No 10 asks for business chiefs' help to cut jobs

Britain's most senior civil servant is to call in a group of businessmen to advise on how to make thousands of job cuts

(Bloomberg/David Sandison/Independent)

Britain's most senior civil servant is to call in a group of key private sector businessmen to advise permanent secretaries on how to make thousands of job cuts in the public sector. Sir Gus O'Donnell, the Cabinet Secretary, wants the civil service to learn from private companies how to reduce in size and reform without cutting services and important functions.

Downing Street is refusing to say who the businessmen are. Among those thought to have been approached is Richard Baker, who as chief executive of Boots led a reorganisation of the company that led to over 2,000 job losses. During Mr Baker's three-year stint as head of the high street chemist, its share price doubled.

Mr Baker is now chairman of the gym chain Virgin Active but also worked for Asda in the run-up to its take over by the American retail giant Walmart. He is understood to have turned down a role as a permanent adviser to the Government.

Others believed to have been contacted for informal advice include Sir Roy Gardner, the former chief executive of Centrica, the company which used to run British Gas and the AA. At Centrica, he oversaw a major restructuring of the business which led to over 1,000 job losses. More recently he was unable to save the troubled social housing group Connaught after he was brought in as chairman. It went bust this year, causing thousands of redundancies.

Anthony Habgood, chairman of the publishing group Reed Elsevier, is another name in the frame. His interest to the civil service lies in his time running Bunzl, a company which pioneered "outsourcing". While he was executive chairman between 1991 and 2005, Bunzl grew £500m of sales to £2.9bn.

Also mentioned are John Gildersleeve, chairman of the fashion chain New Look, who helped organise the controversial sale of EMI to Guy Hands, and Sir Nigel Rudd, chairman of the airports group BAA. Sir Nigel was chairman of Boots during Richard Baker's time, and founded Williams Holdings, a company which went on to become Chubb and Kidde.

As well as informal advice, the Government is looking to fill each department with a non-executive director able to bring outside business experience into Whitehall long term. These positions have proved harder to fill than expected and the date of the announcement of these "non execs" has been pushed back until later this year.

Giving evidence to the powerful House of Commons Public Administration Committee recently Sir Gus said: "I have asked key members of the private sector who have done this successfully to come and talk to the set of permanent secretaries to give them advice."

He also suggested the civil service was considering more redundancies than were needed under the Comprehensive Spending Review to give them scope to hire new people in future.

"It may be at times we are using our redundancy schemes to take out rather more [staff] and then come in with people whose skills we need for the future," he said. "My responsibility is to ensure this [the redundancy programme] is done in a way which makes the civil service stronger. So we have done this in a way that is perceived to have been fair, that we have ended up keeping the skills we need and done it in a value-for-money way for the taxpayer."

Whitehall sources said Sir Gus's plan might include making more senior civil servants redundant to ensure there were jobs for younger staff to move up into. "The last thing you want at a time when the civil service is shrinking is for your best talent to be stuck without the chance of promotion," they said. "The Civil Service needs to do something make sure these people don't leave."

Sir Gus said the public sector had much to learn from private business – not just about job cuts but motivating staff as well. He said the successful private firms had high levels of staff motivation – something that was not always true in the civil service.

"We know from surveys that we have a number of disengaged individuals across departments and we are working on targeting how we can improve engagement."

The move comes as David Cameron, Nick Clegg and Sir Gus prepare to outline plans today to make the civil service more accountable. They will announce a new website bringing together information on all government departments and detailing the performance of schools, hospitals and crime fighting across the country.

Mr Cameron says the plans will not be a repeat of Labour's target culture – but will make departments more accountable to the public and also set out how power will be devolved down from Whitehall. "The last government tried to make things happen through a system of bureaucratic accountability," Mr Cameron is expected to say.

"The target culture pressured people to go for short-term wins at the expense of long-term improvements. Today we are turning that on its head.

"Instead of bureaucratic accountability, these Business Plans bring in a new system of democratic accountability. Each of these Business Plans does not just specify the actions we will take. It also sets out the information we will publish so that people can hold us to account.

"These plans are about running Whitehall effectively so public services are steered by the people who work in them, responding to the people who use them. It is not about controlling everything from the centre – but running the centre effectively so it does what the Coalition agreement says: put more power in people's hands."