Designing government for a better Britain

DESIGNING GOVERNMENT FOR A BETTER BRITAIN Discussion paper This discussion paper explores what improvements could be made to current government structures to make decision-making more effective and less bureaucratic.

This document is intended to facilitate discussion on this topic and we welcome feedback. The ideas and research presented in this paper will inform our final policy recommendations.

June 2021

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THE COMMISSION FOR SMART GOVERNMENT The Commission for Smart Government is an independent initiative to consider how to make public administration more effective. The Commission is a project of GovernUp, which is an independent, non-party research initiative that offers evidenced-based solutions for all political parties to adopt. The 12 workstreams are: Assessment

What have been the standout successes and failures of recent public administrations, and what can we learn from them?

Best Practice

What are the examples of best practice in the UK and around the world from which we can learn?

Talent & Competence

How do we equip civil servants with better skills, recruit and remunerate to attract the best and incentivise success, and share knowledge?

Project Management

How do we ensure government has the right skills and systems in place to commission and manage big projects successfully?

Finance

How do we ensure stronger financial management, strip out cost and drive efficiency?

Structures

How should we improve the current Whitehall structure, with its small yet overlapping centre and siloed departments, to make decision-making more effective and less bureaucratic?

To what extent should we devolve more power and decision-making to local bodies, and how can this be achieved while maintaining a proper role for the UK Government?

How can we make the system, including ministers and civil servants, as well as agencies, regulators and arms-length bodies, more accountable?

Devolution Accountability Technology

How can we deploy technology more effectively and rapidly to improve public services?

Data

How can we ensure that decisions are evidence-based and informed by data?

Ministers

How can we make ministers and advisers more effective in their jobs?

Appointments

How can we ensure that the appointments system attracts the best and aligns with the Government’s priorities?

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COMMISSIONERS Michael Bichard

Deborah Cadman Camilla Cavendish Suma Chakrabarti

Ian Cheshire Phaedra Chrousos Chris Deverell Jayne-Anne Gadhia Martin Gilbert Verity Harding Nick Herbert Margaret Hodge Husayn Kassai Daniel Korski Paul Marshall John Nash Mark Rowley Gisela Stuart Jacky Wright

Lord Bichard KCB is a crossbench peer in the House of Lords and chair of the National Audit Office. He was formerly Permanent Secretary at the Department for Education and the first Director of the Institute for Government.

Deborah Cadman OBE is Chief Executive of Birmingham City Council, and previously of the West Midlands Combined Authority Baroness Cavendish of Little Venice is a former Head of the Number 10 Policy Unit.

Sir Suma Chakrabarti KCB was until recently the President of the European Bank for Reconstruction and Development. He was formerly Permanent Secretary at the Ministry of Justice and the Department for International Development.

Sir Ian Cheshire was the Chairman of Barclays UK plc until 2021. He was formerly the Government Lead Non-Executive Director 2019-2020.

Phaedra Chrousos is the Chief Strategy Officer for Libra Group and a former commissioner for the US Technology and Transformation Service.

General Sir Chris Deverell KCB MBE is the former Commander of UK Joint Forces Command.

Dame Jayne-Anne Gadhia DBE FRSE is a businesswoman and the founder and Executive Chair of the start-up Snoop.

Martin Gilbert is the Chairman of Revolut and the co-founder and former CEO of Aberdeen Asset Management.

Verity Harding is a Visiting Fellow at the Bennett Institute for Public Policy, Cambridge University, where she is on secondment from her role as Global Head of Policy and Partnerships at DeepMind.

Lord Herbert of South Downs CBE PC (Chair) is a former Conservative minister.

Rt Hon Dame Margaret Hodge DBE MP is a Labour Member of Parliament, a former minister, and the former Chair of the House of Commons Public Accounts Committee.

Husayn Kassai is the co-founder and CEO of Onfido.

Daniel Korski CBE is the co-founder and CEO of PUBLIC and a former Deputy Head of the Number 10 Policy Unit.

Sir Paul Marshall is Chair and Chief Investment Officer of Marshall Wace LLP and a former Lead Non-Executive Director at the Department for Education.

Lord Nash is a businessman and Government Lead Non-Executive Director. He is a former minister.

Sir Mark Rowley QPM is a former Assistant Commissioner of the Metropolitan Police.

Baroness Stuart of Edgbaston PC is Lead Non-Executive Director at the Cabinet Office and a former Labour MP and minister.

Jacky Wright is the Chief Digital Officer for Microsoft US.

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Contents Introduction........................................................................................................................5 Summary ............................................................................................................................6 Structural change in government: a means to an end, not an end in itself .................8 Reforming the centre: a powerhouse for turning policy commitments into action 11 The centre of government now ................................................................................. 11 Assessment................................................................................................................... 12 International comparisons.......................................................................................... 13 Key questions ............................................................................................................... 15 (1) Developing and implementing a strategic approach ......................................... 15 (2) Strategy and high-level financial planning ........................................................... 21 (3) Strategy and Civil Service management and effectiveness .............................. 23 (4) Prime Minister’s personal office and other parts of the centre........................ 24 One Team government: bringing different parts of the public service together .... 26 The problem of joined up government ..................................................................... 26 How wider reforms should promote better alignment between departments and services ......................................................................................................................... 27 Is there a case for structural reform? ........................................................................ 28 Enabling teamwork without formal structural reform ........................................... 28 Innovation and teamwork at local level: JOLTs ....................................................... 31 Authors ............................................................................................................................ 34 References ....................................................................................................................... 34

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Introduction The structure of UK government has changed little, in fundamentals, over the last century: •

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“the centre”, consisting of a small Prime Minister’s Office, the Cabinet Office and the Treasury. Perhaps the main enduring change in this set-up has been the migration, after some to-ing and fro-ing, of responsibility for HR and organizational improvement from the Treasury to the Cabinet Office.

Some twenty strongly differentiated departments, typically reporting to a Secretary of State.

All have policy responsibility, many also include large delivery functions. Staff are employed by departments, not the Civil Service, likewise technology and finance are largely managed separately, though recent years have seen attempts by the Cabinet Office to bring about more direction and consistency. Despite the name, they are really separate organisations working together in a highly confederal structure, not sub-divisions of a single government machine.

A highly complex structure of organisations delivering public services, some of them formally part of departments and staffed by civil servants, and others ‘arm’s length bodies.’ i Other public service functions are the responsibility of local government, with its own democratic accountability. The last thirty or so years have seen increasing outsourcing of public service activities to the public and third sector and the removal of functions, independence and resources from local government. That a tax inspector is a civil servant working in a government department, and a care worker typically nowadays works for a private company under contract to a council – both funded by the taxpayer – is the result of historical accident, not of any principle.

While the fundamentals have not changed, the detailed picture has been subject to almost constant flux. Responsibilities have been moved around between departments, which have been created, merged, renamed, broken up and abolished. Other public service organisations have likewise been subjected to frequent renamings, mergers and splits.

This paper explores what improvements could be made to current government structures to make decision-making more effective and less bureaucratic.

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Summary Structural change, in central government and the wider public service, is costly, disruptive, and often ineffective – solving one set of problems while creating another. The Commission’s approach to structural change in government has therefore been cautious: seeing it as a last resort, and considering it towards the end of our process, when we can judge whether or not it is essential for the effectiveness of the reforms we propose in the way government works.

We therefore only propose limited and targeted structural change: • • •

Reform of the centre, to create powerful Offices with a defined remit to drive the Government’s reshaping of Britain and reform of government itself.

The creation of a new Department of Digital, Innovation and Technology, as proposed in our paper Better Digital Government.ii New frameworks for working together, at national and local level, which have too often impeded effective decision-making and service delivery. These enable existing organisations to work better together, as a more effective approach than moving organisational deckchairs.

