Civil Service Department
(Transfer of Responsibilities)
The Prime Minister (Mrs. Margaret Thatcher)
With permission, Mr. Speaker, I should like to make a statement on the organisation of the central Departments.
We have made a good deal of progress in the last two and a half years controlling the cost and size of the Civil Service and in improving its efficiency. The Government are most grateful to the Select Committee on the Treasury and Civil Service for all the valuable work it has done in this area and in particular for its report on the future of the Civil Service Department. I look forward to receiving its recommendations as a result of its current study on improving the efficiency and effectiveness of the Civil Service.
I believe that the time has now come when some organisational changes will help us to make sure that the progress we have already achieved is maintained.
Setting up the Civil Service Department 13 years ago had a number of advantages compared with the situation as it existed before. But it had one consequence whose disadvantages have become increasingly apparent over time. It divorced central responsibility for the control of manpower from responsibility for the control of Government expenditure. I judge that the balance of advantage now lies in favour of consolidating the CSD's manpower control responsibilities with the central control of resources.
I therefore propose to reunify responsibility for the central allocation and control of all resources, and to make the Treasury responsible for control over Civil Service manpower, pay, superannuation, allowances and for the Central Computer and Telecommunications Agency. The staff at present concerned with these functions will be transferred to the Treasury.
My hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) will be appointed as a Minister of State in the Treasury to help in the discharge of these responsibilities. He will continue to answer in this House for the whole range of Civil Service matters. The duties of the other Ministers of State in the Treasury will remain unchanged, but my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) will assume the title of Economic Secretary to the Treasury.
I turn now to the Civil Service Department's other responsibilities. It remains my view that there should not be a total merger of the Treasury and the Civil Service Department. The efficiency of the Civil Service in carrying out its functions and the selection and development of civil servants are as important to the Government as the control of public expenditure. The machinery of government should make special provision for this, since it is a subject in which any Prime Minister is bound to take a close personal interest.
I shall therefore continue to be Minister for the Civil Service and to be responsible for the organisation, management and overall efficiency of the Home Civil Service and for policy on recruitment, training and other personnel management matters. My noble Friend Lady Youngthe Chancellor of the Duchy of Lancaster will, as at present, discharge these responsibilities on a day-to-day basis. She will also answer in another place for the whole range of Civil Service matters. [column 659]
The staff involved in these functions will work alongside the Cabinet Office in a new Management and Personnel Office. Sir Robert Armstrong will be Permanent Secretary of this office and will also continue, as the Secretary of the Cabinet, to head the Cabinet Office. He will be assisted on the business of the new office by a second Permanent Secretary, Mr. John Cassels.
An Order in Council will be necessary to transfer the responsibilities for Civil Service manpower and remuneration to the Treasury. The order will be laid before Parliament shortly. In preparation for its coming into effect, the new arrangements will be introduced administratively from 16 November. During the interim period, Sir Geoffrey Howethe Chancellor of the Exchequer will have charge, on my behalf, of the functions to be transferred to the Treasury. Thereafter, there will not be a Department known as the Civil Service Department. There will be some staff savings as a result of the new arrangements.
Sir Ian Bancroft, head of the Home Civil Service and permanent secretary to the Civil Service Department, and Sir John Herbecq, the second permanent secretary, both of whom were due to retire by the end of next year, have with characteristic public spirit accepted that these changes mean their departure from the public service some months early. Both have had long and distinguished careers in the public service, and have served the nation with all the devotion and integrity that we expect from our public servants. Sir Ian served successive Chancellors of the Exchequer with conspicuous distinction. He did much to build up the Department of the Environment before becoming head of the Civil Service in 1977. I am sure that the House would wish to join me in this expression of appreciation and gratitude for the many years of distinguished service that both he and Sir John have given to the country. On Sir Ian Bancroft's retirement, Sir Robert Armstrong and Sir Douglas Wass, the permanent secretary to the Treasury, will become joint heads of the Home Civil Service.
Arrangements are in hand to explain to all the staff of the CSD how they will be affected by the reorganisation. Both the Council of Civil Service unions and the trade union representatives of the CSD's staff are today being informed of the details of the new organisation.
I have placed in the Library copies of a note setting out the distribution of functions between the Treasury and the management and Personnel Office.
