Government health check

Can the machinery of government be reformed without a constitutional upheaval? Which parts of the machinery are functioning and which are failing? Sarah Hogg offers an inside view
October 19, 1995

At a seminar in Chicago this summer, pundits from both sides of the Atlantic were lamenting the seemingly universal disillusionment with government. Paradoxically, we agreed, just when western democracy has resoundingly defeated communism in the great global battle of ideas, democratic politics and politicians everywhere in the west are sinking lower and lower in public esteem.

It took someone from Chicago to cut the hand-wringing short. Politics, he reminded us, is bound to be a rough old business. "Look," he said briskly, "if all the airlines competed for business by telling you that the others were flown by incompetent drunks who couldn't read a dial straight, pretty soon the airports would be empty."

As one member of the present British cabinet likes to say, you shouldn't expect a pay cheque and a round of applause too. Government is, has been, and always will be a difficult and thankless trade. But hasn't it got more difficult? And more thankless? Asked how our arrangements measure up against the yardsticks of "dignity" and "efficiency" identified by Walter Bagehot in the 19th century, most people's instinctive reply would be: badly.



Disillusion seems to be affecting not only the public but even the politicians themselves, to judge by the number packing their House of Commons bags in preparation for exit at the next election. Some point the finger at an increasingly aggressive media and the over-inflated expectations of voters for making political life less and less worth living. Others blame the system. Many constitutional doctors are prescribing radical courses of treatment for the entire body politic.

But the diagnoses vary sharply. At one moment, government-in-parliament is seen as too powerful-an "elective dictatorship"; at another moment, as too weak-dependent on the support of an unrepresentative handful of MPs holding disproportionate power. MPs themselves are seen at one moment as under-employed troublemakers, demanding-like any other trade union-shorter hours and higher pay. Yet at another, they are characterised as overstressed and under-staffed, burdened by the growth of constituency work and forced to consider important legislation in the small hours.

Local government has not escaped this critical crossfire: councils have been condemned as irresponsible overspenders of money provided by Whitehall, defended as victims of national government's centralising zeal. Scotland and Wales are seen by some as victims of English dominance, by others as the pampered recipients of English taxpayers' money.

Enthusiasm for constitution-mongering has erupted several times in the postwar years, as imperial complacency faded and our national talent for pessimism took over, occasionally overflowing into reforming zeal. But our constitutional arrangements have remained remarkably unchanged. Governments continue to be drawn from one or other House of Parliament. The House of Commons continues to be elected from over 600 single-member constituencies, by the first-past-the-post method. The 1950s innovation of life peerages continues to top up a House of Lords in which a number of men (and a very few women) inherit their seats. Elected local government survives, with two tiers in some areas, one tier in others, free of any regional superstructure. Perhaps the only significant changes in recent years have come about not through a desire to alter the constitution, but as a by-product of other policies, such as the signature of the European Convention of Human Rights or membership of the European Union. This should give the reformers pause for thought. Things have not stayed the way they are just because change is difficult; in Britain, we are almost uniquely unimpeded by constitutional scaffolding, able to knock down our structures of government at will. It may be that they have remained "unreformed" because there is a greater natural equilibrium in our arrangements than the reformers allow.

Our constitutional stability might, however, also demonstrate a practical point about reform, which is that-short of revolution-it is unlikely to happen unless those in charge want it to; and people in power tend to think well of the system that put them where they are. Oppositions are always keener on change than governments. So a good place to start repair work is on those bits of the system which even insiders believe are not working well.

Four years messing around the innards of government certainly do not qualify me as a constitutional brain surgeon. Perhaps they place me at about the level of the fourth-year medical student in casualty-able to detect which bits of government are working as they are supposed to, and which are not. They have also given me an insight into the pieces that are changing, perhaps faster than can be seen from outside. For across the whole span of the working parts of government, there is a good deal more happening, actually or at least potentially, than is generally supposed. One disadvantage of our remarkably casual approach to constitutional matters is that changes which in more formal systems would be promulgated in capital letters are in Britain tossed out in very small print.

One way to test-drive the government machinery is to follow ministers on their annual struggle to turn policy into fact. To begin at the beginning: some policies start life in the labyrinths of party machinery and are christened in manifestos; others are conceived in haste under the harsh lights of television studios, if not-in Kenneth Clarke's immortal phrase-"on a wet Wednesday night in Dudley." Either way, pressed both by the media and lobby groups to have answers on everything from higher education to hedgerows, governments cannot come to power without more or less full portfolios of policy.