The Centre of Government The centre of government is not strong enough, either in the way its role is defined, or its capabilities. A former Downing Street Chief of Staff told us: “The focus is so much on the short term, what's in the media, what's going on in Parliament, and not on the long term, either strategic – what you're trying to achieve – or the risks that could confront you.”

The Government wishes create a more effective centre: its June 2021 reform Declaration speaks of a “smarter centre.”

Its structure needs to change for the reforms proposed in the Commission’s papers and by others to be carried through successfully. There is nothing predetermined about it: it has been configured differently in the past, and other countries with similar constitutions organised their centres differently.

We propose a new structure as shown below. The tasks of ‘close personal support for the PM’, making sure the Government has a plan and makes it happen, and fundamental reform are closely interlinked. The three Offices need to work closely together. But they are also distinct, and very demanding tasks, each of which require clear, focused, leadership.

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The structure suggested below could, if desired, evolve into a full-blown Prime Minister’s department, perhaps after the next General Election.

Prime Minister’s Office

Office of Strategy, Resources and Performance

Personal support to the Prime Minister as political Head of Government

Radically reshape existing secretariats, National Security Council, Delivery Unit and Infrastructure and Projects Authority to enable PM and Government to: • •

Decide what it wants to do and make sure it is right (strategy).

Make it happen (delivery).

Office of Government Effectiveness Build on existing Cabinet Office digital, HR, commercial and other Civil Service management and reform functions to direct and oversee fundamental reform of the Civil Service.

Ministers1 and teams overseeing each of the Government’s main priorities.

‘Account teams’ holding each department to account for performance across its responsibilities.

Reporting jointly to PM and Chancellor and absorbing current role of Treasury spending teams.

One Team Government: ‘Joint Ventures’ The Government’s principal policy challenges, net zero, levelling up, and on the international front, all require effective action across government, between departmental headquarters at the national level, and in local public services. Government has repeatedly tried, without consistent or sustained success, to work in this way.

The Total Place experiments of 2009-10 in local public service redesign, and the recent New Zealand government reforms, establishing a legal framework (‘Joint Ventures’) for clear structures and accountability for joint work by public service agencies, offer good models for the UK to deliver effective change on the government’s highest priorities.

We therefore recommend that Government create formal structures both to bring together the work of departments around common goals, and for innovative, agile, experimentation with redesigning services around the citizen at local level – “policy freeports”.

It should set up experiments in both kinds of approach as quickly as possible, without waiting for primary legislation, but it should consider primary legislation if that is needed to remove barriers to joint management of resources and activity, and accountability.

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Structural change in government: a means to an end, not an end in itself The structure of UK government has not changed in fundamentals for a century. At the centre is a small Prime Minister’s Office, the Cabinet Office and the Treasury. Some functions have pingponged between the Cabinet Office and the Treasury. Between 1968 and 1981, the centre also included a Civil Service Department, but it failed to take root, and its functions were absorbed into the Cabinet Office and Treasury.iii The rest of central government consists of some 20 departments, led politically by a Secretary of State and by a Civil Service Permanent Secretary.2 The exact configuration of departments has changed frequently, with responsibilities moved around, and departments being merged, split, renamed, created and abolished. There have been around 30 such changes in the last 40 years.iv Some operational functions of government are carried out by departments themselves, for example tax collection and welfare payments. However, many others are carried out by a large number of delivery organisations of all types, including the National Health Service (NHS), local government, the police, schools and ‘Arm’s Length Bodies’ – bodies outside the departmental structure, funded by government and with leadership appointed by Ministers. The governance of these organisations and their accountability arrangements are highly variable. Organisational structures and boundaries have changed frequently. A list of changes to NHS organisation, for example, over a forty-year period extends over three pages of one study.v A 2019 Institute for Government (IfG) study argues for a generally cautious approach to changing departmental boundaries, arguing that they are often “an expensive distraction.”vi An earlier IfG and LSE study found that a typical change costs £15 million, on costs like offices, integrating systems and branding.vii In addition, the costs of sorting out inconsistencies in pay arrangements can be considerable, £15 million and £140 million in two examples examined by IfG. viii At least as important are the opportunity and intangible costs associated with organisational change: a focus on internal issues rather than external impact, and staff productivity and morale.ix Such costs should be a concern even where there appears to be a good case for change.

However, the IfG found that many changes were not well-considered. Changes have been undertaken to send a political signal, to manage political relationships, or to reconcile the number of Cabinet roles with the maximum allowed by law.x 2

The exception among large departments is Her Majesty’s Revenue and Customs, which does not have its own Secretary of State, Treasury Ministers answering for it in Parliament.

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Restructuring in wider public services is also often problematic – summed up in the title of one study of NHS reorganisation, “The triumph of hope over experience.” The study found that “reorganisation often seems to be pursued in the absence of good evidence”, that wholescale reorganisation was too often adopted rather than careful experimentation or more local flexibility, and each poorly conceived reorganisation seemed to sow the seeds for yet another one.xi Local government reorganisations typically incur implementation costs of tens of millions.

The evidence seems to suggest that they produce net benefits over time, though there is some evidence of optimism bias.xii Structural change can work. The creation of DfID as a separate aid department in 1997 is widely seen to have been a success, ironically in view of last year’s decision to merge it back in to the Foreign Office.xiii Bringing together the formerly separate benefits payment and labour market activities of the former Departments of Social Security and Education and Employment in 2001 ”created a streamlined organisation that has stood the test of time.”xiv Interestingly and importantly, this change was not the result of a rushed decision on a change of government or in a reshuffle. It was the result of work which began four years earlier, and involved careful options appraisal, operational piloting and planning for such issues as systems integration.xv Successful change is possible, with clear purpose and careful planning. But it is often costly and ineffective. The Commission’s approach, reflected in this paper, is that structural change is not the place to start. Wherever possible, we should look to bring about improvements by other means. Changing departmental boundaries should be an absolute last resort, when current structures are either an insuperable obstacle to change, or make it very significantly more difficult.

From that cautious starting point, this paper is selective in its analysis and proposals, and takes as its starting point that structural change should only be contemplated where current structures appear to be a strong block to reforms of capability, systems and culture proposed in previous Commission papers. In particular, we suggest it is vital to consider whether the way government is structured at the moment enables it effectively to undertake three vital roles: • • •

To define and put in place clear strategic plans, bringing together financial planning with outcomes and value; Ensure those plans are implemented effectively, with a particular focus on the outcomes which are most important for the government’s programme; Continuously improve its capability and effectiveness, in the management of resources, digital, people, programmes and projects.

All of these roles involve effective working across the whole of government.

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In our previous paper Better Digital Government, we have argued that the huge opportunities of digital, innovation and science for Britain’s success are so vital that current responsibilities split between DCMS, BEIS and Cabinet Office should be brought together into one Department for Digital, Innovation and Technology.xvi This is our sole proposal for structural change in the array of government departments.

In this paper, we look principally at two sets of issues, in both cases where existing structures seem to create significant barriers to effectiveness: • •

The structure of the centre of government, in particular how its organisation and capability should be improved.

Enabling different parts of the public service to work more effectively together to achieve goals which require shared endeavour, at national and local level.

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Reforming the centre: a powerhouse for turning policy commitments into action The centre of government now The Commission’s previous papers have focused on how government should manage itself and the digital, financial, project management and people capabilities it needs, rather than structures.

However, two common themes are emerging: the need for government to function more strategically, thinking and acting as one, rather than a collection of departments; and radical improvement in government’s digital and people capabilities. Leadership on both these themes can only come from the centre – as currently constituted, No10, the Cabinet Office and Treasury.

