‘Perm secs are remarkably immune from accountability for spending’: Maude calls for stronger functions to boost oversight

Delivering the benefits of spend controls requires "strong and capable central leadership" of functions, ex-minister's review finds
Photo: Paul Heartfield

Government’s central functions should be given a stronger mandate and given greater authority to hold departments to account, a review of spend controls and the functional model has found.

Former Cabinet Office minister Lord Francis Maude – who was commissioned by his former department to conduct the review – has made a series of recommendations to improve decision making, capability and “often poor” value for money in government spending.

Lord Maude said central government functions – primarily commercial, IT and digital, property, major projects, finance, and HR – play an important role in holding departments to account on delivery and spending, but that their mandate in these areas should be strengthened.

He said finance ministries like the Treasury are concerned primarily with individual departments’ budgets, and their “interest in how the money is actually spent tends to diminish”. They are “not always well equipped to analyse the cost side” of the cost-benefit equation, making horizontal spend controls operated from the centre of government but outside the Treasury useful.

When properly exercised, spend controls enable departments to work together in a more joined-up way; push departments to plan ahead more effectively; and “build visibility and data” about overall government spending in particular categories like IT or property.

But delivering these benefits requires “strong and capable central leadership” of government functions, to ensure “good and timely” spend control decisions are made. This means spend controls and the functional model are “inextricably linked”, Maude said.

Strengthening this link and making it more explicit could improve accountability over spending – which he said was needed because of a “notable lack of clarity, even honesty, around the extent to which departments are accountable to the centre for operational delivery and value for money”.

He noted that while permanent secretaries are supposed to be accountable to parliament, the Public Accounts Committee scrutinises spending “late in the day and often when the permanent secretary responsible has departed”.

“The reality is that permanent secretaries are remarkably immune from real time accountability for, and oversight over, how they spend public money,” he said.

There should therefore make a “clear statement” that the centre of government will provide real-time oversight and direction over operational and capital expenditure.

This oversight should come via not just normal Treasury controls, but also updated Cabinet Office spend controls and strengthened mandates for the central functional leaders, Maude said.

Strengthening the functions

Maude called for central functions to be given greater powers not just to set standards across government, but to enforce them.

“This means sanctions for non-compliance, and a power for the central function to require real-time visibility where they have reason to believe that a department may be falling short of full compliance,” he said.

He noted that while during the course of the review, he was often told that “nobody today disagrees with the functional model”, some civil service leaders have embraced the model to only a “limited” degree.

“Too often I heard that the central functions exist to ‘support the departments’. Of course they should support the departments. But their mandate must enable them to intervene to prevent departments from going down the wrong path before the damage is done,” he said.

The functions should also be empowered to set – and critically, to enforce – cross-government strategies, Maude said.

“In a perfect world, the development of these functional strategies would precede the comprehensive spending review,” he said, noting that while some functions are “strong enough to have put together a compelling cross-government strategy to inform the spending review”, others are not yet.

Recruiting the best leaders

Strengthening the authority and mandate of the functions requires strong functional leadership, Maude said.

Leaders of each of the functions should therefore be at the top of their field, be able to “inspire, persuade and take people with them”, and be recruited from both inside and outside the civil service.

But Maude said that contrary to conventional wisdom, which says that to attract the best functional leaders from outside, government must pay enough to compete with the private sector, experts are attracted to the civil service by to “opportunity to drive change and deliver results, making a difference on a grand scale that benefits their country”.

“The biggest deterrent for these top players is concern about how they will be treated when they join,” he said, pointing to the “outdated class divide” between policy officials and professional specialists.

“Parity of esteem is essential, and we are still some way short of it,” he said, noting that policy officials see more of ministers and “usually still get the top jobs”.

And he said the civil service still needs to overcome “deep cultural issues” – namely a reluctance to “absorb and benefit from those recruited from outside”.

To be effective, Maude said functional leaders need higher status – and so they should be appointed at either permanent secretary or director general level.

And the government should consider revising civil service recruitment principles to ensure a “sensible and proportionate process similar to those used in the private sector” to appoint functional leaders, he said.

Strengths and weaknesses

Maude’s review looked at the cross-cutting functions in government, particularly commercial, IT and digital, property, major projects, finance, and HR.

These functions “have historically received scant attention either from ministers or the leadership of the civil service”, Maude wrote. “Yet it is through these functions that the bulk of taxpayers’ money gets spent and on which citizens depend for the successful implementation of policies, projects and programmes for which they have voted.”

The functional model – which was enthusiastically championed by former civil service chief executive Sir John Manzoni – “introduces a strong central authority for these functions” by making them horizontal structures running across government, rather than verticals within departments as in many other governments, according to Maude.

Maude said some elements of the model, which was introduced in the five years up to 2015 when he was Cabinet Office minister, have been “spectacularly successful”. For example, the Government Digital Service has become a global brand that has been emulated by a number of other governments, while the Major Projects Authority, which later became the Infrastructure and Projects Authority, had turned a failure rate of 70% into a success rate of 70% in just two years, he said.

Spotlight on commercial and procurement

The review made recommendations for each of the major central functions, among which Maude said the commercial and procurement functions represent the “biggest challenges”.

The commercial function is now in “much better shape than in 2010”, aided by the introduction of a systematic assessment and accreditation process in 2014-15, Maude said.

But there is “much more to do”. In particular, contract management is too often delegated to junior officials who lack the background, experience or clout to effectively manage suppliers.

The chief commercial officer should be given a mandate to ensure all contracts are being managed by properly accredited contract managers, and come up with a plan for completing the assessment and accreditation process for existing contract managers, the review said.

Meanwhile, fragmented procurement processes prevent economies of scale, while centralising this could save the taxpayer “billions” he said.

“I recall that stationery, electricity and fuel were being successfully purchased for the whole of government, but little else. Indeed CCS currently allows for 23 alternative suppliers for passenger vehicle purchases which prevents savings through standardisation or volume,” he added.

Maude said the head of the government commercial function should be asked to prepare an implementation plan for the phased extension of central procurement of commodity goods and services.

The Crown Commercial Service should meanwhile make an “immediate start” on centralising procurement for one category of goods or services “where strong capability exists within CCS, and where there is least scope for exceptionalism”.

Welcoming the report, Cabinet Office minister Michael Gove said it brought up "some key issues which we must address".

“Much of this work is already underway, but there is more to do and no time to waste," he added.

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