At this point they receive an infusion of civil service advice-as officials exercise what Haldane called the "duty of investigation and thought." Re-elected governments will, of course, have had recourse to the knowledge of officials in framing their policies ("Oh God, not that batty idea again"); successful challengers will be presented with the analysis of their ideas that the mandarinate has been working on during the election campaign ("What on earth do you suppose they mean by that?"). Either way, it is after elections that the political elixir of policy has to be channelled into the workaday business of government.

Some political theorists have argued that it is at this stage-when policy debate becomes internalised within government-that things begin to go wrong. Their prescription for greater quality is more open debate, "consultation" and discussion, letting the outside world share more of the burden of decision. This, some argue, would reduce the overload on ministers in general and the prime minister in particular, an overload which is generally agreed to be a weakness of the British system.

These critics have a point-but only up to a point; the hard choices of government cannot be contracted out. All governments, every year, face three. They have to pull their ideas together into an annual public spending plan; a tax plan; and a "Queen's Speech" of proposed legislation to put to Parliament. Budgeting and law-making (or unmaking) are both the privilege and the treadmill of government.

Let us start with spending, and its mirror image, tax. Efficient government self-evidently depends on the ability to forecast public spending accurately; to choose spending priorities effectively; and to finance spending adequately. On all these scores, Britain has had a pretty chequered postwar history. Four weaknesses have shown up time and again.

The first enemy of spending control is inflation-to be strictly accurate, unpredictable inflation. Time and again, inflation has destroyed spending forecasts, so that government has ended up off-target. When prices rose faster than expected (as in the late 1980s), government found itself cutting deeper than planned. Even unexpectedly low inflation (as in the early 1990s) can cause problems: spending plans will turn out to be higher, in real terms, than originally intended. Good government-quite as much as economic efficiency-depends on stable and predictable prices. It is no accident that spending control has improved as inflation has settled down.

The second weakness, however, stems from our government structure rather than our economic failings: the dislocation between money-raisers (almost entirely, central government) and money-spenders (quite substantially, local government). In the final days of the poll tax, local government was raising less than 15 per cent of the money it spent. With the more durable council tax in place, the risk that local government might simply disappear altogether has faded. But the "capping" of local spending, the shift in local government responsibilities and the unfinished process of structural reform all leave this part of our system looking distinctly unsettled.

The third weakness has been the momentum of spending programmes that no layer of government actually controls at all: programmes which are, in the jargon, "demand-led." The main reason why spending forecasts have so often proved wrong is that so many more people than expected have applied for benefits. Tightening the qualifying conditions for receiving invalidity benefit is only the first response to the seemingly relentless growth in social security. No one can suppose that this is the end of the story. Other programmes cannot continue indefinitely absorbing cuts forced on them by persistent overshooting of the welfare benefits budget.

All these pressures have shown up a fourth weakness, in the way that public spending choices are made. Flip your way back through decades of public expenditure reports, and you will find that it has been depressingly rare for spending trends to match up precisely to a government's declared priorities. Too much else has intervened: not just forecasting mistakes, but special commitments, the need to avoid parliamentary trouble, and above all, ministerial deals. Something has long needed to be done to improve the government's strategic strike rate. The new Budget system invented three years ago was intended to do just that.

To understand its importance, you have to take a short journey through the kingdom of Whitehall. If it was Bagehot who taught us to relish "the efficient secret" of our system of government, it was Ivor Jennings who rooted another enduring belief about it in British minds: that it is essentially prime ministerial or presidential, and bound to become more so. According to this doctrine, Cabinet is little more than a rubber stamp; the power to hire and fire makes a prime minister so dominant that he or she is the only feudal lord of Whitehall. This ignores a simple workaday fact about central government which ensures its pluralism and makes Cabinet government a reality. Whitehall is a world of big baronies. No. 10 is small; departments of state are large, powerful entities, with a strong sense of their independent identity.

That often meant that public spending was decided in a series of duels at dawn between individual departmental barons and the Treasury, with the prime minister acting as a cross between saw-bones and village constable. The results of this hit-and-miss process were kept entirely separate from decisions on taxation, which the Chancellor discussed only with the prime minister, revealing them to his colleagues just a few hours before pouring it all out in front of the House of Commons.

But three years ago, changes were announced which in a more constitutionally-minded country would have attracted a great deal more attention than they did: a structural overhaul of the way government decides how to raise and spend money. The Chancellor abandoned the quaint practice of announcing a Budget that was not a Budget in the way most people understand the word. That famous little Budget box, the Gladstonian relic waved to the cameras once a year, now bulges with proposals for spending money, not just for raising it. From 1993, the two sets of decisions-tax and spending-have been brought together, and announced together, in a single late-November statement. Less obviously, but even more significantly, the way decisions on spending are taken has been changed.

