PracticePeople In PracticeInsider – Insight: civil service reform

Insider - Insight: civil service reform

A root and branch reform of the civil service will result in a new breed of finance manager - and it could also mark an end to the public sector's status as the 'poor relation'.

‘The world has changed and the civil service must change with it,’ is how the prime minister launched his drive for civil service reform last February. The question is, will the reforms announced by civil service chief Sir Andrew Turnbull on 20 October create a body that is both fit for the challenges of the 21st century, and able to meet the principal challenge set by the prime minister; notably the shift in focus from policy advice to delivery?

Like all the best ideas, the proposals are notable for their simplicity. Three categories of civil servant will be created: policy developers, managers of services, and those focusing on corporate services such as finance, HR, IT and procurement.

Fast-stream civil servants will no longer primarily be those concerned with policy development, but instead will be spread across all three categories. Furthermore, each will be required to be professionally qualified.

It marks an end to the days when the term ‘gifted amateur’ was a badge worn with pride by generalists responsible for implementing multibillion-pound IT projects – and not before time, given the civil service’s long history of fiascos in IT procurement.

In past years, government has had to bring in external people to provide expertise in delivery, whether they be heads of schools or FE colleges in the education sector, or skilled IT project directors, such as Richard Grainger the man responsible for implementing the NHS’s IT programme.

But it is not healthy for any organisation to rely solely on bringing in external skills in such core areas. There needs to be a mix of home-grown talent and the infusion of ideas from outside sources. The importance of delivery and professional skills also needs to be embedded within the culture of departments – not simply implanted at the top.

The reforms will consequently help to achieve a much freer flow of personnel between the civil service and the private sector, as well as between other parts of the public and voluntary sectors. Professional qualifications in management, finance and IT will mean it will be easier for civil servants to get jobs outside. It will also help to get rid of the ‘private sector good, public sector bad’ mentality, which does so much to undermine the morale of civil servants.

As a result of the public sector traditionally being looked upon as the poor relation to the private sector, accountants working in the finance functions of government departments were regarded simply as beancounters.

Now, however, the increased importance placed upon the public sector finance function, coupled with a much greater understanding of good financial management practice and the switch to resource accounting, have succeeded in making the role more like that of an accountant in the private sector. This helps to make a career in finance within the public sector a much more attractive, challenging and rewarding prospect.

Indeed, working in the public sector is no longer seen as an impediment to a career in the private sector. We are already seeing examples of people making such a transition. Take Simon Ball. He recently joined 3i as the firm’s new finance director, after spending two years as the director general of finance at the Department for Constitutional Affairs.

One should not underestimate, however, the challenges in making all this work. Firstly, what does it mean for civil servants in their late 30s and 40s who, for example, do not have accountancy qualifications, but have been doing an excellent job in helping to run the finance function of a major department? Will they now be prevented from getting the top job as finance director on the departmental board? Transitional arrangements and help with training, coupled with appropriate incentives where necessary, must be given to ensure people are treated fairly and that valuable talent and experience is not lost.

There also needs to be recognition by the public, press and politicians that good management involves taking decisions and that some of those decisions might be wrong.

Bureaucracy is often the result of (or another name for) the extensive processes for research, analysis and checks that are undertaken to avoid making wrong decisions. If we want faster decision making and less red tape, we need to accept that there will be failures, and not punish civil servants.

The more open the civil service becomes, the more there needs to be an acceptance of paying a market rate for the job.

In many cases, this will mean substantial pay increases for top civil servants. Greater linkage of pay to performance and, in turn, direct accountability should be used to encourage decision-taking by civil servants and so promote effective delivery.

There is also a need for a much greater focus on leadership skills among senior civil servants. Leading an organisation of individuals with similar backgrounds and generalist skills, all focusing on policy, and leading one that brings together the input of people with different training and professional skills requires very different talents.

Effective leadership of the boards of departments by permanent secretaries will be critical to the success of civil service reform. In certain cases, effective delivery may require the ‘don’t take no for an answer’ approach to dealing with problems. It was an approach that impressed ministers with the armed forces role in helping to solve the foot and mouth crisis, cutting through and sometimes ignoring established processes to get the job done.

The Turnbull reforms, therefore, are a critical step in establishing the right framework for the transformation of public service delivery. The challenge now is to change attitudes, not only of civil servants, but of us all, so they can get on with the job of delivering first-class public services.

Chris Nicholson is KPMG’s first head of public sector.

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