Lord O’Donnell, former Cabinet Secretary and Head of the Civil Service, UK: Exclusive Interview

By on 05/09/2016
Former UK cabinet secretary Lord O'Donnell urges PM to set out her Brexit vision - and highlights inequality as a factor behind the vote

Ten weeks on from the UK’s EU referendum, former cabinet secretary Sir Gus O’Donnell considers why the electorate voted to leave – and tells Matt Ross that new prime minister Theresa May must now explain her vision for a post-EU Britain

Lord O’Donnell is a man who measures his words, but there’s no mistaking the passion behind his plea. “There’s a crying need for the government to lay down its big strategic vision, not just of Brexit but also of where it wants the economy to go,” says the UK’s former cabinet secretary.

Following the UK’s vote to leave the EU, adds Sir Gus O’Donnell, new prime minister Theresa May “started outlining a vision on the steps of Downing Street.” Her concentration on social justice and equality of opportunity reminded him of 1990s Tory PM John Major’s vision of a “classless society”. But on the biggest issue in her in-tray, all she’s said so far is that “Brexit means Brexit” – and O’Donnell argues that greater clarity is urgently required.

The key question, he says, is this: “How does she bring her attempt to reduce inequalities, improve growth, use fiscal policy – I hope – more actively, together with exiting the EU, in a way that is consistent?” The former cabinet secretary – who led the civil service from 2005 to 2011, serving three prime ministers – believes that Britain cannot move forward from the referendum until May has set out her destination.

Sir Gus is not asking the PM to detail her negotiating strategy: “You have to keep some cards close to your chest: you can’t lay out your position for every one of the other 27 countries to see.” But she should, he says, forge a unified, coherent vision of the UK’s goals in Brexit negotiations, giving form to the debate about what an ex-EU Britain looks like.

The former cabinet secretary will be pleased to see Brexit secretary David Davis addressing the Commons on its first day back after the long summer recess, filling in some of those crucial gaps. But O’Donnell is calling for a broader and more comprehensive vision than Davis can supply: he wants the government to “lay out its vision for the UK economy – and within that, Brexit – at a strategic level.”

The Commons is the right place to begin that conversation, O’Donnell believes; and “in return, Parliament needs to treat that sensibly: to debate the big strategic vision, and not to try to get government to lay out its negotiating positions on every single item – because that’s a crazy way to negotiate.”

Double vision

Forging that vision will be tricky, O’Donnell acknowledges – not least because the government will face intense lobbying from groups with conflicting hopes for a post-EU UK. Take air travel, he says: “It’s strongly in the interests of EU consumers in all EU countries that they carry on getting access to relatively cheap airfares. But there may be vested interests on the side of individual countries’ airlines that see this as an opportunity for them to take market share from the existing market leaders.”

If airlines’ lobbyists succeed in using Brexit negotiations to restrict their rivals’ access to particular markets, Sir Gus believes, then competition will be weakened – limiting choice and boosting prices. And there will be similar tricky decisions across many policy fields – such as farming, where the EU’s Common Agricultural Policy has long subsidised and protected producers at the cost of taxpayers and consumers. In many cases, ministers in each country “have got to decide whether they’re going to stand up for the interests of their domestic industries, or their domestic consumers,” comments O’Donnell. Those decisions will underpin “a key part of their negotiating strategy.”

Building a single vision will be made harder still by the many different motivations of the ‘Brexiteers’ – whose campaign managed to encompass neo-conservative free marketeers and Little England protectionists; old-school unionists and unreconstructed racists. “That’s precisely why the important first step is to sort out what kind of Brexit we want,” comments O’Donnell. “There were very different visions of Brexit laid out before the vote: obviously we can only have one Brexit, and we need to sort out what it is.”

Even May’s three leading Brexit ministers – Davis, foreign secretary Boris Johnson and international trade secretary Liam Fox – have quite different goals. But O’Donnell is clear that these “three very strong characters” must get behind a common platform: “It’s not an easy task by any means, but it’s essential that we get to a single voice for the government in these negotiations and that we don’t allow those other 27 countries to divide and rule – which is what they’ll try to do!”

