Q81 Chair: The interesting thing on that one actually was that the Secretary of State, if I look back on it, she-it was when Ruth Kelly was Secretary of State-asked for a cost-benefit analysis of it all and actually she got the wrong figures. She got figures that proved a case, which later proved to be wrong. I am not sure you could have made a difference on that one.
Ian Watmore: I am just saying that I think the process would have intervened much earlier and it may well have continued afterwards if that is what the ministerial team of the day wanted to do. The point is in terms of intervention, I think it would happen much earlier and we would escalate higher, more quickly.
Q82 Jackie Doyle-Price: I think the risk of an act from the centre-believe me, I wish it were, I think it is essential-is that you are setting yourselves up as human shields for accounting officers who might otherwise have to carry the can.
Ian Watmore: Possibly. That is part of the sport of these things. My point of view is that I am not running universal credit; I am running the Major Projects Authority. My job is to ensure that the Major Projects Authority is operating with professionalism, integrity and all those things, and is making the best judgments it can and reporting them openly and honestly to all the parties. At the end of the day I am not running the universal credit system, or the jobcentres, or whatever. That is down to Iain Duncan-Smith and Robert Devereux and teams. You have to be clear that they are running their business, we are running an assurance process, and it is in our interests for both sides to work together well. I am saying if there is a problem we can escalate to the Prime Minister, we have that right.
Q83 Chair: That brings me neatly to ask Lord Browne this question. We have heard all of this, in your view as the key non-executive director for Government, how would you, and therefore we, judge the effectiveness of the ERG two or three years downstream with three or four criteria?
Lord Browne: Going back to the major projects portion of this, I think the Major Projects Authority is a good start. Where I think I and several of the other directors come from is this: without a deeper understanding of all the leadership in project management and how you really do this well with the best practice available in the world outside, this is not something that will be completely sustainable. So an adjunct to the Major Projects Authority is to try and work, and we are presently trying to work the definition of it, the Major Projects Academy where people can go and actually understand what is right and wrong about running a big project. There are plenty of projects in the commercial world that do not work. There is less and less ability to hide them away because they get bigger and bigger, which is good. That means therefore people have to get better and better at really leading these. I do not just mean the technical people. I mean the management, in other words, the leadership.
This has proved to be very successful in a whole variety of different commercial organisations. I think that will be an adjunct to this that can, I believe, eventually provide more realistic budgets and timescales and better complete delivery, including the relevant procurement related to any major project. I think it is the point, because if I was looking at the ERG and I were looking at it in a non-governmental way I would say, "I want to assess how the ERG has affected the behaviour and understanding of the people who are actually doing the activities which the ERG is controlling." In other words, is there a deep understanding of how to get IT projects really working? Do we have the right people doing that? Do we have the same in procurement? Is there a real understanding that you need to have a high degree of professional skills for distributed procurement, as well as centralised procurement? We need to make sure that people do not delude you in the usual sorts of ways. I would look to see whether there was a sense that this had been transferred to people, and actually it becomes self-sustaining. That is the first thing I would look for.
The second thing I would look for is whether people used, as it were, commercial sense, as a result of this. Whether they balanced risk with their outcome, with their return, in a way that just made sense. I would look to see whether that was going on. The third I think is I would look to see whether everything that is being done is in line with strategy. Are the strategies of the Departments clear? Are the strategies of the ERG clear? Are they lined up? The final point I would make I think is, there was this question about organisation. My own view about organisations is that they have to be fit for purpose. The ERG looks to me like it is fit for purpose for now. That may not be the case as it actually delivers its results. It needs to think about how it is managing its own development and change. I would do all that and then I would make sure I had numbers to back it all up.
Q84 Chair: I was going to ask, is that translatable into numbers?
Lord Browne: Absolutely it is. I am not involved with the numbers, I see some numbers. If the numbers are correctly formulated then you can see track record being developed, you can see comparatives with the outside world and that will tell you whether this is making a real change or not.
Q85 Mr Bacon: All of what you just said was fascinating, particularly the last bit about it being translated into numbers that you can follow. That of course presupposes, not just for the ERG but out there in the Departments, that there are senior managers out there who understand that and who have the willingness and the capability to translate it into meaningful numbers. I think it is probably a strategic question, but one of the questions that surely all the non-executives will be asking themselves is, "Do we have the right people and are we giving them the right career formation?" You will be aware of the number of directors general who have had to be brought in from outside because of this lack across the civil service, and this has been recognised quite widely, within the top management of the civil service, that there is a problem there. This may be slightly outside the ERG's immediate focus, but certainly in your capacity as the lead non-executive it is not, so where are we going with this, and to what extent is the capacity of the Whitehall system as a whole and the way Permanent Secretaries relate, not just to one another but to the Cabinet Secretary, fit for purpose? As you know, the Cabinet Secretary is in no real sense the line manager of the Permanent Secretaries. He is an influencer and the present Cabinet Secretary is probably more of an influencer than some of the previous ones. He has been pushing for the capability reviews, but this Committee looked at that two or three years ago and we have not heard a whole lot since. In the capability reviews that the NAO did a report on, there was no mention of performance, just capability, and really no identification of where it is going to go next.
Lord Browne: If I may, let me just set a context about the way in which I think all the boards are thinking. In order to simplify their life a bit they have picked five principles to deal with. One is strategic clarity, which does not really exist for each Department, and how do you get there. Secondly, are there people exercising commercial sense? Thirdly, are talented people being trained? I want to come back to that. Fourthly, are people results-orientated? Fifthly, is management information relevant and timely? These are the questions people are asking, and they are very ordinary questions I think, but rather difficult to answer.
