I spent a recent Saturday evening in the unfamiliar environment of the O2 Shepherd’s Bush Empire, enjoying the once-familiar sound of 1980s ska-band The Beat, and their classic hits Mirror In The Bathroom and Too Nice To Talk To. Lead singer Ranking Roger was joined on stage by his son Ranking Junior, which may have helped my son feel a bit less embarrassed to be at a gig with his dad, in a crowd mostly made up of middle-aged men wearing leather 'pork-pie' hats.
The day before I had been taken down another memory lane from the 1980s, prompted by a visit to Department for Business, Energy & Industrial Strategy (BEIS) agencies Companies House and the Intellectual Property Office (IPO), both products of the groundbreaking Next Steps report of 1988. The report was written during the Next Steps Initiative, a key period of reform brought in under Sir Derek (later Lord) Rayner, Margaret Thatcher’s efficiency advisor. I remember the excitement the report generated across the Civil Service, with its bold call for managing all operational delivery work through a new set of focused and lean public agencies, with their own staff, strategy and leadership structures.
The Next Steps report highlighted five issues:
1. Lack of clear and accountable management responsibility
2. Need for greater precision about results expected
3. Need to focus on outputs as well as inputs
4. Handicap of imposing a uniform system on large and diverse services
5. Need for sustained pressure for improvement.
A dozen candidates for ‘agencification’ were announced that year, including Companies House and the Met Office (another BEIS agency), later followed by the IPO, Land Registry and others. Peter Kemp, the Treasury official tasked with ‘shaking the temple’, told Parliament he aimed to hive off 75% of civil servants into Next Steps agencies. The plan also involved moving a lot of the work outside of London, bringing in more specialist skills from the private sector, and strengthening accountability.
The Civil Service landscape has evolved approximately in line with the Next Steps vision. Between 1988 and 1997 over 100 agencies were created, containing more than 75% of the Civil Service. Today, the Civil Service employs around 400,000 people, about a third less than in 1988, added to which some 73,000 work in executive agencies and devolved administrations. When I worked for the old Department for Trade and Industry in the late '80s, it employed about 20,000 people, compared to the 3,000 who work with me in BEIS now. Taking BEIS and its Partner Organisations as a whole, around 90% of the 37,000 staff work outside London.
Companies House and IPO are good examples of Next Steps agencies and, in my view, of the benefits of the programme. Each agency focuses on a single main activity – company registration in one case, granting patents, trademarks and designs in the other. Each has its own executive and board, its own strategy and plan and staffing structure, and a distinct culture that has grown up outside of departmental influence and the traditions of Whitehall.
Both are based in Wales – Companies House in Cardiff, the IPO in Newport – and most of the staff are locally employed and, on average, stay in their jobs longer than equivalent grades in London departments. Both have developed ambitious apprenticeship and training programmes, and have an impressive record in developing as well as hiring talent. They have invested heavily and well in digital. For example, some 98% of all design applications are now handled purely digitally. The volume of applications to the IPO has increased fourfold, yet the agency is registering designs quicker than ever and with the same number of staff.
When I visited the agencies I was struck not only by the focus on customers but also by the strong sense of pride and common purpose from the staff I met. This is borne out by the data, which shows IPO Customer Satisfaction at 87.3% and Companies House 88%; with staff engagement scores of 63% for both organisations.
Comparing the actuality with the Next Steps vision and those five key issues, my sense is that it has worked out pretty well. Indeed, I felt that I had witnessed the very management style envisaged by the Next Steps reformers: "eager to maximise results, no longer frustrated or absolved from responsibility by central constraints, working with a sense of urgency to improve their service".
What about the drawbacks? I remember for some staff the move out of London did not suit. There was also uncertainty, at least at the outset, about how much delegated authority really existed, and who was accountable for what. As late as 2002 an Agency Policy Review noted that some agencies had become disconnected from their departments and needed clearer accountability frameworks and roles for their non-execs.
Since taking on my role as Permanent Secretary at BEIS, with our 55 partner organisations, my worry has been about whether we have enough clarity and connectivity between the department and the agencies, and whether we are getting all the benefits we might from synergies and comparisons of best practice across our whole network. So I was intrigued to read of two reform measures that were not adopted. First, the Fraser review in 1991 recommended a senior department sponsor for each agency to act as an external adviser on agency performance. Secondly, in the 1990s, when Michael Heseltine was Deputy Prime Minister, he wanted to see cross-agency performance comparisons. I think we might want to revisit these ideas.
In the last 6 months, BEIS has had a real push on strengthening links with our partner organisations, using the Cabinet Office's new Purpose-Assurance-Value-Engagement Framework. I've been really encouraged by the positive response from the chairs and CEOs of all our agencies. Making sure we continue to get the most mutual benefit from the relationship with our Next Steps agencies is a priority for all of us.
As The Beat would say, Can't Get Used To Losing You...