REWIRING THE STATE AND THE FUTURE CIVIL SERVICE

Thank you, Larry, for that introduction, and to the whole team at LSE for hosting us this evening. It's great to be back! And thank you all for coming to this Cabinet Secretary annual lecture, particularly the Prime Minister and the First Secretary of State. I know how busy you are, so the whole Civil Service and I very much appreciate it.

On my first day in the Civil Service, 26 years ago last month, I was shown to my office in the Lord Chancellor's department.

I was a 'Grade 7' in year 2000 terminology, which at that time entitled me to a whole office to myself. It even had a meeting table and six chairs, each with arms.

On my second day in the Civil Service, the facilities team came to apologise. They had mistaken my seniority, believing me to be the more senior 'Grade 6'.

By the time I left for the evening, those six chairs with arms had been replaced by four chairs, without arms, commensurate with my lower status.

This story is not to criticise the Civil Service of the time. It encapsulates the era in which we operated:

Rigorous discipline and transparent traditions meant everyone knew precisely where they stood, down to their office furniture.

But also the rigidity of the bureaucracy, and the attention to hierarchy and process.

Probably no one intended energy and resources to be spent literally reorganising the furniture. Yet somehow this was the result of a set of rules designed to achieve something else.

Back in 2000, I graduated from LSE with an MSc in economics, and had no real idea of what to do with it.

Three months later I walked into the Department on a one year temporary economist contract, on what my father a physics professor said was the proudest day of his life.

I soon became addicted to the complexity of the issues, and the powerful sense of purpose in working for the country.

And I never left.

My time at LSE showed me why it is a leading university in the UK, and a magnet for top students globally.

And it turned out that studying industrial economics and game theory here under John Sutton was a fantastic basis for a career in public policy, describing the way humans and organisations behave under different incentives and conditions.

Almost every problem the state faces involves setting incentives and systems to impact behaviour.

Like hundreds of thousands of civil servants, I have found tackling these issues for the benefit of the citizen to be incredibly rewarding.

The Civil Service has changed hugely in the 26 years since my first day.

It remains a remarkable institution. Every day, every single person in the country depends on our work.

Being educated, finding a job, staying safe, paying taxes, travelling to work.

That purpose, that impact, is what personally motivates me and, I know hundreds of thousands of others, to do these jobs.

And I recognise the privilege and responsibility which comes from leading the people who are doing the work.

I have seen that work at close quarters: on the wings in prisons, at ports at the border, at the operational front line across the country and around the world.

I know what it takes.

No one is prouder of the Civil Service than I am. But few are more determined that it needs to change.

Tonight, I am going to talk about 'Rewiring the state and the Future Civil Service'.

I'll set out where the Service stands today, with the strengths and values that we must preserve.

Why now is an unprecedented moment for us to change.

And the major transformation and modernisation we have begun, to meet this moment.

The Civil Service of tomorrow must look very different from the Service of today. I will come on to why.

But while I believe we cannot and should not settle for the status quo, I also believe it is essential to preserve and protect the best traditions of the Civil Service and the values set out in the Code that we uphold.

In looking towards the future, we need to consider the past.

The Civil Service has been in continual transition over the one hundred and seventy two years since it was first established and codified in a report by Northcote and Trevelyan, published in 1854, and now widely considered the founding document of the permanent, impartial Civil Service.

Commissioned by Gladstone when he was Chancellor, the report was born from the realisation that the old, amateurish ways, based on patronage, could no longer govern a rapidly modernising world.

That relying on personal connections was a failing strategy, and one which did not attract the best people into public service.

Northcote and Trevelyan made 3 principal recommendations:

• to recruit by examination for the best people;
• to promote based on merit; and
• to place first appointments upon a uniform footing (thus establishing the concept of the generalist).

The Cabinet Office itself was not created until 1916. It was set up by Lloyd George, as Prime Minister, to bring order to the war effort, led by Maurice Hankey as the first Cabinet Secretary.

It was responsible for improving cross government alignment, communication and the delivery of the Prime Minister and the Cabinet's policies.

Much has changed in the decades since.

The Haldane 'Machinery of Government' committee of 1918 established departments organised by the services they provided, and a new focus on evidence informing policy.

