in 2005:

Shared targets have a limited impact on working arrangements unless supported by structural innovations that allow joint budgeting

arrangements.143

Departments are now required to show how their budget maps onto theirstrategic objectives – or instance DCSF has to show how much it is notionallyspending on reducing educational inequality – but this is a post-hoc exercise,and there is little attempt to map budgets to shared PSA targets. Hence thecritique o the House o Commons Treasury Committee that:

Given that a number of departments have agreed Comprehensive Spending Review spending plans without apparently agreeing Public Service

Agreement targets at the same time, it is unclear what part Public Service

Agreement targets play in spending settlements.144

This problem is particularly serious or targets that departments contribute tobut do not lead. Thus, or instance, the Department or Work and Pensions leadson PSA 17, which seeks to “tackle poverty and promote greater independenceand wellbeing in later lie”. It has a similarly worded DSO to which it hasallocated some £84m.145 However, the other key contributing departments (DHand CLG), have no specifc objective relating to older people, and thereore nobudget aligned to this. This is the pattern across most o the PSA set, with aew exceptions (such as CLG’s allocation o £467m to its strategic objective to“make communities saer by providing the ramework or fre rescue and other

agencies to prevent and respond to emergencies”, which is in eect alignedwith the Home Ofce-led saer communities PSA). One particularly stridentinterviewee argued that:

If you split money and governance like that you almost neuter the project before it starts, it proves very difcult to do and you are almost doing it on good will.

Such actors act to weaken incentives or cross-departmental collaboration not just or ofcials but also or ministers. A regular rerain heard in interviews wasthat, when ministers give a clear indication that collaboration is a priority, civilservants ollow suit:

143 NAO (2005), Joint Targets144 House o Commons Treasury Committee (2007), 2007 Comprehensive Spending Review , p.55145 DWP (2009), Resource Accounts 2008–09



Shaping Up 85

If the ministerial steer is to come to an accommodation then you will make much more effort to do it. So to me that is what lies at the heart of all of this.

However, the signal that ofcials requently receive rom ministers is that PSAsdo not truly represent the top priorities or government, and in particular thatPSAs led by other departments are lower priorities. Civil servants oten do notbelieve that they will get the backing they need; or that results will ollow romtheir eorts; or their careers advanced, by too much o a ocus on collaborativeactivity. As discussed below, this is something the current cabinet secretary has

sought to address in recent years.

Clearingtheblockages:theroleofthecentre

A central theme o this report (see Chapter 1) is that the centre does not doenough to provide strategic leadership to government as a whole. This claim issupported by fndings rom the Treasury and Cabinet Ofce 2008 stakeholdersurvey. As one stakeholder commented:

I would genuinely like to feel that the centre had a sense of the overall agenda and that the progression of that overall agenda mattered to them as much as

it mattered to the individual delivery of the departments.146

In the specifc context o the PSA ramework, the key part o the centre isthe PMDU, which plays an important role in helping to overcome the barriersdescribed above, though with mixed success.

PMDU was seen by several interviewees as playing a positive role in ocusingthe minds o dierent departments on shared challenges. It achieved this partlythrough the monitoring and challenge unction it plays, and partly throughlending additional expertise in analysing data around particular problems toassist in discussions about prioritisation between the departments involved.

Quotes rom two interviews illustrate this:PMDU has been pretty effective at highlighting common issues bearing on the delivery of the PSA and highlighting good practice.

They are very good at working with us to spot the problem areas and they are very good at putting their resources in and doing the deep dives when that is what we want to do.

But more critical voices argued that PMDU did not do as much to solve deeperunderlying problems, particularly the lack o accountability highlighted above. Asone SRO put it:

I don’t think the process that the PMDU has devised means that I feel directly accountable to anybody.

Some o our interviewees also suggested that PMDU had not done enough totailor its processes to the very dierent types o challenge to be ound acrossthe PSA set. The centre’s monitoring and reporting requirements were oten saidto suit output-ocused targets – such as exam results and waiting lists, but notmore complex and long-term outcome objectives:

I sometimes wonder whether their approach is sufciently subtle for quite tricky policy areas.

146 Ipsos Mori (2008), HM Treasury and Cabinet Of fice Stakeholder Survey, p.26




All the PSAs are assessed for VFM [value for money] and they have got a template of evidence that is required for VFM. It t beautifully for a health model: outputs and costs. It does not work for an inuencing [PSA].

But the inuence o PMDU is also closely connected to the interest in the PSAsystem taken by the central political leadership o government – especially thePM and chancellor. A tighter fscal context and shorter-term electoral concernshave made it much tougher to ocus on long-term goals:

If you went to the Prime Minister today and said ‘tell me the 30 most important things facing the UK in government today’ they [the PSAs] would not be the 30 things on that list.

While it is natural or the government to respond to events, one could arguethat the PSAs were too easily knocked o the top o the agenda. This reectsthe general difculty in embedding long-term strategic priorities in theWhitehall system deeply enough that they are not orgotten about as shorter-term political challenges emerge.

TheCollaborativeToolkit:Otherinterventionsatgovernment’s

disposalPSAs are only one o several tools that have been used over the past decadeto try to overcome the challenges posed by Whitehall departmentalism. Inthis section, we examine a range o other mechanisms, including programmeministers, cross-cutting policy units, pooled budgets and new ways ostructuring incentives, to assess their eectiveness as tools or joining up.

An alternative approach – which government should explore urther – is to jumpover Whitehall altogether through radical devolution o powers and budgets toother levels o government, or even direct to citizens or households. We briey

consider these more radical options at the end o the chapter, but or now ocusmainly on approaches that might increase collaboration within Whitehall itsel.

Cross-cuttingpolicyunits

Policy units usually work to join up particular initiatives that might otherwiseall between the gaps. This can be a powerul way to ocus eort on a particularpolicy area, but in practice these units ace serious challenges in establishingtheir legitimacy across dierent departments. Units o this kind have increasedin number in recent years (see Appendix 3.3).

There are three broad models or this kind o unit:•Centralunits – create reestanding units at the centre o government.

These units do not have to rely on consensus between departments and

can raise outcomes beyond the lowest common denominator. A well-

known example, created ater the 1997 election, was the Social Exclusion

Unit (now reconstituted as the Social Exclusion Task Force). Central units o

this kind appear to be eective so long as they have top-level sponsorship,

but are weakened by their limited array o levers with which to inuence

activity elsewhere in government. As one interviewee put it: “The SEU had

the Prime Minister’s clout… but I think you can tell that it does not last. Ithink i you want something to last you build it into the mix.”147

147 The SEU was later moved to the Oice o the Deputy Prime Minister and was gradually seen by many to produce worthy reports but to lackthe inluence to implement them. Subsequently, when Blair returned to ocus on the issue post-2005, the SEU was broken up, and a new SocialExclusion Task Force was created in the Cabinet Oice, with high-proile Prime ministerial backing and a dedicated Cabinet Oice mini ster.



Shaping Up 87

•Independentunits – the Ofce o Climate Change (OCC), established in

2006, borrowed aspects o the central unit model such as its recruitment

o secondees rom across Whitehall and a consultancy style project

approach to policy development. It was unded by seven departments but

sat independently o the departmental system (though it was physically

located in Dera), so that it was not seen as a creature o the centre

or o any particular department. Despite its high profle, the OCC also

encountered difculties as a result o its limited direct levers over the resto government. The OCC was incorporated into DECC in 2008, though still

ormally works on a cross-cutting basis.

•Cross-departmentalunits – these units are typically at the interace o

two or three departments with a shared or overlapping interest, with the

objective o improving the coherence o government policy in the area in

question. In some cases, such as child poverty and obesity, the departments

involved are pulling in the same direction, due to the clarity o the political

goal. As a result, the role o the unit becomes largely about gathering

evidence and ormulating policy or legislation. For other units, such as youth justice, there is a more obvious tension between the departments

involved – in this case between the more ‘punitive’ and ‘welarist’

approaches to young people. The unit’s unction here is to manage tensions

and trade-os, with the two departments eectively holding a veto over

any new policy developments. Some units, like the Ofce or Disability

Issues, also interpret their role as to oster networks to ensure people

working on a similar agenda across dierent departments “eel part o the

bigger team, rather than battling away in a tiny corner on their own”.148

Specialist central units have largely allen out o avour, with the exceptiono higher-level strategic bodies such as PMDU and the Strategy Unit. Centralpolicy units ace the critique that they are too ar removed rom day-to-daydepartmental policy-making; fnd it hard to extract money or hard commitmentsout o their big sister departments; complicate the responsibilities o centraldepartments; and soon lose impetus once the ocus o the PM moves elsewhere.

Both types o cross-departmental units ace a common set o problems.First o all, there is a question o identity. Creating an entirely new bodypresents a vital opportunity to mould a new institution that transcends the

dierent departmental cultures, and is jointly owned by all the departmentsinvolved. These shared units have to avoid becoming captured by one or otherdepartment, as this will undermine their credibility when dealing with ministersand ofcials elsewhere. Perceptions are as important as reality, so there mayeven be cases where a joint unit is seen by each department as too dominatedby the other, to the detriment o its eectiveness.

To avoid such problems the units themselves must work hard to create aunifed corporate identity separate rom, but also closely associated with, thedepartments involved. This might involve ensuring that both departments andtheir ministerial teams are treated equally, and that potentially competing

departmental perspectives are given equal weight. Thus one ofcial told us:

148 Stibbard [ODI Deputy Director] (2009), ‘ODI: disability is a cheap win’




We have a policy of putting up completely transparent joint advice to all our ministers at the same time unless we can possibly help it; it forces us as civil servants to try and thrash out some of those differences and issues.

Internally, meanwhile, the barrier may be the mindset o ofcials who seethemselves as on loan rom ‘their’ department rather than members o aseparate joint entity. This can hamper the development o the so-called ‘cultureo jointness’. More than one o the joint units we spoke to had taken deliberatesteps to overcome this, or instance by making sta rom the two parent

departments work together on cross-cutting projects.

Another regular complaint is that collaboration is made more difcult by thedierent systems that joint units have to work across. For instance, having staon dierent pay scales, perormance systems and so on makes managementand fnancial planning ‘a real pain’. Some units have also been prevented romcreating separate email and web identities, orcing sta to associate themselveswith one department or another.

