Global Government Summit report; part 1

By on 15/05/2017
Lord Gus O’Donnell – Former cabinet secretary and head of the civil service, United Kingdom

This year’s Global Government Summit attracted top officials from 11 countries for informal, candid discussions on five of the biggest issues facing civil services around the world. Matt Ross presents the first part of our report on the event, covering the introductory session and the challenges of managing today’s skewed, fast-changing global economy

Foreword

The Global Government Summit, organised by Global Government Forum, is a unique event that each year brings together the world’s most senior public servants for informal discussions on common and important public sector challenges. Over an evening and a day, top civil servants from a range of countries explore and discuss some of the biggest challenges facing governments today – hearing presentations from their peers, and sharing what they’ve learned about how to tackle shared problems and agendas. In 2017, it was hosted by the government of Singapore at the city-state’s Shangri-La Hotel on 10-11 February, and attracted very senior officials from 11 countries.

The Summit is designed as a safe space for honest, open discussion between people at the highest ranks of government, and as such is held under Chatham House rules – meaning that no quote can be attributed without permission from the speaker. Additionally, Global Government Summit has excluded from this report some particularly sensitive aspects of the discussion which might lead to governments or delegates being criticised or embarrassed; it is essential that people can speak freely at the Summit without fear of repercussions.

Nonetheless, we produce a report on the event because – with the permission of those quoted – it is possible to present many of the discussions and draw out the key lessons. Our report is intended to share the ideas and learning generated at the Summit, helping senior civil servants in governments around the world to address the issues explored by delegates. This is the first in a five-part serialisation of this report; we very much hope you find it useful.

The participants on the Global Government Summit 2017

Introduction

As he welcomed delegates to the 2017 Global Government Summit, host Peter Ong – the Head of the Civil Service of Singapore – neatly summed up the event’s purpose and goals.

The Summit “brings together heads of civil services around the world who share a common aspiration for superior governance, and seek an informal platform where they can share ideas on how to achieve that,” he said. “Everyone comes both to contribute, and to learn from each other. I look forward to reaffirming old friendships, and forging new ones: as our challenges grow, the mutual support these friendships provide will be invaluable.”

Several of those “old friendships” had been forged at past Summits – for this was the fifth such event, and the fourth to be hosted by Singapore. “Over the years, we’ve had wide-ranging discussions on topics like digital government and big data, citizen wellbeing, service deliver, talent management, and public service innovation,” said Ong. But this, he added, was the biggest event to date – with 11 countries represented around the table. The Summit’s growing cast list “is a testament to the recognition of the growing complexity of governance, and the need for dialogue to build shared understanding,” he commented.

The Summit’s popularity may also, though, say something about the scale of the challenges facing senior civil servants in 2017, as political shock waves – symbolised by the UK’s referendum vote to leave the EU, and Donald Trump’s election as US president – spread through many of the world’s democracies. “I’ve always found it valuable to have the opportunity to connect with senior leaders in other public services,” said Ong. “During periods of economic and political turbulence, in particular, such interactions assume a special significance.”

At these times “the governance terrain becomes more treacherous, with little margin for error, and navigating it successfully is of paramount importance,” he continued. “This is precisely the time when learning from each other becomes crucial to safely steering the ship of state through stormy seas.”

We live, one delegate noted, in “the most interesting of times”. And Lord O’Donnell, the former UK Cabinet Secretary, offered a pithy translation: “The Governor of the Bank of England used to say that success in monetary policy is when it’s really boring,” he commented. “So when we say things are interesting, that means that something’s gone wrong.”

Sketching out the programme for the summit, Peter Ong explained that the key topics had been curated to address the fraught global political and economic context. O’Donnell’s presentation at the opening dinner would, he said, set the stage by discussing a resilient model of economic growth in these turbulent times.

The following day, he explained, the morning sessions would “delve deep into the maintenance of social cohesion amidst diversity, and explore ways of building trust through public engagement and open governance”. The first morning session was planned to give delegates an opportunity to discuss growing public concerns about immigration and integration; and at the second, they would consider why citizens in many countries are growing more cynical about, and disengaged from, established political systems.

In the afternoon, Ong added, the group would discuss ways to strengthen coordination and collaboration across government – creating a more strategic and responsive civil service machine – and consider how digital technologies might reshape the relationships between governments and citizens. “None of these topics are new to any of you – all of us face them, at one level or another,” he concluded. “And it’s through the collective wisdom that you share as we cover each topic that we’ll learn from one another – going away in the evening with some fresh insights and new perspectives.”

