Wales now more confident in engaging Whitehall

As the old joke goes, devolution said in a Scots accent rhymes with revolution, and in a Welsh accent with evolution. When one considers that devolution in 1999 was the biggest change in the system of governance in the UK since – and you pays your money and you takes your choice  – the introduction of universal suffrage in the 19^th Century, the Glorious revolution of 1688 or, in a purely Welsh context, the Act of Union of 1536 – the scale of change has been almost revolutionary. Yet in the relative smoothness of the transition it has been, in effect, evolutionary. The way in which it has been managed has been quite remarkable and testimony to the commitment of governments and legislatures at either end of the M4, as well as civil servants in both institutions.

That there have been and will continue to be tensions in relationships between governments is however quite unremarkable. As Wilfred Bion, the British psychoanalyst who specialised in group dynamics pointed out, human beings cannot live without each other but also cannot live with each other. How we resolve that existential – but rarely articulated – paradox is at the heart of the business of government.

There will always be tensions and disagreements between all institutions, reflecting differing interests and mandates. For example, the relationship between the Welsh Government and local authorities in Wales has not always been hugely cordial. In my view it is how you manage and resolve conflicts that is the crucial issue. Given the scale of change in Wales and the UK I believe the process has been managed remarkably smoothly.

That is however not to be Panglossian about the process of devolution since 1999, and with government of different political colours in Cardiff Bay and Westminster, relationships have inevitably changed, and will continue to change and the process of devolution will reflect that.

As Soren Kierkegaard the Danish philosopher said, “Life can only be lived forwards but only understood backwards” and perhaps it is only now that we can see more clearly what has been achieved and also what works and what hasn’t. So where are we today in terms of relations between Wales and Whitehall, just after the first decade of devolution? I think the relationship has changed and matured significantly over those ten years.

Of course, the first two or three years of the Assembly’s life were a matter of sheer survival. As a new institution, with a problematic birth, it often felt that we were ducking and diving trying to keep the show on the road. That has been the major achievement. After ten years we can look back on having established the legitimacy and authority of the Assembly and created a substantial record of policymaking. The relationship between Wales and Whitehall has matured to reflect more a relationship between different governments with contrasting jurisdictions and mandates, rather than that of a relationship between Whitehall government departments. There has been an exception, with the operation of the Barnett formula where tension has been more acute and the need for change more apparent, which I shall cover later.

How have relationships changed over the years? Of course there have been several phases. In pre-devolution days the Welsh Office was an executive arm of Whitehall, with little autonomy and policy making capacity. The drafting of secondary legislation largely consisted of removing the word ‘England’ and inserting ‘Wales’ in its place. In 1998 speaking at a seminar held to raise awareness about the Assembly I said that I thought devolution was going to be a bigger challenge for civil servants than for the politicians. A Welsh Office civil servant in the audience came up to me afterwards and said,

“You’re absolutely right, it’s going to be a huge challenge for us. And, of course, the other thing that many of us are going to have to realise is that there is a Wales outside Cardiff”.

I sometimes wonder what’s changed. Notwithstanding what has been achieved in a relatively short period historically, the Welsh Affairs Committee in its report on Wales and Whitehall, published in March 2010, made a number of recommendations to improve that relationship. The Committee believed that:

“Ministers and senior civil servants at both ends of the M4 need to be more coordinated, strategic and transparent in their development and delivery of devolution with a much higher priority given to awareness raising of Welsh devolution in Whitehall”.

As politicians we have to accept some responsibility for the failure to develop a longer term strategy in managing relationships between Wales and Whitehall and the other devolved administrations. I believe we should have paused and reflected but the priority and preoccupation was establishing the legitimacy of the institution. However, in giving evidence to the Welsh Affairs Committee I argued that in many ways politicians had responded and adapted to devolution more effectively than officials. The main challenge was to improve the way in which civil servants worked, both in Whitehall and Cathays Park. The Committee’s report agreed:

“After an initial burst of concentration, Whitehall has lost a focus on the devolution settlement and too often has displayed poor knowledge and understanding of the specificities of the Welsh settlement. The Civil Service needs more consistent training and clear department-by-department focus on retaining devolution knowledge and understanding. The Cabinet Secretary and the Permanent Secretary to the Welsh Assembly Government should give evidence annually to the Welsh Affairs Committee to ensure devolution remains on the agenda.”