A 1943 Court of Appeal case established the Carltona principle that there is no distinction between the decisions of officials and Ministers.

Civil servants have no separate legal personality from the Minister.

This remains the core principle under which the Civil Service operates today.

Since then, a series of committees, reports, and initiatives have defined and enshrined the role of the Service. All 14 of my predecessors have shaped that development.

The changes I'll come on to describe are only possible because of the leadership and vision of those 14 extraordinary Cabinet Secretaries who came before, some of whom are here tonight.

The 1996 Civil Service Code, introduced under Robin Butler and updated under Richard Wilson, first codified our core values of: impartiality, objectivity, honesty, and integrity.

These values are not an end in themselves.

The legitimacy of an impartial Civil Service can come only from its effectiveness.

The values were later enshrined in statute, by the Constitutional Reform and Governance Act of 2010, under Gus O'Donnell's tenure, building on work started by Andrew Turnbull.

This also put merit based recruitment and fair and open competition, Northcote Trevelyan's central recommendations, on a legislative footing.

These reforms have meant the Civil Service has been consistently the most admired Civil Service in the world.

Some 50 countries have civil services modelled on our own.

But we rightly need to prove ourselves and our value to successive administrations. We serve Ministers and we deliver their agenda.

Like my predecessors in tackling the challenges of their own time, my job is to make the Civil Service as effective as it can possibly be to do this.

The transformation programme we have started is therefore aimed at building:

a modern world class organisation, famous for excellence in delivery and the use of technology and AI, and trusted by Ministers and the people we serve.

The Prime Minister has set the Government the task of delivering a radical shift in the powers, resources and accountability across the state, from central to regional and local government.

This will lead to a leaner and more strategic Civil Service, focused on the challenges that can best be dealt with at the national level.

What the Civil Service can uniquely do, it should do exceptionally well.

When we speak of the Civil Service today, we are describing an enormous, complex ecosystem of more than half a million people across England, Wales, Scotland and Northern Ireland, and around the world, dedicated to public service.

Bigger than any single private sector footprint in this country.

The weight of the Service is now found in frontline delivery in courts, job centres, prisons, tax offices, military bases, at our borders.

Traditional 'policymakers' make up just 7% of our people, with the lion's share being operational delivery (at 55%), alongside digital and data professionals, scientists, and, yes, economists, to name just a few.

Some are capabilities that didn't exist two decades ago.

80% of our people are based outside of London.

We are united by a common purpose and unwavering values.

Civil servants do some of the hardest jobs in the country, and they do them because they are hard not in spite of them being hard.

It is this ethos that makes the Civil Service much more than the sum of its parts.

But we are no longer unequivocally considered to be the best in the world.

Indeed, in a Blavatnik Index in 2024 which measured the effectiveness of civil services and central administrations we were joint 6th overall. I want us to be first.
Other countries are increasingly rewiring their states for strategic agility:

from Singapore: breaking down traditional policy silos, and elevating a National AI Council to unify government data;

to South Korea: regularly reshaping its executive branch so the machinery of government aligns with economic and industrial mandates.

And Finland is using AI assisted participatory platforms to integrate citizen feedback directly into the legislative process.

We need to be equally radical.

And I have heard and have listened to the criticisms of the Service.

They are no less important for being well rehearsed:

• Tame and risk averse
• Reactive, not strategic
• Siloed, not working across boundaries

These criticisms must be addressed.

In my 26 years in the Service, nine as a Permanent Secretary, I have observed some of them, seen improvements in some, and doubtless been guilty of some of them myself.

I am determined to fix them.

Ultimately, like the team employed to reorganise the office chairs, these behaviours are a function of the system.

They are set in what is incentivised, what is rewarded, and what is expected.

So if we want to change behaviours, it follows that we need to change the system.

And I believe we are on a Burning Platform.

Now nine months into my tenure as Cabinet Secretary I am more sure than ever that we are at a defining and pivotal moment for the country.

We are in a time of extraordinary global uncertainty. Global tensions are the new normal, technology is radically changing everything, and trust in institutions is on the wane.

The Civil Service needs to be reimagined arguably in the most fundamental way since its formation, to serve the Prime Minister and the Cabinet effectively, and deliver for the British people.