It is striking that, in practice, the most successul o the cross-cutting units othe last decade, notably PMSU and, to some extent, PMDU have evolved to take

on a blend o characteristics o traditional central and cross-departmental units.They retain strong links to the PM, but also deliberately take some commissionsrom departments, with departments oten using them to get greater leverageover the rest o Whitehall. Those units that have been seen as relying too heavilyon Prime ministerial patronage alone have generally not lasted long.149

Cross-departmentalministers

As we have already seen, ministers oten ail to engage ully with cross-cuttingissues. One way to get round this problem is to give ministers responsibilitiesin more than one department. The government has already experimented with

this approach (see Appendix 3.4), but there is room to go urther in linkingministerial authority to pooled budgets, as we shall see.

In some cases, bi-departmental ministers eectively hold two separate part-time jobs rather than a single cross-cutting portolio. But in several areas, thereare genuine ‘ministers sans frontieres’ with complementary or overlappingportolios rom two departments, with an expectation that they will coordinatepolicy and manage trade-os across the boundaries.

For instance, the Minister or Trade sits across the business and oreign ofceportolios, and the Minister or Science and Innovation in BIS is responsible or

the large R&D budget in the MoD on the grounds that “with the right steering,the two roles have great potential to complement one another and boostscience in the UK”.150

One interviewee judged the creation o such a minister in her area as a successin comparison to the previous situation where she had to report separately totwo ministers:

Having [the single minister] there I think has made a real difference because it has brought a certain kind of jointness to the ministerial teams as well and he does have that remit to look across the programme.

149 The Oice o Public Service Reorm, or example.150 Rees [President o the Royal Society] (2009), cited in ‘Deence job or science minister’



Shaping Up 89

Where two departments tend towards dierent interpretations o a policy area(as or the economic and educational emphases placed on apprenticeshipspolicy by BIS and DCSF, respectively), having a joint minister oers a route todismantling or at least managing these cultural barriers. In some cases, cross-cutting ministers are appointed to represent the interests o a particular citizengroup, such as the children’s and disability ministers, who are based in a singledepartment (DCSF and DWP, respectively), but have responsibility or leading agovernment-wide strategy or the citizen group in question (see Appendix 3.5).

Regional ministers were also appointed in 2007 to represent the interests oparticular parts o England.

A problem cross-cutting ministers can ace, especially i they are relatively junior, is that they may have insufcient authority in one or more o thedepartments they need to inuence. This can be mitigated by the creation o ashared delivery agency, which the minister oversees, while reporting upwards tothe two parent departments. For example, the Minister or Trade, Investment andSmall Business is supported by UK Trade and Investment, which is eectively aservice delivery agency representing UK commerce in oreign markets as a jointventure between BIS and FCO. Alternatively, a cross-cutting minister can be

supported in policy ormulation by a unit o the kind discussed above (as is thecase or the apprenticeships minister or instance). The combination o thesetwo mechanisms does appear, in certain areas at least, to oer a low-cost modelor achieving some o the objectives o large-scale machinery o governmentchanges. Thus the head o one joint unit who currently works to several dierentministers stated that:

If you could get that working as a model where you have ministers who genuinely sit across all of the departments it would certainly make life easier because it essentially pushes a lot of the coordination and negotiation role up onto that minister rather than me having to do it as the head of the unit.

Some countries have gone urther than the UK in trying to address this problem.In Ireland, ministers or particular citizen groups are supported by dedicatedofces, and have responsibilities in several relevant departments (see Appendix3.6). And the Netherlands has experimented with the creation o a programmeministry or Youth and Families (see Appendix 3.7). The ministry is led by one othe country’s two deputy Prime Ministers and has a dedicated budget o 6.2bnin 2009. But instead o having a large, dedicated sta, it uses its political andfnancial clout to coordinate the work o our other departments. One seniorofcial working in the ministry told us that while the experiment is not a magicbullet, it does “help loosen up accepted and decades-old boundaries between

ministries and the accompanying ‘silo mentality’”.

But the limitations o this model were emphasised by one UK ofcial working totwo separate ministers, who pointed out that where government is seeking toincrease the coherence between delivery systems in two departments:

The important thing that both the ministers bring is that accountability for both of those systems, so actually, you need them to have power over both of those systems. So a separate [cross-cutting] minister wouldn’t help, they’d be too marginalised.

O course, i that Minister also held the purse strings, the view might be dierent.




Budgetaryinnovations

Budget allocation processes in Whitehall have long been recognised as a brakeon collaborative activity, due to the high degree o spending autonomy grantedto individual departments.151 The 2008 Treasury and Cabinet Ofce stakeholdersurvey identifed reorm o unding mechanisms as a priority, in order “toencourage departments to prioritise cross-cutting PSAs”.152

There have been a number o experiments with sharing resources over the pastdecade that have sought to encourage joint working and create incentives tospend on activities that might otherwise be underunded. The cabinet secretaryhas recently indicated an interest in developing urther such models, arguing:

Cross-cutting budgets would not be a magic solution – but as public expectations continue to rise while nances are getting tighter – they could be an important tool to help make sure resources are in the right place at the right time.153

But ormal pooling across departments is currently rare and difcult to manage,in part because o Treasury scepticism. As one ofcial put it:

If you have big pools and you are not clear who is fundamentally responsible,assuming that you were in a situation where there was scal tightening across the piece, that is introducing quite a lot of extra risk.

In practice, many o the experiments with pooled budgets do oer ways roundthis accountability dilemma. One approach is to hold pots o ringenced moneyat the centre, with a central unit, named accounting ofcer and minister directlyaccountable or use o the money. For instance, in the early days o the Blairgovernment a pool o £179m was set aside or the Rough Sleepers Initiativeover three years.154

The logic o this model is that it can bypass Whitehall departments, overcomingthe barriers between them by directly commissioning local initiatives. However,this kind o central budget approach may still run into barriers at the local level,between partners who may report upwards to dierent departments that havelittle stake in the scheme. This approach may also lose out on the expertise thatdepartments bring to bear on their policy areas, and rom not mainstreamingthe results o innovative projects.

Alternatively, unds can be pooled across the departmental interace. Oneexample is the Pooled Treatment Budget (see Appendix 3.2), which combines

money rom the DH and MoJ or drugs unding, while an additional HomeOfce budget line is aligned to this objective. In this case, a separate NationalTreatment Agency oversees the budgets and is held to account accordingly,although most o the money ormally remains within the Department o Health.The objective is to overcome the act that the benefts o drug treatment areelt principally in lower crime and thereore accrue to the Home Ofce andMoJ, rather than DH itsel. Other examples o cross-departmental pools includethe Conict Prevention Pool between DID, MoD and the FCO (see Appendix3.8), and the ‘triple key budgets’ in criminal justice overseen by the Ofce orCriminal Justice Reorm.155 In some cases a budget may be ully owned by one

151 Perormance and Innovation Unit (2000), Wiring it Up, p.47152 Ipsos Mori (2008), HM Treasury and Cabinet Of fice Stakeholder Survey , p.19153 Drillsma-Milgrom (2009), ‘O’Donnell backs cross-cutting budgets’154 Vranken (2004), A Description and Analysis of the ‘Rough Sleeping’ strategy in England on Street Homelessness, p.10155 This latter example is discussed in Gash et al (2008), Performance Art, p.72



Shaping Up 91

department, but with other departments given veto power (via ‘dual keys’)as or DECC’s right to ensure that the BIS-led Strategic Investment Budgetprioritises climate-riendly projects.

A weaker model is or dierent departments to align budgets in a transparentashion to shared objectives, setting out how each department’s spending willcontribute to an overall goal, but without any joint mechanisms to managethe resources. In a sense, this is the traditional approach, with ‘horse-trading’

between departments o the sort that typically precedes many white papers.In any case, as noted, progress towards alignment o budgets to joint PSAs hasbeen limited. For some joint policy areas – such as apprenticeships policy – aunit and its director may have ‘oversight’ o the separate budget lines owingrom the contributing departments down to the delivery agents, thoughwithout direct control or joint sign-o power. This type o model avoids seriousaccountability dilemmas, as monies remain within departmental pots, butacilitates more meaningul cross-departmental debate about joint objectives.

Changingindividualincentivesandbehaviour

O course, “mere structural manipulations cannot produce changes inbehaviour, especially i the existing behaviour is reinorced by other actors ingovernment”,156 and in particular, where incentive structures encourage a ocuson narrow departmental concerns.

One way in which the government is trying to shit the terrain in this contextis through reorms to the capability review process, ollowing a 2009 call romthe National Audit Ofce that it should place more emphasis on collaborationand working across complex delivery chains.157 Partly as a result, rom 2010capability reviews will assess the extent to which departments “collaborateand build common purpose” in the development o strategy.158 Collaboration

might also be encouraged i peer reviews rom key partner departments andstakeholder groups were used more extensively in departmental assessments.And as noted in Chapter 2, board assessments could also be used to createincentives to collaborate.

Parliamentary scrutiny processes also do not create strong incentives ordepartments to ocus on collaborative activity. The select committee systemis designed to mirror the departmental structure o government, meaningthat each ocuses its attention on the activities o ‘their’ departments, while

joint enquiries and hearings between committees are rare. I parliamentarycommittees conducted enquiries to hold government to account or

perormance on its cross-cutting objectives, this could create a greater incentiveor collaboration.

At the level o individual incentives, the cabinet secretary has identifed theneed or the Top 200 group o permanent secretaries and directors general toprioritise cross-government working:

At the very rst Top 200 meeting back in October 2006 – I set the members my ‘100:0:0’ challenge. This was my way of asking them how much of their time was spent on their narrow policy areas, their departmental objectives and civil-service wide, corporate issues. For too many of them, the answer was 100:0:0.159

156 Peters (1998), Managing Horizontal Government, p.47157 NAO (2009a), Assessment of the Capability Review Programme158 Cabinet Oice (2009a), Capability Reviews159 Speech by Sir Gus O’Donnell. O’Donnell (2009), ‘The 21st century Civil Service’




His views are reected in recent changes to the appraisal ramework or thesenior civil service. In addition to being assessed on the delivery o businessobjectives, senior civil servants are assessed on the basis o their contributionsto corporate objectives, and permanent secretaries are expected to allocate theirtime on the basis o a 60:20:20 split.160 The cabinet secretary claims that therehas been signifcant improvement since his ‘challenge’ was frst set. Via regularappraisal meetings the cabinet secretary is able to exercise inuence overpermanent secretaries, but the extent to which this inuence cascades down

into departments could be urther strengthened i greater weight was placedon collaborative work in individual appraisals, including by more systematicallyincorporating 360-degree eedback rom contacts in other departments.