So ensuring its remit is clearly defined and its structure is correct is a vital part of making reform happen.

Figure 1 below shows the current location of functions which are, or, could be, carried out at the centre of government.

Figure 1: Centre of government functions Functionxvii

Current location

PM’s personal supportxviii

No10

Day to day policy advice and support

No10 (Policy Unit)

Communications, external relations, Parliamentary relations Co-ordination and dispute resolution

No10

Strategy xix

Unclear, elements may be undertaken by Policy Unit, Cabinet Office and HMT

High level resource allocationxx (closely related to strategy) Central management of key capabilities – digital, HR, project management, commercial, risk management Progress assurance

Treasury

Incubating and catalysing changexxii

If happening, informally via Policy Unit and secretariats. In Blair era, PMIU, SEU (in Cabinet Office). Sometimes has been attempted by secretariat but day job tends to get in the way.

Cabinet Office (secretariats)

Cabinet Officexxi Cabinet Office (new Delivery Unit superseding Implementation Unit), HMT

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Assessment Our initial paper What’s Gone Wrong with Whitehall suggested that: “the centre of government is underpowered and dysfunctional, with inadequate support for the office of Prime Minister and confused roles and accountability. There are big institutional barriers to departments working together. Systems for planning resources and activity are weak.”xxiii Better Digital Government called for a new set of common approaches and standards across government and a crossgovernment Ministerial National Digital Council to provide leadership for that.xxiv Our paper on project management identified lack of clarity about strategy at the centre, and lack of clear authority to manage actively the government’s collection of major projects as a whole – managing them as a “portfolio” in the language of project management.xxv Smart Devolution to: Level Up called for a shift towards strategic delivery of government priorities in partnership with subnational government – “a programmatic response – combining a range of policy steps sequenced across different departments and multiple administrations.”xxvi Our financial management paper calls for a unified strategic resource and performance planning process, resting on a clear strategy for government, and consistent, well-informed assessment of departmental capabilities. This rests on the centre of government being able to operate with clarity and with the right quantity and quality of resources.xxvii Our forthcoming talent management paper will call for proper talent management driven from the centre, something which former No10 Deputy Chief of Staff Kate Fall highlighted to us: “The lack of a modern HR capability struck me as being something that was going to cause problems and has caused problems.”xxviii Former No10 Chiefs of Staff at our evidence session highlighted the problem of strategy too.

Gavin Barwell, for example, said: “the focus is so much on the short term, what's in the media, what's going on in Parliament, and not on the long term, either strategic what you're trying to achieve, or the risks that could confront you.”xxix The current tripartite structure is a source of confusion, even to those with significant inside knowledge. As Sir Ian Cheshire, one of our Commissioners, put it: “I did find the idea of having three head offices really strange, and I could never quite understand where certain things were decided.”xxx There is no shortage of process: the current list of Cabinet Committees runs to 25 pages.xxxi But the ratio of activity to impact is not favourable. One recent senior Downing Street official said:

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“The Cabinet Committees were notorious as horrendous time-sinks, mostly fig leaves unless chaired by the PM or Chancellor, often used as a forum for ministerial ego trips or territorial battles.” xxxii Other recent studies also argue that the centre of government is underpowered. The Institute for Government’s 2014 report on support for the Prime Minister said that: “Any prime minister should be able to take for granted the existence of capacities to co-ordinate and drive their agenda, to support the solving of longer-term problems, to assure progress and to help incubate or catalyse change, in addition to day-to-day support from their private office.” It argued that an effective centre is “essential to provide the bridge between the prime minister and the machinery of government, between the ‘court’ of Number10 and the £715billion (bn) operation which is modern government.”xxxiii In a recent paper for the Institute for Government, former Cabinet Office official Alex Thomas says that: “Recent governments have found it difficult to set direction from No.10 and the Cabinet Office.” He argues that No10 and the Cabinet Office lack agency in critical respects: on policy, that there is “limited capacity at ministerial and senior civil service level to lift decisions above lowest common denominator compromise;” likewise to oversee implementation; to address cross-cutting issues and breaking down barriers between departments; and to manage data and people issues across government. The relative weakness of No10 and the Cabinet Office contrast with the power of the Treasury, with its control over budgets and economic policy, pointing out that they “are regularly outgunned by officials at the Treasury on the essential task of resource allocation.”xxxiv If it is therefore incontestable that the centre of government is not strong enough, either in the way its role is defined, or its capabilities. Its structure needs to change for the reforms proposed in the Commission’s papers and by others to be carried through successfully.

The Government has already started to make some changes to address this. Following a review

by Sir Michael Barber, a Prime Minister’s Delivery Unit is being set up.xxxv The Prime Minister has appointed Neil O’Brien MP to translate the high-level goal of levelling up into a set of policies to make it happen. Its June 2021 reform Declaration speaks of a “smarter” centre of government.xxxvi

International comparisons There is nothing predetermined about the centre of government being organised the way it is.

Over the last half century or so, the central management of the Civil Service has been taken away from the Treasury and put in a Civil Service Department (CSD), separate from both the Treasury and the Cabinet Office (in the 1960s) and then shared in a number of configurations between the The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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Cabinet Office and Treasury in the 1980s and 1990s after the abolition of the CSD. The Treasury relinquished its remaining roles other than public expenditure management in the 1990s, since when the pattern of responsibilities has remained broadly the same. (Though there have been numerous reorganisations and re-namings within the Cabinet Office).

Other countries with similar constitutional heritages and arrangements organise the centre of government in different ways, as Figure 2 below shows.

Figure 2: centre of government in selected other countries PM’s office

Strategy and co-ordination

Civil Service management functions Cabinet Office Public Service Commission (agency of Department of the Prime Minister and Cabinet) Treasury Board Secretariat

Expenditure budgeting and management HM Treasury Department of the Treasury

UK Australia

No10 Prime Minister’s Office

Cabinet Office Department of the Prime Minister and Cabinet

Canada

Office of the Prime Minister

Privy Council Office

New Zealand

Prime Minister’s Private Office

Department of the Prime Minister and Cabinet

Public Service Commission

The Treasury

Singapore

Prime Minister’s Office

Prime Minister’s Office (notably Strategy Group)

Prime Minister’s Office (Public Service Division)

Ministry of Finance

Treasury Board Secretariat

Key points to note

Degree of separation between Civil Service Management and the strategy and coordination functions of the DPMC Combination of spending and Civil Service management roles in single department Minister responsible for Public Service Commission has other roles (currently education and Leader of the House) Breadth of responsibilities of Prime Minister’s Office

Some observations flow from this comparison: • •

Like the UK, most of the other countries described have a separate, small, Prime Minister’s office with a very high proportion of politically appointed staff. Singapore is the exception.

The UK stands out as combining in a single department both government co-ordination and strategy functions and central Civil Service management functions. In other countries, these are either distinct organisational units within a larger central department, or completely separate.

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•

In all countries except Canada central expenditure budgeting is the responsibility of the Finance Ministry or Treasury.

Key questions From this starting point, we examine four questions about the structure of the centre: (1) How does the structure of the centre need to change to support the government in developing and implementing a strategic approach?

(2) Is there a case for structural change to ensure that the closely linked issues of strategy and high-level financial planning are handled effectively?

(3) What should be the relationship between an enhanced strategic function and the Civil Service management and effectiveness function currently in the Cabinet Office?

(4) What should be the structural relationship between the Prime Minister’s personal office and other parts of the centre?

(1) Developing and implementing a strategic approach The key functions for which the centre needs to be providing leadership for government are: • •

Deciding what it wants to do, and making sure it is right (strategy).

