Q11 Chair: Politics is very much about compromise, and therefore it makes it very difficult.
Lord Browne: I would say that organisations work in many different ways, and you can make things work as long as there is a real intention to make things work. I agree that intention can change, but intention is the single most important thing.
Q12 Mr Bacon: So long as the link between the Cabinet Office and the purse strings, i.e. the Treasury, is absolutely locked tight and they continue to be on the same page-which, presumably at least as long as the deficit is top of mind, is likely to be the case-is it right to assume then there is not much of a danger, although there could be in the future perhaps, of the fact that the finance is sitting somewhere else being a problem?
Lord Browne: You would have to ask Ian how it works, but as I observe it, having Danny Alexander there as well as Francis Maude creates a manifestation of some linkage. The linkage is not just, in my observation, with the Treasury but also with all the departments, because some things that are being promulgated can be mandated, but in the end must be agreed and must be understood by everybody to survive time.
Q13 Chair: Let me just ask you one other question, organisationally. The other thing that rather struck me as being odd is that the management of the Government estate rests in BIS. Again, I do not know if this was a political compromise down the line, but even if you accept that you have this wonderfully close honeymoon relationship going on between No. 10 and No. 11 at the moment that allows you to operate effectively, it just would have made sense to have control of a key component, your physical estate, with you too.
Ian Watmore: Can I just comment on the Treasury, No. 10 thing as well, and I will come on to the BIS thing. Everybody is right that if No. 10 and No. 11 are miles apart it will be a problem, but currently they are not. What we do to try to ensure we do not lapse into that is, first of all, my team is co-located within the Treasury. We physically sit in the Treasury. We have joint board meetings with the Treasury officials-in fact I had one last week. I have a regular meeting with Andrew Hudson, etc. There is a lot going on to make sure that we do not drift apart, and as I have said earlier, my Minister is as much Danny as it is Francis. That is one point.
On the No. 10 thing, the Cabinet Office and No. 10 are subtly different, obviously, but a lot of the people in it are the same people. I sit on Jeremy Heywood's policy board, which I see every week. Therefore I understand what is coming down, as you would call it, the strategy track, and know what it is we have to implement. It is a very open relationship. Although there are three organisations there, we are joining it up at the official level very effectively.
Q14 Chair: On the BIS point?
Ian Watmore: On the BIS thing, I agree that it is probably looking less sensible to be sitting in BIS where it is. I think there is some work going on to look at whether that is the right place to locate it. I think the original thinking was that the property arrangements were more about asset sales, and therefore going to require something more like the Shareholder Executive to be able to manage the Government's ownership of its property estate, which is why it was put there. I think it was put there on the recommendation of Lord Carter's report in the last administration. This Government continued with it. What is becoming more obvious to us is that property is more about the reform of the civil service. What sort of buildings do we have for people to work in? Are they co-located? Are they flexible, open plan? That is absolutely much more the issue. We are getting closer, and we may well make some changes to that in the future.
Q15 Mr Bacon: May I ask Lord Browne about the non-executives? There is a very interesting phrase in the appendix, which is the ERG memo, note 6, which talks about the Cabinet Office and HM Treasury having "a single version of the truth", which I thought was a very interesting phrase because we have seen in this Committee-very recently with the DWP cost reduction programme yesterday, and with the NHS IT programme just three or four weeks ago, and it is something that we see from time to time-arguments between Departments and the NAO as value-for-money auditors on what the facts are. Your non-executives, if they are to do their jobs across these different Departments, need a certain basic tool kit; they need a certain basic standard of information available. From what you have seen, do you think the Departments are in a position to provide the kind of quality information, quality data, which non-executives will need in order to do their job?
Lord Browne: There is plenty of data, there really is. The question is whether it is actually information upon which decisions can be made. There is a very big difference between the two. Of all the principles that are held between the different boards, the fifth principle is management information so that we can treasure what we measure and measure what we treasure. These are old cliches but they are not bad ones. It is beginning. Some of the work that the ERG has done is to look at a limited standardised approach to management information reporting on a quarterly basis, which allows comparability both over time-so for one Department over time, how are you doing- and as between Departments on certain matters. That is quite important for things like benchmarking, peer review and so forth. That is beginning. It is too early to tell whether it is successful. There is a lot of pressure by the non-executives saying, "Can we please have better informed data?"