Individual behaviour can also be shited by soter means, such as networks. Forinstance, the Top 200 network itsel and the High Potential Scheme beneath itrepresent attempts to oster the development o a cross-Whitehall corporateidentity to urther the interests o government as a whole.

Another burgeoning orm o cross-departmental network is the proessionalgroup, o which there are now 23 recognised in Whitehall. These include cross-

departmental groups around economists, chie scientists, social researchers and soon, and represent a growing phenomenon. For instance, the policy proession hasrecently been allocated the support o a small administrative unit that is seekingto develop a common set o standards or policy-makers across Whitehall, alongwith exploring the possibility o a more ormalised career path and qualifcations.Such developments represent small steps towards weakening the importanceo departments as the principal ramework or career development, and maythereore help to shit incentives towards cross-cutting approaches.

JoiningupoutsideWhitehall

We have concentrated on assessing mechanisms or enhancing collaborationwithin central government itsel. The alternative is to ignore or bypassragmentation in Whitehall and to concentrate on joining up government closerto public service users.

For instance, government could go much urther in devolving power, orcinglocal actors to deal with boundary issues closer to citizens and communities.This is the logic behind Local Strategic Partnerships and the revised Local AreaAgreement ramework.161 Regional-tier institutions such as government ofcesand regional development agencies also see a major part o their role as joiningup central government silos. Alternative paths to joining up in localities may also

emerge rom the Total Place initiative, which seeks to support innovation andefciency through a ‘whole area’ approach to tracking public expenditure.162

An alternative is to push the collaboration challenge out o government altogether,or instance by pursuing clear outcome taris or services such as education orwelare, and encouraging innovative providers to assemble these individual tarisaround clients or problems. Individuals themselves could be empowered throughurther moves towards personal budgets, where citizens or households buy whatthey want and join up services in a way that reects their needs.

160 Cabinet Oice (2009b) Managing Performance in the Senior Civil Service , p.17161 See Gash et al (2008), Performance Art162 Total Place (2009), ‘Total Place: Better or less’



Shaping Up 93

Such approaches all hold potential or improving the ‘joined-up-ness’ o publicservices. We cannot do them justice here, but they are likely to be the subjecto urther work by the Institute. In any case, the efcacy o many o thesemechanisms is likely to be seriously limited so long as departmentalism at thecentre remains a problem. More eective local coordination does not removethe need or joining up within Whitehall.

Conclusions

Given the long history o attempts to do something about these problems it wouldbe unwise or any government to make grand claims that it will fnally be able tomove towards a new seamless and holistic Whitehall. And as noted, it may also bethe case that many o the most powerul orces or joining up policy actually lieoutside Whitehall. Nonetheless, the range and the scale o the problems caused byailures to join up at the centre mean that it would be remiss or government notto make urther eort to overcome barriers in Whitehall.

Government has a diverse toolkit that it can dip into in search o improvingcollaboration. In this chapter, we have sought to assess the eectiveness o a

number o these approaches across a range o policy areas. While it is difcult todraw frm conclusions about what works best in general, we make a provisionalassessment in Figure 28 below.163

In our view, introducing a countervailing dynamic to that o departmentalismcan best be achieved by creating powerul cross-cutting ministers holdingbudgets around key government objectives, but with small stas to act ascommissioners o other departments.

To back up these reorms, changes to accountability arrangements are alsoneeded, to create stronger incentives to prioritise collaborative activity. Cross-

cutting programmes should be ormally identifed as such with nominatedprogramme managers given responsibility to manage budget lines and peopleacross departmental lines.

And to support this urther, government must take action to reduce transactioncosts, by making it easier or departments to share inormation and otherresources. In essence, we suggest a transition to what big businesses call a‘matrix’ organisation – introducing a deliberate cross-cutting tension into thebusiness o government. The overarching objective must be to acilitate newtypes o relationship between departments which cease to ‘cramp the energieso the whole body’ and instead enable Whitehall to become more than the sum

o its parts.

163 In this igure, we make an assessment o the eectiveness o nine dierent interventions at overcoming six types o barrier identiied in ourinterviews. To determine our ‘RAG Ratings’, ive researchers at the Institute or Government who have worked in this area independentlymade assessments and the results were then pooled and averaged. We recognise the methodological limitations o this approach, and oer itor discussion, rather than as any inal word on the subject.




Figure28:Estimatedimpactofinterventionsonbarrierstocollaboration

Weak evidencebase in cross-cutting policyareas

Lack oministerialengagement

Departmentalculturaldierences

Lack oalignment oincentives withcross-cuttinggoals

Disconnectbetweenmoney andobjectives

Dierentsystems / hightransactioncosts

Joint target

Joint delivery board

Central unit*

Joint unit

Cross-cutting ministers

Pooled budget (atcentre)*

Pooled budget(between departments)

Use o appraisal processesto encourage ocus oncorporate objectives

Facilitation o inormalnetworks(e.g. SRO cluster groups)

trong Medium Weak / none

Source: IG research

Note: A green/red rating o eectiveness signifes that the intervention in question has no impact on the inter-departmental barrier in question, but that it maybe able to render the barrier a non-problem by bypassing departments altogether.

Recommendations

The creation o a whole o government strategy, supported by departmentalbusiness plans, should lead to a clearer and stronger ramework or governingBritain. However, without eective mechanisms or joining up departments, theimpact o a new strategic ramework may be substantially blunted.

The current PSA ramework and other parts o Whitehall’s joining up machineryare likely to be amended ollowing the 2010 election whichever party is inpower. But whatever else may change, cross-cutting policy challenges willremain high priorities or government, and barriers between departments willcontinue to pose problems. The government will thereore need to fnd ways toovercome these barriers and acilitate collaboration, matching the tools theychoose to the problem they ace. The ollowing reorms oer some ideas orhow to accomplish this.

As well as identiying a number o cultural and procedural barriers to joining up,

we identiy two overarching structural problems that the next government willneed to address – the lack o connection between budgets and problems, and alack o clear and sustained ministerial leadership or joining up.164

164 Similar conclusions were reached by Gash et al (2008), Performance Art



Shaping Up 95

Our frst cluster o recommendations addresses these linked challenges:

1.Createpooledprogrammebudgetsforcross-cuttingobjectives.

Pooled budgets could be created or top-priority issues such as climate

change, alcohol harm reduction, obesity or amily breakdown. These

should be collectively managed by joint programme boards, and overseen

by a cross-cutting minister. Such arrangements would also require

departments to ‘pool policy’, whereby departments would jointly develop

strategy to tackle cross-cutting issues as a precondition or resources

being released.

2.Creatededicatedministerstomanagepooledbudgetsfortop

priorities.The government should appoint a small number o strategic

programme ministers at secretary o state level to oversee these top strategic

objectives. Building on the Dutch model, these ‘ministers sans frontières’

would oversee a cross-cutting programme budget, which they would use to

commission work rom other departments, agencies or other actors. Indeed,

one could argue that DECC is an early example o this approach – a smalldepartment but with a strong minister and a (airly) large budget.

An alternative arrangement could be the strengthening o the role o ministers

or particular citizen groups, such as the elderly or mentally ill. As in Ireland,

these individuals should be supported by ‘co-located’ sta rom dierent parts

o Whitehall, and should have a small budget to commission work rom other

parts o government. See Appendix 3.6 or more detail o these models.

3.Alignbudgetstooutcomeobjectives.At the least, where departments

must collaborate to meet policy goals, there should be clear alignmentof resources to these objectives. This would help provide a hard ocus

or cross-departmental dialogue, with ofcials able to negotiate

tradeos more transparently. This alignment could also provide a clearer

understanding o how each department contributes to government’s

overall strategy.

4.Establishcentralcommissioningbudgetsforcorporatefunctions.

Central commissioning budgets could be used or IT systems, R&D and

some capital expenditure, e.g. by topslicing a proportion o departments’

own budgets to create central pots to which departments must make joint bids to gain unding. Similarly, as recommended in the Operational

Efciency Programme, a central property unction could receive joint bids

to encourage departments, where appropriate, to share property.165 Such

proposals need to be balanced against the countervailing arguments or

distributed, more specialist purchasing and room or innovation.166

Even when there is joint commitment between departments to achieving aparticular objective, it can be difcult to agree upon the best course o action.

165 HM Treasury (2009b), Operational Efficiency Programme166 See Hallsworth et al (2009), Installing New Drivers




There is thereore a need to developsharedevidencebases to determine howgovernment can best intervene to tackle complex problems.

5.Setasideresourcesforcross-departmentalresearch.The central

commissioning budgets mentioned above should thereore dedicate

funds for joint research and analysis to create the basis or meaningul

discussions between departments about prioritisation and tradeos.

In particular, departments should collaborate to develop common metricsto assess the respective impact o dierent possible interventions. This

should include considerations o cost eectiveness (including monetising the

spillover benefts o interventions on other departments’ budgets) and the

distributional aspects o dierent interventions. There are already examples

o such analyses to build on, notably in the public health realm, where

multi-criteria decision analysis is used to prioritise preventative health care

interventions.167

According to many ofcials, incentivestructuresinWhitehallstilltendto

reinforcedepartmentalism. The government could rectiy this through anumber o changes:

6.Putcollaborationattheheartofperformancemanagement.At

the individual level, appraisal processes should be used to encourage

collaboration, using 360-degree eedback rom contacts in other

departments and external stakeholders. For joint objectives, all

contributing departments should nominate lead ofcials, who are

managed partly by a dedicated programme manager rom the lead

department (via ‘matrix management’).

7.Evaluatedepartmentsbasedontheircontributiontogovernment-

wideobjectives.Departments as a whole must be encouraged to

prioritise joint working, as the revised capability review ramework intends.

