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Relying on contractors for digital transformation - who would actually want to be a Civil Servant?

Derek du Preez Profile picture for user ddpreez January 14, 2016
A report by the National Audit Office this week highlights how the UK government is increasingly using contractors for IT and digital work. Is this sustainable?

We’ve reached somewhat of a turning point in terms of digital progress in government. On the one hand it’s safe to say that the digital agenda is firmly ‘on the map’ and part of the dialogue right at the top of the political chain, but on the other hand we are yet to see (in my opinion) any wide scale successful transformation.

The Government Digital Service has done an excellent job in some areas - it’s very good at big thinking and has done well to change the modus operandi in Whitehall. GDS has proven how things could be done differently.

However, beyond GOV.UK (which some say is just a CMS tool/website), there is arguably yet to be a big project that the team can point to as evidence of digital being better than outsourcing. But that’s partly because the big stuff is yet to come.

The big outsourcing deals in departments such as HMRC are winding up over the next year or two and GDS has just received over £400 million as part of the spending review to prove its worth. There is also the work happening around Government-as-a-Platform, which the department is keen to push.

I’m optimistic about the future of digital in government (mostly because I can’t bear the thought of us just going back to the way things were) - but there is one area that I’m becoming increasingly concerned about: skills.

We’ve seen the head of the Civil Service, John Manzoni, speak about how there is a need to decentralise GDS’ capabilities and boost the digital skills within departments.

I was concerned about this a few months back, but following some conversations with people a lot smarter than I, it’s clear that for Government-as-a-Platform to work, and for common technology services to be applied across departments, strong digital capability needs to be build up across Whitehall.

Why? Well, in days gone by departments have essentially outsourced those skills to a single provider (okay, maybe a couple of providers) and left it to them to manage all the complexities. But how can we expect a department like HMRC to knit together a bunch of common technology services, build front facing web apps and then manage all the data integrations on an ongoing basis without the necessary skills?

It’s not possible.

And a report out this week from the National Audit Office has got me worried. According to the NAO, the government since 2010 has helped to reduce annual spending on consultants and temporary staff by £1.5 billion.

However, since 2011-12, annual spending on consultants has gone back up by between £400 million and £600 million. This is happening at the same time that departments are reducing their permanent workforce because of the need to strip out costs as instructed by George Osborne and the Treasury.

So on the one hand we’ve got the ‘slimming down’ of the public sector as required by the agenda of the leading political party. And on the other hand we’ve got a need to build out digital skills in each department and attract top talent.
Is it possible to do both?

Plugging holes

The NAO report found that the most common types of specialist temporary staff were digital, ICT and project management. Interestingly, it also found that the Cabinet Office is a particularly large user of temporary staff (representing 24% of its permanent staff costs), which the NAO said is down to “recruiting private sector expertise for fixed terms, for example, for the Government Digital Service, Major Projects Authority and Crown Commercial Service”.

Another point worth noting is that the figures, for some reason, don’t take into account spend via the G-Cloud or Digital frameworks, where we know that a lot of skills (rather than technology) have been brought in to work on agile projects.

Amyas Morse, head of the National Audit Office, said:

Used well, consultants and temporary staff can be an important source of specialist skills and capabilities for departments that need to transform how they do business. But such specialist staff can be expensive, costing twice as much as their nearest permanent staff counterpart. Government spending on these staff has reduced significantly since 2010, when strict spending controls were introduced, but is now increasing once more.

This suggests that the underlying issues have not been fixed. Professional workforce planning to address skills and capacity gaps in key areas is essential to drive down dependency on consultants and temporary staff.

In short: we need permanent digital skills in Whitehall departments. But is that realistic?

We know from both experience and from research that there is a huge demand for technical and digital skills in the UK (and particularly London) economy. The British Chamber of Commerce’s recent workforce survey found that when hiring, two-thirds of businesses believe tech knowledge is key – and yet a quarter of these firms report digital skills shortages.

Is it realistic to assume that the government can attract the talent it needs?

Matt Ballantine, who has done a stint at GDS himself and has given me plenty of food for thought in recent weeks on the role of technology in the public sector, yesterday wrote his own blog on the NAO report, where he hit the nail on the head. He said:

I did a word search. The word “career” came up precisely once in the entire 53 page document. That’s the bit I find remarkably depressing.

From my experience in central government in recent years I found myself wondering why on earth anyone would want to become a Civil Servant? They are regularly seen as a set of interchangeable units of human resource to be managed usually in the context of cost reduction. They are scapegoated as a feckless waste of public resource by politicians who essentially believe that they shouldn’t exist. And they have to take on remarkable personal career risk (particularly at senior levels), scrutinized in minute detail by both press and politicians, whilst working under wage caps and conditions changes. Not everything in the Civil Service is perfect, but I’ve seen as much, if not more, waste and inefficiency in private sector organizations over the years. Civil Servants even have to buy their own teabags.

In that context, there are a number of initiatives that are claiming to expect to use digital technology to dramatically reduce operating cost (read: headcount) whilst dramatically improving user experience. Now grandiose claims for the future benefits of big technology investments are nothing new – but where exactly are the skills to do all of this digital transformation going to come from? Initiatives in Government are looking to do world-beating, pioneering things with technology so will need world-beating, pioneering people to do it. How are these people going to be attracted to work in an organization that seems to be geared to make the employee experience as miserable as certain politicians can possibly make it?

Sounds appealing, doesn’t it?

In all seriousness, this is a challenge. If we really want to do something as leading edge and innovative as Government-as-a-Platform, I seriously doubt that we can do this by plugging holes with contractors that charge double what a full-time employee would.

My take

As I noted above, the next couple of years are going to be very telling for the digital agenda in government. There are a number of big outsourcing contracts that are winding down and there are also some big technology projects happening internally within departments (I’m looking at you HMRC).

Key to all of this is going to be getting the right skills in place and keeping them there. GDS has done

new skills
a fairly solid job of finding good talent for senior roles within departments (at the CDO/CTO level) but I haven’t seen much evidence of similar talent being attracted further down the value chain.

And when you read Ballantine’s comments above, are we surprised? Who in their right mind (beyond those with a burning desire to serve the public) would want to go and work for the Civil Service when they can likely earn more in the private sector and not have the fear of public retribution.

I’m not entirely sure what the answer to all of this is, but I’ve got a feeling it’s not going to come in the form of contractors. Somehow the Civil Service needs to make its FTE positions attractive and valuable in what is becoming an increasingly competitive market.

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