Peter Ong, head of Civil Service, Prime Minister’s Office, Government of Singapore

Session 1: finding a resilient model of economic growth

Global economic shifts

“People are going to attribute this to Trump and protectionism – but let’s be clear: flows of finance, goods and services have fallen from a peak of 53% of global output in 2007, to 39% in 2014. So that whole globalisation process is changing quite radically.”

Gus O’Donnell, who served three prime ministers as UK Cabinet Secretary and Head of the Civil Service, has since 2011 returned to his pre-civil service career in economics: amongst other things, these days he’s Chair of consultancy Frontier Economics, President of think tank the Institute of Fiscal Studies, and a trustee for the Economist magazine. So he was well-placed to explain to delegates some of the underlying economic dynamics that have fostered political and social changes in recent years.

After decades during which trade expanded much faster than economies, O’Donnell said, since 2012 they’ve grown broadly in parallel: “So trade is slowing down, and there’s an interesting question as to why.” Two possible hypotheses, he added, are that protectionism has been growing subtly, and that the process of moving production to maximise the efficiency of the supply chain has slowed down – at least for now.

In today’s environment of constrained GDP and trade growth, O’Donnell continued, some regions will struggle to make progress; in particular, he raised concerns about structural problems within the Eurozone. But the USA is a different matter: “I’ve been amazed, talking to US businesspeople, about how bullish they are about the US economy and the impact of Trump’s expected policies on infrastructure, tax and the like,” he said. “The people who were telling me what a disaster it would be if he got in have completely changed their tune, and are now saying that – at least short-term and on the economic side – it’s going to be great.”

Meanwhile, fast growth is anticipated in India – which may outstrip China in 2017, with growth of nearly 7% – and Turkey. By 2020, O’Donnell said, the emerging economies’ combined GDP may top that of the G7: “This is a real change in the global economic weight of the world,” he commented. “For those of us within the West, we need to be thinking about how we cope with a world where we’re not the economically dominant part of it.”

Source: The IFS Green Budget, February 2017

The distribution of growth

Inside that global picture, O’Donnell argued, lie important questions around how the benefits of growth are distributed. “Globalisation has led to growth, but it’s leading to some really severe issues around inequality,” he said. Meanwhile, the growth of automation in manufacturing is cutting production jobs and shifting the distribution of rewards between capital and labour: “Technology is driving ‘winner takes all’ sorts of decisions,” he pointed out.

Too often, those losing out in these economic shifts are turning on the perceived beneficiaries – often identified as the “global elite” and new immigrants. “What we did in the UK, I think, was we failed to get the winners to compensate the losers; to find ways to get transfers such that everybody felt they were winning,” O’Donnell argued. “I think that’s something we should think about very carefully.”

To illustrate his point, O’Donnell pointed to changes in hourly pay across different British regions: over nearly two decades, he explained, pay growth has been substantially faster in regions that trade a lot – leading to a growing pay gap between the wealthy South-East and outlying regions. “The process of globalisation has exacerbated regional inequalities,” he said. And those who have not benefited from globalisation are now rejecting the model: “One of the biggest indicators of whether an area voted to leave the EU was inequality in wellbeing: people’s perceptions of how they were doing in life.”

The most crucial factor, O’Donnell argued, is not people’s income or their quality of life, but their perception of fairness: people will put up with a lot if they feel the pain is shared equally – but they’re intolerant of what appears to be inequitable treatment. In part, he added, the fact that ‘quality of life’ rankings vary so much across US society “explains why you’ve got so many people who say: ‘This isn’t working for me,’ and so someone like President Trump can come through.”

Source: Frontier Economics (Europe)

The rise of the robot

The rise of automation – and, increasingly, Artificial Intelligence (AI) – presents a parallel set of challenges. To date, we’ve seen robots replace many skilled manual jobs; but looking ahead, O’Donnell warned, AI will take chunks out of the professional workforce. “If you’re an accountant or an auditor, it’s not looking good,” he said; and the same is true for many skilled jobs, from health technologists to economists, pilots to technical writers. “This is the kind of thing that AI is going to completely replace,” he said. “In many cases, computers can do a much better job than humans.”

Some jobs are relatively safe, he added – particularly in personal service roles, such as social care and personal training, and in artistic and creative work. But with lifespans continually growing, O’Donnell foresees a world in which people retrain several times over the course of their lives; and in which it’s normal to take a step back from paid work to focus on caring and family responsibilities. “We won’t be in a situation where, come retirement age, people just stop and do nothing,” he said. “I can imagine newly ‘retired’ people in their 60s looking after people in their 80s – assuming they’ve saved enough and have reasonable pensions.”