Mr. Michael Foot (Ebbw Vale)
The right hon. Lady has made an important statement that affects both the efficiency of the Civil Service and the welfare of those employed by it. However, it seems to be a volte-face—I shall not use the offensive term “U-term” —compared with the statement that the Prime Minister made a few months ago. I hope that she will provide more information as to why that has occurred. I hope that there will be a debate in the House so that hon. Members will be able to discuss her proposals.
What consultations have taken place with the unions and staff concerned? The Prime Minister said that they were being informed of the proposals today, but have there been proper consultations about the people who work in those Departments? Why does she now reject the advice of the Civil Service associations, which have given her and her predecessors advice on these matters? Will the Prime Minister tell the House why she has changed her mind since her statement in January, when she told the House [column 660]that she had decided to strengthen and improve the existing Civil Service Department organisation, rather than to merge the two Departments? Has her mind or the Government's mind been in any way affected by the industrial action earlier this year?
Will the Prime Minister give the House an assurance that the new Management and Personnel Office will have all the power and authority of a Department of State? Why does she consider that the diffuse control of the Civil Service will necessarily make it more efficient? Why does she consider that the Treasury has had such brilliant successes in the last few years that extra powers and authority should be transferred to it?
I join the Prime Minister in her tribute to the individuals and high officials whose names she recorded. I knew some of them and I wish them every success. However, the announcement by the Prime Minister of the dizzy promotion of the hon. Member for Knutsford (Mr. Bruce-Gardyne) to the high post of Economic Secretary to the Treasury will cause terror and derision throughout Whitehall.
The Prime Minister
With regard to the right hon. Gentleman's latter point, my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) will carry out the same responsibilities that he carried out previously. I am surprised that a change of name makes such a dizzy change in the right hon. Gentleman's reactions.
We are not transferring the whole of the Civil Service Department to the Treasury, simply a particular part of it. Experience has continually shown the disadvantages of divorcing the management and control of expenditure on manpower resources in central Government from the management and control of Government expenditure as a whole. That is why the change is being made. Those sections of the CSD will now be closely in tune and in touch with policy changes on resources and control. The efficiency units in the management and personnel parts of the CSD will now amalgamate with the Rayner unit, which hitherto has been under the office of the Prime Minister. It will become a management and personnel office and will therefore be closer to policy-making in general.
There were not advance consultations with the unions. It is difficult in a matter of the machinery of government, of which the first formal notice should come to the House, to hold such consultations. We are very sensitive that Parliament should be the first body to be told. That is the way in which to proceed.
Mr. Edward du Cann (Taunton)
Does not my right hon. Friend agree that vastly more important than the location or the chain of command of the CSD—or whatever its new name is to be—is that it should continue to be an arbiter of the effectiveness and efficiency of the Civil Service? It is disappointing that that has not always been the case in recent years. It remains the policy of the Government to bring about that desirable state of affairs and to raise the standards of the great Departments of State—which, alas, vary so much—to the standards of the highest. Ministers also have a substantial responsibility for that.
With regard to the point raised by the hon. Member for Newham, North-West (Mr. Lewis), is my right hon. Friend able to shed any light on the leaks in the newspapers this morning? Is it not agreed that it is very offensive to [column 661]the House that we should read the Government's proposals almost verbatim in the newspapers before we hear them here?
The Prime Minister
I found those reports in the press today as offensive as did my right hon. and hon. Friends. I cannot shed any light on the leak. The first we knew about it was when we received questions from the press late last night. I do not believe that the leak came from my office. I do not know where it came from. I, too, found it as offensive as my right hon. Friend.
I agree with my right hon. Friend that it is important to get the maximum efficiency. That is why we have the Rayner unit in my office, and why Ministers and permanent secretaries are taking a fresh interest in securing the maximum efficiency within their Departments. I hope that the new office will assist in that direction.
Several Hon. Members
rose——
Mr. Speaker
Order. I have an exceptionally long list of hon. Members who hope to participate in the main debate. I therefore hope that hon. Members will co-operate during questions on the Prime Minister's statement and be as brief as possible, because a Business Statement is to follow before we reach the main business.
Mr. J. Enoch Powell (Down, South)
In spite of the length of the intervention by the Leader of the Opposition, is there any necessity or justification for the time of the House to be taken up by a long and detailed statement, including notification of personnel appointments and retirements in the Civil Service, such as that which has been inflicted upon us this afternoon by the Prime Minister?
