Issue 14 - Varney on transforming government

 

Sir David Varney is perhaps better known in this part of the world for his review of corporation tax, but his day job is as Gordon Brown’s guru on public service transformation. Owen McQuade met up with Sir David to discuss public service transformation.

 

Although best known as the man who said no to a lower corporation tax rate for Northern Ireland, Sir David Varney was on this occasion visiting Northern Ireland to deliver a keynote address at agendaNi’s Innovation in Public Services conference. We start by discussing why the transformation of public services is now top of the policy agenda.

Service transformation: staying competitive

Service transformation is something that is now the focus for governments around the world. Varney asks the question: “Why do governments see the need to transform their public services?” He goes on to answer the question himself, saying that there are a number of factors. The first of these is what he calls “macroeconomics”. Over the last 10 years there has been unparalleled economic growth and low inflation that has brought over one billion more people into the international workforce. This globalisation has led many countries to ask how can they remain competitive? Varney says many governments are asking themselves how they can get their economy to be more productive. He explains: “There was a period when anyone who said that really meant how do we make our private industry more productive? But it now includes the public sector and there is now a realisation that because the public sector is so large, it needs to be as productive as the rest of the economy.”

Other factors he highlights include technology. He sees the trend of increasing functionality and lowering costs increasing the use of technology but observes: “We are a bit jaundiced in our view of technology, because it often overpromises, we say it is always comingsooner, but when it does finally arrive its impact is more than we thought before.” Varney highlights the impact of technology in healthcare where diagnostics and new drugs are having a increasingly important impact. Other drivers of change include the rising expectations of citizens who “are taking the best experiences and are demanding we get these in other parts of the economy.” He also says that we shouldn’t overlook the obvious impact of travel and communications: “People are going overseas and seeing what governments are doing. People are going to New York and seeing the 311 service and saying ‘Why can’t we have a service like that?’”

Varney believes that the issue of public service transformation will remain high on the government’s agenda: “This is not something that is flavour of the month. This is something that will be with us for the long term – how do we make our public services as productive as we can in order to help produce a productive economy?” As someone who has spent most of his career in the private sector, he observes: “The startling thing when you are an outsider looking at the public services is the size and the complexity of the organisation. What also strikes you is the long-enduring nature of the structure.”

Brown’s guru

I ask Varney how he finds the day-to-day aspects of his current role in advising the Prime Minister on transforming public services. He outlines his role: “It has been interesting, working with civil servants and politicians to try to bring to life a report [Service transformation: A better service for citizens and businesses, a better deal for the taxpayer] which was published with the pre-budget report last year [December 2006]. I think the Civil Service understands the scale of the challenge and the politicians are also trying to identify the areas where they want to make the most rapid progress.”

In comparing his experience in the private sector to his new role at the heart of government he says that his experience with Shell has prepared him well for the transformation role: “With Shell you get the global size of an organisation, and seeing transformation and being involved with it in Shell has been very useful. Then going to a mobile phone company [mm02] I saw the effect of rapid change, where things happen in months, and learning how an organisation responds to such rapid change has been very interesting. Then the opportunity to lead HMRC gave me an insight into what the challenges are in the public sector. You are dealing with an organisation that collects about £400 billion a year and has 100,000 people in 800 offices and has 500 computer systems. That’s a big organisation.”

Sir David has not found that much difference between the two sectors but there are a couple of examples he highlights: “Dealing with Ministers is a different challenge compared to dealing with a Chairman and the relationship with the Minister is a contact area and like any senior civil servant you have to manage your relationship with Ministers and their teams and it is all done in a blaze of publicity. In the two years I was Chair of HMRC I went to see 11 select committees. That is one every 19 days that Parliament was sitting. Your accountability in the public sector is completely different compared to the private sector.”

Sir Humphrey Appleby

We then compare notes on the difference between working for Shell, with its strong corporate culture, and elsewhere and how he finds being in government as opposed to influencing it. I first bumped into David Varney a number of years ago when he was General Manager of Shell Sweden and I was working for Shell International. I remember it being a fairly bruising affair with Varney doing most of the bruising. He is very intense and, unsurprisingly given his track record, is not afraid to state what he thinks. The intensity comes across when I ask him if he had any ‘Yes Minister’ moments when moving to work in government after 30 years in a business environment. He thinks Yes Minister was: “the most deeply destructive programme on the Civil Service. It is absolutely humorous entertainment but the idea that a Permanent Secretary could be quite so self serving and so negative, just wasn’t the reality. I think it’s from a different era.If you were in the [Cabinet] room, as I was when the terrible events of the bombing that happened in London, and you see people who are the equivalent rank of Sir Humphrey Appleby, you see a complete series of people working together. I was immensely impressed by the quality of people I worked with and was grateful for their help.

He continues: “I think Sir Humphrey is very good entertainment but if it’s meant to be an insight into the workings of the modern Civil Service then I’m not so sure. The job of a Permanent Secretary is ‘to talk truth onto power’ and that’s the major responsibility. Am I giving the best advice? It may not be the most palatable, but am I giving the advice that the evidence suggests will give the right outcome and that is the test? It [Yes Minister] is a bit like television in general with the caricatures. When do you ever see an honest businessman on East Enders?”

Despite his position Varney is down-toearth and very workman-like. He arrived at the conference on his own with no fuss and stayed most of the morning mixing freely with delegates before catching a taxi himself back to the airport. You get the impression thath he is someone focused on the task at hand rather than worrying too much about his position.

Northern Ireland

At the start of the interview Sir David makes it clear he will not discuss his (then) forthcoming report on corporation tax. But I ask Varney how he has found working in Northern Ireland: “I’ve been very fortunate to come at a time when Northern Ireland is optimistic and at a time of peace. I’ve now made my report to the Chancellor and it’s now for him to decide what decisions he wants to take.” He goes on to say that there were a number of things that struck him about Northern Ireland: “The size of the public sector. The fact that you have been successful in attracting investment to date. There are also economic changes in terms of the relationship between yourselves and the Republic which are beginning to take place. I came away with an optimism about Northern Ireland, even greater than when I arrived.”

 

agendaNi - February 2008