Gus O’Donnell, Former UK Cabinet Secretary: Exclusive Interview

By on 03/03/2015
Lord O'Donnell presenting to Heads of Civil Service at the Global Government Summit, Singapore in November

Retired head of the UK civil service Lord O’Donnell tells Global Government Forum how parliament should be reformed and why the UK’s upper house is too big

He is dubbed the UK government’s “ultimate insider” by the Financial Times newspaper and was nicknamed GOD during his time as head of the British civil service. Though the latter moniker was made up by his initials – Gus O’Donnell – one can’t deny the charisma and sense of authority he exudes. After 32 years in the civil service, six of which as its head, Lord O’Donnell retired in December 2011. Since then, the Manchester United supporter, however, has not sat still. He has been busy chairing Frontier Economics – a microeconomics consultancy advising public and private sector clients on a range of topics including policy design and regulatory systems.

Frontier, he says, was “an obvious place” for him to go. An economist throughout, the choice does seem plausible: O’Donnell studied economics at the University of Warwick, gained an MPhil in economics from Oxford University, then went on to lecture in economics at the University of Glasgow, before joining the UK Treasury as economist in 1979. Since then, he has held various positions at the British embassy in Washington, the International Monetary Fund and the World Bank, as well as many top-ranking civil service roles, such as that of permanent secretary to the Treasury and the Cabinet Office, and – most recently – cabinet secretary and head of the civil service.

His time at the Treasury has been a “huge advantage” to his effectiveness as cabinet secretary, he says, adding that his predecessors Andrew Turnbull, Richard Wilson and Robin Butler also benefited from working at the finance department. Notably, the current head of the Singaporean civil service is also in charge of the country’s Ministry of Finance. The Treasury is useful for cabinet secretaries, O’Donnell explains, because “it covers the whole range of government, hence you get a bit of experience of all the issues and, of course, money is hugely important in all decisions we make.” Making the best use of taxpayers’ money, he says, “is what government should be about so I think it’s a huge advantage to have spent time in the Treasury.”

Besides his consultancy work, O’Donnell has also been spending his time speaking on debates in the House of Lords – the upper house of the UK parliament. He entered the Lords in 2012, after being given a life peerage upon nomination by the prime minister and appointment by the Queen. The Lords is currently made up of around 800 people, the majority of whom are life peers – like O’Donnell, as well as 92 hereditary peers and 26 Church of England bishops. The chamber scrutinises and amends bills proposed by the elected House of Commons before they pass into law.

Dating back to the 14th century, the House of Lords has been subject to century-long reform debates and attempts. The UK’s current coalition government too proposed to restructure it by reducing the number to 450, introducing elections as well as 15-year terms. However, the government dropped the plans after facing considerable opposition, particularly among Conservative MPs.

Most Lords are party-political appointments, but there are also a small number of so-called cross-benchers, who aren’t affiliated to any particular party. O’Donnell is one of them. While he sees the Lords as an invaluable “revising house” that improves legislation and boasts deep expertise on issues that “often transcend party politics”, he has identified one major problem with its make-up: “It’s just too big.” There is no limit on how many life peers a prime minister can nominate – and the Queen usually does not withhold her official appointment; there is no set retirement age or tenure; and there is no overall limit on how many Lords there can be overall. Therefore, O’Donnell argues: “There needs to be a debate on reforming the Lords. The problem is that there are now more and more party-political appointments: every time there is a new administration, it appoints a whole bunch of people to try and ensure that they’ve got a majority. Every time that happens, the house just gets bigger and bigger and bigger.”

One way to get the numbers down would be to impose a limit on how long lords can serve, he says. “I think we need to think about term limits. There aren’t many places where you stay on until you die.”

Another change he would like to see is increased involvement by the Lords in the drafting of bills before they enter the legislative process. “We could play a stronger role in pre-legislative scrutiny by looking at things before they’re introduced so that we can give some views, because quite often legislation is done in really quite a rush.” Under current law, the UK government can decide whether it wants its bills to undergo pre-legislative scrutiny. This is usually carried out by a joint committee of both houses, which reviews a bill and votes on amendments that the government can either accept or reject.

The work of the Lords is often underappreciated, O’Donnell argues. The debates in the Lords are “really good and rich – in a way that you just don’t get in the Commons,” he says. Due to its large number of technical experts, the Lords is “particularly good at issues of conscience and constitutional issues,” he says. But, he says, it often fails to get noticed for its work. “A lot of very good House of Lords reports have really just sat there,” he says.

The media does not cover the Lords as much as it should, he argues, but adds that this is part of an overall trend. “The coverage of parliament as a whole has diminished considerably, compared to when I was head of the civil service.” So how could anyone ensure that the Lords get more coverage? “I don’t know the answer,” he says, before adding jokingly: “Get Michael Cockerell on the case!” Cockerell is leading the BBC four-part TV documentary ‘Inside the Commons’. Following this up with an ‘Inside the Lords’, O’Donnell says, could give the chamber its needed publicity boost.

All jokes aside, O’Donnell’s reform proposals do not stop with the Lords. “I wouldn’t rule out that you might want to think about reforming the Commons as well,” he says, adding that he has some ideas “about how you might make the House of Commons perform its accountability role better.” The Commons’ main accountability mechanism is through the Public Accounts Committee (PAC) – a cross-party group of MPs which examines all government expenditure.