Making it happen (delivery).

Both need to work. It is equally futile either to be brilliant at strategy but not able to make anything happen; or to have great systems for delivery, but of the wrong things. Indeed, if the strategy is not clearly defined, delivery planning is futile.

As Sally Morgan, a former No10 Director of Government Relations told us, this creates particular challenges in government: “In terms of strategy and delivery, it's so unlike the private sector. You've got quite a limited time to actually develop the strategy, try and move forward, before you're then going back out to the electorate which is a real issue.”xxxvii

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The Government’s main ambitions – net zero, levelling up, global Britain, and indeed making government itself work better – cannot be pigeonholed wholly or mainly into one department.

They need the whole machine to be working together. Ministers need to work together to oversee the different elements and sign off the key decisions. At the centre of government, close to the PM, there need to be teams of people with the right skills to help him and others decide what to do and make sure it happens, getting money and other resources to where they are needed, and make sure the important day-to-day business of government carries on.

Government needs to have strong approaches to designing and delivering individual pieces of the jigsaw, but it also needs to be able to look at the big picture, all the pieces together. That would include: • •

• • •

•

Deciding which pieces are most important, based on the difference they make to the government’s main ambitions, and how risky they are.

Being absolutely clear about authority and accountability for each element. This is particularly vital when so many of the Government’s ambitions depend on a number of departments delivering different elements. This extends beyond central government, to arm’s length bodies, metro mayors, local government and other parts of the wider public service.

Making sure departments, their senior leadership and the wider public service are incentivised to work together and consider the big picture, not just the delivery of their own elements.

Looking at the whole jigsaw and decide whether it will actually deliver the things the government thinks are most important.

Choosing how it spends its money (there will never be enough for absolutely everything): looking across the pieces as a whole, where will it get most bangs for its bucks? And is it spending money on the same things in different places?

Balancing change and reform against keeping the essential everyday business of government going.

This is not one-off. Government needs to be looking at all the main pieces on a regular cycle, checking how they are getting on, moving money and people round the system quickly when required. All this needs to be based on the facts about what is going on, so excellent data, and the systems to enable it to be analysed, are vital. Ministers and senior civil servants need to use those facts to answer key questions: • • • •

Do we start this new project or not?

Is this existing project worth continuing with or not?

How can we make projects happen cost-effectively?

How can we allocate money to achieve the greatest impact across the whole system?

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What we are describing is not rocket science. As “portfolio management”, it is common practice in corporates and in the better run departments (for example HMRC). Nor is it unprecedented to set up strategic capability at the centre which goes beyond co-ordination. For example, the Blair government established the Performance and Innovation Unit (later renamed Strategy Unit), and units working on specific topics, like the Social Exclusion Unit.xxxviii It would be a significant extension of the existing role of the Cabinet Office in ensuring that policy and execution are well co-ordinated across government, and (through the Infrastructure and Projects Authority) overseeing government’s most important projects. The key differences are that: •

•

the centre would have stronger capacity to reach its own view, bring departments and arm’s length bodies together around it, and to direct and exercise control over execution, not least through having control over, and accountability over the totality of spending across the piece.

A rigorous, disciplined, approach, drawing on established effective practice in portfolio management would be adopted to formulating, reviewing and overseeing the execution of the government’s most important priorities.

We emphasise that this is about leadership, not attempting to manage everything from the centre: steering, not rowing. Indeed, the essential requirement to be able to see the big picture, and distinguish the wood from the trees, means that systems and staffing at the centre need to embody quality, not quantity. The approach should build on the experience of the Brexit Operations Committee (“XO”), which Michael Gove has commended as a model for the future.xxxix A precedent and model, which indeed should be retained and adapted to support the Government’s Global Britain priority, is the National Security Council, created under the Coalition. The Institute for Government’s study of suggested its success was based on five main characteristics, set out in Figure 3 below.xl They seem to us to be applicable to challenges outside the security and international sphere.

Figure 3: National Security Council: Features of effective performance Prime ministerial commitment High-level senior attendance by ministers, including key political players Participation of officials in discussions Lead departments being prepared to ‘cede sovereignty’ on issues under discussion High-powered, activist and well-resourced secretariats.

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The main changes needed from the systems and structures in place now are therefore: •

• •

Creating Ministerial groups for each of the Government’s main ambitions, for external impact and for system reform. Each needs a chair or leader with the PM’s strong backing. Depending on the issue and personalities, that could be a departmental Secretary of State and has an explicit additional role leading on a particular ambition. Or it could be a Minister without major direct departmental responsibilities.

Top officials in groups backing up the Ministerial groups.

Official teams at the centre of government with more firepower than now to support the Ministerial and official groups in defining strategy and overseeing execution.

A likely list of the priorities which these structures should support is set out in Figure 4 below.

Figure 4: Thematic teams: likely topics Levelling Up Net Zero Global Britain (maintaining and developing existing National Security Council structure) National Digital Council (as recommended in Better Digital Governmentxli)

The official teams should be a mix of career civil servants and people with subject expertise from outside government – business, tech, other parts of the public service and charities, universities.

They need to bring together: technical experts, strategic thinkers, and people who know how to plan and organise activity, and monitor what is going on.

Diagrams showing the structure of the new Office and an illustrative description of how it would support the proposed approach to decision-making are on pages 16 and 17 (Figures 5 and 6).

The corollary of setting up more powerful, effective, mechanisms for supporting the Government in working as one on its most important priorities should be a ruthless cull of current committees or groups which are not important for the Government’s strategy and consume too much Ministerial time and official resource to too little effect – the “time-sinks” castigated by a former No10 (page 10 above). We emphasise that our proposals are not to add these mechanisms to the extensive existing structure, but to replace it with a set of Ministerial groups and supporting official teams which are action-focused, in keeping with our general theme about prioritisation.

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Figure 5: proposed structure of Office of Strategy, Delivery and Resources The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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Figure 6: Description of new approach to handling major cross-cutting priorities Ministerial Team for Levelling Up Membership: SoSs for: BEIS; DCMS; DfE; Defra; DIT; DfT; DWP; DHSC; HO; MHCLG; MoJ; plus CST and Minister of State for Levelling Up. Chair: SoS for one of the participant departments, as chosen by PM Perm Secs from each department represented (also meeting in a shadow committee) Terms of reference: - To define a whole-of-government strategy for levelling up, consisting of a package of capital investment and public service improvement, each defined by a long term target and a 2024 milestone - To define output and outcome measures, key interim milestones and KPIs - To manage the collection of activities across government that contributes to delivery of the levelling up strategy, including: Prioritising activities according to their contribution to strategic objectives and level of risk.

Reviewing whether taken together activities are sufficient to achieve the strategic objectives and the return on investment.

Providing high level governance for the collection of departments, agencies and arm’s length bodies involved in delivery.

Allocating funding, people and digital resource so they are allocated effectively and efficiently across both activities and places eliminate duplication; reallocating resources where necessary.

Identifying how activities impact on each other, and risk.

Balancing new initiatives sensibly alongside business as usual.

Managing external relationships: metro Mayors, local government, business and third sector Accountability: - Chair of Levelling Up Committee is accountable to PM and Cabinet for overall coherence and execution of the strategy, and return on investment.

- Chair is accountable to Parliament for overall coherence and execution of strategy.

- Each SOS is accountable to PM and Cabinet and to Parliament for delivery of the activity within the strategy that is allocated to their departments.

- Permanent Secretary accountability mirrors SOS accountability.