The civil service is pre-devolution in its structure and accountability. Constitutionally, Welsh Government officials are part of the UK civil service and its top official, the Permanent Secretary is accountable to the UK Cabinet Secretary, Sir Gus O’Donnell, not to the First Minister or, indeed, the Welsh Government Cabinet. The Permanent Secretary is a civil service appointment, in which Welsh Ministers have no formal role.

In giving evidence to the Welsh Affairs Committee, Sir John Shortridge, the former Permanent Secretary in the Welsh Government, appeared to largely blame Whitehall for the allegedly diminished relationship between Wales and the UK Government. He believed there was often a lack of trust that existed between Welsh and UK ministers and officials, and said that UK Government announcements often took Wales by surprise.

I believe this is a simplistic view which does not reflect the complexity of the relationship between Wales and Whitehall, involving not only politicians and civil servants, but also different political priorities and cultures. There are established relationships between Wales and Whitehall at senior civil servant level. However, I am not aware that at any time the senior Civil Service has considered those long-term relationships in a strategic way, and as a consequence developed a long-term strategic approach to managing relationships. I believe this to be a fundamental weakness.

Many of these challenges reflect long standing defects in the civil service culture. in 1997 reform of the Civil Service was identified by its Head, Sir Richard Wilson, as his major priority. His aim was to change the culture of the Civil Service to one based on delivering on strategic outcomes whereby senior civil servants were measured or assessed on their leadership and management of their department.

One has to ask what progress was made on this. A decade later Whitehall undertook a series of Departmental Capability Reviews, which showed very clearly the deficiencies in the Civil Service culture, across the UK. The main thrust of the Reviews was that within the civil service there was:

• Weak executive capacity, with poor leadership and management.
• Weak reflective capacity and poor long-term thinking.
• Poor co-ordination and disjointed government, with little evidence of joint working between Civil Service departments.
• Management of memory and knowledge is poor, which undermines learning and innovation.
• An obsession with process and compliance, not outcomes and delivery.

My own experience as a Minister confirmed this. The Civil Service is not good at long-term planning and rarely strategic in its thinking, policy making and its financial planning. In my experience promotion of senior officials is largely on the basis of intellectual ability not on leadership and management capability.

There is also a legislative bias in government. Making policy is what governments do, because the preoccupation of politicians and civil servants is in passing legislation. As the former Director General of the BBC, Greg Dyke, put it:

“Politicians and civil servants think that policy-making and legislation is the hard bit, whereas anyone who has actually run any sort of large organisation knows, the difficulty is not making the policy, but knowing how to deliver it.”

Because of the narrow preoccupation on policy the wider management of relationships is not seen as a priority. Many years ago, I remember a consultant working in the Welsh Government saying to us as Ministers:

“Don’t forget, senior officials spend most of their time managing you and not their departments.”

Perhaps it was always probable in the early years of the Assembly, with the preoccupation with its own affairs and with the dominant civil service culture, that relationships between Wales and Whitehall would weaken. The big challenge for the Assembly in its first term was establishing a distinctive policy agenda. It was almost inevitable that, as the institution grew and the emphasis was on making our own policy, new officials came in who had not previously been civil servants and links with Whitehall attenuated.

Also, what struck me, in my contacts with Whitehall as a Minister, was the huge size of Government in Whitehall. While the Welsh Government civil service has grown from 2,500 officials in 1999 to over 6,000 today, it is still smaller than many local authorities in Wales. On the other hand Whitehall government departments are huge, with large teams of civil servants working in specific policy areas, whereas Welsh Government capacity might be just one official, often working on several policy areas.