Future reviews should make extensive use o peer reviews rom key

partner departments and stakeholder groups (i.e. 360-degree appraisals

or departments themselves), with permanent secretaries held to account

or their department’s ability to collaborate successully.168

8.Createformalandtransparentprocessforassessingjoint

programmes.Forcross-cutting programmes and objectives, particularly

where pooled budgets are attached, government should develop a

ormalised ramework or assessing capability o the relevant parts

o government to work together eectively. This could develop into

a thematic capability review process, where, or instance, all parts o

government working on adapting to or mitigating climate change would

be jointly and transparently assessed. This would build on the reviews o

PSA boards currently carried out by PMDU.

167 See, or instance, Health England and Matrix Insight (2009), Prioritising Investments in Preventative Health168 A more radical alternative, one step urther than a department-ocused capability review could be reviews that are ocused on cross-cutting

delivery, with department’s scores assessed by combining the results o the individual poli cy area reviews.



Shaping Up 97

We also heard regular reports that incompatible or inconsistent HR, fnancialand inormation management systems raise the costsofcollaboration.Building on the arguments made in Chapter 1, there is thereore a case to:

9.Reducetransactioncostsofcollaboration. The centre should make

cutting transaction costs a priority by moving towards more common

standards, acilitating inormation sharing through shared IT space, and

allowing joint policy units and similar bodies to establish their own web

and email identities.

Externalscrutiny andengagement can also play a greater role in encouragingand creating incentives or cross-departmental working:

10. Encourageparliamentarycommitteestoconductcross-cutting

inquiries. Select committees should approach cross-cutting issues in a

joined-up way in order to hold departments to account or perormance

on government-wide strategic objectives. For instance, new committees

could be established or government’s strategic priorities, departmental

committees would be expected to link up to scrutinise overlapping policyareas, and the Public Accounts Committee could hold more joint inquiries

(rather than calling to account one department at a time, as is usually the

case).

11. Increasestakeholderengagementinpolicydevelopmentto

highlightcasesofpoorjoiningup. This could be done by increasing the

use o stakeholder representatives on joint delivery boards, or by holding

joint engagement activities. The amount o consultation could be capped

to create an incentive to limit the number o overlapping consultation

eorts carried out across government.

ShiftingbehaviourandcultureinWhitehall towards a ocus on corporateobjectives requires soter interventions as well as structural and perormancemanagement reorms:

12. Facilitatethedevelopmentofloosehorizontalnetworks.This would

build on current practice and encourage groups with shared objectives

(such as the SRO cluster groups) to share lessons and build relationships,

with the centre providing support as required. The proessional networks

should also be assisted in ormulating more common standards and jointtraining activities across Whitehall.

13. Determineanddevelopthenecessaryskillsforcollaboration.

Collaborative working requires specifc capabilities. To identiy these

capabilities, government should conduct a skills audit to identiy skills

and capability gaps that act to limit the eectiveness o other joining-up

interventions, and should develop a programme to redress these gaps.




Whitehall aces tough times. A decade o rapidly growing budgets is coming toan end, probably replaced by years o cuts, efciency gains and tough choices.The recent white paper, Putting the Frontline First: Smarter government,169 oersa glimpse o the years to come. It proposes that the Senior Civil Service – theroughly 4,000 top civil servants in the UK – ace a cut o 20%, although thequestion o how much o this comes rom cuts in pay as opposed to a reductionin sta numbers is let open.

At the same time, Smarter government cut o the normal routes that Whitehallmight have used to oset this pain. Spend on consultancy is proposed toall by 50%, making it much harder to quietly shit people rom a Whitehallpayslip onto a consultancy contract. Similarly, with a strong push rom acrossthe political divide, sharp reductions in the number o arm’s length bodiesare proposed. History shows us that this is most easily done by bringing suchbodies and their unctions back into central government, as seen in Wales andScotland. But, o course, this would only add to the size o Whitehall, making theaspiration to shrink Whitehall even more difcult.

Public opinion surveys oer little cheer. Though civil servants attract relatively

high levels o public trust – levels that have risen over recent decades – thishas not spared them coming top on public lists o where to prioritise cuts, aswe saw in the introduction (see Figure 1).170 The view that Whitehall is ripe orcuts seems to be shared both by external experts and, perhaps surprisingly, bymany civil servants themselves.171 This is rooted partly in a sense that there istoo much unnecessary duplication across departments and arm’s length bodies.As one senior civil servant put it: “One way o reducing spending is simply toreduce the number o people in Whitehall ‘doing stu’.”

Some old hands are wary. One ormer permanent secretary warned a collectedgroup o senior civil servants and politicians “not to get distracted by trying tocut Whitehall – it is a tiny raction o the public service and you’ll need them[Whitehall] to get a grip on the billions that are spent elsewhere”.

Widerchallenges...

A key question or Whitehall over the coming ew years will be whether it canuse the fscal consolidation to bring down costs while protecting and perhapseven improving results or the public.

Whitehall is highly capable o containing public spending. Indeed one couldargue that the UK’s strong central control over tax and spending – and limited

parliamentary leverage over the budget – makes it almost uniquely well placed

169 HM Government (2009), Putting the Frontline First170 Parker et al (2009), State of the Service171 Quotes rom private seminars at IG during late 2009

Conclusion



Shaping Up 99

to hit any given spending targets. But these same institutional characteristicscould also highlight Whitehall’s weaknesses. Departments and silo-based publicservice providers are likely to protect their core unctions and squeeze outopportunities or the collaboration and innovation necessary to tackle the reallybig ‘wicked issues’ such as climate change and inequality.

But there are some reasons to hope that the public sector could realise an‘innovation dividend’ rom the fscal squeeze. Technology oers the promise o

enabling the wider public sector to work in more efcient and satisying waysor citizens. Citizens are themselves more educated, auent and able to take onmore responsibility or their own welare, particularly when they are supportedby innovative and ambitious public service institutions.

Not everyone will welcome these changes, but they undoubtedly represent anopportunity to fnd new ways o organising and solving the challenges we ace.As Tony Wright MP, Chair o the Public Administration Select Committee put itat a recent hearing,

it is at least conceivable that this is going to be a moment of major innovation in actually how we do government in this country, not because

anybody chose to do it in that way, but because we were forced to think rather radically about it.172

Is Whitehall is ready and able to rise to these challenges? Our answer is‘only partly’.

Shapingup:keyconclusions...

Whitehall is a solid perormer in international comparison – but there is nodoubt it can be urther improved. Our ocus has been on three key areasidentifed by our earlier work and by civil servants themselves.

Thestrategychallenge. We argue or a centre o government, led by the PrimeMinister and Cabinet, with a more explicit overall strategic plan. We also urgethe Cabinet Ofce and Treasury to act more decisively in relation to certaincommon objectives and shared services, while at the same time reducing thelevel o micro-management that has sometimes characterised policy anddelivery in recent years.

Thegovernancechallenge.We urge much greater ministerial involvementat the top tables o Whitehall; a ocus on perormance management withindepartments; and greater ormal training and development o boards and their

members.

Thecollaborationchallenge.We urge the greater use o cross-cutting budgetsand secretaries o state or key issues; greater recognition o collaborativecontributions in the promotion and reward o senior civil servants (and perhapsministers); and also highlight the potential o addressing the challenge outsideo Whitehall itsel.

Our vision or the uture o Whitehall is one that is likely to be smaller – perhapsby as much as third or more. But much more importantly, our vision is o aWhitehall with much clearer division o responsibilities between the centre and

departments alongside a stronger sense o collective endeavour in implementing

172 Tony Wright, Chair Public Administration Committee Public Administration and the Fiscal Squeeze, 3 December 2009, quoted in Undertaking a fiscal consolidation: a guide to action, IG (2009)




a shared strategy; a closer relationship between ministers and boards withindepartments; and a more collaborative approach to tackling the great policychallenges o our time.

Some degree o conict between the great departments o state, the centre,parliament and other levels o government are an appropriate and importantpart o good government. But too oten we think o power as a ‘zero sum game’,where more or one part implies less or another. Our conclusion is much more

upbeat. Indeed we conclude that a more strategic, and in some sense morepowerul, centre o government would thrive i departments themselves weremore strategic and powerully led.



Shaping Up 101

Appendices

Appendix1.1:TheCabinetOfcesince1979173

FigureA1:Thecentrein1979

Prime Minister Cabinet Secretary

EstablishmentDivision

Secretariat

Central Statistical

Office

Central Policy

Review Staff

Chief Scientist

and other specialadvisersPolicy Secretariats

Historical Section

Cabinet Office

Source: Lee et al (1998), At the Centre of Whitehall



Shaping Up 103

FigureA3:Thedeliverycentrein2003

Sir Andrew TurnbullSecretary of the Cabinet andHead of the Civil Service

Sir David OmandSecurity & Intelligence Co-ordinator &

Permanent Secretary, Cabinet Office1

Notes:1. Sir David Omand is the Accounting Officer for the Cabinet Office and the Single Intelligence Account.2. The Head of the Defence & Overseas Secretariat, Sir David Manning, is the Prime Minister’s

Foreign Policy Adviser.3. The Head of the European Secretariat, Sir Stephen Wall, is the Prime Minister’s European Adviser.4. The Office of Government Commerce is part of the Treasury.

Reports to Sir Andrew Turnbull

Reports to Sir David Omand

John ScarlettIntelligence & SecuritySecretariat

Susan ScholefieldCivil ContingenciesSecretariat

Mike GranattGovernment Information& CommunicationService

Leonie AustinCommunications Group

Peter WardleCorporate ServicesGroup, Official HistoriesProgramme, HMSO

Sir Stephen Wall1

European Secretariat3

Sir David ManningDefence & OverseasSecretariat2

Paul BrittonEconomic & DomesticSecretariat

Gay CattoCeremonial Secretariat

Delivery & Reform Group

Geoff MulganThe Strategy Unit

Michael BarberThe Prime Minister’sDelivery Unit

Andrew PinderOffice of the e-Envoy

Alice PerkinsCorporate DevelopmentGroup (including CMPS)

Wendy ThomsonOffices of Public ServicesReform

Paul KirbyReform Strategy Group

Peter GershonOffice of GovernmentCommerce4

(Part of the Treasury)

Simon VirleyRegulatory Impact Unit

Source: Adapted rom House o Commons Library (2005), The Centre of Government




Appendix2.1:Boardcomposition

Academic research on private sector boards is conicted over the eects oboard composition on organisational perormance. Eective group literaturemaintains that working groups should be staed by the smallest number opeople possible.174 Research on corporate boards, however, argues that largerboards improve company perormance.175

FigureA4:Departmentalboardcomposition

0

2

4

6

8

10

12

MoDDH DWP Defra BIS HMTMoJ CO CLGHODCMS DfT NIODCSF DflD FCO

T o t a l N u m b e r o f B o a r d M e m b e r s

Source: Departmental websites and www.dodonline.co.uk

Figures A4 and A5 show the variations in board size and the proportion onon-executive members or each department, respectively. While no centralguidance is provided on the absolute number o board members, departmentsare instructed to have at least two NEDs and encouraged to have more.176 Boardcomposition has not remained stagnant across Whitehall. The Department oHealth recently restructured its departmental board, trimming the number omembers rom 14 to six. We did not fnd a relationship between board size andperormance or Whitehall departments.

