Gus O'Donnell: London house prices making it harder for civil service to share knowledge

As Lords Committee looks into whether Scotland needs a separate civil service, former Cabinet secretary Lord O'Donnell says London house prices "seriously damage mobility" between Whitehall and the rest of the UK

By matt.foster

20 Jan 2016

The high cost of housing in London is preventing some of the country's best officials from working in the capital, former head of the civil service Lord O'Donnell has warned.

According to the latest figures from the Office for National Statistics, there remains a huge gulf between house prices in the capital and the rest of the UK. The average house price in London is now £537,000, while it costs just £173,000 to buy the average home in Wales, £195,000 in Scotland, and £158,000 in Northern Ireland.

Lord O'Donnell, who served as Cabinet secretary from 2005 to 2011, told peers on the Lords Constitutional Committee on Wednesday that he believed the cost of buying a home in London was making it harder for civil servants working in the devolved administrations in Scotland and Wales, as well as the separate civil service in Northern Ireland, to gain vital experience in Whitehall.

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He was speaking as part of an inquiry into the relationship between the UK and the devolved administrations, and Lord O'Donnell's remarks on housing costs came as he elaborated on some of the barriers to closer working between London and the separate Northern Ireland administration.

"There are definite drawbacks to them being a separate civil service, in my eyes," he said. "The fact that they weren't there [in meetings with fellow senior civil servants] every Wednesday. They weren't listening to everything that we were doing as a government. The fact that when it came to selecting civil servants and senior civil servants, they selected from a far smaller pool than anywhere else. I talked to a number of heads of the Northern Ireland civil service who also thought that wasn't great. 

"But the one thing I would say that would improve matters is, alas, not within the hands of this committee: which is please could you reduce London house prices? That would make an enormous difference. That really did seriously damage mobility between Northern Ireland, Wales, Scotland and London."

He was joined at the committee by Lord Kerslake, the former head of the civil service who took on the job after it was briefly separated from the cabinet secretary role in 2011. Kerslake – now a crossbench peer – is currently chairing a review into boosting London's housing supply on behalf of the Institute for Public Policy Research think tank, and he joked: "I won't yet say I'm brave enough to say I have an answer to it."

In recent months, the Cabinet Office has launched a new "One Civil Service" interchange scheme in a bid to give officials in UK departments, as well as those in the Scottish and Welsh governments, more opportunity to experience life working for another administration – without necessarily having to relocate.

In a blog explaining the scheme, current cabinet secretary Sir Jeremy Heywood said that as well as "traditional" one-to-two year postings, the One Civil Service would include "lighter touch options such as job shadowing and mentoring".

He added: "So you don’t have to move house to interchange on this scheme; and this flexibility will enable more exchange of knowledge and skills to take place. We should also take advantage of the opportunities of flexible working that comes with the better IT that we are moving towards."

"Stress test"

Elsewhere in the committee session, both Kerslake and O'Donnell rejected the idea that the increasingly divergent positions of the SNP-led government in Scotland and the Conservative administration in London meant the UK would be better served by having a separate Scottish civil service along the lines of the Northern Ireland model.

Instead, O'Donnell said the Scottish independence referendum had shown that the civil service was more than capable of serving two masters.

"I think if you were thinking of trying to devise a stress test for a unified civil service, what would you do? You would have a referendum where  the Scottish government is in favour of it [leaving the UK] and the UK government is on the other side," he said.

"And I think that showed you, to my mind [...] the way a unified civil service was able to manage what I would regard as probably the hardest thing you can manage when you have a unified civil service, which is where you've got one government arguing a case for independence, and the UK government arguing completely the opposite."

That view was echoed by Kerslake, who dismissed the view that a unified civil service was no longer tenable.

"It's a very intertwined set of arrangements that I think combine both the value of being a single civil service with the proper flexibility and difference that you needed in Scotland and Wales...

"I think the striking thing about the referendum was how few issues came up - there were a few along the way as you would have expected - but given how hard fought and passionate the issues were, and the risk you might have seen divisions building, they didn't."

The Scottish independence referendum was not entirely without controversy for the civil service, however. MPs on the then-Public Administration Committee warned last year that the impartiality of the Treasury's top civil servant was “compromised” by a decision to make public his advice on sharing the pound with an independent Scotland.

The committee also criticised the independence ‘White paper’ published by the Scottish government in 2013, saying it "did not uphold the factual standards expected of a UK government White Paper" and "raised questions about the use of public money for partisan purposes".

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