There is a confluence of five imperatives which I believe together present the burning platform for change:

• The advancement of Artificial Intelligence,
• New global threats facing the UK,
• Declining public trust in institutions,
• The urgent need to increase public service productivity, and
• Delivering the task set by the Prime Minister: his radical 'devolution by default' agenda.

I'll take each of these factors in turn.

The first of these factors is the unprecedented technological changes arising from the advancement of Artificial Intelligence.

AI presents us with the defining opportunities and challenges of this generation, and therefore also for the state. The sheer scale of that change is difficult to fathom: AI's capabilities continue to improve at an exponential rate.

But what is clear is that, from policymaking to direct service delivery, the use of AI will radically rewrite all of the domains in which the Civil Service operates.

The traditional model of the state administering siloed services to the public is no longer sufficient. We are now delivering services to a public with tech enabled tools and capabilities unimaginable to previous generations.

Technology driven expectations of, and demands on, the state are not new, but this is of a new scale and pace. The surge of automated, high volume citizen demand is hitting operational desks today.

AI potentially represents the most profound paradigm shift in modern governance. For the first time in history, the efficacy of public service no longer has to be artificially constrained by the limits of human bandwidth.

As well as changing how we do things, AI will change what we do. From healthcare screening for types of cancer, to tackling the risk of homelessness, technology can enable us to be much more predictive, preventative, and personalised, under appropriate controls and safeguards.

AI can help us make public services more human.

This is about more than marginal improvements. It will make goals that were previously considered impossible, possible.

But advanced technological development brings significant risks too: from economic disruption, to misinformation, or loss of agentic control. And the transition to an AI enabled state could expand our domestic cyber vulnerability.

We need protection and resilience against these.

This takes me to the second factor: the new global threats facing the UK. We are in a new age of geopolitics and national security. Both are now a part of our everyday lives, rather than remote concerns.

Nine days after I became Cabinet Secretary, the conflict in the Middle East started.

It was immediately clear that the conflict would have significant consequences for the domestic economy, energy prices and the cost of living.

We have become so globally connected that there is no distinction between domestic and international, or security and economic issues.

This in itself requires a more strategic and joined up way of working.

But the last 10 years have also seen a series of crises and developments make their mark: stubbornly low growth; mass migration; emerging tech; climate change; increasing greyzone attacks and hybrid threats that target the confidence and cohesion of our communities.

These are not going away. And they risk compounding in terms of the threats they represent.

To be resilient to them, we need to adapt how we operate. And we need to do so quickly.

These are global issues, with real domestic impact.

We will need to change how we work collectively across all fronts to address them, from short term, tactical resilience, to preparing for the long term and the unknown, and building our systemic and societal resilience.

Getting on the front foot to tackle threats before they arrive.

The third force we need to address is declining trust in institutions.

I've already mentioned that the legitimacy of the Civil Service depends on our effectiveness.

It also depends on trust. Trust in us by Ministers, by Parliament, and ultimately by the citizens we serve.

Trust in public institutions generally has reduced and needs to be re earned. According to OECD figures, only 4 in 10 members of the public report that they trust the Civil Service, significantly down in half a decade.

Trust is earned primarily through consistent delivery, reliability and fair outcomes.

To improve public confidence and trust in the Service we therefore need to demonstrate our effectiveness.

We need to get things done and to do so exceptionally well.

These are three profound external challenges facing many countries. The fourth factor is endogenous to the UK public sector: the decline in UK public service productivity since the pandemic.

Public sector productivity is hard to quantify precisely, but the data we do have tell a stark story. UK public service productivity steadily, if slowly, improved in the decade before 2019. Yet today it is almost 3% below its pre pandemic peak.

Extra resources invested in the years since to tackle pandemic generated backlogs, and some recent improvements, have not yet propelled us on to the previous trajectory.

Too often, when I have talked to teams on the frontline, they have said the system gets in the way of them doing things differently and having a bigger impact.

Maximising value for every pound of tax payers' money spent must be a critical objective.

And the demands on public services are only going to increase: given an ageing society with more complex needs,

An AI literate society with low barriers to engaging with government,

And an increasingly interconnected state.