Spending is now reviewed, programme by programme, by a committee of senior ministers chaired by the Chancellor, which assembles in the Cabinet Office-appropriately enough in the old Treasury board room. This development is significant in itself. It is also a hugely important boost for the Cabinet committee structure that (almost unregarded) underpins our system of government.

Cabinet itself is usually-but not always-a formality. A body of 20-plus ministers cannot reasonably debate and reach detailed conclusions on issue after issue; but Cabinet committees-the 20 or so formal groups of ministers, of which the prime minister chairs only a few himself-can and do. These are the nervous system of central government, and after a long period of presumed decline, they are enjoying a renaissance.

Until 1992, even the name and membership of each of these committees was kept secret. Today they are published after each reshuffle, and a quick read will tell you a great deal about the distribution of power in Whitehall. The membership of the public spending committee, EDX, will tell you most. In Britain's largely undefined, infinitely flexible system, such changes may not last. This spending committee could be disinvented as quickly as it appeared. But my bet is that it will survive to become institutionalised, almost constitutionalised-and would do so even if the Labour party were to win power. Tony Blair, even more than John Major, would need some such mechanism for corralling his team into agreement on public spending.

Nevertheless, the new system is likely to evolve because the present situation is not stable. One problem is that even if this new spending committee reduces the overload on the prime minister, it adds to the load on senior ministers. At a rough guess, last year's "round" of meetings must have absorbed a combined total of something approaching 200 ministerial man-hours. The Treasury is having to learn to operate differently. Reform, once begun, has a habit of setting its own agenda.

A second problem is that the ministers assembled to act as jury over spending decisions have still had no part in the decisions over tax. The Treasury has clung jealously to its right to decide taxation unilaterally. It is unlikely to be able to maintain this barrier much longer. Involving other senior ministers in spending decisions provides the Treasury with extra firepower against public spending pressures in Cabinet. For that assistance, committee members are bound to extract a price: foreknowledge of-indeed involvement in-decisions on tax.

Already, in previous years, the Chancellor has been obliged to take some colleagues into his confidence on taxes. Sooner or later, this side of the government's balance sheet is bound to become a matter of collective discussion, too. And that may even lead the Treasury towards the still more open process of publishing a "Green budget" of forecasts and tax proposals. That would entail abandoning the traditions of "purdah" and internal mystique that have surrounded the Budget process for far too long.

This change in the Budget-making system, however welcome it is in itself, has had one further unbalancing effect. It has made the parliamentary year extremely top heavy. November is now crowded with big announcements: the legislative programme, tax changes and spending plans. Added to this, the prime minister's biggest official speech of the year-at the Lord Mayor's banquet-comes at much the same time. By contrast, the spring is now a tedious trek across the parliamentary plain, as one bill after another passes from second reading to committee stage and out again. Sooner or later, government is likely to take another look at the parliamentary year-either moving the official start of the year, or instituting some big set-piece "State of the Nation" occasion to fill the "spring gap."

The greater transparency of the Budget-making process has a parallel on the monetary side of the Treasury's activities. This has been opened up over the past couple of years, with the publication of minutes of the monthly meeting between the Chancellor and the Governor of the Bank of England. Here, too, the situation looks unstable. In its first skirmishes over interest rates since the change, the Bank may have lost some ground to the Chancellor, but it has not abandoned its ultimate goal of independence. Nevertheless, even in a country with as casual an attitude towards the constitution as Britain, such a radical step would not be allowed without a formal policy decision and parliamentary debate.

Which takes me to the third key activity of government: the way it makes law. Most thoughtful ministers, let alone backbench MPs, would agree there is room for improvement here. When governments begin to squeeze their policy plans into the straitjacket of legislation, their first hurdle is again a Cabinet committee, called FLG, chaired by the leader of the House of Commons. This committee receives bids from departmental ministers, warnings from parliamentary business managers on the difficulty of passing legislation, specialist legal advice, and then tries to marshal proposed bills into a manageable list for announcement in the Queen's Speech.

The departmental bids are a mixture of "flagships" and "tug-boats"-big policy bills and dreary tidying-up measures, some of them the consequence of earlier legislative mistakes. A glance back at the Queen's Speeches of the post-war period illustrates nothing so much as the perpetual triumph of political hope over administrative experience. It is not merely that there has been "too much" legislation, or even that it has so often had to be revised. After all, you have to make new law to unmake bad law, or even to get law out of the citizen's way altogether-although the government has now lessened this legislative burden by providing a new parliamentary fast-track procedure for deregulation. But there have been some sorry examples of rapid revision in recent history: the community charge, the 1991 Criminal Justice Act, the Child Support Act-all had to be changed almost before the ink on the statute book was dry. None of this breeds great confidence in the law-making process.