FigureA5:Percentageofnon-executivedirectorsonboard

0

10%

20%

30%

40%

50%

60%

MoD DH DWPDefra BIS HMTMoJ CO CLGHO DCMSDfTNIO DCSFD fl D FC O

P e r c e n t a g e o f N E D B o a r d M e m b e r s


174 Goodman et al (1986), ‘Current thinking about groups’175 Zahra and Stanton (1988), ‘The implications o board o directors’ composition or corporate strategy and perormance’176 HM Treasury (2005), Corporate Governance in Central Government Departments



Shaping Up 105

Prior studies on private sector board composition have tested the relationshipbetween the non-executive/executive ratio and company perormance.The majority o work testing this relationship argues that the greater thenumber o non-executives on a board, the better a company’s perormance.177 Having a greater number o independent NEDs creates a more challengingenvironment or the executive team, thereby demanding higher perormancerom management. In testing this relationship or Whitehall boards, we ound avery weak negative linear relationship, shown in Figure A6. However, it is striking

that the highest-perorming boards seem to lie in the middle o the graph,with around a third o their members being NEDs. This hints at a non-linearrelationship: boards should avoid both too many (over 50%) or too ew (lessthan 25%) NEDs.

FigureA6:Outsiderratiovsleadership

0

0% 10% 20% 30% 40% 50% 60% 70%

0.5

1

1.5

2

2.5

3

3.5

Percentage of Non-Executive Board Members

C a p a b i l i t y R e v i e w L

e a d e r s

h i p S c o r e

Source: IG interviews o directors general, departmental websites and capability review leadership

Non-executivedirectors

Composition is by ar the easiest board attribute to measure, and has beenused extensively in prior research linking attributes to board perormance.178 Collecting data on characteristics, however, proves more difcult. The mosttangible aspect o board characteristics is the background o its members.

Prior research on private sector boards stresses the need or directors to beadept at dealing with both internal and external contingencies.179 This requiresboards to have an appropriate balance o NEDs – those that can deal well

with internal issues (control unctions), and those with a network to deal withexternal ones (service unctions) (see Figure A7).

177 Wagner et al (1998), ‘Board composition and organizational perormance’178 See Baysinger and Butler (1985), ‘Corporate governance and the board o directors’; Daily and Dalton (1992), ‘The relationship between

governance structure and corporate perormance in entrepreneurial irms’; Dalton and Kesner (1987), ‘Composition and CEO duality in boardso directors’; Pearce and Zahra (1992), ‘Board composition rom a strategic contingency perspective’

179 Provan (1980), ‘Board power and organizational eectiveness among human service agencies’




FigureA7:PercentageofNEDsfromprivatesectorandleadership

0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

0.5

1

1.5

2

2.5

3

3.5

Percentage of NEDs from private sector

C a p a b i l i t y R e v i e w L

e a d e r s h i p S c o r e

Source: IG interviews o directors general, departmental websites and capability review leadership

Committeestructure

As mentioned above, the Treasury’s 2005 guidance on boards relies on theweakly enorced ‘comply or explain principle’ – allowing departments tostructure their boards as they please. Instructions on subcommittee structuresare correspondingly exible, with one notable exception. Each board is requiredto have an audit committee, chaired by a fnancially qualifed, independent non-executive.180 This requirement was designed to ensure boards paid due diligenceto the risk management unctions outlined in the Treasury guidance. However,even the strictest o directives rom the Treasury guidance document are notuniversally adhered to, with one large department ailing to meet the auditcommittee chair standard. Figure A8 gives the number o board subcommittees

or major central departments.

FigureA8:Numberofboardsubcommittees

0

1

2

3

4

5

6

MoD DH HMT MoJ CO DCMS HO BIS DCMS Defra DCSF DflD FCO


180 HM Treasury (2005), Corporate Governance in Central Government Departments



Shaping Up 107

Our research ound no relationships between board perormance and thenumber o committees. Unortunately, it was outside the scope o this researchto probe urther into subcommittee structure and perormance in departments.Sufce to say, the eectiveness o subcommittees ar outweighs their number.




Appendix2.2:Categoriesforthecodingofdepartmentalboardminutes

1. Governancestructure/procedure– item discussing the governance

arrangements o the department or the board itsel

2. Departmentalcorporateservice – mostly pertaining to IT, shared

services or change in departmental processes

3. Strategy – long-term departmental strategy, does not pertain to short-

term policy

4. Risk – covers risks to the delivery o policy, corporate service risks,

political risks and general fnancial risk

5. Businessplan – pertains to the approval o the departmental

business plan

6. Financereport – monthly or quarterly fnancial report rom FD

7. Performancemanagement – reporting/discussion on delivery o

PSAs, DSOs, policy programmes, change programmes and/or corporate

services perormance; this also covers updates on the progress o

implementation o programmes and projects

8. Capabilityreviews– covers meetings with Cabinet Ofce capability

review teams, discussion o capability review response action plans,

progress against capability review action plans, and stock-takes

ollowing capability reviews

9. Internalcommunications – discussion o communications strategy or

sta survey eedback on board perormance/visibility

10. Stakeholdermanagement – includes items pertaining to the

management o stakeholders, including delivery partners, NDPBs, executive

agencies, work with other departments, regional and local government

11. HRandHRplanning – includes items on HR programmes, uture

HR strategy, health and saety, diversity, talent management and

succession planning

12. Policy – items covering departmental policy



Shaping Up 109

Appendix2.3:Regressionanalysis

In an eort to build a more comprehensive understanding o how board ocusrelates to board perormance, a series o linear regressions were calculated orthe our most requently occurring agenda item categories: strategy, risk, fnanceand perormance management. For the regression analysis, our separate modelswere built:

1. The frst uses the average leadership score rom the second roundcapability reviews as the dependent variable. The independent variablesare the our agenda item categories given above, and the sample includedall meetings that took place ater the frst round capability review. Theresults o the regression are ound in Model 1 (Figure A9).

2. The second regression uses the same independent variables and thesame sample, but the dependent variable uses 2008 sta survey results;specifcally, it is the percentage o sta agreeing that their ‘departmentas a whole is well run’. The results o the regression are ound in Model 2(Figure A10).

3. The third regression uses the average leadership score rom the frst roundcapability review as the dependent variable. The independent variablesare the same as above. However, the sample includes data or only thosemeetings that occurred beore the frst round capability review, withinthe years 2005–07. As a result, the number o observations or eachdepartment will depend on the date their capability review was published.The results o the regression are ound in Model 3 (Figure A11).

4. The ourth regression is the same as the third, but the dependent variableused is the sta survey question rom the second regression, but rom the

year 2007. The results o the regression are ound in Model 4 (Figure A12).There were two reasons or calculating our separate regressions. First, weneeded to capture the impact o board ocus on perormance by looking atboth capability review leadership scores and sta survey results. Second, theobservation period spanned our years and each department in the samplehad undergone two capability reviews over this our-year period. As a result,observations had to be set against the temporally appropriate dependentvariable. This division gives a more accurate reection o the relationshipbetween board ocus and perormance.

FigureA9:Model1

Model

Unstandardised coefcients Standardisedcoefcients

t Sig.B Std error Beta

(Constant) 2.307 0.161 14.289 0.000

Strategy –0.003 0.003 –0.093 –0.925 0.358

Risk 0.002 0.004 0.064 0.641 0.523

Finance 0.004 0.004 0.121 1.208 0.231

PerormanceM 0.013 0.003 0.483 4.553 0.000

Dependent variable: LScore2ndRound

Selecting only cases or which Ater1stRoundCapRev = YES




FigureA10:Model2

Model



(Constant) 44.454 4.938 9.002 0.000

Strategy –0.242 0.100 –0.260 –2.428 0.018

Risk –0.076 0.106 –0.076 –0.721 0.473

Finance –0.155 0.097 –0.169 –1.603 0.113

PerormanceM 0.220 0.082 0.307 2.690 0.009

Dependent variable: Sta12008

Selecting only cases or which Ater1stRoundCapRev = YES

FigureA11:Model3

Model



(Constant) 1.694 0.108 15.653 0.000

Strategy –9.412E-7 0.002 0.000 0.000 1.000

Risk 0.002 0.003 0.061 0.707 0.481

Finance –0.005 0.003 –0.177 –2.041 0.044

PerormanceM 0.009 0.002 0.423 4.585 0.000

Dependent variable: LScore1stRound

Selecting only cases or which Ater1stRoundCapRev < YES

FigureA12:Model4

Model



(Constant) 9.394 5.215 1.802 0.075

Strategy 0.046 0.085 0.058 0.548 0.585

Risk 0.277 0.143 0.177 1.932 0.057

Finance 0.039 0.119 0.031 0.323 0.747

PerormanceM 0.507 0.086 0.629 5.880 0.000

Dependent variable: Sta12007

Selecting only cases or which Ater1stRoundCapRev < YES



Shaping Up 111

Appendix2.4:Categorycodesforboardobservations

1. Agreeing

2. Disagreeing

3. Giving inormation

4. Questioning (clariying points/acts/data)

5. Summarising

6. Challenging

7. Giving opinion

8. Relating experience

9. Criticising

10. Suggesting action

11. Thanking/praising




Appendix3.1:Historyofselectedjoining-upinitiatives

MinisterialOverlords

From 1951 to 1953 Winston Churchill introduced a system o ‘overlord’ ministers,drawn rom the House o Lords.181 These ministers were based on the War Cabinetmodel o having a senior group o ministers between the Prime Minister anddepartmental ministers to coordinate the activities o government departments.182

CivilServiceDepartment

In 1968 Harold Wilson’s government created a Civil Service Department. Thenew department took over the responsibilities o the Civil Service Commissionand responsibility or the Civil Service pay and management divisions o theTreasury. It was abolished in 1981.