On talented people, I went to a meeting that was chaired by Gus O'Donnell-I go to it occasionally- that many Permanent Secretaries attend. It is the senior leadership committee, where the topic of conversation was in effect defining what are the attributes of leaders in the civil service in the future. That definition, which is still I think pretty well being fixed now, says what you have to do to get leaders in the civil service to be aware of tools, techniques and understanding that balance implementation with policy development. A balance is needed between those two things. Promotion and all the other things that go with training people in a balanced way should align. In other words, people should be promoted when they are good, not only on policy but also implementation. The definition of that is in process. Therefore someone, but we need to figure out who, can actually begin to train, educate and evaluate people on the basis of what they need to do for this part of the 21st century, which I think is very much looking at how you actually get things done with limited resources. That is what this is about.
Amyas Morse: Complementary to that, I have been listening to the answers that you both gave, and Ian said at the beginning that the driver for setting up the ERG is the deficit, ministerial support, and the incoherence in the corporate back office. I understand all those, but you were asked questions about how really sustainable it is; really I think that is the theme. Is it important to get people to get the idea that there is a different way of managing, where it is not just downwards, and there is actually an enduring need for a matrix relationship where you have people with subject matter expertise who always have something to say, and therefore just saying a Department is to run itself, does not mean it can run itself and make ill-advised or inexpert decisions. Equally, if you are going to have a policy of devolution, it does not mean that in every place you devolve to, everybody should go off and busily invent the wheel. There are still a very high percentage of good practices that should be reproduced in practically every place. I would have thought that your group should be one of the people who are driving that out across wider Government. I will just put it to you in that way. Is that a responsibility and a challenge you actually recognise and see yourselves taking up?
Ian Watmore: Yes, absolutely. We are not going to continue to hold back on expenditure items by moratoria and brute-force tactics forever. They work for a period of time, but if you want sustainable change to happen you have got to change the capability and the culture of the organisation. That is why part of what we are doing-it is my team that helped John set the boards up across Whitehall, so we would see that as a very integral part of transforming the way Whitehall Departments are run. It is my team that owns the civil service reform agenda which we are just coming on to, laying out what the Government's vision for that is. So yes, the first year has been about, "Let's get control of the money, stop bad spending and do this, do that, do the other", but by the end of Parliament it needs to be much more down the other end of the spectrum, which is about coaching, helping and advising because the system has begun to adapt for itself.
Q86 Chair: Have either of you got a figure in your brain? The £81 billion or whatever it is that we are trying to eke out of the budget, how much is stopping doing things and how much is efficiency?
Ian Watmore: I do not know. These are very rough figures, but I say about a quarter of that £81 billion ought to come from central Government applying real aggressive efficiencies to itself. Probably another quarter can come out of the wider public sector doing the same thing. So about half is my answer.
Q87 Mr Bacon: Before we leave the point about the wider role of the civil service reform agenda: you said a Parliament out, you should have seen a lot of it bed down. Does that include a role in deciding who the Permanent Secretaries of the future are and making sure that they come from an implementation background, so that we end up, fairly soon, with a preponderance, perhaps even more than 50%, of Permanent Secretaries who come from a background where they have done something; by which I mean run something.
Ian Watmore: I am rather heartened by the fact that half of the Permanent Secretaries are now women, so I think we have a real chance for success. I think part of the civil service reform agenda has got to be, as John was saying, to lay out what are the capabilities and expectation of a leader in the system going forward, which include many of the previous things.
Q88 Chair: Is it one of your back office savings: fewer Permanent Secretaries?
Ian Watmore: That would involve fewer Cabinet Ministers, which may never happen.
Mr Bacon: Certainly not in a coalition.
Ian Watmore: Certainly not in a coalition. I think John's leadership points are the ones I would alight on.
Lord Browne: As I am sure you know, the development of a leader is not to go from one extreme to the other. It is to give people a strong suit and a minor suit so that they actually appreciate people who have the minor suit as their major suit. That is actually what a leader needs to do, to be able to understand the diversity of talent and to use it really well. I think by training people in this way you can get a more effective approach to management and leadership.
Q89 Stephen Barclay: On that issue of training, could you give us a sense, with the Major Projects Academy, which I think is a very welcome development, how many people will undertake that training over the next 12 months and what will it involve?
Lord Browne: It is too premature to give an answer. I think you should refer that to David Pitchford in a few months when he has developed it. What he is doing is he has got an outline that I think is fit for purpose and now he is going round filling it up with exactly this detail: size, scale and time.
Q90 Stephen Barclay: This links into that: I was told anecdotally-I do not know if it is correct-that the National School of Government has a training course for people appearing before this Committee, but it does not have a training course for senior responsible owners. I do not know if that is correct or not. How many senior responsible owners are there in central Government? It seems quite difficult to get a handle on that. To what extent are you, at the centre, appraising those and perhaps changing the appraisal system for senior responsible owners to pick up on some of these common issues?
Ian Watmore: One of the things we are doing with the major projects work is trying to assemble the portfolio of major projects; I suspect David talked to you about that last week. Outside of defence, which I think has a special cadre, it is going to be 120-130 projects or something of that ilk that we define are the major projects of Government. Part of his remit is to assure himself that the SRO for each of those projects is somebody who is up to the job and, if they are not, recommend that they are changed.