SIR GUS O'DONNELL KCB

11 DECEMBER 2008

  Q40  Paul Flynn: When you appeared before us in July we had a session about the loss of data. Since then there have been further losses, two involving contractors and one involving the Secretary of State. The losses now involve almost the entire population of the country in various ways and 25 million in one case. Do you have a single case of anyone being harmed by these losses of data?

  Sir Gus O'Donnell: It is very difficult to come to a completely definitive answer on that. We have no concrete examples where information has got into the wrong hands and has been used. I suggest that the harm is the uncertainty created as to whether that may happen, so people have had to take action. I suppose that for me the bigger issue is that to deliver world-class public services we have to get the public's trust in the way we handle data in order for us to share certain information. That is the area where there is potential damage and why I am quite passionate about improving the quality of our data handling.

  Q41  Paul Flynn: Is it not true that the only people who have never lost such data are those who do not have these modern miraculous devices? There is so much on these sticks that inevitably some will be lost but it is extremely unlikely they will get into the hands of people who can put them to any nefarious use?

  Sir Gus O'Donnell: You can look at some of the reports in the press and then see what happened. One data stick found in a car park was supposed to contain information about millions of people. We discovered that it was much more minor than that. That was an example of a contractor. One of the issues we are now focusing on much more to improve what happens in government is to ensure that those little sticks are encrypted. Sometimes we withdraw the ability of people to use those sticks and the capacity of computers to download. It is important we ensure that large data sets are available only when it is essential for someone to have them and that if it is essential it is encrypted. Those issues are not just for government departments but for their contractors and subcontractors. We are working on it by putting into our departments' contracts the right clauses. Most recently I brought together a very large meeting of contractors from the private sector and basically laid down the law about what we expected from them in terms of data security.

  Q42  Paul Flynn: I notice that the media coverage rarely refers to the fact that the information was encrypted and not accessible. Can you look forward to reports of future losses being reported with less hysteria by the press?

  Sir Gus O'Donnell: I would like to think so, but my job is to try to minimise the number of data losses and the harm associated with them.

  Q43  Paul Flynn: There has not been any harm so far?

  Sir Gus O'Donnell: No. The figures provided by the Information Commission suggest that there were more private sector losses than public sector losses.

  Q44  Kelvin Hopkins: We have had lots of interesting documentation including the NAO report on the Cabinet Office performance briefing. It contains some charts showing all of the various functions of the Cabinet Office, but nowhere does it say directly who services the Cabinet and where they fit in the various charts. The Cabinet Office grew up essentially as the government department that services the Cabinet but now it seems to do lots of other things but not service the Cabinet.

  Sir Gus O'Donnell: It most certainly does. Whenever there is an issue across Cabinet about a policy issue quite often a number of departments will get together and sort it out. If there is a big policy issue it goes to a cabinet committee. The structure of that committee is serviced by the Cabinet Office. I send round letters on behalf of the Prime Minister in terms of the membership of that committee. We provide secretariats for those committees. If they are in the domestic policy area in most cases they will be within the economic and domestic secretariat according to the charts you have. That is a very large chunk of what they do. When we talk about supporting the Cabinet there is support through all of the cabinet committees and obviously the Cabinet itself.

  Q45  Kelvin Hopkins: My hope is that there has been a change since the days of Prime Minister Blair when it was alleged that the Cabinet met very briefly, saw almost no papers and on one occasion new cabinet members questioned the Prime Minister and were told firmly by a colleague after the meeting that to question the Prime Minister was not done. In those days it was alleged to be a cipher. Has there been a change? Is there now more genuine debate about policy at cabinet and is that more your role?

  Sir Gus O'Donnell: I have to be very careful here because I am the person who has recently been arguing very vehemently that the proceedings of cabinet should remain confidential and cabinet members take a privy council oath to that effect. I shall not comment on the level of debate within cabinet, but I can give you figures for the number of cabinets there have been. There has been an increase in the number. Obviously, there has been a big change in that the Cabinet does not always meet in Number 10. Most recently we have met in Birmingham and Leeds, so cabinet is getting out around the country and that will continue.

  Q46  Kelvin Hopkins: But the fear is that it could become part of the decorative part of the constitution rather than an effective part and somewhere there must be debate about policy by elected Members, not just by the Prime Minister's private office?

  Sir Gus O'Donnell: Absolutely, and that is why the cabinet committee structure is absolutely vital. It is important that cabinet meets regularly and discusses really important issues.

  Q47  Kelvin Hopkins: To pursue another tack, you talked about recruiting talent. A lot of talent will be flushed out of the City with banks collapsing and so on. Presumably, you can pick up some talent. Has there been a problem in that although the Civil Service has not been politicised in a party-political sense it has signed up to the world of neo-liberal free markets with privatisation and globalisation that is now collapsing in flames? Is there anyone else with an alternative view who can come forward and say to the Prime Minister or permanent secretary that he has one that he gave earlier? Are there people thinking intelligently about alternatives?

