Pat McFadden starts a long haul on public sector reform

Pat McFadden opened his speech on reforming the state by acknowledging that he “hadn’t got this all figured out from beginning to end”. That openness was a recurring theme, with McFadden striking a very different tone to Michael Gove’s lecture on the same subject four years ago. Gove deployed more self-consciously intellectual rhetoric, cantering from Gramsci to Roosevelt to set out his views on the public service. McFadden was grounded in the process of reform, intended to underpin Keir Starmer’s speech last week announcing a new set of policy milestones.

McFadden’s secondary objective seemed to be to moderate Starmer’s criticism of the civil service as being comfortable in the “tepid bath of managed decline”. He went out of his way to praise officials and to point his analysis towards the system and not the people, and he was right to approach the subject in a spirit of curiosity and to be “more interested in an answer rather than a grievance” – because it is a subject that he will return to repeatedly.

Opening up Whitehall and encouraging experimentation are welcome

The Chancellor of the Duchy of Lancaster did set out some specific proposals. One welcome commitment was to encourage more external recruitment by expanding an existing programme of ‘innovation fellows’ and to streamline and de-bureaucratise civil service recruitment processes – drawing on the ideas in our report about opening up the civil service. 

McFadden also talked about building a “test-and-learn mindset” of experimentation and risk taking, building on what he sees as the successes of rebooting the passport service and the later stages of the universal credit rollout. He wants public servants to set ambitious delivery outcomes then be agile and flexible in how they achieve them, and is allocating £100m to pioneer reforming projects.

That is also welcome – but it is a sign of how entrenched existing patterns are that some of McFadden’s lines could have been said by Francis Maude 15 years ago. Maude wanted “empowerment of those who know how to innovate and take appropriate risks” and public services that were “agile, flexible and digital by default”.

Ministers will need a high risk appetite and determination to stick with changes

To make change happen, all ministers in the government will need to send the signal that this is the sort of environment they value and will reward – both in public as well as privately. In each policy decision they make they should be asking civil servants for evidence about the views of outside experts, international comparisons and those closest to the frontline, and interrogating officials on how a test-and-learn approach has been built into the process.

McFadden was right to talk about a higher risk appetite. Ministers, as well as civil servants, will need to hold their nerve. Both for the inevitable failures that are essential to the ‘learn’ part of test-and-learn, but also to being open and transparent with the public about what is and is not working. That will be hard. It demands a fundamentally different approach where civil servants are confident that ministers will back them for taking risks, embracing innovation and occasionally learning from failure. 

On past form, ministers will be willing to tolerate one or two totemic ‘failures’ but very wary of anything that looks like a pattern of risky misfires. Starmer will have to judge how many innovative failures ministers have overseen when he decides whether to reshuffle or dismiss them.

More fundamental reforms will be needed to change the state

The question is not whether the public sector should adopt these methods, but how to get it to do so in a sustainable and comprehensive way, beyond the areas of best practice highlighted by McFadden. The speech was a recognition of the practical ways the state needs to begin the work of reform, and McFadden recognised that it was just a beginning. The Labour government will need to look for deeper change, which takes sustained effort over years to make happen.

That should come in three areas. The first is about structures and accountability. McFadden and his team need to address the incentives around accountability that are such obstacles to the government’s cross-departmental missions. The way that budgets are allocated and the built-in tensions between different departments will need to be addressed as part of the coming spending review. A £100m fund is a sum of money that could make a big difference to some important projects, but a tiny amount when compared to the ambition for making systemic change across government. Unless the fundamental incentives on financial accountability are aligned with the government’s core objectives, ministerial exhortations to do things differently will be quickly blown out of the water. Watch out for every project in the spending review being badged as having a test-and-learn phase to help access the latest funding pot.

The second deeper change is cultural. Innovation, test-and-learn and bringing in outside expertise will only work well if people across the public sector, and in the civil service in particular, are encouraged to adopt a mindset of curiosity and experimentation, with the self-confidence to accept what they do not know and the courage to be bold. They also need to value outside experience properly. Outsiders often struggle to thrive because of the underlying tension between career civil servants and the fresh, sometimes perceived as naïve, ‘newcomers’ trying to navigate the system. The friction between departments and the Government Digital Service during the development and implementation of the GOV.UK Verify programme is just one example of a common problem.

The third is about learning. Failure alone is not enough – civil servants must learn from it. Policymakers need strong, consistent feedback loops to learn quickly from delivery and adapt approaches over time as they discover what works. Real-time, honest discussions about what isn’t working – the mistakes, the pitfalls and difficulties along the way – are crucial too. 

Starmer’s missions and milestones, and McFadden’s advocacy of test-and-learn, mean that the structural outlines of this government’s approach are becoming clearer. As he said in this speech – this is the start of the conversation. There is no need to have everything “figured out” at this stage. What matters is consistent commitment to a changed approach to governing – including changes to the civil service. McFadden has realised that he needs to spend time on this. It is a subject to which he will have regularly to return.