We help companies affected by political change. To access our political and commercial intelligence service, email GUIDE’s Chief Executive on greig@theguideconsultancy.com

Civil Servants only ask questions when they know the answer

We noticed the Cabinet Office published the results of a “social value trial” from Harrow Council this week. The trial found suppliers can deliver social value outcomes to the public sector “at almost no extra cost”, that they can be paid to deliver social goods, and that the system should now be used for all local contracts over £100k. The conclusion wasn’t surprising (it’s exactly what it was supposed to be) but it’s still a helpful reminder that the Government has no money left and that it will make private sector suppliers deliver social policy through procurement. No doubt these trials will be referenced a lot in the run up to the Autumn Statement.

Brexit negotiators must avoid conflicts of interest

Because there are too few British trade negotiators, the UK Government is recruiting expertise from friendly nations, including Australia and New Zealand. Many of these staff have previously conducted talks focused on the extraction and food industries  that are mainstays of Antipodean economies, so UK firms from these sectors might take heart that their issues will be understood. But the UK also has to avoid any perception of conflicts of interest. These could come about by UK-employed foreign negotiators having one eye on supporting their own native markets, or how Brexit is viewed by their home countries’ major trading partners. For example, China is the biggest foreign market for both New Zealand and Australia, with more than 30% of Australian exports going to the Chinese.

Government rebuffs PAC

The latest Treasury minutes confirm the Government will not accept two recommendations from the Public Accounts Committee regarding accountability for spending. The PAC asked for Departments to set out which individuals are accountable for specific spending decisions and, most ambitiously, to encourage Civil Servants to notify Parliament when they have concerns over taxpayers’ value for money. Unsurprisingly, the Government resisted both calls – so it still falls to firms like GUIDE to explain what’s happening behind the scenes to interested parties outside Whitehall. The full Treasury minutes are here: http://bit.ly/29SNLia

May's blueprint

Rightly, political types have revisited May’s 2013 speech on her vision for Government. Business leaders should note three points that have survived into the new administration: first, social policy by procurement is set to continue, with major suppliers to Government expected to help deliver frontline public services; second, there are planned changes to corporate governance legislation to make executives accountable not only to their shareholders, but also their workers; and third, the Government’s industrial strategy will focus on a small range of sectors and focus different policies (education, tax, procurement, regulation and investment) on supporting them.

Crown Commercial Service

CCS published its annual report this week. Strikingly, while new ideas around management systems and structures have progressed, some issues remain regarding lower level staff and supplier engagement. There are reasonable explanations for some failures, but the need to prove CCS can translate ambition to action and ensure something happens when the levers of power are pulled remains.

What happens if Labour splits?

Her Majesty’s Official Opposition is the party with the most seats in the Commons that is not in Government. If Labour splits in two, the faction with the most seats would become the Opposition – and if both factions have more than 54 MPs, they would also knock the SNP into fourth place, causing the nationalists to lose most of their Parliamentary privileges (and making EVEL debates that much more important). The different factions from Labour would also have to vie over the £5m+ of short money it currently receives every year – and, awkwardly, it would probably need a motion put forward by the Government to redistribute the cash. That awkwardness would be nothing compared the wrangles over staff, property and debts, though. In short, this extraordinary political era is not going to calm down for a while yet.

EU negotiations: 2yrs is a long time in politics

The UK’s withdrawal negotiations do not have to last 2yrs. That timeframe is a maximum limit, not a minimum target, for when the UK must leave the EU institutions after enacting Article 50. Moreover, the new Government has strong incentives – a need to demonstrate a referendum dividend at home and the alternatives to EU membership abroad – to strike trade deals with non-EU countries as soon as possible. Until we officially leave the EU (which we have not done yet), those trade deals are not possible, as we are bound by EU rules until the very day we walk out. Far from a long drawn out process, EU talks could be much speedier than people think.

Predicting the new Cabinet

Sadly, predicting the new Cabinet is a mug's game - at this stage, the even the Prime Minister elect doesn't know the final line up. Cabinets are formed through a mix of merit, political balance, personal ties and blind luck (the PM does not know, for example, who might decline their first offer). We should know where the cards have fallen by the weekend.

Public sector contract terms will change dramatically in light of new Cabinet Office plan

The new Cabinet Office and Civil Service workforce plan to 2020 has three major implications for commercial suppliers to Government.

1/ Changes to Senior Civil Service recruitment and pay will encourage mutual secondments between Departments and suppliers, but will also increase the risk of key staff being ‘poached’ by the public sector.

2/ The Civil Service will recruit according to “potential not polish” (i.e. it will hire people from wider socio-economic backgrounds) and it will establish a requirement to collect more demographic data on staff. Both “voluntary” features are highly likely to be passed on to suppliers, too – initially through an “invitation” to agree “a common national

set of measures for employers to use for understanding the socio-economic background” of their staff and potential recruits. As a result, major public sector contracts will only be won when firms toe the line and can demonstrate the diversity of their own workforce.

3/ The workforce review allows the Cabinet Office to grab even more power over wide-ranging functions across Government. There will be “a centre of expertise within Cabinet Office, centralising the senior recruitment function”. In other words, senior officials in all Departments will be chosen by – and answer to – the Cabinet Office, rather than their own Department. This makes engagement with the Cabinet Office more important than ever.

As an aside, the review also poses some prickly political challenges. For example, while Senior Civil Servants are in line for pay rises by November (“flexible rewards for scare skills”), there will be job cuts elsewhere (“in future the Civil Service will need to be smaller”). Indeed, if the review represents an effort to stuff the mouths of top mandarins with gold but leaves frontline staff demoralised, Theresa May’s new administration could quickly find that when it pulls the levers of Government, nothing happens.

The full Cabinet Office workforce plan can be found here: https://www.gov.uk/government/publications/civil-service-workforce-plan-2016-to-2020

The Conservative leadership race

Two factors make this race to be Tory leader and PM unusual. First, it comes hot on the heels of the referendum, which means backbench MPs have recent experience of when they can give, withdraw, or withhold their public support for one side or the other to maximum effect. Second, the incumbent Prime Minister does not have a chosen candidate in the competition, which makes it much less likely that the party machinery can sway the vote (as happened when Michael Howard appointed Francis Maude as Party Chairman to boost David Cameron, for example).  


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