Volume 15: Government and Public Administration
6. Planning and resources
Cost-consciousness
Departmental planning
Pressure on costs and staff numbers
Management information systems

Departmental planning

6.10 Within each Department, the Permanent Secretary led a top management team (or Board), comprising senior officials including the Chief Finance and Personnel/Management Services Officers. One of this team's key tasks was to prepare and secure approval from Ministers for the departmental corporate plan, and the priorities set within it. The object was to provide a consistent basis across Departments for allocating staff and money. Departmental plans were used as a basis for the annual bids to the Treasury for resources, as part of the Public Expenditure Survey (PES) round outlined at the start of this chapter.

6.11 During the 1980s and 1990s, the Government sought to improve financial accountability within the civil service by developing management information systems to focus attention on the costs of Departments' programmes and of administration generally. It imported a business approach - for example, requiring Departments to charge for services such as advice and research. It reviewed whether government needed to perform certain functions itself and also whether traditional civil service organisation was as suitable for 'factory' functions as it was for providing 'think-tank' policy advice. ¹

6.12 This review process resulted in a shift of executive functions and staff into Executive Agencies, and the contracting out and privatisation of many functions. How this came about, and the impact on Departments (especially MAFF and DH), are described below and in the next chapter.

Pressure on costs and staff numbers

6.13 During this period, there was constant pressure on officials at all levels to reduce public expenditure generally and administrative expenditure in particular. This meant cutting back provision for Departments' 'running costs' (ie, their expenditure on themselves) as well as for their expenditure on policies and programmes. Painful choices had to be made, and taking on new tasks might require existing ones to be postponed or even abandoned.

6.14 All Departments were required to find ways to reduce their running costs. For example, DH was required to make an annual 5 per cent saving in costs from 1979 to 1984. ² Pressure on running costs naturally led to a reduction in the number of civil servants. Both MAFF and DH reduced their staffing levels by approximately 25 per cent between 1979 and the mid-1980s, ³ and the number of staff continued to decline thereafter. In 1985/86, MAFF had 11,393 staff; the equivalent number in 1996 was 9,993, a reduction of approximately 12 per cent. ⁴

6.15 These reductions were accompanied by (and often resulted in) changes in working practices, and some functions had to be scaled down or discontinued. Several witnesses commented on the effects of this. Mrs Attridge explained how MAFF managers operated:

Within . . . the Ministry we were under considerable pressure to reduce staff, and it was therefore very difficult to make out a strong enough case to get additional staff, and we therefore first started to look to what resources we could bring to bear within our own command to put the troops in where the line was thinnest. Only then would we as it were put up a plea for additional staff. ⁵

6.16 Dr Roger Skinner (a senior Medical Officer) commented on the day-to-day effect of a later round of DH staffing reductions, following the integration of administrative and medical divisions in 1995:

While the integration was in itself a sensible reform, it was combined with a 21% reduction in staffing levels. In my view, the reduction of staff meant that at times we were not able to respond quite as flexibly and speedily as we would have wished. With all staff present, it was probably a cost efficient way of working. But when staff were absent through illness or periods of leave, resources were undoubtedly over-stretched. ⁶

6.17 Budgeting, reviewing and downsizing took up a great deal of the time of managers, including the most senior. Sir Donald Acheson commented:

All I can tell you is I am amazed that we have any service from the Civil Service in Whitehall that is of any good at all because the cuts which have taken place starting in my time, right through to the present time, have been radical, and yet . . . the need for the same service and the complexity of the work has increased . . . I had to take at least 20 to 25 per cent of my work defending my people from further cuts throughout my years in office. And that would be . . . a conservative estimate. It was incessant. ⁷

Management information systems

6.18 The initial impetus for greater efficiency after 1979 came from the programme of 'Rayner Scrutinies', named after the head of the Government's Efficiency Unit, Sir Derek (now Lord) Rayner. These were one-off reviews of selected policy areas or activities within a Department, with the aim of achieving savings and increasing efficiency.

6.19 One such scrutiny resulted in the setting up, in 1980, of the Management Information System for Ministers (known as MINIS) in what was then the Department of the Environment (DoE). This brought together information about activities, past performance and future plans across DoE, with the objective of tying resource allocation more closely to Ministers' chosen policy aims. In 1983, MINIS was complemented by a computerised accounting and budgeting system based on cost centres, known as MAXIS.

6.20 At that time, information about the costs of administrative activities and options was not readily available to departmental managers. It was difficult to budget accurately or to compare actual against projected costs, so lines of responsibility for the effective use of resources were unclear. To address this, the Financial Management Initiative (FMI) was launched in 1982. ⁸ Civil service managers were to have clearly defined objectives and responsibilities, the means of measuring their performance against these, and support, information and training to achieve them.

6.21 Each Department was encouraged to adopt a system that met its own particular needs. DoE's MINIS became a model for others, notably MAFF's MINIM (Ministerial Information in MAFF) system. Better information and the ability to relate objectives to costs allowed the development of devolved budgeting, from the Treasury to Departments and from finance divisions within Departments to operating divisions.

6.22 The MAFF Permanent Secretary at the start of the BSE story, Sir Michael Franklin, told the Inquiry that:

I regarded it (MINIM) essentially as an internal management tool . . . Their intention fundamentally was to allow Ministers to see whether what we as a Department regarded as our objectives were in fact what Ministers wanted to happen. That was the first part of it, so that spelling out rather clearly what the programme was - what we thought the programme was intended to do - and then, secondly, to set alongside that what the resources involved in actually running it [were] . . .

[I]t enabled ministers, I think, to see more clearly what the Department thought it ought to be doing, to decide whether they agreed with that and to relate the resources to that.

I recall, on occasion, that kind of material, information, was helpful not only in the way I have described but in the annual public expenditure discussions. It . . . did indeed throw up areas where it seemed to all of us that perhaps the resources were excessive and we could make some savings here which would enable us to persuade the Treasury to give us a little more in another area which seemed to us more important in relation to this balance of purpose and cost. That was the intention of this tool and I think it was a useful one.

He added that it was a tool for officials as well as for Ministers. ⁹