Finances: - Committee has oversight of the “Levelling Up Budget”, and ensuring: o Resources are allocated against priorities o Value is maximised Secretariat: - A small, very high calibre team of around 10-20 people (some full-time, some, for example subject experts, part time, comprising: civil servants, specialist advisers, secondees, with technical and domain expertise and portfolio management skills.)

Example agenda: - Where to invest in new initiatives - Whether to continue to invest in existing activity - How to ensure efficient and effective delivery - How to maximise the return on investment

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(2) Strategy and high-level financial planning There are three potential approaches: (1) No structural change: rely on the enhanced strategy function to work effectively alongside the Treasury to ensure strategy and financial plans are aligned.

(2) A shared Office of Resources and Performance, reporting to both the Cabinet Office and the Treasury.

(3) Full integration of strategy and financial planning, bringing together the current responsibilities of the Cabinet Office with the spending management functions of the Treasury.

No structural change This approach avoids the disruption and risk of significant structural change. The Cabinet Office would have more firepower, in relation both to departments and the Treasury, in developing strategy and delivery plans, overseeing progress and holding departments to account. The Treasury and Cabinet Office say that they already work together effectively on such matters as departmental plans, major projects and procurement. There was close and successful alignment in 2001-05 between the Treasury and the Prime Minister’s Delivery Unit.xlii However, even with a continuation of the current close working between the Treasury and some parts of the Cabinet Office, resource allocation would remain in the Treasury’s hands, risking a continuation of the current tendency for departments to prioritise their relationship with the Treasury over the Cabinet Office.xliii A new unified Office of Strategy, Resources and Performance Under this option, the responsibilities of the Cabinet Office and Treasury would remain unchanged, but the work of the two departments on strategic resource and performance planning and monitoring would be brought together into a single unit (for which our working title is the Office of Strategy, Resources and Performance), with dual reporting lines. Building on the existing informal joint working between the Treasury and some Cabinet Office teams, the Office would operate: • •

Teams overseeing the government’s main strategic priorities (as described above).

‘Account’ teams, managing the centre’s relationship with each department across the whole spectrum of issues.

The head of the Office would have Permanent Secretary status and report jointly to the Cabinet Secretary and Treasury Permanent Secretary.

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The staffing would be a mix of officials with career bases in the Cabinet Office, the Treasury, departments and the wider public service (on loan or secondment), and relevant backgrounds outside public service, as described above.

This option would give the Prime Minister a stronger sway in strategic decision-making and resources and ensuring delivery, without severing responsibility for public spending from the other aspects of the Treasury’s role in fiscal and economic policy. Departments would benefit from a single focal point at the centre for discussions about resources and performance.

However, there are always risks in dual reporting lines. In this case, success would depend on successive combinations of Prime Minister and Chancellor being consistent in their view on government priorities, and on the priorities of the Office and how it should go about its work.

The accountability of the head of the Office would also be more complicated than if the role reported to one person.

Department of the Prime Minister and Cabinet The most radical option would be to create a new department at the centre, combining responsibility for strategy and delivery with the spending directorate of the Treasury.

Such a restructure of the centre has been proposed a number of times. In 2004-05, Tony Blair gave serious consideration to setting up an ‘Office of Budget and Delivery’. xliv Two papers published ahead of the 2015 election, by NESTA and by GovernUp, proposed a single Office dealing with spending and the management of government. xlv There was speculation before the 2017 election that Theresa May would split up the Treasury.xlvi The reasons such proposals have not been implemented are a mix of political and substantive.

The politics of breaking up the Treasury are extremely difficult, when the Chancellor is so pivotal in the Government. An incumbent would likely fight such proposals, publicly and to the point of resignation. It would be a bold Prime Minister who took on that risk for the sake of a change of this kind. There are also substantive counter-arguments: •

•

One strand of criticism of current arrangements is that they make the Treasury overpowerful. A new unit of this kind would be even more so. That could have big benefits in terms of driving strategy, resource management and delivery focus in government, but such a department could become over-mighty and interfering, when the counterpart of a more strategic approach from the centre of government should be sensible autonomy on detail and the day-to-day for departments.xlvii The Treasury, in particular, is likely to argue that the management of public spending is such a vital part of national economic policy that it cannot be severed from it entirely. Effective

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spending control is a central part of fiscal management. Spending on infrastructure and skills, scale and programme design, also has very significant microeconomic implications. It is likely that, in practice, the Treasury would maintain capacity for forming its own view about departmental spending, operating alongside the new unit, and leading to the same mixed messages and confused accountability which characterise the current arrangements.

In addition, previous critiques of the current structure which have not recommended a radical restructuring, like Lord Kerslake’s 2017 review for the Labour Party, have pointed out the transition management risks involved in a very significant restructuring of functions, in the Treasury and Cabinet Office, which are so vital to effective government.xlviii Conclusion: our recommendation 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 as we recommend in our paper on financial management. 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. We therefore recommend that, following the conclusion of the 2021 spending review, the Treasury and Cabinet Office should proceed to set up a joint Office of Strategy, Resources and Performance as we describe above. 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. 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.

(3) Strategy and Civil Service management and effectiveness Organising government to set and execute a clear strategy, and carrying out a programme of reform to government’s digital, people and other capabilities, are both essential and interdependent. On the one hand, the success of a strategy and delivery function depends on rapid and radical improvement in capability, such as we have proposed in our digital and talent and competence papers, and for which the Government is developing its own plans. On the other hand, a successful programme of reforms to capability must be based on clear answers to the question “capability for what?” which need to derive from a clear picture of what the Government’s intentions are and how it intends to bring them about.

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These challenges are linked, but they are also distinct. They are currently combined in the Cabinet Office (though, as explained above, its strategic capability is not well developed). Especially if the strategic function develops in the way we propose, it is important that both it and improving capability have their own clear leadership. In particular, the strategy function needs to be small, focused and high-powered, not bound up in a department of over 6,000 officials, as the Cabinet Office is now.

The two functions are all separate in the other countries whose arrangements are summarised on page 11 above. (They are both part of the Singapore Prime Minister’s Office, but as organisationally distinct entities.)

We therefore propose that the strategic function, as proposed in (1) and (2) above, is organisationally wholly separate from an Office of Government Effectiveness, which would be formed from the parts of the Cabinet Office currently led by the Government’s Chief Operating Officer. The Office of Government Effectiveness also requires its own full-time political leadership, and board, with suitably qualified non-executives.

(4) Prime Minister’s personal office and other parts of the centre Proponents of stronger support for the Prime Minister sometimes envisage a Prime Minister’s Department bringing together, in some combination, central functions concerned with strategy, delivery and public service reform, with the Prime Minister’s personal office.

Aside from Singapore, in all the other countries whose arrangements are summarised on page 11 above, the Prime Minister’s Office is a distinct, small, highly political unit, not part of a larger central department.

In the UK too, there are strong arguments for keeping the Prime Minister’s personal office separate from other parts of the centre of government. If the strategic and Civil Service reform functions we have discussed above are designed and led in the right way, they will enhance the ability of the Prime Minister and his team to provide leadership for government. There is a long history of housing units which provide strategic support for the Prime Minister in the Cabinet Office. Some examples are quoted on page 13 above. They were successful, not because they were formally part of a single operation with No10, but because the Prime Minister had given them a clear mandate and was engaged in their work in a way which was visible to the rest of the system.

