Hodge urges civil service reform to reduce waste and boost transparency

7 Dec 16

Civil service reform should be a government priority in order to tackle waste and increase accountability, Dame Margaret Hodge, former chair of the Public Accounts Committee, has said.

Discussing her 2015 book, Called to Account, at CIPFA’s headquarters in London earlier this week, the Labour MP said politicians should put greater emphasis on reforming the civil service to improve current delivery.

“Everybody loves thinking up brand new ideas,” Hodge said. “Nobody wants to concentrate on present delivery.

“And I think we need to. If prime ministers were to give a hint that they would prioritise reform it would get somewhere.”

She said that while there are many dedicated public servants, “on the whole the system delivers huge waste”.

The civil service needs to be taken “out of politics”, she stressed. “If you leave it in politics it’s limited to the electoral cycle.”

An “inward-looking” leadership that “rejects outsiders” is also part of the problem, she continued, as well as an “absurd lack” of a link between responsibility and accountability.

Hodge said the system – under which civil servants are accountable to ministers who are in turn accountable to parliament – worked when the civil service was first created, but does not today when its size has increased by tens of thousands.

Ministers do not appoint their civil servants, she pointed out, and should not be accountable for them because this doesn’t work.

“Until you link responsibility to accountability you will not get the value for money that we all seek and deserve.”

Hodge also said the civil service needs to use its collective buying power better and improve its ability to learn from mistakes.

Touching on another key element of the PAC’s work – tax avoidance and evasion – Hodge said that Revenue and Customs has “just got to toughen up”.

While the agency has lost a significant amount of its staff in recent years, she stressed that their attitude and approach is also part of the problem.

“They are just not aggressive enough or assertive enough in defending the public interest,” she noted, comparing action taken against companies like Google in other European countries to the UK.

Earlier this year, Google was ordered to repay £130m in back taxes to the UK for unpaid tax stretching back over a decade. Although this was considered by critics to be unacceptably small, with estimates of the tax the firm evaded since 2005 topping £1.5bn.

Hodge, who now heads an all-party parliamentary group on responsible tax and was an ardent critic of tax avoidance during her time at the PAC, said there should be more transparency in such cases to allow the public to see how HMRC calculated Google’s bill.

As chair of the PAC, she said she had been “shocked” by the “arrogant disregard” for the truth exhibited by firms and others giving evidence to the committee despite clear and incriminating evidence.

PwC was one firm she highlighted whose representatives staunchly denied they sold tax avoidance schemes, even though the committee had documents clearly suggesting otherwise.

“I think there is a way forward,” she stated. “I don’t think it’s an anti-business way. I think it’s a pro-fairness way.

“There is a moral obligation on all of us as citizens...that we give according to our means, or profit or our status, into the common pot, for the common good.”

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