  Sir Gus O'Donnell: Absolutely. In one sense that was why I said I was really pleased about the big increase in the number of economists coming through. If you have had economics training you learn about John Maynard Keynes, liquidity traps, circumstances where there are market failures, deficiencies of domestic demand and global demand. If you do economic history you study the depression. Those sorts of things are hugely valuable and that is why I think that people who understand those things are really important to us. The quote by John Maynard Keynes that everybody knows is that in the long run we are all dead. He went on to say that economists set themselves too easy and useless a task if all they can tell us is that when the storm is long over the ocean will be flat again. Basically, this is an example. We are going through tempestuous seasons with the ocean out there and we have to manage that process and think proactively about some of our key assumptions, for example that financial markets are deep and liquid. That is just not true and does not hold true any more. That is where you need people who can think from first principles. I believe that an economics and history education is hugely powerful.

  Q48  Kelvin Hopkins: I have some very modest claims to be an economist. I was late for this hearing because I was on the radio discussing the euro with somebody who took a different view. I go back to the time of Mrs Thatcher. She did not like people who disagreed with that model. The Cambridge Economic Policy Group led by Wynne Godley put forward views. Their forecasts were invariably more accurate than all the others, particularly those of the London Business School which was pathetic at forecasting. Mrs Thatcher preferred the London Business School and took away funding for the Cambridge group because she did not like it. Will we see all the talent with various views brought into government and the Civil Service to make sure we do not make that mistake again?

  Sir Gus O'Donnell: The Prime Minister did make a number of appointments from outside the Government. There were two appointments of people from different backgrounds to ministerial positions. The Civil Service is always looking for the best talent. I am very pleased with the fact that applications have gone up a lot. I do not believe it is just because of the financial turmoil but because people are becoming more interested in the kinds of jobs that government do; they are interested in the whole area of active government, if you like.

  Q49  Mr Prentice: It was reported in the press, perhaps incorrectly, that you were a bit exercised about the Alastair Campbell diaries being published. Is that the case?

  Sir Gus O'Donnell: Yes.

  Q50  Mr Prentice: If he were to bring out the unexpurgated version with all the stuff about Gordon Brown that was airbrushed out what would happen to Alastair Campbell—anything?

  Sir Gus O'Donnell: That is the issue we face. We have very limited powers to prevent people. Obviously, it will be a question of what kinds of things are involved. If there is something on the national security side that I believe is really important I would hope and expect that Alastair Campbell would not publish anything that we decided was damaging to national security.

  Q51  Mr Prentice: I do not want necessarily to single out Alastair Campbell, but there has been a spate of memoirs by John Prescott and so on. Do you think that in the round these recently published memoirs have damaged trust within the Government between civil servants and ministers, or is it the case that now anything goes?

  Sir Gus O'Donnell: I am a huge fan of the Radcliffe rules, which I would strongly commend to anyone. Ministers are in a different situation from civil servants. We have accepted for a long time that ministers will write their memoirs. I recognise that as elected officials they want to explain their decisions, but if they abide by the Radcliffe rules that is good for government and governance.

  Q52  Mr Prentice: After the Sir Christopher Meyer business, Jack Straw tightened the rules that applied to diplomats and Foreign Office people. We have had some letters from retired diplomats saying that the new rules are just too onerous. People who perhaps have served as high commissioners or ambassadors in important posts throughout the world with a wealth of experience now feel constrained and cannot speak out and give people the benefit of their experience. Will you revisit those rules?

  Sir Gus O'Donnell: Yes. There are certain technical aspects. This is a matter for Peter Ricketts in the Foreign Office, but we are working with him to come up with guidelines that meet their concerns but also allow us to be very clear about what we need to do.

  Q53  Mr Prentice: Would those apply also to the Home Civil Service?

  Sir Gus O'Donnell: We will do both together.

  Q54  Chairman: In the past we have reported on memoirs. The expectation was that the Government would come forward with a new settlement on the issue of memoirs.

  Sir Gus O'Donnell: Indeed.

  Q55  Chairman: That seems to have stalled.

  Sir Gus O'Donnell: I hope we will have that with you before Christmas. These things are technically quite difficult. We also wanted to roll in the whole issue of diplomats.

  Q56  Chairman: You are getting there?

  Sir Gus O'Donnell: Yes.

  Q57  Chairman: To go back to where we started, I think we can agree that ministers leak, do they not? Is that one of your concerns? What effect does ministerial leaking have on the ability to hold the line in relation to civil servants?

  Sir Gus O'Donnell: I suppose I am a real traditionalist. I like it when ministers announce policy to Parliament and I try to encourage all of them to do that.

  Q58  Chairman: But we do not have inquiries into ministerial leaks and call in the police?

  Sir Gus O'Donnell: No.

  Q59  Chairman: Would you like to do so?

  Sir Gus O'Donnell: I can think of a cliché in response to that. I am being very careful here. I do not think it would be appropriate for civil servants to do that.

  Chairman: As usual, we have had a very fresh, cliché-ridden but reasonably open series of exchanges. We are extremely grateful to you. Thank you very much for coming along.