SIR GUS O'DONNELL KCB

15 NOVEMBER 2007

  Q1 Chairman: Can I welcome our witness this morning, Sir Gus O'Donnell, Cabinet Secretary, Head of the Home Civil Service, on one of your periodic visits to see us, which we always enjoy very much. We shall, as usual, ask you questions over a range of territory, but you are well aware of that. Is there something you would like to say by way of introduction?

  Sir Gus O'Donnell: Yes, please, Chairman. I would like to comment on a number of issues that you have raised in your reports and to report on where there has been some significant progress. I am pleased to announce that we will be meeting one of your long-held objectives, finding space to put the Civil Service on a statutory footing in the forthcoming Constitutional Renewal Bill. I cannot comment in advance on specific issues relating to the drafting of that but there are some areas which might be of interest where we have made separate progress. First of all, on the issue of single non-renewable terms of office we have already announced that we will take on board the recommendation in your report on ethics and standards, that we will have a single non-renewable term for the Chair of the Committee on Standards in Public Life, so we will be doing that. It will be a term of five years. Today I can say that with the Queen's agreement we are converting the appointment of the First Civil Service Commissioner, Janet Paraskeva, and the Commissioner for Public Appointments, Janet Gaymer, to non-renewable terms of five years. They have both done two years, they will do three more and then we will recruit for five year non-renewable terms. On a similar topic, the Government has dealt with some of the ideas around pre-appointment scrutiny by Parliament in the Governance of Britain green paper. We are drawing up a list of appointments that might be suitable for such scrutiny, which will be discussed further with the Liaison Committee and the Commissioner for Public Appointments. I imagine the Committee will want to be involved in such a process and we will look carefully at what you say about this. I know you have been looking at it and you have been studying the US experience and I would be very interested to know anything you have learnt from that so we could put that forward. Memoirs: I am pleased that we have now submitted a response which accepts the majority of the Committee's recommendations, and in particular the key recommendations on assigning copyright to the Government and the identification of sensitive posts to which the rules should apply. Apologies from me for the length of time it has taken us to respond to some of your reports, but the approach I have been taking is to take your recommendations and implement them as soon as possible and not to wait for a full response before coming to you, so to get on and do things. I think action is the most important thing. Finally, two Permanent Secretary appointments that we are announcing today that might be of interest to the Committee. As you will know, Sir Richard Mottram is retiring today from his sixth Permanent Secretary job after 39 years in the Civil Service, 15 of them as a Permanent Secretary. I would like to pay tribute to him as one of the outstanding officials of his generation and a real help to me. The Prime Minister announced that he wanted to separate out the role that Richard had, so there will be a separate policy person on the security and intelligence side, and we have appointed Robert Hannigan to that post from the Northern Ireland Office, and a separate Chair of the Joint Intelligence Committee. That Chair of the Joint Intelligence Committee was the subject of the Butler Report where it said that we should put someone very senior in there, normally in their last post. The Prime Minister has appointed Alex Allan, who is currently the Permanent Secretary at the Ministry of Justice, to that post. He will be coming across to be JIC[1] Chair. The Permanent Secretary post at the Ministry of Justice, I am moving across Sir Suma Chakrabarti, who is currently the Permanent Secretary at DFID,[2] to that post. We will be having an open competition for the Permanent Secretary post at DFID. Those are being announced now.

  Q2 Chairman: Thank you very much for that. We had our own encounters with Sir Richard Mottram at the time that bad news was being buried and we have fond memories of our encounters with him. Can I pick up just a few points immediately? In terms of the pre-appointment hearings, the so-called confirmation hearings that the Government is getting interested in, is it clear what the criterion is for having certain appointments under this procedure? Is there a clear category of appointments that would fall under that heading?

  Sir Gus O'Donnell: That is something we are thinking about at the moment. As I said at the start, it would be really interesting to have your views on that. The kind of appointments we are thinking about is, as you have already seen, the Chair of the Office for National Statistics, Sir Michael Scholar, and that was an idea because of the breadth across the whole issue of statistics covering the whole of Government and the importance of independence and credibility for that post. It could be posts like ombudsmen, Civil Service Commissioners, some of those kinds of posts.

  Q3  Chairman: You mentioned the Chair of the Committee on Standards in Public Life, which is not on the list at the moment and I cannot see a reason why it should not be. Is it going to be included?

  Sir Gus O'Donnell: That is certainly possible. We were just aware of the fact that we were having to get on with that appointments process ahead of Government making a final decision on what should be on the list. That is the reason for it.