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As Jonathan Powell told us: “I think it's quite important not to import into No10 too many other functions. There's always a danger of sucking in different things. We had, of course, the Delivery Unit, which was a very good thing. But we didn't have it in No10….Later the Strategy Unit which was not in No10, it was outside No10 but reporting to No10.”xlix

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One Team government: bringing different parts of the public service together The problem of joined up government It has been a very longstanding criticism of UK government that there are significant barriers to joint working between different parts of the public service. This matters because many public policy challenges require more than one agency to work jointly with a citizen. For example, offender rehabilitation requires collaboration between justice, employment and welfare, health and housing agencies. Likewise achieving policy goals which are associated with place is difficult if different parts of government do not bring together their investment and service activity together. Two of the current Government’s areas of ambition, levelling up and net zero, both have a strong place element.l The current Government has ambitions to address these challenges. Michael Gove has spoken of needing “to look beyond the outdated model of individual departmental baronies.”li Our proposals in this section are intended to provide some radical, yet practical, thinking about how that could be done.

Successive governments have tried to bring about more effective working between different parts of the public service. In the first year of his premiership, Tony Blair said that “joined up problems demand joined up solutions.”lii A key principle of policy development by his Social Exclusion Unit was to bring together the work of different parts of government to produce better outcomes for individuals at risk of exclusion, and neighbourhoods with high levels of deprivation. liii In 20092010, the Total Place initiative aimed to bring together elements of central government and local agencies within a place, with twin objectives of making better use of resources and achieving stronger impact on citizens.liv Likewise, the devolution deals which have been implemented for a number of English metro areas since 2014 are intended to improve the deployment of capital programmes and public service delivery.

However, as with other aspects of public service reform, bringing about better inter-agency working has proved easier said than done. In fairness, this challenge is not unique to UK government. It is a commonly experienced problem for governments round the world. lv An unintended consequence of New Public Management reforms, with their emphasis on clarity of organisational goals and accountability for results, may have been to make organisations and their leaders even more reluctant to collaborate: an intention of New Zealand’s public service reforms has been to correct for this.lvi The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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How to overcome barriers to working across government has been a strong theme of previous Commission papers. In our initial paper What’s Gone Wrong with Whitehall we argued that the separate Parliamentary accountability (of both Ministers and Accounting Officers), and political competition, mean that “working across departmental boundaries…is against the grain.” lvii Our discussion paper on digital pointed out such problems as citizens having to set up multiple accounts with different government agencies, and a lack of ‘shared plumbing’ – digital infrastructure to support common activities. There have been some improvements since the creation of the Government Digital Service in 2011, but such problems persist, to a considerable extent.lviii For project management too, the division of government into departments with separate missions and accountability inhibits properly understanding the combined impact of projects on government priorities, and on places.lix Lack of effective working across government inhibits financial management. Our finance paper found that: “The UK has also not done enough to pull together the work of departments, so that the whole is more than the sum of the parts. Spending has normally been planned on the basis of financial allocations to departments, not what government as a whole is seeking to achieve, with plans bringing together the work of different departments to contribute to a whole. At an even more basic level, the current approach has failed to prevent cost-shunting between different parts of government, with reductions in spending in one place resulting in increased pressures elsewhere.”lx

How wider reforms should promote better alignment between departments and services Although the problem manifests itself as a structural problem, other important reforms, which are not structural in nature, for which the Commission is arguing should help address it. Above all, being clearer about strategy, as we have argued in our papers on digital, project management, finance and Ministers, should promote better alignment across government and the public service, through a focus on combined impact on a manageable number of important issues.

A stronger and better organised centre of government, as proposed in the earlier part of this paper, would also be better able to understand the combined impact of spending and services on citizens and places, and to work with departments on planning resources and activity, including the role of arm’s length bodies, in a co-ordinated way, and bringing about effective delivery.

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Devolution, as proposed in the Commission’s recent paper, would also assist with bringing together investment and services around the needs of places and citizens. Decisions would be taken by people with more knowledge of local areas, and it should be easier to solve problems in specific places, with their own distinct circumstances and opportunities, than to find one-sizefits-all solutions to working together at the national level.

Is there a case for structural reform?

Further formal reorganisation of government, either at the national level or in front line public services, is unlikely to be a feasible or effective component of a solution. It would be impossible to create departments for net zero or levelling up, because both priorities require action across spans of policy, investment and service delivery far beyond what would be manageable for a single department. For, example, the former Department of Energy and Climate Change was directly in charge of energy supply, but action in other important sectors for carbon reduction, housing and transport, was the responsibility of other departments. Defra continued to be responsible for climate mitigation. Levelling up, done effectively, demands action from all domestic departments. Both climate change and levelling up have international ramifications, notably multilateral climate negotiations and inward investment. At local level likewise, formal mergers of local organisations are not the answer: rather, there is a need for mechanisms which promote collaboration based on a shared understanding of the needs of local people and places, but do not involve the cost, disruption and delay of formal restructuring.

Enabling teamwork without formal structural reform Our scepticism about formal reorganisation does not mean there is nothing which can be done about the way departments and services can work together. We suggest there is much to be learned, both from the Total Place experiments of 2009-10, and from reforms in New Zealand, to put in place new models for collaboration which, to a considerable extent, ease the traditional barriers to joint working, accountability, and political and institutional competitiveness.

Total Place Rather than significant organisational reform, Total Place (Figure 7) emphasised the potential to bring about better services for citizens and more efficient use of resources by organising around a small number of outcomes. In some places, most ambitiously, this was to be achieved through ‘the Single Offer’ – enabling local public services to deliver greater transparency, efficiency and The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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value for the citizen and the public purse through a reduction in ringfences, agreeing a small number of outcomes targets and indicators, and with carefully controlled assessment and with lighter touch assessment and reporting. Elsewhere, there was to be ‘the innovative policy offer’, with freedoms linked only to an agreed policy area, with expectation of identifying potential savings.lxi Figure 7: Total Place Total Place was an initiative led by central government. Over a twelve month period from April 2009 it aimed to bring together elements of central government and local agencies within a place. It aimed to show how a place-based approach to local public services could deliver better outcomes and improved value for money. It was intended to break down the existing top down departmental models and cultures of accountability and service delivery.

The Total Place approach was tested in 13 pilot areas (covering 63 local authorities, 34 Primary Care Trusts, 12 fire authorities and 13 police authorities) in different areas but with a common objective; •

examine the totality of public spending, with a view to cutting duplication, saving money and improving service delivery;

•

redesign services around citizens (utilising the ‘customer insight’ methodology).

Each pilot mapped the totality of public spend in their area and took a different theme. For example, in Manchester - delivery of services to young children under 5, Dorset/Poole - services for older people, Luton & Bedfordshire - offender management and access to benefits and Birmingham - health, housing & crime.

The initiative was steered by a ministerial group and a high-level officials’ group which included representatives from the LGA, delivery agencies from the pilot places and the significant spend departments, including HM Treasury.

Creating new legal structures for joint working by departments and public services Faced with similar social policy challenges, and structural and cultural barriers to tackling them in the public service, the New Zealand government has put in place a new legal framework, which it calls ‘Joint Ventures’, to address them. The Public Service Act provides new legal structures for: • • •

“Interdepartmental executive boards” whose purpose is “to align and co-ordinate policy, planning, and budgeting activities for two or more departments.”lxii “Interdepartmental ventures”, to deliver services or regulatory functions on behalf of two or more departments.lxiii “Joint operational agreements” “to provide a formal structure for co-operative and collaborative working arrangements between public service agencies.”lxiv

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•

Functional leadership, similar to the UK functions, giving specific authority to certain chief executives to lead functions across government.lxv

The new approach is being used to tackle family violence and sexual violence – a classic “wicked issue” demanding action by justice, health, education and welfare. The main features of the new arrangements are: • •

• • •

A Ministerial group, led by a Justice Minister, with representation from the ministries of Social Development, Māori Development, Children and Seniors; Governance by the Chief Executives who currently sit on the Social Wellbeing Board: the Department of Prime Minister and Cabinet, Children and Families, Health, Maori Development, Social Development, Education and Justice; Support for the Chief Executives from a Director and dedicated business unit; A joint venture Budget allocation of over NZ$200m; Bespoke arrangements for advisory input from the Maori community and external experts.lxvi

The New Zealand Government found that, so hard-wired have the drivers for departmentalism been, it was necessary to use changes in primary legislation to overcome them, after having tried other approaches over a number of years. However, as well as legislation, they need clear objectives, and aligned authority and accountability, as former Prime Minister Bill English told us.lxvii At least as important as structures and changes to the way funding and accountability are organised, clarity about the shared goals for which they are being put in place is vital.