Because of their culture and size, Whitehall civil servants often find it very difficult talking to each other within theirdepartments. Working with other departments is even more of a challenge, let alone working with the devolved administrations. Consequently, I think it almost inevitable that Whitehall was going to struggle with devolution because of its preoccupation  with its day-to-day work.

The Welsh Affairs Committee suggested that a broad review of how intergovernmental relationships are coordinated is required and recommended that the Joint Ministerial Committee meet on a regular basis and Ministers at all levels should be alert to the consequences of policy and legislation on devolved areas. There are a network of formal and informal relationships at both Ministerial and elected member level, including bilateral links between Welsh Ministers and officials with Whitehall departments and Wales Office. In addition there are multi-lateral relationships through the Joint Ministerial Committee.

In my experience, relationships vary from department to department, both at political and official level, and these will reflect political and policy preferences as well as institutional relationships. Where policies were devolved, education and health particularly, the relationships between officials and ministers have tended to be more robust than where the policies were either non-devolved or there was a grey area.

Certainly my own experience as Transport Minister reflected this. An example was my dealing with the Department of Transport over the 2005 Railways Act, which devolved responsibility for the Wales and the Border Rail Franchise to the Welsh Government, and the 2006 Transport (Wales) Act, which gave Wales greatly needed transport powers. This legislation represented the largest transfer of powers to the National Assembly since 1999. The relationship worked reasonably well, although Department of Transport officials were not as sympathetic as Government ministers. On one occasion they were telling my officials that on the Railways Act they were unwilling to concede certain clauses. It just happened that the relevant Transport Minister was non other than Kim Howells, the MP for Pontypridd. So I rang him and said “Have you got a problem with this?” and he said, “No, I haven’t”. So I told my officials what we agreed and my officials in turn told Department of Transport officials that Ministers did not have a problem, and it was sorted. However, in other cross-border areas, particularly the First Great Western Franchise and with another Minister, the relationship was less constructive.

While there are few formal agreements, in the early days of devolution, Whitehall and the Welsh Government established Memorandums of Understanding, formal but non-statutory agreements to assist in managing relationships between Wales and Whitehall departments. While there was a good deal of discussion about these in the very early years of the Assembly’s life, after the first year or two I do not recall them being mentioned very often.

As the Welsh Affairs Committee recommend, there would be benefit in reviewing the Memorandum of Understanding, something that has not been done since 1999. Even in the event of a successful referendum on enhanced Assembly powers there will still be policy areas in both jurisdictions which will impact on the other.

Of course, one additional significant factor in the first decade of devolution was having governments in Wales and the UK formed from the same political party, Labour. With a UK Coalition Government of a different hue in Westminster, there will almost certainly be change. Relationships with Westminster are now governed by the Prime Minister’s ‘Respect’ agenda and it remains to be seen how this will influence or change relationships. Recent announcements by the UK Government over the abolition of the quangos and the closure of the Passport Office in Newport, with no apparent prior consultation or notice being given to Welsh Ministers, demonstrates little acknowledgement of devolution.

What has changed is that the devolved administrations and legislatures are more mature and confident with greater legitimacy to re-negotiate the relationship. The political relationship between Cardiff Bay and Westminster is going to be the major fault-line in Welsh politics for the next five years. However, early actions by the UK Coalition Government show little recognition of the legitimacy and authority of the devolution settlement in Wales.

Of course, in terms of continuity of relationships at a political level there is much greater ministerial turnover in Westminster than in the Assembly. For example, in two and half years as Finance Minister I dealt with three Chief Secretaries to the Treasury – Andy Burnham, Yvette Cooper and Liam Byrne. A similar turn-over for civil servants leads to one of the paradoxes of the Civil Service. You have a permanent Civil Service yet its organisational memory is poor. Consequently, its ability to sustain relationships, develop policy, and to learn and innovate is often not good.