The Prime Minister
I am not usually accused of making too many statements—rather, too few. If the House does not wish me to make statements on these matters, I shall refrain from doing so in future.
Sir Timothy Kitson (Richmond, Yorks)
Will there be any financial savings following the reorganisation and, if so, what will they be?
The Prime Minister
I believe that the main financial savings will accrue eventually from putting the manpower control division in the Treasury. That should lead to very much greater efficiency than we have seen in the past few years.
Mr. Richard Wainwright (Colne Valley)
Is the Prime Minister aware that, although she referred in passing to the Select Committee on the Treasury and Civil Service, she omitted any reference to its unanimous report in the previous Session which recommended against the sort of changes that she has announced but made constructive proposals for improving the CSD? The right hon. Lady also did not controvert, or attempt to controvert, the Committee's statement that manpower is a different sort of resource from others and that managing people calls for special skills, not least the ability to negotiate effectively with trade unions?
The Prime Minister
When we received the Select Committee's report we implemented a number of changes that it recommended. Since then it has become increasingly difficult to operate at greatest efficiency with the control of manpower separate from the control of [column 662]expenditure. I am sure that from the point of view of the best allocation of resources we have made the best decision. We look forward to receiving the report on efficiency throughout the Civil Service which I know the Select Committee is engaged upon.
Dr. Jeremy Bray (Motherwell and Wishaw)
Will the Prime Minister answer the question of my right hon. Friend the Leader of the Opposition? What has happened since 29 January when she specifically said that she did not wish to merge the CSD with the Treasury because
“all concentration would go on reorganisation rather than on dealing with the true problem?” —[Official Report, 29 January 1981; Vol. 997, c. 1070.]
Does she not feel that there is a danger of weakening the responsibility of departmental Ministers for the management of their own Departments in this gathering to herself and her office of greater responsibility for the management and personnel in the Civil Service?
The Prime Minister
On the hon. Gentleman's latter point, the Prime Minister is the head of the Civil Service and I do not think that he can accuse me of arrogating greater powers to myself. That is not the point at all. On the hon. Gentleman's first question, I said that it has become increasingly difficult to operate separate control of expenditure and control of manpower. I am sure that we have taken the right managerial decision and that now is the best moment to take it.
Mr. Raymond Whitney (Wycombe)
May I congratulate my right hon. Friend on the decision to abolish the CSD which, over the past 13 years, has, it is sad to note, made a net negative contribution to the efficiency of the Whitehall machine? Will she assure the House that the Government will take the opportunity of the reorganisation to strengthen the role of the Cabinet Office in the co-ordination, planning and presentation of Government policies?
The Prime Minister
I am grateful to my hon. Friend. It will help many of those engaged on the management and personnel side of the former CSD to be more closely attached to the work of the Cabinet Office, which is a policy-making office. Much of their main work will be in improving efficiency, although, strictly, that falls finally within the sphere of each departmental Minister.
There are many wonderful young people in the Civil Service Department who are anxious to have as much influence as possible on increasing the efficiency of the Civil Service as a whole. I hope that the new arrangements will meet with their approval and that they will enjoy working in their new Departments.
Mr. Stanley Cohen (Leeds, South-East)
On a point of order, Mr. Speaker. May I ask for your guidance? I note from our Order Paper that Prime Minister's questions start at 3.15 pm, but is there a limit on how long they should continue? The Leader of the House has to announce next week's business and there is an important debate to follow that. Is there any constitutional rule——
Mr. Speaker
Order. The hon. Gentleman may have overlooked the fact that this is not Prime Minister's Question Time. The Prime Minister has made a statement and at 4 o'clock I shall pass on to the next business.
Mr. John Garrett (Norwich, South)
Does the Prime Minister agree that her proposals make no sense in management terms? How can it be right to give [column 663]responsibility for pay to the Treasury and responsibility for industrial relations to the Cabinet Office, unless industrial relations now count for nothing? How can it be right to put manpower control in the Treasury and efficiency in the Cabinet Office? Is it not a fact that this has nothing to do with a rational analysis of the functions of Government, but is one of her terrible tantrums over the success of the Civil Service strike?
