By Tony Collins
Margaret Hodge spoke incisively this week about her five years as chairman of the 160 year-old Public Accounts Committee.
It’s assumed that civil servants answer to ministers who are then accountable to Parliament when things go wrong. Hodge mentioned failed IT projects several times.
But she painted a picture of senior officialdom as a force independent and sometimes opposed to Parliament. She said some senior officials had a “fundamental lack of respect for Parliament”. She had come up against an opposition that was “akin to a freemasonry”.
“With accountability comes responsibility. I can’t think how often we ask whether those responsible for dreadfully poor implementation are held to account for their failures.
“It rarely happens. People rarely lose their job. Those responsible for monumental failures all too often show up again in another lucrative job paid for by the taxpayer…”
Some excerpts from Hodge’s “Speaker’s Lecture” are worth quoting at length …
“… I have been truly shocked by the extent of the waste we have encountered. This is not a party political point. It’s not that this Conservative- Lib-Dem Coalition is worse or better than the previous Labour Government.
“It’s not that the private sector is more efficient than the public sector.
“It’s not about questioning the dedication of hundreds of thousands of public sector workers wanting to do their best… for me personally, sitting on the left of the political spectrum, I passionately believe in the power of public spending and public services to transform and equalise life chances.
“Yet if I am to ask other people to give up their money so that we can use it to secure greater equality, then I must earn their trust that I will use that money well.
“From £700m which I believe is likely to be written off with the botched attempt to introduce a politically uncontroversial benefit change with Universal Credit, to £1.6bn extra cost incurred by the previous Government in signing the contract for the Aircraft Carriers without any money in the Defence budget and then delaying its implementation; from the failure of successive Governments to tackle the many billions lost through fraud and error or IT investment, to the inability of successive Governments to deport foreign nationals who have committed crimes and ended up in our prisons, the failures are too many, they occur too often and they occur with persistent and unbroken regularity.”
Media shuns “good news” stories
“Of course we do things well. I think of recent positive reports on the Troubled Families programme, the Prison buildings programme or the implementation of the Crossrail contract. And trying to get proper recognition of these successes is well-nigh impossible. …
“I remember being rung up by a researcher on the Today programme who wanted me to go on to speak about education for 16-18 year olds. She asked what I would be minded to say and I told her that it was a good report and I would be complimentary. ‘I thought you would be critical’ she responded. No it’s a positive report I replied. Well, she said, I’d better go away and read it, She rang me half an hour later to tell me they had dropped the item from the programme.
“But despite acknowledging the good things that are done, I remain frustrated and angry at so much wasted expenditure and poor value for money.”
“… If we do want to ensure public attention is drawn to something, it may involve the occasional bit of grandstanding. I don’t apologise for that, for I have very few tools available which I can use to get purchase and have an impact.
“If a bit of grandstanding is the only way to stop something happening again and again, we will use it – with big corporations, top civil servants and any establishment figure whom we believe has a case to answer…”
PAC versus a civil service freemasonry?
“I received a letter from the departing Cabinet Secretary which was widely circulated around Whitehall and to officials of the House accusing the Committee of treating officials unfairly and reminding me that civil servants are bound by duties of honesty and integrity and therefore should only be asked to give evidence on oath as ‘an extremely unusual step’.
“Then a researcher from the Institute of Government came to see me, armed with a report of interviews she had undertaken with senior civil servants. She was just the messenger, but her message from senior civil servants was blunt. I quote:
‘The NAO/PAC are modeled on the red guards – not a convincing grown up model of Government… the chair is an abysmal failure… the worst chair I have ever seen….. MH is informed by friends in the media… PAC profile is seen to be bashing senior officials and determined to get media soundbites.’ ‘It is under appreciated how important dull committees are.’
And then the final shot… ‘Should the PAC be broken up?’
“Basically, the explicit threat relayed to me was that if we did not change how we held civil servants to account, we would be closed down. Shut up or we’ll shut you down.
“The story sounds like something from Yes Minister, but more seriously demonstrates a fundamental lack of respect for Parliament that I find deeply worrying.