CentralPolicyReviewStaff

In 1971 Edward Heath’s government created the Central Policy Review Stain response to the 1970 publication Reorganization of Central Government.183

Contemporaries dubbed the CPRS a ‘US style think tank’ as it undertook manyin-depth studies o cross-departmental issues, including the Joint Approachto Social Policies, which highlighted the need or greater interdepartmentalcoordination in ormulating policies. The CPRS was abolished in 1983 by theThatcher government.184

HeathandWilson’s‘SuperMinistries’

The Heath government created ‘super ministries’ or the Environment, andor Trade and Industry, which joined the Health and Social Security ‘superdepartment’ created under Harold Wilson’s government. It was hoped that the

super ministries would incorporate “programmes that would otherwise have tobe made compatible across departmental structures”.185

SeniorCivilService

A 1995 review o senior management in the Civil Service led John Major’sgovernment to carve out the top tiers o ofcials in Whitehall into a ormallyseparate Senior Civil Service. The aim was to create a core o elite policy-makerswho would think strategically across departmental policy areas.

Citizen’sCharter

The Citizen’s Charter was introduced under John Major’s government in 1991and laid out the common principles that citizens could expect rom all servicedelivery departments.186

CentralUnits

Following the election o Tony Blair’s government in 1997 a number ocross-cutting units were created at the centre o government including thePerormance and Innovation Unit, and the Social Exclusion Unit. The latter wastasked to “promote joined up polices to combat poverty and deprivation”.

181 Kavanagh and Richards (2001), ‘Departmentalism and joined up government’, p.3182 Flinders (2002), ‘Governance in Whitehall’, p.58183 Kavanagh and Richards (2001), ‘Departmentalism and joined up government’, p.4184 Flinders (2002), ‘Governance in Whitehall’, p.59185 Peters (1998), Managing Horizontal Government, p.32186 Flinders (2002), ‘Governance in Whitehall’, p.58



Shaping Up 113

ComprehensiveSpendingReview

The Comprehensive Spending Review process, launched in 1998, sets out athree-year spending ramework on the basis o cross-government review ospending priorities.

CivilServiceSteeringBoard

The Civil Service Steering Board was established in 2007 and aims to improve

the Civil Service as a whole by ensuring that “the vision, role, direction andpriorities o the Civil Service are communicated eectively”.187 To achieve this,CSSB meetings address among other issues service transormation and undingo cross-government projects.

Top200Group

The Top 200 group was created in March 2006 as a Whitehall-wide networkcomprising the most senior Civil Service leaders (permanent secretaries anddirectors general). It meets every six months to “share best practice and fndsolutions to cross-cutting issues”.188

Cross-cuttingPSAs

Public Service Agreements set policy and outcome targets or departmentsas part o the CSR process.189 Since 2007 all PSAs are ormally cross-cutting,meaning they are jointly owned by more than one department.

187 Civil Service (2009a), ‘The Civil Service Steering Board (CSSB)’188 Civil Service (2009b), ‘Top 200’189 Mulgan (2005), ‘Joined-up government’, p.182




A l c

o h o

l - r e l a t e d

c r i m e

( P S

A 2 3

)

D f T

D C S F

H O

L e a

d D e p

t

C a

b i n e

t C o m m

i t t e e :

D o m e s t i c

A f f a i r s

C h a

i r : J u s t i c e

S e c r e t a

r y

P S A D

e l i v e r y

B o a r d

T a r g e

t

R e

d u c e

t h e

h a r m

c a u s e

d b y a

l c o

h o

l a n

d d r u

g s

M o

J

K e y

C o n

t r i b u

t i n g

D e p a r t m e n

t s

O t h e r

P S A I n d i c a

t o r s

L o c a

l T a r g e

t s

P S A 2 5

P e r f o r m a n c e

I n d i c a

t o r s

A l c

o h o

l - r e l a t e d

h o s p

i t a l a

d m

i s s i o n s

D r u

g - r e

l a t e d

o f f e n

d i n g

Y o u n

g p e o p

l e

u s i n

g d r u

g s o r

a l c o

h o

l ( P S A 1 4

)

P u

b l i c p e r c e p

t i o n s

o f d r i n

k - r e

l a t e d

p r o

b l e m s

A G O

H M R C

C L G

D r u

g u s e r s

i n

e f f e c

t i v e

t r e a

t m e n

t

( N I 4 0

)

P e r c e p

t i o n s o

f

d r u

g u s e

/

d e a

l i n g

( N I 4 2

)

S u

b s t a n c e

m i s u s e

b y

y o u n

g p e o p

l e

( N I 1 1 5

)

A l c o

h o

l - h a r m

r e l a t e d h o s p

i t a l

a d m

i s s i o n s

( N I 3 9

)

A s s a u

l t w

i t h

i n j u r y r a

t e

( N I 2 0

)

D r u

g r e

l a t e d

o f f

e n

d i n g r a

t e

( N I 3 8

)

P e r c e p

t i o n s o

f

d r u n

k & r o w

d y

b e

h a v

i o u r

( N I 4 1

)

L S P s

D H

R e c o v e r y o

f

c r i m

i n a

l a s s e

t s

( P S A 2 4

)

P u

b l i c p e r c e p

t i o n s

o f d r u

g - r e

l a t e d

p r o

b l e m s

D r u

g U s e r s

i n

t r e a

t m e n

t

F i g u r e A 1

3 : G o v e r n a n c e o f t h e P S A f o r

d r u g s a n d a l c o h o l

S o u r c e : I G i n t e r v i e w s

N o t e : S i m p l i f e d m

a p – d o e s n ’ t s h o w a l l c o n t r i b u t i n g d e p a r t m e n t s , a

g e n c i e s o r d i e r e n t l o c a l a n d r e g i o n a l b o d i e s .



Shaping Up 115

Appendix3.2:Joining-upcasestudy–drugtreatment

Drug treatment provides an interesting case study o joined-up government, dueto its cross-cutting nature and the range o interventions used in this area.

One specifc problem is that drug treatment is a health intervention, so mustbe delivered within the health service. But the numbers who die or become illeach year rom Class A drug addiction are small relative to the numbers whosehealth is harmed by alcohol, tobacco and diet problems. Thus, the Departmento Health has an incentive to deprioritise drug treatment as expenditure willhave a greater aggregate health impact or the marginal pound spend. As oneinterviewee commented:

Different economists cut it different ways but in the end the amount of health harm would not justify the level of investment.

However, tackling drug dependency does have a positive societal impact sincethe overall costs o drug addiction are estimated at £15bn per annum, 90–95%o which is elt in the acquisitive crime rate (which benefts Home Ofce andMoJ bottom lines, rather than that o DH). Thus, there is a potential problem

o undersupply.

The government has recognised this problem and introduced a range ointerventions to address it. The frst is the governance arrangements around thecross-cutting PSA or drugs and alcohol (see Figure A13). Under the PSA, the DH hasresponsibility, through locally commissioned services by PCTs, to provide treatmentor “high harm causing drug misusing oenders and other drug misusers”.190 ThePSA is supported by local targets to reduce the damage caused by drug misuse.

190 HM Treasury (2009c), PSA Delivery Agreement 25, p.12



Shaping Up 117

Second, as illustrated in Figure A14, to reinorce the commitment to drugunding, the Pooled Treatment Budget (PTB) pools money rom the DH andMoJ budgets to spend on drugs treatment. The PTB is allocated on a per capitabasis, usually through PCTs, to local drug treatment commissioners who areresponsible to local partnerships o PCTs, local authorities, police and probationservices. The idea is that, as the PTB is ringenced, PCTs will be encouraged tosupply drugs programmes even though the benefts all outside the healthrealm. However, ringencing the PTB does not on its own solve the prioritisation

problem as ringencing may encourage existing local spend on drugs treatmentsto be diverted elsewhere. As one interview told us, a situation could occurwhere “the pooled treatment budget comes in the ront door, the existing[discretionary local] spend goes out the back”.

FigureA14:FundingDrugTreatment

DCSF HOMoJCLG DH

Treasury2009/2010

National Treatment Agency

Local Commissioners and Providers

Local spend Mainstream

DH funding

£200m £200m£373.3m £28m

PTB Drug

Intervention

Programme

Source: IG interviews

Thus, the third intervention is the National Treatment Agency (NTA), whichwas also established in 2001 to advocate or the drugs treatment agendaacross government and at the local level. At the national level, the NTA has todemonstrate to departments the advantages o a cross-departmental approachto drugs treatment. This involves convincing the criminal justice world o thevalue o drug treatment programmes over custodial sentences, persuadinghealth workers about the value o working within the criminal justice system,and DCSF to prioritise children aected by drug abuse. Thus, the potentialundersupply o drug treatment programmes has been addressed through threekey interventions: PSAs, a pooled budget and the creation o the NTA.




Appendix3.4:FigureA16:Cross-cuttingministers

Minister Title Departments

Lord Drayson Minister or Science and Innovation BIS, MoD

Rosie Winterton Minister or Regional Economic Development and Coordination; Local Government BIS, CLG

Lord Davies Minister or Trade, Investment and Small Business BIS, FCO

Kevin Brennan Minister or Further Educat ion, Skills, Apprenticeships and Consumer Aa irs BIS , DCSF

Phil Woolas Minister or Borders and Immigration HMT, HO

Baroness Taylor Minister or International Deence and Security FCO, MoD

Maria Eagle Minister or Prisons MoJ, GEO

Lord McKenzie Parliamentary Under Secretary o State CLG, DWP

Stephen Timms Parliamentary Under Secretary o State HMT, BIS

Source: IG research

Appendix3.5:FigureA17:Leadministersforparticularcitizengroups

Minister Title Citizen group represented Department

Angela Eagle Minister o State or Pensions and the Ageing Society Elderly people DWP

Dawn Butler Minister or Youth Citizens and Youth Engagement Young People CO

Dawn Primarolo Minister o State or Children Young Peopleand Families

Children, Young Peopleand Families

DCSF

Harriet Harman Minister or Women and Equality (Member o Cabinet) Women and LGBT people GEO

Jonathan Shaw Minister or Disabled People (Parliamentary UnderSecretary)

People with disabilities DWP

Source: IG research




Appendix3.7:TheDutchProgrammeMinistries

In Holland, the Ministry or Youth and Families operates as a ‘programmeministry’ on a matrix basis. The matrix consists o policy directorates in ourdepartments overseen by the Minister or Youth and Families, who is responsibleor coordinating policy between the directorates. The Youth and Familiesdirectorate and the Youth Care directorate are located in the Ministry o Health,Welare and Sport and are ully dedicated to the programme minister or

Youth and Families. There are also policy directorates in the Justice, Educationand Social Aairs ministries that are still employed by their home ministry butwork partly or the programme minister. The heads o directorates in the ourdepartments have weekly sta meetings in order to acilitate joint working andensure alignment between policy directions.