I think there is another aspect to relationships between Wales and Whitehall, which reflects an introverted culture in the civil service in Wales. I remember Sir Jon Shortridge saying to me very early on in the Assembly’s life that he found it extremely difficult to get civil servants to go on secondment to Whitehall or indeed Brussels. I believe little has changed. When in 1999 I first met my then opposite number in the Scottish Government Tom McCabe, the Minister for Parliament, the head of his Private office had spent several years in Whitehall and had an extensive network of contacts there. Few Welsh Government officials appear to have this wider experience.

For the first ten years of the Assembly’s existence, the Wales Office helped co-ordinate relationships between the Welsh Government and Whitehall departments. Given the uncertainty about the future of the Wales Office, the Welsh Affairs Committee recommended that the Cabinet Office should take lead responsibility for devolution strategy in Whitehall. This reflects the absence of a strong co-ordinating centre in relation to devolution.

Whatever the future of the Wales Office, it is important to have a Whitehall department whose remit is to co-ordinate activity across Government in relation to Wales and other devolved administrations. For example, as Finance Minister I became aware that the UK Government was legislating to give Parliament powers of scrutiny over the National Audit Office. I thought it anomalous that we did not have similar powers in Wales over the Wales Audit Office. Initial discussions at official level indicated that this would be refused. However, I made the case and Wales Office Ministers and the Treasury finally agreed through the Constitutional Reform and Governance Bill. This granted the National Assembly powers of scrutiny over the Auditor General and the Wales Audit Office. In view of recent evidence of manifest management and audit failings within the Office, this scrutiny function would have been very timely. Sadly, however, this piece of legislation fell in the ‘wash-up’ at the end of the last parliament.

Perhaps nowhere were relationships between Wales and Whitehall seen in the clearest and harshest light than in the operation of the Barnett formula. Here the Welsh Affairs Committee supported the argument of the Calman Commission in Scotland, Wales’ Holtham Commission, the House of Lords and House of Commons Justice Select Committee reports, that the Barnett Formula has passed its sell-by day and that reform of the formula is required.

Having seen the operation of Barnett at first hand as a Finance Minister, in my evidence to the Holtham Commission I argued that the system is anachronistic and does not recognise the reality of devolution today. It was clear to me that the Treasury treated the Welsh Government as if it was a Whitehall government department rather than a separate jurisdiction with its own legitimacy and mandate.

Many of the criticisms I made to the Holtham Commission relate to the lack of transparency and accountability in the way in which Barnett is administered. For example, as Finance Minister I was not a signatory to the Statement of Funding policy, which laid down the funding arrangements between the UK government and devolved administrations. It was in effect an internal UK Government agreement, signed by the Secretary of State for Wales and Treasury Ministers.

Similarly, the Treasury is effectively judge and jury in how Barnett operates, and there is currently no formal appeals system or mechanism for conflict resolution, other than through the Joint Ministerial Committee. The UK Coalition appears to have recognised this defect and have offered the devolved administrations some avenues for resolving differences of view through Ministerial meetings. Ultimately, however, the only formal appeal would be to the Joint Ministerial Committee.

To address the lack of transparency, the Holtham Commission recommended that Barnett be administered by an arms length or independent body, such as the Office of National Statistics. To deal with the accountability deficit the Holtham Commission recommended that a Treasury Minister should appear before the Finance Committee of the Assembly. This recommendation is currently being followed up by the Finance Committee, of which I am a member, in its scrutiny of the Welsh Government’s Budget process.

It has been said that devolution is a process not an event, and it has certainly been an eventful process. The world and Wales are very different places than they were before 1999. In the summer of 1997, a matter of weeks before the Assembly referendum, I accompanied Phillip Gould, the Labour party’s top pollster, to Maesteg to carry out focus group work on attitudes to devolution. Afterwards, depressed by the obvious lack of awareness by local people of the coming referendum and devolution, he paced around the room saying, “They don’t want it, they just don’t want it.” The fact that over ten years later the debates today are about enhancing the authority of the Assembly rather than questioning its very existence shows how far we have come – and also how much has been achieved in our decade of devolution.