New 'specialist' pay scale, Single Departmental Plans, and an academy for future Whitehall leaders – eight things we learned from John Manzoni and Matt Hancock's latest grilling by MPs

New 'specialist' payscale to help recruitment, staff cuts at the Cabinet Office, Single Departmental Plans, the future of civil service reform, details on a brand new leadership academy – as the civil service chief executive and minister for the Cabinet Office face MPs, CSW tries to keep up...

By matt.foster

30 Nov 2015

It’s the job of the Public Administration and Constitutional Affairs Committee to get stuck into the detail of the government’s plans for the civil service. In a hefty, wide-ranging session on Monday, the cross-party committee took evidence from civil service chief executive John Manzoni (who's also now the permanent secretary of the Cabinet Office, and pictured above) and Matt Hancock, the minister for the Cabinet Office. 

It's the first time the pair have been questioned since the government-wide Spending Review set out the latest departmental settlements last week, and there was plenty to chew over, including on pay, training and the relationship between the Treasury and Cabinet Office. Here are the eight key things Civil Service World learned from Monday's session...

1. The Cabinet Office is drawing up plans for new permanent civil service payscales to try and help Whitehall recruit and retain specialists at a time of ongoing pay restraint – with a view to reducing the civil service's reliance on contractors

Committee member Paul Flynn gave the pair a particularly hard time over the Cabinet Office’s reported £51m spend on almost 350 contractors last year, with the Labour MP suggesting it was a sign of bad management. Both Manzoni and Hancock (pictured below) were pretty up-front about the problem, with Hancock saying the use of contractors had been “absolutely necessary to improve and strengthen the calibre and quality of people” at the centre of government. But he stressed that the use of specialists from outside Whitehall was a temporary fix to a problem the pair intended to address in the long-run through pay reform.

“I think that the civil service, too much in the past, has thought that for difficult things they need to get outsiders in or contract things out,” the minister said. “I think the civil service is absolutely brilliant at running big things and we want to make sure that people who have those skills are in the civil service on a permanent basis, working to improve the country that they serve.”

So should we expect to see a fall in the number of contractors drafted into Whitehall, Hancock was asked? “Yes – because I want permanent civil servants with those skills within the civil service, and that’s why we’re bringing in new pay bands for those with specialist skills in order to ensure that these skills are deeply embedded in the civil service.”

But Manzoni said addressing the problem could take some time, and pointed out that, on the commercial front, the government had “£3bn-worth of contract expiring every year”, meaning some short-term use of contractors was necessary.

He added: “I’m going to hire more commercial specialists across the government, but to do that I’ve got to create career paths for them otherwise they won’t want to come, I’ve got to change the pay scales otherwise they won’t come, and I’ve got to change the terms and conditions, and I’ve got to do all of that with – at the same time-living within the fiscal constraints of the existing departments.

“So actually we’ve assessed the commercial organisations in each department, we’ve looked at them, we’ve benchmarked them – if that’s not management speak – against what we think would be ideal and we have got a specific set of actions in each department and in the Cabinet Office to say ‘what do our senior commercial specialists need to look like across government over the course of the next few years?’ 

2. The Cabinet Office itself is reducing the number of Senior Civil Servants on its payroll by 30-40% – but shifting some of them into the new specialist category

While some parts of the Cabinet Office received a boost at the Spending Review (notably the bits dedicated to security and intelligence and the Government Digital Service) the core department is expected to reduce its resource budget by 26% by 2019-20.

Explaining the department’s approach to achieving those savings, Manzoni revealed that he was expecting a big reduction in SCS roles. “We're about 20% fewer heads, which is broadly 400 people,” he said. “In addition to that we have a particular focus on the Senior Civil service within the Cabinet Office, which will reduce [by] between 30% and 40%."

The civil service chief said the reduction in senior staff “actually has lots of benefits”, including allowing younger staff at the junior grades “to come up and get some air and grow more”. But rather than a big cull of senior civil servants, it looks as though some of those senior roles will actually be reclassified in line with the specialist category mentioned above. 

“Many of those senior civil servants need to be moved what we call specialist grades,” Manzoni said. “I've mentioned that the introduction of a commercial function, where actually we have to pay a little bit more, [means] we're finding that we can't attract people on existing civil service terms and conditions, so we have to change the terms and conditions and we have to attract them under special delegated authority. But those are specialists, they're not, in the normal way, at Senior Civil Service Grade. So we have to compartmentalise some of our people in that way and move what we've hired as Senior Civil Servants into this category.”

3. The long-awaited Single Departmental Plans (SDPs) – new documents that attempt to tie departments’ priorities with the actual resources available to them – will be out in January, not December as suggested in the Spending Review. And they'll be fleshed out further in March, when we’re likely to get a substantial amount of detail on how the various parts of government are set to change over the next four years

Hancock said the plans for each department would “be published in one go”, and shed light on the process of drawing them up. “The design of the Single Departmental Plans has been going on alongside the Spending Review, because it’s crucial that you tie up the running of the government business as usual with the manifesto commitments for change, and the money to be able to do these things,” he said. “But only when the Spending Review is settled do we know exactly what the budgets are and therefore it takes a short period to fill in the details that can only be settled once the budgets are finalised.”

So what exactly will be in these SDPs, which Manzoni confirmed would be published in January? “There’s two parts to the plan,” he said. “The first is the manifesto commitments and milestones on the way to the delivery of the manifesto commitments That’s a relatively familiar part of the planning process inside departments. I think we’ve done that before… 

“The second part, which is the new bit, is about how the departments will run themselves within the fiscal envelope which they have been set, and how they will do the business as usual. So the transformations that have to happen over the course of the next four years need to be embodied in the plans. That process is going to continue from now until the beginning of the fiscal year in March when we will be launching, if you like, the new phase. There will be a publication in January of those plans at a high level and then there will be continued working of the implementation plans about how the departments will work.”