The programme ministry has a budget o €6.2bn or 2009, which is determinedthrough the annual budget process. Within this ceiling the Minister or Youth andFamilies allocates resources to specifc parts o the programme ministry, andcan make reallocations rom previous expenditure trends in line with the overallpolicy objectives laid out at the beginning o the budget cycle.191

FigureA19:TheDutchministryforyouthandfamilies

Director-General

Minister for Youth and Families

Secretary-General

Facilities Units

Staff Direcorates

Ministry of Health, Welfare

and Sport

Policy directorate that works partly for the

programme ministry

Policy directorates dedicated to programme

ministry

Ministry of Justice


programme ministry

Ministry of Education, Culture

and Science


programme ministry

Ministry of Social Affairs

and Employment


programme ministry

Source: Adapted rom Ministry or Youth and Families (2008), A Special Ministry for Youth and Families

191 Ljungma (2009), ‘Top-down budgeting’, p.7



Shaping Up 121

Appendix3.8:ConictPreventionPool

Since the 2009 budget the Conict Prevention Pool (CPP) has combined undingor Global Conict Prevention, Arican Conict Prevention and the StabilisationFund into a single pot. As illustrated below, the CPP is allocated directly bythe Treasury rather than being pooled rom departmental budgets. The CPPis administered rom within the Department or International Development(DID) but the unds are controlled via a ‘triple key’ mechanism with the Foreign

and Commonwealth Ofce (FCO) and Ministry o Deence (MoD), meaningthat programmes unded by the CPP require cross-departmental agreement.CPP money is parcelled out to conict prevention projects across the worldcontrolled by one o the three participating departments. Accountability or allspending thereore ows through one o the three permanent secretaries asaccounting ofcer.

FigureA20:TheConflictpreventionpool

MoD DfID FCO

Treasury

CPP

Project expenditure

Control over

spending

decisions

Flow ofmoney

Source: IG research

Two key lessons or any uture pooling o unds around cross-governmentpriorities can be learnt rom the CPP. The advantage o having a ‘triple key’decision-making process is that cross-departmental discussion about the mosteective way to prevent conict is stimulated. As one ofcial told us:

It has certainly increased the level of cross-Whitehall dialogue and understanding about different departments’ conict objectives; it’s put some

focus on discussion priorities because the money is jointly managed, so I am sure it has worked in a number of ways to promote joint working.

However, it may be that this discussion generates competition betweengovernment departments seeking to maximise their share o the pool. Anotherinterviewee remarked:

I think you could say the [CPP is] fairly competitive with departments trying to win resources for their department’s priorities.




Thus, although pooled budgets can stimulate cross-departmental discussion,they may not lead to the development o a shared sense o priorities. Ourinterviewees also alleged that the transaction costs o the CPP are high ora budget which totalled just £112m in 2008/09, with hundreds o ofcialsinvolved in allocation decisions in the three departments and ‘in the feld’. Inaddition the CPP does not cover all conict prevention spending, so urthercoordination is needed to ensure wider consistency in the government policy.



Shaping Up 123

Bibliography

Balakrishnan, R., Allender, S., Scarborough, P., Webster, P. and Rayner, M. (2009),‘The burden o alcohol-related ill health in the United Kingdom’. Journal of Public Health, vol. 31

Baysinger, B. and Butler, H. (1985), ‘Corporate governance and the board odirectors: perormance eects o changes in board composition’. Journal of Law,Economics and Organization, vol. 1, no. 1, pp.101–24

Bertelsmann Stitung (2009), ‘Australia report’, Sustainable GovernanceIndicators 2009. At: www.sgi-network.org/pd/SGI09_Australia.pd, accessed8/12/09

BHP Billiton (2007), ‘Non-executive director induction programme’. At: www.bhpbilliton.com/bbContentRepository/docs/AboutUs/NEDInductionProgram.pd,accessed 18/12/09

Bogdanor, V. (2000), ‘Why the PM will never be president’, Times Higher Education, 6 October

Cabinet Ofce (2006), Capability Review of the Home Ofce (London: CabinetOfce). At: www.civilservice.gov.uk/Assets/Capability_Review_HO_tcm6-1065.pd, accessed 18/12/09

Cabinet Ofce (2008), Cabinet Ofce: Progress and next steps (London: CabinetOfce)

Cabinet Ofce (2009a), Capability Reviews: Refreshing the model of capability.At: www.civilservice.gov.uk/Assets/Model%20report%20fnal_tcm6-8285.pd,accessed 20/12/09

Cabinet Ofce (2009b), Managing Performance in the Senior Civil Service: A guide for permanent secretaries and members of the senior civil service (London:Cabinet Ofce)

Cameron, D. (2009), ‘Ensuring the NHS delivers rising standards o healthcare’,August 20. At: www.conservatives.com/News/News_stories/2009/08/Ensuring_the_NHS_delivers_rising_standards_o_healthcare.aspx, accessed 8/12/09

Caulcott, T. (2001), quoted in Hennessy, P. (2001), Whitehall (London: Pimlico)

Civil Service (2009a), ‘The Civil Service Steering Board (CSSB)’, 15 November. At:www.civilservice.gov.uk/about/leadership/cssb/index.aspx, accessed 20/12/09

Civil Service (2009b), ‘Top 200’, 15 November. At: www.civilservice.gov.uk/about/leadership/top-200.aspx, accessed 20/12/09




Comptroller and Auditor General (2006), Tackling Child Obesity – First Steps,Session 2005–06 (London: Audit Commission, Healthcare Commission, NationalAudit Ofce)

Cray, S. (1994), ‘Inducting non-executive directors o trust boards’. HealthManpower Management, vol. 20, no. 5

Daily, C.M. and Dalton, D.R. (1992), ‘The relationship between governancestructure and corporate perormance in entrepreneurial frms’. Journal of Business Venturing, vol. 7, pp.375–86

Dalton, D.R. and Kesner, I.F. (1987), ‘Composition and CEO duality in boards odirectors: an international perspective’. Journal of International Business Studies, vol. 28, pp.33–42

Drillsma-Milgrom, D. (2009), ‘O’Donnell backs cross-cutting budgets’. LocalGovernment Chronicle, 15 December

DWP (2009), Resource Accounts 2008–09. HC 455 (London: Department orWork and Pensions, TSO)

Flinders, M. (2002), ‘Governance in Whitehall’. Public Administration, vol. 80, no.1, pp.51–75

Foster, C. (2004), ‘Cabinet government in the 20th century’, Modern Law Review, vol. 67, pp. 753–71

Gash, T., Hallsworth, M., Ismail, S. and Paun, A. (2008), Performance Art: Enablingbetter management of public services (London: Institute or Government)

Goodman, P., Ravlin, E. and Argote, L. (1986), ‘Current thinking about groups:

setting the stage or new ideas’. In Goodman, P. (ed.), Designing Effective WorkGroups (San Francisco: Jossey-Bass), pp.1–27

Hallsworth, M., Nellis, G. and Brass, M. (2009), Installing New Drivers: How to improve government’s use of IT (London: Institute or Government). At:www.instituteorgovernment.org.uk/pds/Governing_IT_Report.pd, accessed20/12/09

Halpern, D. (2009), The Hidden Wealth of Nations (Cambridge: Polity)

Hammond, P. (2009), Doing More With Less, November. At www.conservatives.

com/News/Speeches/2009/11/Philip_Hammond_Doing_more_with_less.aspx,accessed 8/12/09

Hastings, M. (2006), ‘The soa government o Blairism has been an unmitigateddisaster’, Guardian, 16 May. At: www.guardian.co.uk/commentisree/2006/may/16/comment.labour, accessed 8/12/09

Health England and Matrix Insight (2009), Prioritising Investments in PreventativeHealth. At: http://help.matrixknowledge.com/page/Full-Report-Listing.aspx,accessed 20/12/09

Hennessy, P. (2001), Whitehall (London: Pimlico)

Hirsch, D. (2008), Estimating the Costs of Child Poverty (York: Joseph RowntreeFoundation)




Kavanagh, M. (2009), ‘Oral evidence to the Lords Constitution Committee’, 10 June. At: www.publications.parliament.uk/pa/ld/lduncorr/const240609ev4.pd,accessed 8/12/09

Kelly, J. (2009), Shaping a Strategic Centre (Canberra: Commonwealth oAustralia)

Kershaw, I. (2007), quoted in ‘How will history judge Blair?’ BBC News Online, 10May. At: http://news.bbc.co.uk/1/hi/uk_politics/6636091.stm, accessed 8/12/09

Kibblewhite, A. and Ussher, C. (2002), ‘Outcome ocused management in NewZealand’. OECD Journal on Budgeting, vol. 1

Kirkup, J. (2009), ‘Whitehall mandarins ace sacking threat under Conservativeplans’. Telegraph, 27 October. At: www.telegraph.co.uk/news/newstopics/politics/6408248/Whitehall-mandarins-ace-sacking-threat-under-Conservative-plans.html, accessed 18/12/09

Lee, J.M., Jones, G.W. and Burnham, J. (1998), At the Centre of Whitehall(Basingstoke: Macmillan)

Lightbown, S. and Smith, B. (2009), Parliamentary Trends (London: House oCommons Library)

Ling, T. (2002), ‘Delivering joined-up government in the UK: dimensions, issuesand problems’. Public Administration, vol. 80, pp.615–42

Lipsey, D. (2000), The Secret Treasury (St Ives: Viking)

Ljungma, G. (2009), ‘Top-down budgeting – an instrument to strengthen budgetmanagement’. IMF Working Paper , WP/09/243

