Whitehall's machinery needs an overhaul

Say Winston Churchill and Clement Attlee were contending for power instead of John Major and Tony Blair. How we'd laugh at the homburgs and the suits. Yet the machinery those old men would find on entering Whitehall would be instantly recognisable: the number and range of the departments and the committee grid that connects them are the administrative equivalent of a Forties valve radio.

But does machinery matter if Blair or Major know their minds and manifestos? It does, and it is anachronistic. The strong, semi-autonomous departments at the heart of British government are not neutral. They act like giant prisms bending and shaping the way politicians and policy advisers view the world. Around them have grown up, like barnacles, encrusted networks of interest groups, MPs and officials, all as ready to lobby against change to the left as to the right, closing down options, heading off spending cuts at the pass. The Ministry of Agriculture, Fisheries and Food, the farmers' friends at court, is the obvious recent example. (Consumer interest gets short shrift across Whitehall - the Department of Trade and Industry is as much on the "producer" side as the Ministry of Agriculture, Fisheries and Food.)

Whitehall is like a kaleidoscope that has not been shaken for years. As soon as departmental boundaries become fluid and changeable, vast policy opportunities open out. The Home Office, the Environment Department, the Department of Social Security - their names belie their functions. There is no synergy between them; they lock up policy options. How, for example, will Labour's thinking about a better relationship between benefits and work fare in a Whitehall structure where ne'er the twain meet?

For long years, the ministry, then department, of education relegated further, technical and vocational education to the periphery - they were to do with employment and that was somebody else's responsibility. It will be ages yet before the recently created Department for Education and Employment starts bringing ministers exciting new thought about the interaction of schools, universities and the world of work.

The case for reform is non-partisan. We all need better articulation within government of the interests of business than the DTI offers. There would be general benefit in combining the personal tax side of the Inland Revenue and the Department of Social Security; in carving a proper Ministry of Justice out of the Lord Chancellor's Department and the Home Office. (How much easier that would have made Michael Howard's life of late.)

The Tory reform agenda for Whitehall has, if anything, strengthened departmentalism - it has certainly weakened the processes by which departments share problems and think together about solutions. On Whitehall's structure, Mrs Thatcher was an arch-conservative. For all her talk, she did nothing to reform a Foreign Office locked into a view of the world that Palmerston would still recognise. In its place is needed a Department for Europe (which paradoxically would be even more necessary if the Euro-sceptics had their way and Britain moved to Europe's outer circle). Only superb linguists with German as their first foreign language would get posts. As for the rest of the world, embassies should be shut up, shared with friends in Europe or turned into outstations of a new Department of Business.

What needs to be done is, first, to map departments against a modernised list of functions, ranked according to what it is government actually delivers, drawn up according to an honest assessment of what British governments can (and cannot) do. Clearly, Whitehall's shape ought in part to reflect the priorities of the party in power - the almost complete absence of Labour thinking about the machinery of power speaks volumes about the likelihood of a Blair government changing much.

A prime minister who is going to accomplish anything must reform Number 10. A radical would hand the actual building over to the National Trust and commission Sir Norman Foster to hack something exciting out of the back of the Treasury building (which is being pulled down anyway). A new PM's department, supported by a new, long-term think-tank on the lines of the former Central Policy Review Staff (CPRS), is essential if he or she is to have any chance of reviewing and monitoring across Whitehall, let alone tracking policies through time.

Since the building is being demolished, the time has come to destroy the Treasury and its mind-set. Gordon Brown needs to start making plans. One possibility is a Department of the Budget headed by a full cabinet minister responsible for policy and decisions on spending, taxation and delivering the "fiscal balance", defined as a ratio of spending to gross domestic product.

Rejigging Whitehall is only part of it. Civil service reform is incomplete. The key posts of Cabinet Secretary and Head of the Home Civil Service should be separated and the job descriptions of permanent secretaries revised. The number and workload of ministers needs urgent review. Some better "fit" into Whitehall of functions carried out by local and or regional government is needed, so that appropriate "homes" are found for them. There is urgent need of a study of the accountability, auditing and other regulatory regimes as they apply to quangos, the regulators and auditors themselves, and others who deliver public services. And so on.

This isn't tinkering because it is easier to fiddle in the garage than get out on the highway. Public faith in governing institutions is in freefall. People doubt government's competence. The object in a democratic system must surely be to work towards maximising the fit between the outcomes of government decisions and public will. The more modern the machinery of state, the closer the fit.

David Walker's booklet on Whitehall reform, 'A Better Contrivance', written with Sir Peter Kemp, is published today by the European Policy Forum.