The Prime Minister
It has been argued that the whole of the CSD should go into the Treasury, but as there was already an efficiency unit in the Prime Minister's office, under Sir Derek Rayner, I felt it best that the other functions of the CSD, apart from those connected with pay, pensions and allowances, should be exercised in relation to the efficiency unit in my office. The unions will deal both with the Management and Personnel Office and with the Treasury, according to the matters involved in the consultations.
I deliberately refrained from putting everything back into the Treasury. I believe that the Civil Service Commission, in dealing with matters of recruitment, will be better if it is kept separate and that the Management and Personnel Office is the best place for that.
Dr. David Owen (Plymouth, Devonport)
Is the Prime Minister aware that many people will view her statement with some anxiety, lest it be the first step towards a Prime Minister's Department? There may be some important constitutional issues involved in the decision. Can the right hon. Lady confirm that no previous Prime Minister has ever seen his responsibilities for the Civil Service as being to hold executive responsibility and managerial responsibility for such important areas of overall Civil Service policy and that previously that responsibility has been designated to another Minister? What makes the Prime Minister believe that concentrating power in her office is the right way of proceeding?
The Prime Minister
I do not think that the right hon. Gentleman could have heard everything I said. The Management and Personnel Office will be attached to the Cabinet Office and the efficiency unit, which was in my office, will go to form part of that management and personnel unit. With regard to the Prime Minister taking executive responsibility, I pointed out carefully in my statement that those responsibilities will continue to be discharged in exactly the same way as they are now, either by my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), who will go to the Treasury to discharge them, or by my noble Friend Lady Youngthe Chancellor of the Duchy of Lancaster, who will discharge the day-to-day responsibilities in the Management and Personnel Office in the same way as she does in the CSD now.
Mr. Nigel Forman (Carshalton)
Is my right hon. Friend aware that her package of decisions is amply justified by the disappointing record of the CSD in the years since the Fulton report? Will she undertake to come back to the House in due course, perhaps in a few months, with a report on the savings in manpower and money that may flow her wise decision?
The Prime Minister
I am grateful to my hon. Friend. If we were starting again, I do not think that we would set up the CSD in quite the same way as it was set up. I believe that my hon. Friend's conclusion is correct. In the past few [column 664]years the CSD has reduced its own staff by about 10 per cent. We shall certainly keep a careful watch on the points that my hon. Friend has raised, and report back.
Mr. Michael English (Nottingham, West)
I congratulate the Prime Minister on grasping a nettle that has been around for at least four years. Will she congratulate her hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who was one of the two people who drafted the recommendation in the 1977 Expenditure Committee report, which she has now substantially implemented? Does she agree that that shows that if a Select Committee takes two years to consider the Civil Service—the first time in 106 years that hon. Members had considered the Civil Service as a whole—it demonstrates the strength of bipartisan Select Committees on such matters?
The Prime Minister
I am grateful to the hon. Gentleman. I was aware of the conclusions of that Committee and am glad of the hon. Gentleman's support and the support of all those who constituted the Committee under his chairmanship.
Mr. Philip Holland (Carlton)
Can my right hon. Friend give an assurance that the demise of the CSD will in no way dilute the follow-through on the recent advice and instructions issued to all Departments on the subject of non-departmental public bodies?
The Prime Minister
I am glad to give my hon. Friend that assurance. I hope that the subject in which he has taken a foremost interest will continue to be prosecuted vigorously by Ministers in charge of Departments.
Mr. Charles R. Morris (Manchester, Openshaw)
Would the Prime Minister explain what contribution to Civil Service efficiency will stem from having a two-headed Civil Service administration? Does she recall the phrase she used in her White Paper of February of this year when she said that the functions of the Civil Service Department had a logical cohesion which it would be harmful to split? How can she justify not only splitting it but splitting it three ways?
The Prime Minister
I have explained the reasons for the split, but the split is two ways, not three ways. Those who go to the Treasury will come under Sir Douglas Wass, and the others will be under Sir Robert Armstrong in the Cabinet Office. They will be joint heads of the Civil Service. The right hon. Gentleman is right in that there have not previously been joint heads of the Civil Service, but I am sure that it will work extremely well.
Several Hon. Members
rose——
Mr. Speaker
If hon. Members will be brief, I shall try to call those who have been rising. [Interruption.] Those groans come from hon. Members who have not been seeking to catch my eye.