‘How dare you MPs touch us’ was what they were saying. It felt like we were up against something akin to a freemasonry.
“Now that was January 2012 and things have moved on… but have they?
Civil servants unaccountable?
“The sad truth is that in that struggle between civil servants and politicians, the civil servants are most likely to win, because whereas we are here today and gone tomorrow, they are there for the long term.
“There remains a deep reluctance among too many senior civil servants to be accountable to Parliament and through us, to the public. The senior civil servants hide behind the traditional convention that civil servants are accountable to ministers who in turn are accountable to Parliament.
“That principle worked when it was first invented by Haldane after the First World War and the Home Secretary worked with just 28 civil servants in the Home Office. Today there are over 26,000.
“It worked when the public did not demand transparency. Today they do.
“It worked when public spending was primarily funneled through large departments running large contracts. In today’s world with a plethora of autonomous health trusts and academy schools, in a world where private providers are providing public services in a range of fragmented contracts, delivering everything from welfare to work, healthcare and now probation services, in today’s world the old accountability framework with the minister being responsible for everything is plainly a nonsense.
“And whilst we, of course, want to maintain an impartial civil service, that is not inconsistent with the need to modernize accountability to Parliament and the public.
“There is a fundamental problem at the heart of the traditional accountability system. How can civil servants be accountable to ministers if the ministers do not have the power to hire and fire them?
“It is the accountability framework that is broke and in need of reform – not the Public Accounts Committee…
Need for reform
“The promise to reform the Civil Service has produced a few welcome changes, like a Major Projects Academy to train people to manage big projects, but the change has been too little, too piecemeal and too marginal, not fundamental.
“We just need to build different skills and do it, not talk about it.
“We may need to pay more so that working in and staying in the public sector becomes a more attractive proposition for more talented people. Trumpeting success in keeping public sector salaries down is not sensible if you end up wasting money or hiring in expensive consultants to clear up the mess or do the work for you.
“We need to transform the way people get promoted. At the moment, you’re a success if you leave your post after two years in the job and move on.
“When I was Children’s Minister, after two years I had a better institutional memory than any of the civil servants with whom I was working.
“And when the PAC reviewed the Fire Control Programme, which aimed at reducing costs by rationalising how 999 calls were dealt with, but ended up costing nearly £1/2 bn when it was written off as a failure; we found that there had been 10 different responsible officers in charge of the project over a five year period.
“I know some projects take longer than the Second World War, but continuity of responsibility is critical to securing better value.
Centre of government “not fit for purpose”
“It is also clear to me that the way the centre of Government works is not fit for purpose. We have three departments Treasury, Cabinet Office and Number 10 all competing for power, rather than working together.
“And all of them seem to be completely unable to use their power to drive better value. Treasury carves up the money and then does little to ensure it is spent wisely.
“They only worry whether the departments keep within their totals. This is not a proper modern finance function at the heart of Government that you would see in any other complex organisation.
“So, for instance we all know that early action saves money, be it in health, education, welfare spending or the criminal justice system. Treasury knows this too, but they are doing nothing to force a change in the way money is spent.”
“There is little learning across Government. The mistakes in the early PFI contracts are being repeated in the energy contracts negotiated by DECC [Department of Energy and Climate Change]…
“Nobody at the centre seems to think through the impact of decisions in one area on another. So of course cuts in local authority spending, where nearly 40% of their money goes on community care services, will impact on hospitals and bed blocking.”
“Too much thinking is short-term. PFI, to which the current Government is as wedded as past governments, is building up a huge bill for future generations; assets worth £30bn today will cost £151bn over time. And using PFI locks us into ways of delivering services which quickly become outdated – like large district hospitals when we now want to care for people outside hospitals in the community.”
Price of fish
“None of this is rocket science. So why doesn’t change happen? Why is there such resistance? Radically transforming the culture must be at the heart of securing better value.
“If the machinery of Government is so resistant, we need to take that challenge outside party politics. Only by working together across parties and over time will we be able to secure the culture, capability and organisation that we all need to deliver on our different political priorities.