Lord Gus O’Donnell, former cabinet secretary and head of the UK Civil Service, House of Lords, UK Parliament

Sharing the proceeds of growth

“We’ve forever taken this view that world trade increases GDP and there’ll be some kind of magic trickle-down,” said O’Donnell. “Well, actually it turns out that quite a lot of it isn’t trickle-down: it’s virtuous circles and vicious circles. And often, winner takes all.”

Many of the answers, O’Donnell argued, lie in education – both in giving people the flexibility and adaptability to find opportunities in fast-changing economies, and in supporting people to change roles and develop new skills mid-career. And governments, he argued, also need to address the perception that immigration has weakened the living standards of existing residents.

Immigrants plug gaps in the labour market that residents can’t or won’t fill, he said, and their readiness to go where the work is provides economies with great flexibility. But there are “mostly wrong, but very firmly-held” views that immigration has harmed host populations, “so we need to come to a sensible way of handling migration which doesn’t shoot ourselves in the foot”.

So is there a market solution to this, asked one delegate: a way to reconfigure economies that protects employment rates across the piece? Or must we look at redistributing income, to avoid creating a vast new class of the poor and workless?

Part of the answer will lie in redefining work, O’Donnell answered, so that people spend more of their lives working voluntarily for families or communities. But in the shorter term, governments must help prod economies in the right direction – assisting transitions in areas left high and dry, whilst stimulating growing market sectors.

There are traps here, he warned. And he cited the UK’s attempts to shift civil service jobs out of London in order to support regional economies: these apparently stable, well-paid public service employers took many of the best local staff, weakening private businesses – and when shrinking public budgets took those jobs out, local private sector markets were too weak to take up the slack.

The British government had much more success when it focused on stimulating private business, O’Donnell said. When the pits closed in England’s coalfields, for example, regeneration agencies prepared sites, put in broadband, retrained local people and offered tax incentives to investors. Meanwhile digital services and online shopping were pulling money away from many town centres, but stimulating demand for call centres and logistics hubs ¬– neatly fitting the coalfields’ offer of cheap land and ready workforces near strategic transport links.

“You can’t pick winners – but you can pick sectors and skillsets,” commented O’Donnell. Similarly, working with universities to stimulate spin-off businesses produced good results in the UK – particularly when they linked into established industries such as engineering and manufacturing.

The key point, O’Donnell concluded, is “that there are losers from globalisation, and it’s no fault of theirs that they happen to be in the sectors which have gone away.” As the loss of jobs extends into traditionally middle-class professions, “we need to be ahead of the game, helping people to retrain, to restructure.” And this will require big changes in education and skills provision: “We need to build in the ability to change and develop new ideas, and to cope with the demands of whatever the technology throws up.”

Ultimately, then, “we do need to be thinking about redistribution”, said the former Cabinet Secretary – not via subsidies or benefits, but through “adjustment payments, transitional payments, possibly help with relocation.” Governments, he believes, will have to work out “how you redistribute in a smart way and through the right incentive structures – so you’re not paying people to do the wrong things in the wrong places.”

Coming up in part 2: In the light of election and referendum results revealing a backlash against immigration and social change in the developed world, the delegates debate how to foster cohesion in diverse societies. The full report is available here


What brought you here?

Serge Dupont, Deputy Clerk of the Privy Council, Canada

“When you’re faced every day with immediate pressures, you do need to find space to think things through a bit more – and you can’t do that by yourself in the office. You have to make some kind of a break from your day-to-day work. You need to get out and meet new people. Coming to a place like Singapore also allows you to take in a different reality. And the Summit brings you into contact with people who share many of the same challenges you’re facing, while bringing to the discussion new experiences and perspectives.

“In Canada, the cabinet secretaries of the federal and provincial governments get together periodically to talk about their challenges as public service leaders – and that’s very fertile ground for discussion. Likewise, interaction among peers [at the national government level] is insightful and productive; and the more informal the setting, the better.”

About Matt Ross

Matt is a journalist and editor specialising in public services, policymaking, government and management. He was the editor of trade title Civil Service World from 2008 to 2014, serving an audience of senior UK officials; and the features editor of weekly news magazine Regeneration & Renewal between 2002 and 2008, covering urban regeneration, economic growth and community development. He has also been a motoring and travel journalist, and now combines his role as editorial director of Global Government Forum with writing for other publications including The Guardian and Planning magazine.

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