Mr. Tim Eggar (Enfield, North)
I congratulate my right hon. Friend on this welcome decision. Is she aware that the evidence to the Treasury and Civil Service Sub-Committee showed quite clearly that the CSD was not doing an effective job, in stark contrast to the work being done by Sir Derek Rayner and his team? Can we now expect that a proper management accounting system will be brought into all Departments, not only the Department of the Environment?
[column 665]The Prime Minister
I hope that the amalgamation of those two units into the Management and Personnel Office will help both to carry out their responsibilities as efficiently as possible. I am aware that the management accounting unit to which my hon. Friend refers is now being set up in the Department of the Environment. I hope that that will act as a model for other Departments.
Mr. Robert Sheldon (Ashton-under-Lyne)
Why on 29 January did the right hon. Lady agree that the Civil Service Department should continue its separate existence when now, a few months later, she is trying to join them once again?
Is the right hon. Lady aware that it will not end here? When these matters of pay are dealt with in the Treasury, they will have to go all the way up to the Chancellor of the Exchequer. The trade unions will not be satisfied with meeting the Chief Secretary to the Treasury, as the right hon. Lady's spending Ministers are: they will want to go to the person who makes the final decision. The work of the Treasury will be increased and there will be a concentration of power without the ability to resolve problems any more satisfactorily than at present.
The Prime Minister
I disagree with the right hon. Gentleman. My hon. Friend Barney Hayhoethe Minister of State, Civil Service Department, will continue to carry out the work he is now doing. He has been doing that work in the CSD. He will be doing it in the Treasury. The trade unions will deal with him and they will also consult my right hon. and noble Friend Lady Youngthe Chancellor of the Duchy of Lancaster.
In any event, these matters had previously to come either to me or to Sir Geoffrey Howethe Chancellor of the Exchequer, or groups of Ministers. The system in that respect will not be different.
Mr. Barry Henderson (Fife, East)
Is my right hon. Friend aware of the vital role that information technology can play in efficiency in the Civil Service, from her own office down? Will she assure the House that the changes proposed today will not affect the development of the work of the Central Computer and Telecommunications Agency? Might this not be an opportunity for shifting the responsibility for the agency to my hon. Friend the Minister for Industry and Information Technology?.
Will my right hon. Friend also assure the House that these changes will not in any way affect the dispersal of Civil Service jobs in Glasgow?
The Prime Minister
There will be no change whatever in the dispersal programme of the Civil Service as a result of these changes. [column 666]
I hope that all matters concerning information technology, in which my hon. Friend Kenneth Bakerthe Minister for Industry and Information Technology has taken such a vigorous interest, will continue to be pursued actively. They are important not only to the Civil Service but as an example to the rest of commerce and industry.
Mr. K. J. Woolmer (Batley and Morley)
If a major employer, employing over 600,000 people, announced a decision of this scale and importance only 30 minutes after calling in the unions to tell them, would not this House condemn it as a gross violation of good industrial relations? In view of the significance and importance of such a change, and the reservations expressed today, would it not be appropriate for this House to have the opportunity for a proper debate on the issue?
The Prime Minister
Machinery of government changes have always been announced to this House first, and I believe that that is the way to do it.
Mr. Christopher Price (Lewisham, West)
Where will the ministerial and administrative responsibilities for openness of government, and the follow-through of the flow of directive, now reside? Does the Prime Minister's statement mean that the pledges given to this House by the Lord President of the Council earlier this year, in a debate about the openness of government will be adhered to as strongly as he said they would be in that debate?
The Prime Minister
I do not think that there is any change. I remain head of that part of the office which deals with those things. Lady YoungThe Chancellor of the Duchy of Lancaster will carry out those duties on a day-to-day basis, as she does now.
Mr. Stan Crowther (Rotherham)
Is it not a fact that the Government, in their doctrinaire pursuit of the notion of reducing the total number of civil servants, have concentrated mainly on the industrial civil servants and handed out their work to private contractors? Will the Prime Minister acknowledge that the cleaners, the painters, the electricians, the drivers, and so on, whose jobs are now being destroyed by the thousand, are no less dedicated to the public service than the very senior people to whom she referred in her statement?
The Prime Minister
I do not accept what the hon. Gentleman has said. There have been some reductions in the numbers in the industrial Civil Service, but there have been a similar number of reductions in the non-industrial Civil Service.