Q16 Mr Bacon: I was re-reading parts of Michael Heseltine's autobiography recently where he talks about MINIS and when he first became a Cabinet Minister. When he entered the Cabinet in 1979, the first thing he said to his Permanent Secretary, Sir John Garlick, was, "What management information do you receive on a Monday morning to help you assess whether the Department is meeting its objectives?" On hearing the answer, "None", he said, "At least I knew where we were." What I would really like to know is this, and you have spent now a reasonable amount of time inside Government looking at this and presumably thinking very hard about it. Here were are, 30 years later, and you say that we are beginning. This is despite the Financial Management Initiative from 1982. It is despite the Next Steps, the whole purpose of which was to get more sensible management into Government by having executive agencies with autonomy, control and authority. There has been pressure, as you describe it, of various kinds for 30 years. I applaud completely what the ERG doing. I think it is very exciting and the early signs are it is going to be a lot better than the old OGC approach was, so I am not saying this from a critical point of view. I am great fan of what you are trying to achieve and I hope it works. However, what I still have not got my head around is that there has been this pressure for at least 30 years-you could say for 50 years-so what is going to be different about what you are doing?
Lord Browne: I can offer no historical context whatsoever. I can simply say what I see, which is first that there is clearly competent financial information. There is no doubt about that. Going beyond that the question is one of performance, efficiency and effectiveness. These require different approaches to the assembly of information so that you know where you are. That I think is something which all the boards are trying to get their heads round. What is really needed today, in today's context, is to see how well things are going. There are measures for certain aspects in the ERG. So there are measurements of things like expenditure on certain functional items, procurement, consultants, and so forth, things like that, which clearly are controlled instruments for this period of development of the ERG.
Q17 Mr Bacon: How much do you think there is inside Whitehall amongst the management group, among Permanent Secretaries, an understanding of the importance of, or the aspiration to have, better management information? I am thinking of the role of the Rural Payments Agency scheme, where they actually cancelled the system that would have provided them with management information as to what was going on, which sitting from the outside looking in is staggering. How much of a genuine appreciation is there of the importance of management information? How much do they really care deep down?
Lord Browne: I think it is mixed. Like almost everything there are clearly people who are driving this. Notably the person sitting next door to me here who in my view is very qualified in this area. But there are also people who actually look at things in a very different way, more qualitatively than quantitatively. The quantitative is as important as the qualitative and vice versa. It can shorten and make more easy the communication of direction and how you are doing it against your work plan or to-do list. That is something that I think will take time to get to the point where everyone is satisfied that the standards are the right standards.
Q18 Austin Mitchell: You talk about management information, the Departments have management information hopefully, but Government is an area of conflicting and cross-cutting responsibilities. What you have got is the power of preaching really; it is the Treasury that holds the purse strings and controls the spending. You have not even proved yet that you have achieved the £6 billion work of efficiency savings you were set up to achieve last year. That is left to cuts in Departmental budgets which will be enforced by Treasury. You cannot prove anything, Ian Watmore. Ian Watmore: First of all, we were not set up to save £6 billion last year. The £6 billion was the budget reduction that the Government made to the budget when it came-
Austin Mitchell: You were set up to achieve that.
Ian Watmore: We were set up to achieve half or more. We are just having the figures audited at the moment, but we are pretty certain we have got over £3 billion, and somewhere between £3 and £4 billion of savings out of the first year.
Q19 Chair: Will you be able to let us have a note on that?
Ian Watmore: As soon as the auditors have finished crawling through the numbers.
Chair: When?
Ian Watmore: Definitely before the summer recess.
Chair: Before the summer recess. Will you let us have a note before the summer recess?
Ian Watmore: Of course, yes.
Q20 Chair: What is clear according to this report is that it is unverifiable. You are saying you can verify it.
Ian Watmore: We have got our internal auditors going through the numbers as we speak and we are happy to share that.
Chair: Before the summer recess is fine.