4. We shouldn’t expect a brand new version of the Civil Service Reform Plan anytime soon

That plan, which Hancock’s predecessor Francis Maude launched in 2012 with a promise to tackle “long-standing weaknesses” and “build on existing strengths” in the civil service, was intended to apply across government, and introduced measures such as the controversial system of performance management for appraising staff. But Manzoni said the next batch of reforms would instead be done on a department-by-department basis rather than through a big bang initiative at the centre.

"The difference this time is that the reform itself will be delivered through the departmental plans for the next parliament,” he said. “It's not something separate. It's not something on the outside going in. It is core and at the heart of the sort of transformations that we've described... The departments will not meet their spending settlements without the sorts of reforms and transformations that have to be effected. So that is the next phase of reform – I think the first one was necessary because it loosened the system. This one is now much more mainstream, into the core of the department changes."

5. A new academy is going to be set up to train the next generation of civil service leaders – and it looks like it’ll be part of a much broader HR strategy for Whitehall to be unveiled in the new year

Manzoni had previously hinted that such an idea was in the works, and a report published by the committee before the election said the civil service needed to carry out an “honest appraisal” of the skills it lacks or risk losing talent to the private sector. Committee chair Bernard Jenkin revealed on Monday that the government had accepted its recommendation to boost leadership training in Whitehall with a dedicated centre, and Manzoni explained that government was now “on the verge of appointing world class delivery partners for something called the leadership academy”.

Manzoni said the academy would occupy its own dedicated site, with “several” locations in the running. Both Manzoni and Hancock were keen not to pre-empt the announcement with too many details, but Hancock said it would form part of a “broader paper which we hope to publish in the new year once we have the new chief people officer [Rupert McNeil] in place”. McNeil will take on the newly-created CPO post, leading on HR matters across the whole of government, in January.

6. HMRC's major office closure programme looks likely to be emulated by other government departments

The tax authority last month unveiled plans to vacate more than 100 sites and focus instead on larger “regional centres”. Manzoni told the committee that HMRC’s plans were in line with broader thinking across government as it seeks to make savings. “[HMRC chief executive] Lin Homer recently announced her closures of buildings for HMRC,” Manzoni said. “When I look down the lens that looks at property across government, the closures and where she [Homer] is going to end up are compatible with other departments’ plans across government. So those two things join up and we now, therefore, have the emergence – it’s not fully done yet – but the emergence of a coherent property plan across government. 

He added: “Otherwise HMRC would have done their own thing, DWP would do their own thing, the Ministry of Justice and the Home Office would do their own thing – but in fact there have been conversations going on across government which ensure the places that Lin wants to move her teams to are in fact the same places [as the rest of government]." Last week’s Spending Review outlined proposals to shrink the Department for Work and Pensions’ estate by 20%, as part of a quest to shave a cool £4.5bn from the cost of the government estate.

7. The recently-spotted tweak to the code of conduct governing the behaviour of special advisers is just an attempt to “normalise” relationships in departments – according to Hancock.

CSW first reported in October that the code had been changed to allow politically-appointed special advisers – known as spads – to convey instructions to permanent civil servants, in a move committee chair Bernard Jenkin warned could set up “a new potential for conflict” in departments. Jenkin took the opportunity at Monday’s session to quiz the minister on why the change had been made.

“Well, this normalises the situation that existed,” Hancock replied. “Special advisers cannot manage or direct civil servants, except where they are passing on the instructions of ministers. This is, I think, an appropriate balance to ensure that ministers and special advisers can work effectively.”

Jenkin asked why, if officials already understood that to be the case, the change was needed?

Hancock said it was “better to write down and describe the working practices as they are”. He added: “If we didn’t make the change then we’d not be reflecting the standard working practices.”

Jenkin raised the spectre of spads walking around departments “waving their code to get things done”, something Hancock denied would happen. “As a matter of fact, I think this is essentially how things have been working and I think it’s better that the code brings clarity to that,” the minister added.

8. The centre of government – that’s the Treasury, the Cabinet Office, and Number 10 – is now much more closely aligned than it has been for some time

Hancock said the Spending Review had seen the Treasury working very closely with the Cabinet Office, explaining the blissful harmony at the heart of government. "What we’ve tried to deliver over the formulation of this Spending Review – and which we fully intend to continue to strengthen – is to have the principle that there’s one centre of government between Number 10, Treasury and the Cabinet Office, working hand in glove."

The minister added: “Of course, there are inevitably lots of different functions within the Cabinet Office, let alone when you then add on the Treasury and the PM’s view. But the principle is to make government more effective by having a more coordinated centre."

Manzoni agreed, saying officials involved in the Spending Review process believed dialogue between the departments and the Cabinet Office had been “much more open” this time around, with joint discussions held and “weekly or monthly meeting between the spend teams and the functional leaders”. He added: ”I think the truth is that all of that functionality is carried out in the centre of government. In this context I see the Treasury and the Cabinet Office as, collectively, the centre of government, with Number 10.”

Hancock also offered another, rather more partisan, explanation for this smooth running of the government machine. “It’s easier to clear things upwards these days because, you know, you don’t have to get Nick Clegg’s clearance to get anything to happen, which was a big blockage in the last parliament. And, you know, government is just more effective than it was.”

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