Lord O'Donnell presenting to Heads of Civil Service at the Global Government Summit, Singapore in November

Former UK cabinet secretary Lord O’Donnell

No hair trigger

Preparing for those negotiations will also be a huge mission for the UK civil service – but O’Donnell says he’s “quite optimistic about the civil service’s ability to manage many of these tasks.” The point at which the UK is ready to enter the ‘Article 50’ process of negotiating an exit, he believes, will not be determined by the civil service’s ability to pull together the right teams, skills and information; it will rest on the more political decisions required to settle the government’s key goals. “Let’s not get into this process – let’s not start triggering Article 50 – until we’re absolutely clear about our overall strategy and our negotiating tactics,” he says. “That’s getting it the right way round; it’s that which should determine the point at which we trigger it.”

Many have argued that the UK shouldn’t trigger Article 50 at all – but Sir Gus says that “it’s almost certain we’ll be leaving.” In August, the Times ran an interview with O’Donnell in which he appeared to suggest that the EU might reform itself to the point where another referendum would be justified. But he points out that his comments were “in answer to the question: are there any circumstances in which we might not leave?”

That possibility is a remote one, he says: “If the EU were to change radically, so that there was a core Eurozone and a wider group – something like a reformed European Economic Area – then that’s a different scenario. But it’s very unlikely that those reforms will happen quickly enough” to avert a British exit. “It’s really important that we get on with Brexit and negotiate the best possible deal for Britain,” he concludes.

Some Brexiteers believe that negotiating that deal should be straightforward: the UK should simply leave the Single Market, they argue, then agree single-sector deals. And they believe that these agreements could be “at least as good as, if not better than, the arrangements at the moment,” says O’Donnell. But this plan overlooks the complexities of the ‘Article 218’ procedure under which the remaining 27 members approve each deal – a procedure that permits coalitions of small countries, or a couple of bigger nations, to block any agreement.

“That’s why it will be quite difficult: because the final deal is by qualified majority vote,” he explains. So the Germans, for example, might be keen to agree a deal ensuring free trade in cars; but the Poles have a much stronger interest in sending us people – and, with a couple of allies, could block any deal that doesn’t offer concessions on free movement of labour.

Trade not tariffs

In Gus’s view, the UK should be ready to compromise in order to protect international trade and avoid a mutually-destructive tariffs war. “There was a real risk after the global financial crisis that we reverted to protectionism, and we know what happened in the ‘30s: you can turn a recession into a depression very easily,” he says.

Many Brexit campaigners, pointing out that the UK imports far more goods from the EU than it exports to it, argue that any tariffs regime would benefit Britain more than the Continent – and believe the EU will therefore accept a zero-tariffs deal. But O’Donnell would prefer to see the UK take a much stronger and more activist line in favour of free trade: “Avoiding protectionism is absolutely crucial, and we must really try and push free trade – which benefits all sides.”

Sir Gus is clearly much more interested in securing free trade than in limiting immigration. And here, he calls for a more honest and evidence-based public debate. “There are fundamental misconceptions out there; lots of areas where people’s perceptions are way out of line with the facts – particularly in the area of migration,” he says. “I think that creates a need for leaders in our society to say: ‘I know people believe this, but the facts are as follows,’ and to try to get perceptions in line with reality.”

Immigration may have increased the pressure on public services and housing, O’Donnell says – but it’s not necessarily the reason for shortages. “Maybe people are blaming migration, whereas part of the problem is just that not enough money has been allocated to public housing and our health service,” he suggests.

Another reason behind the Brexit campaign’s victory, O’Donnell suggests, was the bias in our print media. “During the campaign, Loughborough University analysed in the print media the allocation of articles towards Leave and Remain, weighted by circulation,” he recalls. “They found it was 82% Leave, 18% Remain. I think that’s one of the factors that might well explain part of the result.”

The Remain campaign itself also had its weaknesses, he believes – depending too heavily on warnings of economic harm, whilst underplaying the positive case for the EU. “The economic message was a very negative one, and I would have liked to see a much, much more positive case for Remain based on our influence in the world,” he comments. “It was pretty much uni-dimensional in the end, just about the economy, so I think there was more to be said. Whether it would have made any difference – who knows?”

Too few winners

Above all, though, Lord O’Donnell worries about another of the factors that appears to lie behind the Brexit win. “Since the global financial crisis, we have seen that real wages haven’t gone up,” he says. GDP is growing again, but “our recovery from the crisis hasn’t got through to many people in our country.”

The former cabinet secretary – who used to lecture in economics, and now chairs consultancy Frontier Economics – has long championed the measurement of ‘wellbeing’, incorporating metrics on issues such as healthcare, environmental quality and family life as well as monetary income. And it appears, he says, that “those areas that have high inequality in wellbeing were much more likely to vote Leave.”