Improving our productivity and efficiency is therefore essential in a tight fiscal context. It is the only way we will be able to meet increased demand for services, without a commensurate increase in the burden on the taxpayer.

Importantly, the final major imperative driving the need for urgent change is closer to home.

The Prime Minister has set an ambitious objective for his Government, to deliver good growth in every part of the UK - including through devolution by default.

The Civil Service's job is to deliver the Government's agenda. That puts devolution by default at the heart of our work.

It will require a fundamental rewiring of the way the state works, and a major shift in powers and resources from Westminster to communities and the regions.

And a more collaborative approach, ensuring policy made in Westminster helps the communities that most need it.

This new approach to give power to communities will be a central part of the Prime Minister's 10 year plan.

It represents a radical change to central government genuinely devolving power, not just delegating it.

It will mean a more streamlined and strategic Civil Service, focused on the things that can only be done at a national level and working collaboratively with regional and local government to build capability and deliver outcomes.

The Prime Minister has agreed that this goal will be central to the vision of the Future Civil Service.

All this will have significant and positive implications for the Service.

It is an opportunity for the Service to reduce duplication between the layers of the state, and adapt and learn through greater interchange and collaboration with regional and local government and working closely with devolved government arrangements to build new skills and deliver outcomes.

Each of these five factors alone would be an imperative for change, but the unprecedented convergence of all five has brought us to a unique and historic moment requiring major transformation in the Service.

That brings me to what we're doing to meet this national moment and achieve transformational change.

Civil Servants themselves are the most vocal in telling me that we need to change.

I have spent much of the past 9 years as a permanent secretary talking to our people across the country about what they want from the Civil Service. On the operational frontline, and at our campuses around the UK, from Darlington and Cardiff to Glasgow.

And we have received 8,000 responses from civil servants across the country to the new 'Future Civil Service Portal' to tell us how they want things to change.

They say: they want to use AI and technology to replace bureaucracy.

They want to be more productive, and to do things differently, to scale the very best of what we do and stop what's not needed anymore.

They want us to overhaul the things that get in the way of allowing them to perform, deliver, and progress their careers.

Talented people want to work in a high performing environment.

They want to be rewarded for building expertise and delivering, and they want access to world class learning opportunities.

If we get this right, coming to work in the Service will be not only purposeful, but as exciting and motivating as working for any top tier company.

Delivering radical change across a half a million person ecosystem requires a massive effort across all of our work.

We need to get on with these changes now. The five imperatives for change I've described are converging now, the Government requires it now, and our people want it to happen now.

The case for reform is urgent.

We already know many of the areas where immediate action is needed, and we are already making changes through a major programme of transformation the Future Civil Service programme.

Working closely with the First Secretary of State, and the whole Cabinet, the Civil Service's most senior leadership team of the Permanent Secretaries are personally taking charge, to deliver the shift the Service needs.

The Future Civil Service programme has three central principles:

A relentless focus on Delivery,

Championing Innovation and Productivity, and

Building Pride and Trust.

And our mindset to do it is: Make it happen. Make it better. Make it count.

It starts with delivery and results. The number one expectation on us by the Government and the country.

Delivery is about focusing intensely on getting things done, to achieve outcomes for the Prime Minister, the Government, the public, and the taxpayer.

This starts with accountability, and accountability starts at the top.

As I learned on this very campus, behaviour is determined by incentives and signals in the system. And clarity on what you are trying to achieve is King.

All civil servants should have clarity on how their work and objectives are delivering those of the Prime Minister and Ministers, and we should make it easier to deliver by removing the barriers that get in the way.

Our current structures and processes don't always incentivise the right behaviours, and we expect people's passion and commitment to compensate for these incentives.

A framework where the quickest way to get a pay rise is to move to a different role is fundamentally the wrong incentive.

It results in churn, and a lack of incentives for leaders to develop their people.

Likewise we disincentivise our brightest talent from stepping outside the Civil Service to gain vital experience, and bring that critical knowledge back.

These disincentives are currently hard wired into the system.

But we can and will rewire them so that all our incentives point at the behaviours and outcomes that we want.

A strong and strategic centre of government is essential to set direction, and focus delivery of the whole machine on the priorities of the Prime Minister and the Cabinet, ensuring strong integration across economic, domestic, international and national security portfolios.

