Q1 Chair: I welcome our colleagues from Ghana. I hope you find it an interesting session with us this afternoon. I also welcome Ian Watmore and John Browne. Thank you for attending. Again, it is a slightly different session from the usual ones, in that it is more forward-looking than backward-looking. We will to try to divide it into a "What are you there for?" type start, then "What have you achieved in your first year?" and then a look to the future. It is very much an open session, if we can see it in that context. I will start with you, Ian. We have your memo at the back, describing your purpose and objectives, and you are bringing together under the Cabinet Office a number of organisations that existed across Government in the past. I wanted you to take us through, in a practical way, why you think that bringing together will make a step change in the effectiveness and impact that those units will have.
Ian Watmore: I will be happy to do that, Chairman. There are three things that are acting in our favour. The first is the deficit, and the desire to reduce the deficit is causing people to think very differently about what they do, and therefore that means people are interested in doing things in a fundamentally new way. The second thing is we have very strong ministerial support for what we are doing, and indeed some very hands-on ministerial activity, so that always helps. The third thing, and this is something I have believed for a long time, is that a lot of the corporate functions that sat at the centre of Government were too disaggregated. There are very few real problems that ordinary departments and public sector workers face that just confine themselves to HR or IT or something like that. It is nearly always the combination that causes things to improve.
For example, one of our age-old topics in this Committee is about the so-called IT projects. Initially they start with policy, then they run through procurement, then there is project and programme management, there are core IT disciplines. All those things together will lead to success. If you have them all in different bits of Government, you do not have that joined-up-ness. It is those three things that I would highlight.
Q2 Chair: Let me just ask you about one of them. In the way that these things happen, the use of ministerial commitment matters. We know that Francis Maude is very driven by efficiency in Government, but what if he is moved? Is that a good enough way of structuring an institutional change?
Ian Watmore: I would not want to underestimate the role that Francis is playing, because he is, as you know, very passionate and driven about this agenda. One of the things that we are trying to do is to embed this right across the ministerial team. The first point is that I report both to Francis and to the Chief Secretary, Danny Alexander. We have a regular Efficiency and Reform Board that they both chair, with John and half a dozen other external experts on it, to challenge us. Also, probably since we last met there is a new sub-committee of the Public Expenditure Committee, PEX, focused on this agenda as well.
Q3 Chair: But it could weaken with a weaker Cabinet Office presence.
Ian Watmore: That is always possible, but what we are finding is that we are moving the agenda away from being a central push into being something that is now increasingly being owned by departments, because they have their own spending settlements to deliver.
Q4 Chair: Lord Browne, if you look at page 12, it sets out the role of the ERG. At the end of it, in paragraph 1.9, it says it "brings together most of the functions of a typical organisational headquarters, except finance which remains with the Treasury and overall strategy which remains with the Prime Minister's Office." This seems to me pretty central to any organisational performance, to control your finance and to control your strategy, yet it sits outside this ERG structure. Does that make sense to you?
Lord Browne: Clearly it needs to be controlled somewhere, and it is not controlled in the Efficiency and Reform Group, which is specific, and it has taken on specific aspects of efficiency and reform that are useful but not comprehensive in-
Q5 Chair: Can they work without what seem to me to be the two absolutely central features of any organisational performance and competence?
Lord Browne: My experience is outside the ERG, which has only being going for a reasonably short period of time in an organisational history sense. In my experience, you can do it providing you are very clear about strategy and about finance. In the end, someone has to set a direction. Someone has to set boundaries, and then you get other people to work components of that within. That is how you do it in a large corporation outside government, and it is the approach that these boards that we have set up for different departments are beginning to take. They recognise, of course, their limits, their advisory nature, but they have picked five particular principles on which they will work.
Q6 Chair: I am going to press you on this a little. You have said that you have to set strategy, you have to set the parameters of the money and then you can look for efficiency within that context. I accept that. Therefore, in your view, with your background and experience, particularly in BP, would you have set it up in this way? It just seems to me that there is a Government that has come in, driven by deficit reduction and efficiency, and ended up structuring itself not that differently from its predecessor Government, with the potential for tensions between No. 10 and No. 11, with the ERG in the middle of it and probably falling into the sands if that relationship in any way cracks?
Lord Browne: I must say, in my limited experience with the ERG, I have not seen these tensions manifest themselves.
Q7 Chair: So far.
Lord Browne: So far.
Q8 Chair: Early days. Early days.
Lord Browne: Oh, I agree. You never know. But so far it is, I think, a well-intentioned group, to get certain really technical and mechanical things done, and that is what it is doing. It is sitting down and working out what to do with procurement.
Q9 Chair: But you would not set it up that way, would you?
Lord Browne: I do not know. If I were running a corporation, probably not. Again, in my track record I definitely would not have done it in a corporation, but I keep reminding myself that a Government is not a corporation.
Q10 Chair: No, Government is about compromise, but compromise makes it very difficult.
Lord Browne: Very different. A very different sort of environment.