If the UK government put in place a framework of this kind, it would provide an excellent basis for the political and Civil Service governance of delivery of the government’s major priorities, notably net zero and levelling up. The support unit for each ‘Joint Venture’ would be located in the central Office of Resources and Delivery which we propose in the previous section of this paper. On a smaller, but still significant, scale, ‘Joint Ventures’ would also be a good framework for lesser, but still important, goals, like reducing reoffending or homelessness, with a lead department but requiring collaboration with others. They would also be a good framework for the Digital Task Forces proposed in our Better Digital Government paper to carry out digitallydriven radical redesign of cross-cutting services.lxviii We suggest there is a strong case for putting in place a UK version of joint ventures. As well as the components outlined above, the prospects of their success would be increased by a strong political commitment to collaborative working, visibly modelled by Ministers, and a willingness

by Parliament to exercise its scrutiny function in new ways, like joint Committee hearings on the work of Joint Ventures. The Government should put some experimental structures in The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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place as soon as possible, with as much radicalism as is possible without primary legislation.

But, learning lessons from New Zealand, it should consider whether primary legislation would assist in enabling such ways of working to be fully successful in terms of joint management of resources and activity, and accountability.

Innovation and teamwork at local level: JOLTs In the UK, a larger country with a developing architecture of metro region governance, there is an opportunity to take the approach further, by creating a similar legal framework for cooperation in metro regions at local level.

The Government is already taking steps to make the development of policy and infrastructure plans less London-based. The Places for Growth programme is working to relocate Civil Service roles away from London to places where that can contribute to align with national and local industrial strategy, The Beyond Whitehall programme, create improved career pathways for civil servants away from London, and improve social mobility and diversity. lxix The 2020 spending review announced the relocation of 22,000 roles away from London by 2030.lxx The relocation of workplaces and roles creates the opportunity also to experiment with innovative new ways of working: civil servants working alongside local agencies in a variety of places away from London to experiment with radical redesign of local services – ‘Freeports for Social Policy’ as Polly McKenzie, Chief Executive of Demos, put it in the Commission’s evidence session on devolution.

‘Joint Local Action Teams’ (JOLTs) would be cross-organisational, place-based joint ventures, bringing together local government, the local presence of government departments, like DWP, arm’s length bodies, health, the police and other local public services, depending on the issue being tackled. At least as important, they would harness the insight and effectiveness of local business and the third sector. Figure 8 sets out how an initial small number of pathfinder Teams could operate.

The initial teams would test whether a radically different approach to working together at local level could produce two kinds of benefits: •

By acting as “policy freeports”, allow for the testing of radically different approaches to tackling the big challenges which the government has identified, particularly net zero and levelling up. They could, for example, try out new approaches to replacing gas central hearing with low- and zero-carbon technologies in existing housing; or to training people in new technology skills in regions where economic performance has lagged for too long.

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•

As models for public service reform, testing how current bureaucratic approaches, characterised by division and mistrust between different parts of government, and with too little engagement with business and the third sector, can be replaced by strong team-work, open to talented people of all backgrounds, and making the most of the ambition and insight of local business and institutions. At the heart of their approach would be liberating frontline professionals from pointless bureaucracy and reporting requirements.

Equipping these teams with a single budget, drawing on the resources of a number of departments, arm’s length bodies, local government itself and other public sector entities, and with a single set of accountability arrangements, will be critical to their success. Effective delivery and value for money are fatally undermined when people leading local planning and delivery have to manage multiple national government funding streams, subject to different timing and accountability arrangements. The way this approach, too often government’s default, leads to wasteful spending and ineffective delivery is very well documented.lxxi A recent report on Cultural Compacts, local place-based teams with similar characteristics to those we propose here, found that, in the next phase, they should be the vehicle for bringing together a range of different government funding streams.lxxii As with joint ventures at national level, a small number of pathfinder schemes should be put in place, with as much radicalism as is possible without legislation. But the Government should not hold back from legislation if it would enable such structures to work better.

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Figure 8: JOINT LOCAL ACTION TEAMS (JOLTs) Purposes: (1) to bring together all parts of government, and local business and the third sector, to design and deliver innovative and successful local approaches to national priorities. For example: • (net zero) – home energy retrofit, decarbonising transport.

• (levelling up) – transformation of adult skills provision, housing regeneration.

Teams will have a clearly defined mission based on desired outcome (for example carbon reduction or increase in regional GVA) and geographic scope, fit for their individual purposes.

(2) to spearhead new style of government: collaborative, innovative, agile, unbureaucratic, harnessing people with a wide spectrum of professional and personal backgrounds.

Teams will draw on talented people in cities and regions from a wide range of social and organisational backgrounds, and on civil servants in new regional hubs. Central to their approach will be experimentation, test and refine, with learning informing their own work and delivery elsewhere.

The main elements of Teams’ work will be: •

• • • • •

Strategy: working out how to deploy resources and activity to bring about the intended outcomes, resulting in a defined set (portfolio) of projects with planned outputs, together achieving the outcomes. For longer term outcomes, there will need to be interim measures of achievement.

Innovation: the project portfolio should include some innovation and experimentation, with necessary checks and controls to understand success or failure at early stages and correct as necessary.

Delivery: overseeing the delivery of projects, taking action to address underperformance, and in a dynamic but controlled way.

Evaluating performance to refine the strategy: through periodic reviews based on monitoring and evidence, adapt strategy to shift resources and activity towards most successful approaches.

Partnership with business and local institutions: making the most of the insight, resources and capability of local firms, universities and other institutions Citizen and community involvement and ownership: building public consent and achieving visible impact through, for example co-design through citizens’ assemblies, and getting community groups involved in delivery.

Funding and accountability These are ideas for an initial, pathfinder, phase. If successful, the approach should become business as usual for much local activity, and would likely require a different approach.

• A single political and single executive leader (the latter with Accounting Officer-type role). Flexibility to mix and match across public service, for example Metro Mayor and senior civil servant, Minister and council CEO. • Leaders chair boards bringing together main public sector players, business and the third sector, according to mission and local opportunity, providing direction, oversight and visibility of the project to participating organisations • Resources pooled into a single budget.

• Public accountability via open publication of financial and performance data and a scrutiny process linking into national audit and accounts process but with strong local involvement.

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Authors Martin Wheatley is a former senior civil servant and local government professional, with experience on social policy, environment and housing including the Treasury, the Social Exclusion Unit, Croydon Council and the Local Government Association. An independent adviser and researcher since 2011, his published work on government reform includes reports on the centre of government and localism for GovernUp, and on government financial and performance management for the Institute for Government.

Francesca Reed is an analyst at FMA, supporting the Commission as an independent researcher.

At FMA, Francesca provides research and financial analysis to assist foreign governments on public sector reforms in a range of areas including financial management, major projects and procurement. She graduated from Homerton College, Cambridge with a degree in Education and Theology.