Lodge, G. and Rogers, B. (2006), Whitehall’s Black Box (London: ippr)

Lusk, S. (2009), The Scottish Government: The line of sight (London: NationalSchool or Government)

Maude, F. (2009), ‘Ready to deliver change’. Speech to the Conservative PartyConerence, 5 October, Manchester, UK. At: www.conservatives.com/News/Speeches/2009/10/Francis_Maude_Ready_to_deliver_change.aspx, accessed22/12/09

McCrae, J. and Myers, J. (2009), Undertaking a Fiscal Consolidation: A guide toaction (London: Institute or Government)

Megson, C. (orthcoming), Developing the Whole Household Model (Shefeld:City Council)

Mellahi, K. (2005), ‘The dynamics o boards o directors in ailing organizations’.Long Range Planning, vol. 38, no. 3, pp.261–79

Ministry or Youth and Families (2008), A Special Ministry for Youth and Families:How does it work? (Ministry or Youth and Families: The Hague, the Netherlands).At: www.jeugdengezin.nl/includes/dl/openbestand.asp?File=/images/a4-older-how-does-it-work-_tcm21-167545.pd, accessed 22/12/09



Shaping Up 127

Micheli, P. and Neely, A. (orthcoming), ‘Perormance measurement in the publicsector in England: searching or the golden thread’, Public Administration Review

Mottram, R. (2009), Written evidence to the Lords Constitution Committee. At:www.parliament.uk/documents/upload/ConstSirRichardMottram.pd, accessed8/12/09

Mulgan, G. (2005), ‘Joined-up government: past, present and uture’. InBogdanor, V. (ed.) (2005), Joined-Up Government (Oxord: Oxord UniversityPress)

Mulgan, G. (2008), The Art of Public Strategy (Oxord: OUP)

NAO (2005), Joint Targets, HC 453 (London: National Audit Ofce, TSO)

NAO (2006a), The Delays in Administering the 2005 Single Payment Scheme inEngland (London: National Audit Ofce)

NAO (2006b), Department of Health: The National Programme for IT in the NHS(London: National Audit Ofce)

NAO (2009a), Assessment of the Capability Review Programme, HC 123 (London:National Audit Ofce, TSO)

NAO (2009b), Dealing with the Tax Obligations of Older People (London:National Audit Ofce), p.5

NAO (2009c), Recruiting Civil Servants Efciently, HC 134, Session 2008–09,February (London: National Audit Ofce)

Normington, D. (2008), Senior Civil Service Workforce and Reward Strategy

(London: Cabinet Ofce). At: www.civilservice.gov.uk/Assets/Final%20Version%20o%20Sir%20David%20Normington%27s%20report%20or%20publication._tcm6-6542.doc, accessed 22/12/09

Northcote, S.H. and Trevelyan, C.E. (1854), Report on the Organisation of thePermanent Civil Service (London: House o Commons). At: www.civilservant.org.uk/northcotetrevelyan.pd, accessed 19/12/09

O’Donnell, G. (2009), ‘The 21st century Civil Service: return o public sectorethos’, 18 February. Speech delivered by Sir Gus O’Donnell at the LancasterUniversity Business School. At: www.cabinetofce.gov.uk/newsroom/news_

releases/2009/090218_gusspeech.aspx, accessed 20/12/09OECD 2007/08, ‘International budget practices and procedures database’. At:www.oecd.org/document/61/0,3343,en_2649_34119_2494461_1_1_1_1,00.html, accessed 8/12/09

Ofce o Government Commerce (2004), ‘NHS National Programme orIT: Gateway Number 217’. At: www.connectingorhealth.nhs.uk/about/oi/g0npft0217.pd, accessed 18/12/09

Osborne, G. (2009), ‘We will lead the economy out o crisis’, October 6. At: www.conservatives.com/News/Speeches/2009/10/George_Osborne_We_will_lead_the_economy_out_o_crisis.aspx, accessed 10/12/09




Page, E. (2005), ‘Joined-up government and the civil service’. In Bogdanor, V.(ed.), Joined-Up Government(Oxord: Oxord University Press)

Parker, S., Paun, A., and McClory, J. (2009), The State of the Service: A review of Whitehall’s performance and prospects for improvement (London: Institute orGovernment). At: www.instituteorgovernment.org.uk/pds/state_o_the_service.pd, accessed 19/12/09

Pearce, J. and Zahra, S. (1992), ‘Board composition rom a strategic contingencyperspective’. Journal of Management Studies, vol. 29, no. 4, pp.411–38

Peck, E. (1995), ‘The perormance o an NHS Trust board: actors’ accounts,minutes and observations’. British Journal of Management, vol. 6, no. 2, pp.135–56

Perormance and Innovation Unit (2000), Wiring it Up: Whitehall’s managementof cross-cutting policies and services (London: Cabinet Ofce)

Peters, B.G. (1998), Managing Horizontal Government: The politics of coordination (Ottawa: Canadian Centre or Management Development)

Peters, B.G. (2004), ‘Back to the centre? Rebuilding the state’. Political Quarterly ,vol. 75, pp.130–40

Powell, J. (2009), House of Lords Constitution Committee Inquiry: Written evidence from Jonathan Powell (London: Parliament). At: www.parliament.uk/documents/upload/CC137JonathanPowell.pd, accessed 21/12/09

Provan, K.G. (1980), ‘Board power and organizational eectiveness amonghuman service agencies’. Academy of Management Journal, vol. 23, pp.221–36

Public Accounts Committee (2009), Learning and Innovation in Government. At:www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/562/56202.htm, accessed 21/12/09.

Rees, Lord, President o the Royal Society (2009), cited in ‘Deence job orscience minister’, BBC News, 9 June. At: http://news.bbc.co.uk/1/hi/sci/tech/8091330.stm, accessed 19/12/09

Rentoul, J. (2003), ‘Jonathan Powell: Driven, devoted and discreet: is this thelast true Blairite?’, The Independent, 27 September. At: www.independent.co.uk/news/people/profles/jonathan-powell-driven-devoted-and-discreet-is-this-the-

last-true-blairite-581333.html, accessed 8/12/09

Rhodes, R., Wanna, J. and Weller, P. (2009), Comparing Westminster (Oxord:OUP)

Rhodes, R.A.W. (1996), ‘The new governance: governing without government’.Political Studies, vol. 44, pp.652–57

Singleton, N., Murray, R., and Tinsley, L. (2004–05), Measuring Different Aspectsof Problem Drug Use: Methodological developments. Home Ofce Online Report16/06 (London: Home Ofce)

Sonneneld, J. (2002), ‘What makes great boards great?’ Harvard Business Review ,September, pp.106–13



Shaping Up 129

Sorabji, D. (2008), Changing Whitehall’s DNA: Reforming Whitehall to free citiesand counties (London: NLGN)

Stibbard, K. (2009), ‘ODI: disability is a cheap win’, Civil Service Network,4 December. At: www.civilservicenetwork.com/latest-news/news-article/newsarticle/odi-disability-is-cheap-win/, accessed 19/12/09

Timms, N. (2006), ‘Back risk-taking civil servants, says PM’. Financial Times, 19 July

Total Place (2009), ‘Total Place: Better or less’. 14 December. At: www.localleadership.gov.uk/totalplace/, accessed 22/12/09

Vranken, J. (2004), A Description and Analysis of the ‘Rough Sleeping’ Strategy in England on Street Homelessness. At: http://tinyurl.com/ykeeczd, accessed20/12/09

Wagner, J., Stimpert, J. and Fubara, E. (1998), ‘Board composition andorganizational perormance: two studies o insider/outsider eects’. Journal of Management Studies, vol. 35, no. 5, pp.655–77

Wilks, S. (2007), ‘Boardization and corporate governance in the UK as a responseto depoliticization and ailing accountability’. Public Policy and Administration,vol. 22, no. 4, pp.443–60

Wright, T. (2009), Evidence to the Lords Constitution Committee’s CabinetOfce Inquiry. At: www.publications.parliament.uk/pa/ld/lduncorr/const030609ev1.pd, accessed 9/12/09

Zahra, S. and Stanton, W. (1988), ‘The implications o board o directors’composition or corporate strategy and perormance’. International Journal of

Management, vol. 5, no. 2, pp.229–36



Shaping Up 131

FSA Food Standards Agency

FSU Forward Strategy Unit

GCHQ Government Communications Headquarters

GEO Government Equalities Ofce

HMRC HM Revenue and Customs

HMT Treasury

HO Home Ofce

HR Human Resources

ICT Inormation and communication technologies

IG Institute or Government

LGBT Lesbian Gay Bisexual Transgender

MoD Ministry o Deence

MoJ Ministry o Justice

NDPB Non-departmental public body

NED Non-executive director

NIO Northern Ireland Ofce

NOMS National Oender Management Service

NTA National Treatment Agency

OCC Ofce o Climate Change

ODI Ofce or Disability Issues

OECD Organisation or Economic Co-operation and Development

OEP Operational Efciency Programme

OGC Ofce or Government Commerce

OGD Other government departments

OPSR Ofce o Public Service Reorm

PCT Primary Care Trust

PIU Perormance and Innovation Unit

PM Prime Minister

PMDU Prime Minister’s Delivery Unit

PMSU Prime Minister’s Strategy Unit




PSA Public service agreement

PTB Pooled Treatment Budget

SEU Social Exclusion Unit

SRO Senior responsible owner

TBS Treasury Board Secretariat (Canada)

YJB Youth Justice Board



The Institute for Government

is here to act as a catalyst for

better government.

The Institute for Government isan independent centre foundedin 2008 to help make governmentmore effective.

• We carry out research, look intothe big governance challengesof the day and nd ways to helpgovernment improve, re-think andsometimes see things differently.

• We offer unique insights andadvice from experienced people who know what it’s like to beinside government both in theUK and overseas.

• We provide inspirational learning and development for very seniorpolicy makers.

We do this through seminars, workshops, talks or interesting connections that invigorate andprovide fresh ideas.

We are a place where seniormembers of all parties and theCivil Service can discuss thechallenges of making government work, and where they can seek andexchange practical insights fromleading thinkers, practitioners,public servants, academics andopinion formers.

Copies of this report are availablealongside other research work at:

www.instituteforgovernment.org.uk February20102nd Edition

shaping up: a whitehall for the future

Documents