“This wasn’t about levels of wellbeing,” he explains. “It was about inequality and wellbeing: that feeling that somehow the world isn’t fair, and that people aren’t getting a good deal whilst some others do extremely well. I think [the data] suggests that people weren’t voting just about the EU, but about a more general feeling about how society has played out.”

The research is not yet conclusive, O’Donnell concedes – but he wonders whether this feeling of inequality is linked to a shift towards the political fringes. “We’re getting people moving away towards the extremes, and we’re not getting the centrist view coming through,” he says. “It’s a very profound change, and we need to analyse why that’s happening and what the consequences are.”

In the short term, of course, those consequences include Brexit: the biggest peacetime challenge the civil service has faced in living memory. “Believe me, this is a big task, and one that covers virtually all departments,” O’Donnell says. “But the civil service is highly flexible and can respond very quickly, and I think people have underestimated that. It will do its utmost to deliver [Brexit] in the best possible way.”

All that remains, then, is for the government to define what Brexit means – making clear its priorities on key issues such as free trade, immigration controls and EU budget contributions. “I don’t think the government has decided any of those points yet,” concludes O’Donnell. “That’s really what we need to understand: what the vision looks like.”

The Global Government Forum: Five Thoughts for Better Government

Lord O’Donnell on learning from overseas

To help our readers get the best out of Global Government Forum, we ask interviewees five standard questions – four seeking practical advice and opinions, and one to reveal something a little more personal. This is an edited version of Sir Gus O’Donnell’s answers – click below to watch his full answers in a GGF video.

https://youtu.be/aPw-uG_jDjo

Can you name one idea from abroad that’s helped you or your colleagues?

“I’d go back to the time when I was first secretary at the Embassy in Washington, in the ‘80s. It was the start of workfare: an example of active labour market policies to try and get people back into jobs. It was an example of something that wasn’t done at central government level; this was done state by state. I think it’s a really good lesson to civil servants to look not just at what central governments are doing, but also at what states and provinces are doing around the world.”

Are there any projects or innovations from this country that might be valuable to your peers overseas?

“I’d pick up three key ones. First the so-called ‘nudge’ unit: the Behavioural Insights Team. I think every country should set one of those up.

“Second, the emphasis that prime minister David Cameron put on measuring wellbeing. Our official National Statistics office taking that up that was crucial.

“Third, the ‘What Works’ centres, which bring together all the evidence in areas like education, health and crime to provide decision-makers with information about what actually works: what the evidence tells you about the policies that are successful and the ones that aren’t.”

How can we improve the ways in which senior public officials work with and learn from their colleagues overseas?

Global Government Forum is a classic example of the way forward. We need to make it easier for civil servants to pick up on examples: things that work and things that don’t work around the world – not just central government, but local governments as well

“We should do this in a way that doesn’t require people to be travelling all the time, because there isn’t the money in public budgets for lots of conferences around the world. We need to make it easy and simple for people to learn from the experience of others, and that means web-based learning.”

What are the biggest global challenges within public services over the next few years?

“All public services are having to face the fact that in the developed world, there’s been a slowdown in growth. The new normal is slower GDP growth rates; productivity seems to be stagnating; world trade growth, which used to be growing much faster for a given level of GDP, seems to be growing at about the same rate as GDP. So that creates some problems.

“Resources are going to be harder to come by, and if there’s less growth then people are going to care even more about the distribution of that growth – and it looks like the proceeds of that growth are not being spread very evenly. The top 1% are getting an enormous amount.

“So dealing with inequalities, dealing with the productivity slowdown, and dealing with the fact that people are beginning to realise they’re living longer. It’s not just about work and income: it’s about having fulfilling, satisfying lives. That’s why we come back to this issue of well-being.”

What’s your favourite book?

“Daniel Kahneman’s ‘Thinking, Fast and Slow’ has been a really important influence for me on the behavioural side. At the moment I’m reading ‘Exposure’ by Michael Woodford, which is great fun. And I’m halfway through a new book which isn’t out yet by Carol Graham called ‘Happiness for All’, which I think will try to explain the relationship between wellbeing and the growth of very strange politics: the emergence of people like Trump in the US, and what that tells us about not just how society is changing, but how policies need to respond.”

For up to date government news and international best practice follow us on Twitter @globegov

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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.

One Comment

  1. Jane Morrice

    07/09/2016 at

    Why do you interview so few women?

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