  Q4  Chairman: As you say, we have been waiting for a whole string of replies to our reports on a range of issues, all of which have arrived in the last 24 hours, so there is great advantage in having you come to see us; we may have to do it more regularly. Could I ask you some questions on a number of fronts to get us going. Could I ask you what it has been like having the transition from one prime minister to another. I ask this particularly because I see Lord Butler has been saying that this is a much more sensible way of arranging our affairs than when we have these elections at uncertain intervals and it is very hard for the machine to prepare. Just tell us how the preparations for the transition of regime, as it were, have gone on.

  Sir Gus O'Donnell: As you say, it was a virtually unprecedented change. As soon as it was clear that there would be an uncontested election the Prime Minister made it clear to me that I should make preparations and talk to the then Chancellor about issues like constitutional reform. The fact that we were able to put that constitutional reform paper out so quickly after the change of prime minister was the result of a lot of work behind the scenes. We were able to think about structures. The new Prime Minister wanted to put his key policy advisers in the Cabinet Office rather than inside Number 10, and we were able to organise those sorts of things. We were able to do quite a lot of work. For us it was very unusual because we had gone from a period of very unusual stability in terms of a Chancellor and Prime Minister working together for over 10 years, and I look back and I think you have to go back to Lord Liverpool and Lord Vansittart in 1812-23 to get a similar period when you had a change of that kind. There were big implications from the change, not just for Number 10 but for the Treasury which had had one Chancellor for 10 years.

  Q5  Chairman: Fixed-term Parliaments would give far more certainty to Whitehall, would they not?

  Sir Gus O'Donnell: They would give us certainty about the dates of elections, that is true, yes.

  Q6  Chairman: That would help with planning, would it not?

  Sir Gus O'Donnell: It would help with planning. My job as Cabinet Secretary, given our system, is to be ready for an election at any time, so we can manage one at any time.

  Q7  Chairman: It is our job as well to be ready at any time! Can I just ask you some questions about this "cash for honours" inquiry and the role of Number 10 and what it has done to the conduct of Government over a long period of time. Could you first of all tell us, having that inquiry run for well over a year, what impact it did have on the conduct of Government.

  Sir Gus O'Donnell: It was certainly a very important distraction for the Prime Minister. As you know, there were lots and lots of media reports and lots of speculation around it which obviously would take up some of his attention as he would be forced to consider his particular responses to that. It raised some issues for me in terms of managing the relationship with the police. Again, I seem to be lucky as Cabinet Secretary, getting lots of unprecedented things, but we had not had a situation before where the prime minister was interviewed by the police, and in this case interviewed eventually three times. I appointed someone to liaise with the police because the Prime Minister, Tony Blair, had made it clear to me that we should co-operate fully with the police. That meant doing some very unusual and unprecedented things. For example, the police asked us for access to emails, to servers, so they could locate various documents. That is a very intensive process and takes up a lot of time. Of course, we were not in a position where we could tell the Prime Minister or other key officials that this was going on, so I had to make some decisions about granting access to those sorts of things which I suspect no previous Cabinet Secretary has been faced with but, given the blanket command from the Prime Minister to co-operate, that was what I did. Yes, it is a very intensive process and very distracting process. When I had bilaterals with the Prime Minister, quite frequently he would express his views about the latest media headlines, and there were a lot of them. It was a very intensive process.

  Q8  Chairman: Was there an issue for you about the way in which the inquiry seemed to have a constant media commentary and that events in the inquiry seemed to be reported publicly on a regular basis?

  Sir Gus O'Donnell: Yes, it was. You asked me this last time and I mentioned that to my mind it was extremely disappointing that so many things that were going on, some accurate, some wildly inaccurate, would appear in the media. It was incredibly distracting.

  Q9  Chairman: Did you ever take steps to find out how this was happening?

  Sir Gus O'Donnell: My experience of these things is given the nature of the kinds of stories that were there I did not think we would have ways of being able to determine accurately and precisely how they were getting into the media.

  Q10  Chairman: Can you help us with this central question about the extent to which Number 10 did or did not co-operate with the inquiry. There is a mystery about this. I know from your side, and this has been confirmed by the police, that, as you are describing now, you went to extraordinary lengths to open up Number 10 to scrutiny and yet, as you will have seen, when Assistant Commissioner Yates came to see us the other day he was wanting to indicate that Number 10 had not been co-operative. How are we to put these two things together?

  Sir Gus O'Donnell: All I can say is we answered all questions from the police. I am in charge of the Cabinet Office which, I stress, includes Number 10 and they were very clear that they got full co-operation from the Cabinet Office, so I am puzzled.

  Q11  Chairman: There have been these reports overnight, which you may have heard, about the police having created some sort of forensic image of Number 10 or something. Do you know what all of this is about?

  Sir Gus O'Donnell: The mechanics of how you get emails from servers does involve taking images of hard drives and the like, so I guess that is what it refers to.