Since being elected PAC chair, Margaret Hodge, has catapulted the committee’s findings into countless media headlines, repeatedly attacking government contractors, senior officials and ministers for failing to properly run projects, spot risks and spend taxpayers’ money wisely. Known for its sharp questioning style in hearings, the PAC has seen its influence rise dramatically under Hodge’s chairmanship. But O’Donnell warns that the committee “has got itself into a blame game: if something goes wrong it [asks:] who do we blame?” This, O’Donnell argues, is not a very effective way of improving outcomes, and calls for the scrutiny to happen ex-ante rather than ex-post. “I’d like bodies like the PAC to ask questions when there’s a proposal for a new project, so looking at things before they start and then as they are going on, as opposed to spending your time saying: ‘My goodness, this milk is spilt and that’s terrible!’.”

The accountability system in the UK is flawed, he argues, because the “line between what ministers and civil servants are accountable for is grey in our system, but accountability systems work best where you can make it black and white.” One example of the government creating clear lines of accountability, he says, has been the decision in 1998 by former chancellor of the exchequer Gordon Brown to grant the Bank of England operational independence over monetary policy. “You have a chancellor accountable for setting an inflation target and then a monetary policy committee accountable for setting interest rates to deliver that target, and the Commons can hold to account the chancellor for the system. It’s a classic example of where we got it right.”

Another way to improve accountability, O’Donnell believes, would be to increase the number of MPs entering parliament through open primary elections. This process means that residents of an entire constituency can vote on who they would like as their MP in an election open to anyone, including those without party affiliations or a background in politics. MPs selected in this way are “a bit more rebellious so the parties don’t really like them,” O’Donnell says, but adds that increasing their count would lead to better diversity. “If you have open primaries I think you’ll start to attract people who have done other jobs. And that could be a really big positive. We’d get a more diverse Commons with people who’ve got more experience of the world, not just being in politics all their lives.”

Politicians and senior officials alike are often accused of being out of touch with the population, with the majority coming from wealthy backgrounds. And British prime minister David Cameron has faced claims that he is running a “chumocracy” in Downing Street after he promoted several Old Etonians to senior positions in his team. Having worked with politicians for more than three decades, O’Donnell, who was raised in south London and went to state-funded primary and secondary schools, seems to agree that there is a problem: “There are unfortunately too many people in politics who just don’t get it; who just don’t understand what life on benefits would be like.”

Recalling his time as press secretary to former British prime minister Sir John Major from 1990-1994, O’Donnell says Major repeatedly emphasized that “we need to really care about public services”, but was often met with opposition from ministers who would ask: “Why should we bother about that? Our people don’t use them.” O’Donnell stresses that this kind of attitude is now “dying out, but there are still a few out there [who say:] ‘We send our kids to public schools, we have private health care, we travel by car or chauffeur, we don’t go on public transport.” Ideally, O’Donnell says, ministers would “have done jobs like the population they’re serving.”

Whether he will be taken up on any of his suggestions, however, remains to be seen. The UK parliament dissolves on 30 March, and on 7 May the population will take to the polls to vote for the next government. However, the outcome is as uncertain as ever: support for the Liberal Democrats has declined sharply since they have reneged on some of their election promises after entering into a coalition with the Conservatives. At the same time support for smaller parties such as the UK Independence party, the Greens and the Scottish National Party, has been growing rapidly.

O’Donnell, who was an active adviser during the 2010 coalition talks, is urging the current cabinet secretary Sir Jeremy Heywood to be prepared for all outcomes: “You don’t want to be negotiating rules on how parties operate at war time in the middle of a war – you want to have done those negotiations in peace time. And I think similarly when it comes to rules about what’s going to happen if there’s an unclear [election] result, you want everybody to be in agreement, as far as you can, [on] what the procedure is and what the rules are well in advance of the election.”

Whatever the political make-up of the next government, O’Donnell says the top priority should be mental health. While the rhetoric has been there to increase spending on mental health under this government, it has not led to considerable action. Chief executive of the National Health Service (NHS) for England Simon Stevens has described the system as “out of balance” with just 13% of the overall NHS budget spent on mental health. He pledged to put this right at a select committee hearing last year.

However, O’Donnell argues that more needs to be done: “[The] number one issue should be treating mental health on a par with physical health. You would not accept that one in four people with a broken leg should get treatment and the other three just leave. Yet, that’s what we do with mental health. If I were prime minister and I wanted to have a legacy of one thing I’d change, [mental health] would be it. I think this is such an important thing to society that it should be the prime minister saying: ‘This is going to be a priority for me’.”

About Winnie Agbonlahor

Winnie is news editor of Global Government Forum. She previously reported for Civil Service World - the trade magazine for senior UK government officials. Originally from Germany, Winnie first came to the UK in 2006 to study a BA in Journalism & Russian at the University of Sheffield. She is bilingual in English and German, and, after spending an academic year abroad in Russia and reporting for the Moscow Times, Winnie also speaks Russian fluently.

One Comment

  1. william smith

    06/03/2015 at

    Those on benefits are amongst the poorest? Does this clown live in Britain? The low paid workers are THE poorest, the m’lords and honourable gentlemen of the country have planned it that way. They want the nation to be solvent and the working public to be impoverished. They MUST deceive us into thinking that an EU-controlled future is better than a democratic and free future. The liblabcon dross are seperating the future lifestyles into theirs and ours. Ours will be immediately recognisable by the former residents of East Germany.

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