28 July 2006
Anyone who doubted Cabinet secretary Sir Gus O'Donnell's claim that his Departmental Capability Reviews would be tougher and more honest than many Whitehall stalwarts expected need look no further than the latest casualty of the process.
Leigh Lewis, the Department for Work and Pensions' permanent secretary, told Public Finance this week that he will put the department's Performance and Development System up for scrutiny as part of his post-DCR 'action plan'.
This flawed staff appraisal regime has previously been defended vociferously by senior managers despite intense employee criticism.
But now Lewis says that his department's DCR, one of four published last week, exposed 'widespread dissatisfaction' with the PDS and showed 'that a review of the system from first principles was necessary'.
Richmond House's PDS volte-face followed a high-profile overhaul of senior personnel and organisational structures by Home Secretary John Reid and his permanent secretary, Sir David Normington, after the Home Office's widely anticipated DCR meltdown (see below).
Permanent secretaries, unwilling to risk a second wave of criticism from the Prime Minister's Delivery Unit – which will review all 17 core departments by next autumn – are now scurrying to their desks to produce compulsory master-plans for improvement.
That's something that critics doubted when O'Donnell launched DCRs last year, as – unlike local government's Comprehensive Performance Assessment regime – they are not conducted by an independent body.
Jonathan Baume, general secretary of the FDA senior civil service union, says: 'The DCRs were clearly an honest attempt [by Whitehall] to be self-critical and weaknesses have been identified for good reasons; the desire ultimately to improve delivery of public services.'
Ian Watmore, head of the Delivery Unit, told PF that, despite some 'teething problems', the assessments process 'went as well as we could have hoped for.
'I doubt we'll ever put to bed criticism that it is partly an internal review process. But the question is, would this be done better externally and I personally doubt that.'
Watmore, drafted into the unit because he has the private sector delivery experience cherished by Prime Minister Tony Blair, says he has been 'encouraged' by the first set of results.
The Home Office aside, Whitehall has emerged as impressive in its strategic and leadership functions, he says.
But he is concerned about Whitehall's ability to produce the end product of 'effective services to its customers [the public]'.
Just one department, the DWP, scored satisfactorily in just one of the three delivery categories: the development of clear roles and responsibilities across its agencies. All the rest raised concerns about future service delivery.
In particular, departments' abilities to plan, use resources effectively and prioritise services were woeful – three of the four departments assessed need 'urgent' or 'serious' attention.
'It is clearly in the area of delivery that the biggest challenges remain,' Watmore says. 'That's partly because, across the four departments reviewed, the delivery agenda is particularly heavy and difficult – reform of the Child Support Agency, pensions systems and new courts services, for example.
'But there is variability in delivery across individual departments… that we must eradicate. The DWP, for example, has one of the best agencies – the Pensions Service – and one of the worst in the CSA.
'We're not going to hide from problems. If a permanent secretary's action plan identifies improvements, we'll make sure they follow them through.'
O'Donnell and Watmore have also launched a review to establish in which circumstances Whitehall delivery models – arm's-length agency, non-departmental public body or direct delivery organisation – work best. The likely result is further tampering with Whitehall structures.
Judging by an 'overview' document published alongside the departmental reviews last week, Blair, O'Donnell and Watmore believe the most effective future arrangement is to minimise core Whitehall departments, making them more strategic in operation and focused on performance management, priority setting and tackling failure. Delivery functions could then be devolved to specialist agencies or arm's-length organisations.
'It's not too early to conclude [that] that's the broad system we want. I think that arrangement is something that we can create universally,' Watmore says.
Reid certainly believes it is the answer to the Home Office's woes. Last week he announced plans to slash the department's workforce by 3,200, cull a quarter of senior directors below board level and turn the Immigration and Nationalities Directorate into an arm's-length agency. This would also, Reid argued, free at least £115m for frontline services.
But all this sounds familiar. Whitehall commentators have long called for departments to be broken up and made more strategic at their centre – allowing delivery specialists to provide services out of arm's reach of Whitehall interference.
Sir Robin Ibbs's 1988 Next Steps report, for example, called for the extended use of agencies and the development of delivery specialists.
Colin Talbot, professor of public policy at Manchester Business School and a former government adviser, says the prime minister's aim is the right one – but warns of some potential pitfalls.
'The more you construct specific agencies dealing with one activity, the more chance it has of complete failure when it goes wrong – you only have to look at the Child Support Agency to see that.
'Agencies still need to interact effectively with the centre and across the public sector, and you need to ensure you have the right management in place across the core department and the agencies involved. Successful delivery is as much about the management culture as structure.'
Baume believes that Whitehall's evolving Professional Skills for Government initiative has a major role to play in engendering the improvements demanded by Blair. PSG requires civil servants to develop specialist skills across three areas – policy formulation, corporate services (such as financial management and IT) and operational delivery.
But one senior civil servant this week expressed concerns that the programme still risks 'discontinuity' between the policy experts at core departments and the delivery personnel in agencies or elsewhere.
Watmore acknowledges that his unit must 'light a fire under operational delivery' as a civil service skill and warns that 'policy folk' need to 'get deliverability as well as affordability into their mind-set'.
But he argues that Whitehall's improved strategic functions will help. Strategy emerged from the four pilot reviews as Whitehall's strongest skill; seven out of 12 strategy assessments showed that the departments are 'strong' or 'well-placed'.
Watmore defines good strategy as the 'ability to start with the customer in mind and work backwards into systems and policy formulation… to a point where the organisation is generally aligned around its customers' needs'.
As the DCRs are forward-looking, Watmore believes last week's scores bode well for improved delivery. 'If you take the well-regarded Pensions Service as an example… it reinvented its whole business process around the elderly, asked “what do older people want” and geared support services around them.
'You have to support organisations when they do things well. It's quite easy to trash or whitewash an organisation, but we wanted to emerge somewhere in the middle. I'm confident [that] we had independence and clout.'
John Reid believes the way ahead is now clear – but don't just take his word for it. Ask Leigh Lewis as he wrestles with a replacement for the PDS and improvements to child support.
DCRs: the story so far
The reviews are the brainchild of Cabinet secretary Sir Gus O'Donnell and are the first attempt to measure objectively the future capabilities of Whitehall departments. The first four assessments, published on July 19, measured departments against ten criteria (such as the use of resources) divided broadly into leadership, strategy and delivery functions.
The Home Office effectively 'failed' all ten assessments. It was 'strong' or 'well placed' in none, needed 'development' in six, 'urgent development' in two and was the source of 'serious concerns' in another two. Last week's reforms at Marsham Street, announced by Home Secretary John Reid, were directly influenced by the results of the DCR.
The departments for Work and Pensions, Education and Skills and Constitutional Affairs were 'strong' in one area each, 'well placed' in at least three assessments, and had 'serious concerns' in none.
PFjul2006
