Cabinet Office and Treasury urged to create new ‘joint office’

Commission says move would strengthen centre of government and could pave the way for a future Office of the Prime Minister and Cabinet
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By Jim Dunton

23 Jun 2021

An influential commission looking at government reform has called for the Cabinet Office and HM Treasury to set up a joint “Office of Strategy, Resources and Performance” to better support the prime minister and improve planning and delivery.

It is the latest recommendation from the Commission for Smart Government, which is led by former Conservative policing minister Lord Nick Herbert and which has the ear of Cabinet Office minister Michael Gove. Gove effectively launched the Declaration on Government Reform at an event hosted by the commission last week.

Under the commission’s latest proposal, the work of the Cabinet Office and the Treasury would remain unchanged, but the two departments’ work on strategic resource and performance planning and monitoring would be brought together into a single unit with its own permanent secretary. The perm sec would report jointly to the cabinet secretary and the Treasury perm sec.

The commission said the new office would build on the existing informal joint working between the Treasury and some Cabinet Office teams. It would operate teams overseeing the government’s main strategic priorities and “account” teams managing the centre of government’s relationship with each department across the whole spectrum of issues.

The proposal starts from the base that government needs to function more strategically, “thinking and acting as one, rather than a collection of departments”, and that leadership can only come from the centre: the Office of the Prime Minister, the Cabinet Office and the Treasury.

The Commission for Smart Government report, written by Martin Wheatley and Francesca Reed, acknowledges the cost implications of machinery of government changes and says they should be an “absolute last resort”.

Wheatley and Reed rejected the idea of creating a new Department of the Prime Minister and Cabinet – which would also contain the spending directorate of the Treasury – on the grounds that it was likely to be opposed by the Treasury and had “significant” transition management risks.

However  they said that that the creation of an Office of Strategy, Resources and Performance could pave the way for the creation of a joined-up Prime Minister’s Office and Cabinet Office in the longer term.

“The focus of the Cabinet Office and Treasury over the rest of 2021 needs to be on the recovery from the pandemic, and managing an ambitious and strategic spending review,” Wheatley and Reed said.

“We also think there is force in the arguments that completely severing government financial management from the Treasury and folding it into a new all-powerful central department is neither desirable nor feasible.

“However, through the rest of the parliament and beyond, we do not think that simply enhancing the capability and resources of the Cabinet Office will create a sufficiently strategic and powerful centre of government.”

They concluded that after the 2021 Spending Review, the Treasury and Cabinet Office should proceed to set up a joint Office of Strategy, Resources and Performance.

“Such a ‘soft’ or ‘shadow’ approach to a unified centre could form the basis for the creation of an Office of the Prime Minister and Cabinet after the next election,” Wheatley and Reed said.

“The staff work to consider and prepare for such a change, so that it was successful and the risks managed, could be done at relative leisure ahead of that.”

The commission’s discussion paper notes that the Declaration on Government Reform speaks of the need for a “smarter centre”. However, the 10-page document does not set out any specific machinery of government changes.

Instead, it seeks to “modernise the operation of government” and “be more disciplined in prioritising and evaluating what we do”.

Among the ambitions contained in the declaration are improvements to cross-government functions, such as digital, finance, commercial and HR. It also contains a pledge to put data “at the heart of decision-making”.

It said: “In order that departments can focus on solving the policy and delivery problems they face, we will ensure that the centre supports them effectively by providing the functions and platforms they need to excel.”

Former chancellor George Osborne contributed to one evidence-gathering session held by the commission for its work on reform of the centre of government. He suggested that the Cabinet Office should be enhanced to give the PM better suppport.

Wheatley and Reed’s discussion paper will feed into the project’s final report.

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