The establishment of the Office for the Prime Minister and the Cabinet on the Prime Minister's first day in office has been a major step towards this.

The new OPMC houses No 10, No 10 North, and Cabinet Office teams directly serving the Prime Minister and the Cabinet, and doing what can only be done at the centre, including coordination of a government wide AI strategy.

Delivering our ambition requires the structures of the future Civil Service to be fundamentally more flexible, able to build at speed and adapt as demands evolve.

We know what is possible when we work this way:

We set up the AI Security Institute in just six months in 2023, bringing world leading talent into government at a pace the system rarely permits.

Today, it is the largest state backed team in the world dedicated to understanding and mitigating the risks of advanced AI.

The Test, Learn and Grow programme has established multi disciplinary teams across the country, with frontline expertise to create system change and support local, evidence led problem solving.

Agility of this kind should be the norm.

We must embed flexibility across our entire operating model, for example by small and agile 'Frontier Teams' within departments armed with an explicit licence to operate differently. Free to recruit specialist talent at pace and redesign outdated processes.

They will allow us to model the Future Civil Service immediately proving in real time what a faster, more flexible Service looks like in practice. A Service that makes it happen.

Next is innovation and productivity.

My vision for the Civil Service is for it to be a global leader in safe, AI enabled state transformation.

Integrating advanced technology into an enterprise of over half a million people is not a future aspiration, it is an active, ongoing reality.

For example:

• HMRC protected and recovered £10 billion in tax revenue during the last tax year alone, by applying machine learning.
• The Home Office is pioneering the future of international travel, rolling out biometric, contactless e gates to make journeys faster and safer.
• And MHCLG is deploying AI to analyse planning applications, helping halve processing times for routine householder applications.

But history shows us that pure automation of specific tasks absent a rethinking of the entire workflow, or indeed the whole operating model, will not fully capture the underlying gains from technology, and their productivity benefits. We need to take full advantage of what AI has to offer to deliver simpler, better, faster services to the public.

And we must remain capable of explaining how and why decisions are made to retain public trust.

Ethical and transparent deployment of AI with appropriate guardrails must be our overriding principle.

Change of this scale is not easy.

The transition must be done carefully, drawing on the expertise of our people, managing the impact of change on jobs, strengthening governance and trust, and testing and scaling the ideas that deliver.

Yes, jobs will change.

There are obvious areas where AI can help automate tasks, leading to increased efficiency and job augmentation.

We need to equip Civil Servants with the most relevant frontier models for their work and find ways of sparking them into use.

But AI won't replace the need for human creativity, interaction, or decision making.

In the age of AI it will be these human skills which will become even more valuable.

And that is what the Civil Service is built on.

By automating the routine, fundamentally rethinking our service delivery model, and technologically enabling our people, we will be more productive, and deliver deeply responsive, profoundly human public services that match the highest standards of the modern world.

But innovation and productivity improvement are not just about technology.

The starting point must be streamlining the underlying businesses processes which have calcified over time. We need to remove the bureaucracy that slows us down, change how we do things and break the mould.

The First Secretary of State is leading a programme across government of simplification and agency to overcome administrative frictions, focusing on consultation, legal considerations and judicial review.

Alongside this work, we should learn relentlessly from the private sector, local communities, other countries, and importantly from history. This is how we will Make it better

And thirdly, and crucially, Pride and Trust. Pride comes from working for an organisation that is genuinely excelling from doing excellent work yourself, and from knowing that what you do changes lives.

The Permanent Secretaries and I want the Civil Service to be a magnet for top talent from all parts of the country, and that requires a top offer for talent development for current civil servants and the people we want to attract in the future, including the students in this room.

Working in the Civil Service should be a badge of honour on any CV.

We have heard clearly from our own people that recruitment processes are too complex.

We will strip these back and simplify recruitment, bringing an end to formulaic job ads, generic interviews and slow processes.

We need to invite people in, not put them off.

This starts with our flagship graduate scheme the Fast Stream. For the second year running, it is the number one programme of choice for new graduates, but it needs to evolve to meet the challenges of the future.