Nor is it enough simply to focus on the distinctly patchy revising skills of Parliament. Studies of the legislative process do not provide much reassurance. The ultimate weapon of backbench rebellion is applied erratically at best. In any case, no government is likely to embrace ideas for strengthening parliamentary opposition with enthusiasm. Where it does have a strong interest of its own is in avoiding the embarrassment of revision and repeal. For that, the vital question is whether the heart of government-the unsung Cabinet committee structure-can reinforce its own filters for legislation, wrenching more control from departments or imposing greater supervision on "their" legislation.

One important step has already been taken: departments are now required to publish a "compliance cost assessment" for every bill that they propose-an estimate of the burden on business of meeting the requirements laid on them by each new piece of legislation. To carry weight, however, this has to be compiled well before a bill starts rumbling down the parliamentary tracks, while the Cabinet committee which selects legislation can still give it the thumbs-down. Only the threat of "losing a bill" will really make departments concentrate. So the proposal to publish more bills in draft is even more important.

As an election approaches, so governments become less and less keen to risk parliamentary upsets over legislation. But for the moment, the centre is unusually well placed to tighten its grip on legislation as well as spending. With the last reshuffle, the prime minister has given himself a core of no fewer than five ministers in the Cabinet who are based close to him and serviced from the Cabinet Office-from the newly-created First Secretary of State to the Chancellor of the Duchy of Lancaster (and that excludes the extra pair of hands belonging to another central player, the Chief Whip, not formally a member of Cabinet). After the 1992 election, John Major had only three such ministers. Today, roughly a quarter of the Cabinet is available to ride shotgun on the process of government. Free of the preoccupations of running a large department, these ministers can use the Cabinet committee structure to impose direction on the baronies of Whitehall.

The parliamentarian who said that "procedure is all the constitution the poor Briton has" knew what he was talking about. More open Budget-making, more open law-making, a stronger centre of gravity to Cabinet government: to achieve these we need no glamorous new constitutional architecture, merely changes in procedure. But is that really enough? Are there not greater charges than inefficiency against our system? An equally strong line of attack today is focused on the accountability of government-and to judge that we must step outside the machine itself. At one level, this concern is directed towards Parliament itself: on the composition of its upper chamber, on its relationship with the different parts of the United Kingdom, or alternatively on its relationship with treaty-made organisations outside the UK. All this is hugely important but also familiar; explored in the 1960s and 1970s, taken then to the test of legislation and even referendum; perhaps to be tested again at the turn of the century.

But there is a newer set of issues of accountability on which the arguments are less well-rehearsed. It is ironic that it should be the government's effort to decentralise and disperse power beyond the bureaucrats and "experts," beyond either central or local government, to school governors, local hospital trusts, regulated private enterprise, that should have aroused this attack. Debate is healthy, but what is needed is to broaden the argument beyond electoral accountability-the voter's intermittent right to hire and fire-to the "new accountability" that the government has been seeking to develop throughout the public services. Through published standards, information about whether they are met, real choices of schools or hospital treatment, systems of redress, this new accountability can operate not once every few years at the ballot box but day by day, direct from the providers of services to the people who use those services.

The change in the way public services are being delivered is still patchy, but profound. It is part of a final paradox: that while Britain's constitution has survived remarkably unchanged, the role of the state in Britain has been changing very fast. Agencies, regulators, self-governing bodies, inspectors-all have to settle into new relationships with each other, the state and the citizen. The Whitehall monoliths themselves have been changing, the baronies becoming fragmented. Throughout the public sector the connections between purchaser and provider, player and whistle-blower, rule-maker and contractor, are being exposed to view. The smooth stone Whitehall fa?ade has become more like the Lloyd's of London building in the City: all the shiny working parts are on show.

This new transparency is a powerful tool, not just for those who run government, but for those who judge it or seek access to it. But it inevitably takes time for a new order of things to become established, with-no doubt-plenty of trial and error on the way. The manager and the constitutionalist each have a part to play in articulating this new order; but they do not always speak a language that the other understands. Not the least of the tasks facing the prime minister's new core grouping, his five Cabinet Office ministers, will be to bridge that gap. There is rich terrain here for the reformer-both inside and outside government-who is able to cross boundaries, defining and refining the new pluralism of the modern British state.