  Q12  Chairman: When you hear the police talk about the lack of co-operation from Number 10, what do you think they are talking about?

  Sir Gus O'Donnell: I am afraid that is something you would have to ask the police. All I can say is that as far as I am concerned they did not ever complain to me about any problems and, indeed, they wrote us letters making clear that they thought they got full co-operation from the Cabinet Office.

  Q13  Chairman: We tried to ask the police and Mr Yates said, "Number 10 has many meanings", which did not help us greatly.

  Sir Gus O'Donnell: No. Well, Number 10 is part of the Cabinet Office.

  Q14  Chairman: We have heard about how much the inquiry cost the police and the CPS. Do you know how much it has cost public funds, the Government?

  Sir Gus O'Donnell: No, we have not estimated that. It would be very difficult. There were some of my staff who were engaged in other work who had to spend a long time, quite often at weekends, doing this kind of work. As I say, it involved the Prime Minister in thinking about this issue when he might have been thinking about other things and it is very difficult to quantify that.

  Q15  Chairman: Can you help us on the general policy issues. Whatever else we say about this period, as I see it, it has been immensely damaging in a variety of ways and there are lessons that clearly have to be learned from it. Have you learnt any lessons from it?

  Sir Gus O'Donnell: I would say the most important thing is that the best place to think about this is right at the start and to say, "Actually, is this an investigation that is worth starting?" It is at that point that you really need the judgment applied. Given the nature of the legislation, given the nature of what would constitute something which the CPS[3] would say is worth taking to trial, then you would need to say it is at that point that you need maximum judgment.

  Q16 Chairman: The police answer to that, which is not a bad answer, is to say, "If people come to us and tell us there is prima facie evidence that laws have been broken we have got an obligation to do something about it even if, as it turns out, it is not possible to get a prosecution". What I am really asking is, is there not something about the way in which we regulate the award of honours, the role of patronage in the House of Lords, all of these issues which are the source of many of these difficulties that we really have to attend to?

  Sir Gus O'Donnell: On the question of honours, the thing that annoyed me most was when people referred to this as "cash for honours". It had nothing to do with honours, this was about peerages. The honours system is a very clear, transparent system, we publish the names of all the members of the committee following the Hayden Phillips report and the reforms. There are independent chairmen and you know exactly who is on all of the committees, they analyse different things and they put forward proposals. The current Prime Minister has confirmed the decision made by his predecessor not to alter those lists, so I chair the final main Honours Committee which brings together all the different recommendations which go straight to the Queen. That is a very clear, transparent process. On the Lords' side, we have now got HOLAC—House of Lords Appointments Commission—that looks at these things. From the Lords' side I think there are issues but, of course, that is related to the whole question of House of Lords reform and the like, so that is slightly more complex.

  Q17  Chairman: The confusion comes in because although you say it is not honours, it is because peerage combines both honour and service in the Second Chamber, which is the source of many of these difficulties, is it not?

  Sir Gus O'Donnell: When I refer to honours I mean—

  Chairman: Okay. Let me bring some colleagues in.

  Q18  Mr Prentice: We know that the House of Lords Appointments Commission will not elevate someone to the peerage unless they are UK resident for tax purposes and we know that Lord Laidlaw gave an undertaking in 2004 that he would end his tax exile status and start paying UK taxes, but he reneged on that promise and he is still a tax exile. I want to ask you about the situation that applied before the creation of the House of Lords Appointments Commission when we had the Political Honours Scrutiny Committee. You will know that Lord Ashcroft, Michael Ashcroft, was ennobled in 2000. You will also know that Number 10 in March 2000 said that he, Michael Ashcroft, had given a clear and unequivocal assurance that he would be taking up permanent residence in the UK before the end of the calendar year. That was in 2000. My question to you is this: what form did Michael Ashcroft's undertaking take and to whom was the undertaking given?

  Sir Gus O'Donnell: These whole sets of issues are not for me as Head of the Civil Service and Cabinet Secretary. First, I would not be able to comment on any individual's tax status for reasons of taxpayer confidentiality and, second, I do not think it is appropriate for me to comment on the status of people in the Lords one way or the other.

  Q19  Mr Prentice: I am absolutely not going to make a meal of this. I would like you to take this as a formal request under the Freedom of Information Act. I would like you to get back to me with the information I have asked as a Freedom of Information request. To take the point that it is nothing to do with you, I would say, with respect, it is everything to do with you because the House of Lords Appointments Commission is within your bailiwick, I suppose, and its predecessor committee, the Political Honours Scrutiny Committee, was under the Cabinet Office umbrella. I would suggest that it would be your responsibility.

  Sir Gus O'Donnell: We do not set the rules for these things. I will take your FOI request, of course.

2   Department for International Development Back

3   Crown Prosecution Service Back