The new, expanded, competitive Fast Stream will be more place based, AI focussed and with even greater emphasis on training and performance management, whilst upholding the highest standards.

This will be alongside our apprenticeships schemes into the Civil Service, which open up high quality routes into the Service, bringing in fresh perspectives and knowledge of place.

Tackling youth unemployment is a priority for the Government, and the Civil Service - as a major employer of young people - has a vital role to play in this.

A continual influx of brilliant young people is the best way to keep the Civil Service at the cutting edge.

Bringing exceptional people through the door is only half the job.

We must invest in our people throughout their careers.

The National School of Government and Public Services, launched last month, will give every civil servant, wherever they work, access to world class training, equipping colleagues with cutting edge digital, analytical and operational skills required for the Future Civil Service.

And we are seconding civil servants into Mayoral Strategic Authorities, with 100 matched to roles, and more to come, providing the opportunity to gain new experience from our regional partners.

These changes will support the culture that I want to build.

A culture of excellence, and one of the pride that comes from high performance.

We need a completely new approach to performance management to incentivise and reward brilliant delivery, valuable expertise, and sticking it out to get the job done.

The approach we have taken to SCS pay this year, introducing a new performance element, is just the start.

Poor performance drives out good performance and discretionary effort, and we must urgently address that.

We will strengthen processes and train and equip managers to reward those making the biggest impact, and take decisive action on poor performance.

And finally, we need to look at how we uphold and adhere to the Code. The very foundation of the Service, and a source of pride for us all, it is in every one of our contracts.

The Code has not been updated in more than 10 years.

While its original values are lasting, the challenges and context today call for further thinking on the values and behaviours of outstanding civil servants. In my view, this could include curiosity, courage, and excellence.

The Government will publish the refreshed Code in the Spring, reinforcing pride, and supporting Making it count.

This is a radical programme of change to deliver excellence within our current structures.

But these changes alone will not meet this national moment. Each of the forces I have described, taken by itself, would be significant. Taken together, they are profound. They demand more than incremental reform.

The Review into the Organisation, Performance and Transformation of the Permanent Civil Service which began in July and will report to the Prime Minister before next summer will set out a vision for the future of the Civil Service for the decades ahead, as a genuinely world class institution serving the duly elected government of the day, with relentless focus and determination.

It will follow the Prime Minister's 10 year plan to rewire the state by putting devolution by default and power to communities at the heart of our future operating model.

The Review will confront the tough questions:

Whether current departmental structures remain optimal in an era of cross cutting delivery?

What AI and devolution by default mean for Civil Service boundaries, and accountability?

And how to build the capabilities needed for the future, at national, regional and local levels?

What will this require of us?

A change programme of this size demands imagination, determination, and visible leadership.

It is being led by the Permanent Secretaries, and we are asking all leaders across the Civil Service to demonstrate energetic and positive leadership, showing passion for high performance, grounded in the highest standards to motivate and support their teams as we transform the Service.

Since I started in this role, my experiences have reinforced everything that I believe about our organisation since I joined 26 years ago: it is full of extraordinary people doing incredible work that much of the country never sees.

However, we are at an inflection point.

All the exogenous and endogenous factors are coming together which means this is the time for change.

Amid global uncertainty, rapid technological change, and a clear new direction from the Prime Minister, the imperative for radical reform is irrefutable.

We must become a modern world class institution famous for excellence in delivery, for the use of technology and AI, and trusted by the people we serve.

An impartial, curious, and engaged Civil Service, with a culture of pride that comes from consistent high performance.

We will build on the best of the Civil Service, and learn from other sectors and other countries.

I want our delivery and services to be world class, and this means we need to be world class.

This is not a time for incremental change.

We have been tasked by Ministers with a fundamental rewiring of the state.

The public's expectations of us are, rightly, high.

We have to do it, we can do it, and we will do it.

We will Make it happen, Make it better, and Make it count.

To all Civil Servants: Thank you for your service.

And to all the students in the room or indeed anyone else who may be seeking a mid career move I'd like to say: if you are looking for a role with purpose and impact and to serve your country, think about applying to join the Civil Service.

I can't promise you'll have your own office, or even chairs with arms, but you may become addicted to working for the country.

And what could be better than that?

Thank you very much.

ENDS