“When I first took this job I read the IPPR study which said that whilst officials dreaded their appearance before the Public Accounts Committee, they were confident that it would never ‘change the price of fish’.
“I am determined to change the price of fish.
That is why we have instituted new ways. We now have regular recall sessions, calling back people to tell us why they haven’t accepted our recommendations, or why they haven’t implemented them. We bring back people after they have moved jobs to hold them to account for what they did in post.
“That caused a minor revolution when we first did it. I wanted Helen Gosch, who had moved from DEFRA to the Home Office to come back and account for the mess she had made administering the rural payments agency, paying farmers late, paying them the wrong amounts and having to send money back to Brussels because of the errors. She refused our invitation and only caved in when I ordered her to appear.”
More protection for whistleblowers please
“We try to use our analysis of past expenditure to improve spending in the future; understanding problems with past rail investment can help improve the delivery of future projects. We take regular evidence on the big change programmes, like Universal Credit or the Probation service.
“And I take seriously the material I get from whistleblowers. My time on the PAC has strengthened my respect for whistleblowers. Without them, we would have been less effective on tax avoidance and on the performance of private companies receiving taxpayer’s money to deliver public services.
“A major regret for me is that I was unable to prevent the treatment meted out to Osita Mba by HMRC. He was the official who sent us the documents on the Goldman Sachs affair. The department used the Regulation of Investigatory Powers Act, designed to get terrorists, to get into not just his emails and phone calls, but into his wife’s phone records. In the end he couldn’t stand it any more and quit HMRC. We clearly need to do more to protect whistleblowers.”
“I am also probably one of very few MPs who has a good word to say about journalists. From eye Eye to the Times and from the Guardian to Reuters, their fantastic investigative work (when they do it properly) has helped us uncover abuse, malpractice and waste in a way we just couldn’t have done without them.
“For despite the excellent work produced by the National Audit Office, they are constitutionally separate from and different to the Parliamentary Committee. So we need our independent sources of help.”
“Unlike our American counterparts, who have 120 staff working to their committee, 80 working for the majority party and 40 for the minority party, we have a small committee staff who focus purely on process.
“If select committees are to increase their effectiveness they need to be better resourced. It’s partly about people, although I would hate to mirror our American colleagues because their system is very much more partisan.
“But it is also absurd that when we wanted to hold an international conference on tax avoidance we were told we had no money. It is just plain wrong that when we wanted to test whether a parliamentary committee should have access to company tax files to hold HMRC properly to account, we were unable to fund legal advice to support our case that HMRC should be accountable to us.
“Both the NAO and HMRC paid for expensive legal advice to oppose us. We had no money to secure our own advice.
“Select committees should have clear statutory powers to call for all papers and people to help them hold the Executive to account. We still don’t know whether Vodafone should have paid £6bn or £2bn with an interest free staging of the payments when they settled their tax bill with the Revenue. We should know and you should too…
“Reflecting on what I have said may leave you thinking everything is wrong. I know that there are many brilliant public sector workers and many stunning public services.
“Inevitably our work focuses on the problems and the challenges. But I come at it with a determination to seek and secure improvements. Because I care about public service and because I passionately believe in the power of public services to transform people’s life chances and to create greater equality in our society. That is my goal.”
One of the striking things about the PAC is the way it leaves crude tribal party politics at the door. That’s one of the reasons it’s quietly disliked by some senior officials: they cannot condemn the committee’s partisanship. It produces 60 unanimous reports a year. But do they make any difference?
One irony is that senior officials cite the PAC as a key Parliamentary device holding them to account. They lasso and rope in the PAC for their own purpose.
The work of the PAC in holding the civil service to account is cited by lawyers for the Department for Work and Pensions in repeatedly refusing to release four old Universal Credit documents.
In reality the PAC does not make much difference to the way Whitehall departments are run. But waste would probably be much greater if it didn’t exist.
What’s not in doubt is that Hodge is a great chairman of the PAC. If anyone can change the price of fish she will.