References Arm’s-length bodies (ALBs) is a commonly used term covering a wide range of public bodies, including nonministerial departments, non-departmental public bodies, executive agencies and other bodies, such as public corporations.” (NAO) ii Korski, D et al (2021) Better Digital Government: Recommendations, Commission for Smart Government iii House of Lords (1998) Report of the Select Committee on Public Service, paragraphs 29, 65-67 iv Durrant, T, and Tetlow, G, (2019) Creating and dismantling government departments: How to handle machinery of government changes well, Institute for Government, p 3 v Edwards, N., (2010), The triumph of hope over experience: Lessons from the history of reorganisation, NHS Confederation, p 14-16 vi Durrant, T, and Tetlow, G. (2019), p 21 vii White, A. and Dunleavy, P. (2010) Making and breaking Whitehall Departments: A guide to machinery of government changes, Institute for Government and London School of Economics, p 44 viii Ibid, p 50, p 58 ix Durrant, T, and Tetlow, G. (2019), p 11-15 x Ibid, p 7-9 xi Edwards, N., (2010), p 11 xii Ernst & Young (2016) Independent Analysis of Governance Scenarios and Public Service Reform in County Areas, p 4753: Sandford, M (2021) Unitary local government, House of Commons Library, p 18 xiii Durrant, T, and Tetlow, G. (2019), p 4 xiv Ibid, p 6 xv Ibid xvi Korski, D, et al (2021), p13 xvii Most items from IfG Centre Forward (2014) but with additions xviii Not mentioned by IfG but clearly critical xix IfG call it “long term policy development and direction xx Not mentioned by IfG but critical xxi Finance function led by Treasury i

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This refers to “internal think tank” activity, developing serious policy thinking on issues which matter to the PM but on which standing government machinery cannot be relied upon to deliver. xxiii Wheatley (2020a), What’s Gone Wrong with Whitehall?, Commission for Smart Government, p 5 xxiv Korski, D et al (2021) p 7-10, 12 xxv Kidney Bishop, T (2021) Why is Government Failing to Deliver Projects Successfully? Commission for Smart Government, p 20 xxvi Hawksbee, A and Kaye, S (2021) Smart Devolution to Level Up, Commission for Smart Government, p 17 xxvii Wheatley, M (2021a) How Can Government Improve Financial and Business Planning, Commission for Smart Government, p 38-41 xxviii The Role of No. 10: Driving Effective Government from the Centre: Evidence session with Jonathan Powell, Baroness Sally Morgan of Huyton, Baroness Kate Fall, and Lord Gavin Barwell, Commission for Smart Government, 3 December 2020, https://www.youtube.com/watch?v=fChOClJ_-YM, 1:08 xxix Ibid, 1:09 xxx Ibid, 1.10 xxxi List of Cabinet Committees and their membership, Cabinet Office, 19 November 2020 https://www.gov.uk/government/publications/the-cabinet-committees-system-and-list-of-cabinet-committees xxxii Correspondence with research team xxxiii Harris, J and Rutter, J (2014), Centre Forward: Effective Support for the Prime Minister at the Centre of Government, Institute for Government, p 5-6 xxxiv Thomas, A (2021), The heart of the problem: A weak centre is undermining the UK government, Institute for Government, p 5-7 xxxv PM to set up No.10 Unit to strengthen policy delivery, Jim Dunton, Civil Service World, 22 April 2021 https://www.civilserviceworld.com/news/article/pm-setting-up-new-unit-to-strengthen-policy-delivery xxxvi Cabinet Office (2021) Declaration on Government Reform, June 2021, p 6 xxxvii The Role of No. 10: Driving Effective Government from the Centre: Evidence session with Jonathan Powell, Baroness Sally Morgan of Huyton, Baroness Kate Fall, and Lord Gavin Barwell, Commission for Smart Government, 3 December 2020, https://www.youtube.com/watch?v=fChOClJ_-YM, 0:39 xxxviii Harris, J and Rutter, J (2014), p 40-42, 75-76 xxxix Gove, M (2021) The Obligations We Owe: Reforming government in the shadow of COVID-19, https://www.gov.uk/government/speeches/the-obligations-we-owe-reforming-government-in-the-shadow-of-covid19 xl Devanny, J and Harris, J (2014), The National Security Council: National security at the centre of government, Institute for Government, p 36 xli Korski, D et al (2021), p 12 xlii Wheatley, M et al (2019) The Treasury’s Responsibility for the results of public spending, Institute for Government, p 30-31 xliii Ibid p 42-42 xliv Blair 'broke promise to Brown not to run a third time', BBC News, 14 July 2010 https://www.bbc.co.uk/news/10628363 xlv Wilkes, G and Westlake, S (2014), The End of the Treasury: How breaking up the UK’s most powerful department could change government for the better, NESTA; Wheatley, M (2015) Repurposing Whitehall, GovernUp xlvi Don’t split up the Treasury now – strengthen its ministers instead Julian McCrae, Institute for Government, 6 June 2017 https://www.instituteforgovernment.org.uk/blog/dont-split-treasury-now-strengthen-its-ministers xlvii Thomas, A, 2021, p 4-5 xlviii Kerslake, R, 2017 Rethinking the Treasury: the Kerslake Review of the Treasury xlix The Role of No. 10: Driving Effective Government from the Centre: Evidence session with Jonathan Powell, Baroness Sally Morgan of Huyton, Baroness Kate Fall, and Lord Gavin Barwell, Commission for Smart Government, 3 December 2020, https://www.youtube.com/watch?v=fChOClJ_-YM, 0:03 l Hawksbee, A and Kaye, S (2021), p 12-13 li Gove, M (2021) lii Bringing Britain Together, speech by Tony Blair, Stockwell Park School, 1997 http://www.britishpoliticalspeech.org/speech-archive.htm?speech=320 liii Grieve, J and Howard, R (2004), Communities, Social Exclusion, and Crime¸Smith Institute, p 14 The Commission for Smart Government is powered by GovernUp, an initiative of The Project for Modern Democracy, a company limited by guarantee no. 8472163 and a registered charity in England and Wales no. 1154924. Privacy Notice.

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HM Treasury and Communities and Local Government (2010), Total Place: A Whole Area Approach to Public Services, March 2010 lv Froy, F and Giguère, S (2010), Breaking out of Policy Silos: Doing More with Less, OECD lvi Wheatley, M (2021b), New Zealand’s Innovative Government Reforms, Commission for Smart Government, p 6-7 lvii Wheatley, M (2020), p 15-16 lviii Korski, D et al (2020) Better Digital Government: Obstacles and Vision, Commission for Smart Government, p 6 lix Kidney Bishop, T (2021), p 20-21 lx Wheatley, M (2021a), p21 lxi HM Treasury and Communities and Local Government (2010), p 6 lxii New Zealand Public Service Act 2020, s25 lxiii Ibid, s32 lxiv Ibid, s38 lxv Ibid, s53 lxvi Family violence & sexual violence work programme, New Zealand Ministry of Justice, https://www.justice.govt.nz/justice-sector-policy/key-initiatives/reducing-family-and-sexual-violence/workprogramme/ lxvii International best practice in public administration, Evidence Session with Sir Bill English, John Micklethwait and Adrian Wooldridge, Institute for Government, 19 November 2020 https://www.youtube.com/watch?v=TTEDHk2j0Ho lxviii Korski, D et al (2021), p 12 lxix The Places for Growth Programme: driving growth across the UK, Cabinet Office, 30 August 2018, https://civilservice.blog.gov.uk/2018/08/30/the-places-for-growth-programme-driving-growth-across-the-uk/ lxx HM Treasury (2020), Spending Review 2020, p 49 lxxi Wheatley, M et al (2019), p 13-14 lxxii Core Cities UK (2020), Cultural Cities Recovery, p7

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