ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Now then a key part of the budget this week was cuts, more cuts to welfare but what about cuts in Whitehall. Are politicians and civil servants taking their share of the pain? In a moment I’ll speak to the Cabinet Office Minister, Francis Maude. Well let’s say a formal good morning to Mr Maude and let me ask you about that first of all, is there is still foot dragging which I think you have described in the past in Whitehall when it comes to the civil servants who are not only suffering cuts themselves to their own pay, pensions and conditions but also elements of policy that they might find difficult to implement. What are you doing to bust through that?

FRANCIS MAUDE: Well I think the Civil Service needs reform and the people that say that most strongly are civil servants themselves. What we’ve got is a collection of fantastic people but the whole is less than the sum of the parts. I had a meeting recently with a bunch of middle ranking people just entering the senior civil service and it is full of amazing people who want to change the world, who are able, energetic, bright, forceful. That was the good side of it, the bad side of it is they were all frustrated, all felt themselves weighed down by the weight of the system so we need to reform it so that these fantastic people can not only give everything that they are individually capable of but where you have a civil service where the whole is greater than the sum of the parts.

DM: There is an element of turkeys voting for Christmas isn’t there because you are, as I said in the introduction, changing the pay, the pensions, the conditions and you are asking them not only to implement it but to suffer some of that as well.

FM: Well if you look at the total reward of civil servants so you add in these very generous pension arrangements that we still have even after the reforms and quite generous arrangements around holidays and so on, if you look at the total reward then most civil servants in most parts of the country are better rewarded than their private sector counterparts. The place where that isn’t true is more senior civil servants in London and the south-east who would be relatively less well paid and it is really important that we continue to keep them engaged and motivated which by and large they are. We don’t lose all that many people and the engagement scores in the annual staff survey have increased so that’s good but we don’t take any of it for granted and we particularly have to be ready to do what’s needed to get in specialists because we need specialist skills. A lot of the work we’re doing in making savings is technically quite difficult, a lot of really serious commercial skills are needed and Whitehall doesn’t have enough of those.

DM: So what you’re saying is, cutting through it there are too many time servers at the top, you’ve got this bunch of young, energetic intelligent people coming through and you want to release them and as much as saving money, as implementing these policies that we hear you’re having difficulties getting through the civil service?

FM: Well the two things are very much related. It’s giving the bright and the energetic their heads so that they can get on and do the things that they and we want to do. I mean we have made a lot of progress in the first year just by cutting, I mean real folding money, cash savings, from efficiency, from renegotiating contracts with the biggest suppliers, from getting out of properties we don’t need to be in, by a whole range of things, buying goods and services collectively so that we can use the whole weight of government, the scale and volume of government to drive down cost and price. None of this had been done effectively before. Just so far we’ve saved in the region of £12 billion but there’s much more we can do.

DM: Is there?

FM: Absolutely, much more we can do.

DM: When you get the emissaries from the Treasury or even direct from the Chancellor himself saying look, we look at the numbers we saw in the budget, they’re awful and you have to get more for me, Francis. Do you say we’re close to the bone or there is an awful lot more to go?

FM: We are nowhere near close to the bone.

DM: How much more?

FM: Oh a lot more. We’ve said five billion in the 2015/16 spending round that we’re about to embark on that Danny Alexander’s been talking about, we think there is at least five billion we can take further from actual … just taking out the cost of government because we started from a very low base. I have to say the last government didn’t really do any of this, they had a lot of brave talk about it but the National Audit Office consistently said it’s smoke and mirrors, they haven’t actually taken the cost out. The National Audit Office is saying if anything we’ve under-counted the savings we’ve made which is where I would much rather be. There is much, much more we can do. To give you an example, when we started we didn’t even know who the biggest suppliers to government were, we had to make a guess and write to them to ask them, to tell us how much business they did with the government. No one was on this case at all but we’ve now got much better insight into where the money is being spent, not nearly enough yet. We get much better collaboration from departments who’ve tended to try and keep things secret from the centre of government, that won’t do, we can’t afford to do that, we’ve got to protect the front line services on which the public depends so that we can actually take out the cost of government. These are the difficult things to do, the soft option is always to turn off the tap and cut the front line services or simply throw more money at it. We can’t do that.

DM: Okay, I mean you keep telling us, and we can read it in the numbers, that there are a lot more difficult and unpalatable things to do and taking those budget figures, you’re way off target, this is not where you wanted to be three years ago. You’re way off target in deficit reduction, you’re way off target in growth, you’re way off target in so many economic areas so the cuts continue. We know that, the Chancellor ….

FM: Well the cuts are going to have to continue anyway, there’s no question about that. But it’s worth making the point that we have cut the deficit by a third and that’s not trivial.

DM: Not as much as you projected. How much further does this have to go, these economic difficulties, before you say the ring fencing of certain departments has to end and in particular people are saying international development, is it right that that continues to be protected when so many other areas are suffering?

FM: Well I am very happy to justify the spending on international development. A) we think it’s right, b) we think it’s in Britain’s national interests because terrorism breeds in those areas of the most acute poverty so I’m proud that we’re the first government to have committed to this and to have achieved it and we’re also making sure that the money gets spent much better than it was before, so much more focused and much more being spent for example on conflict prevention and conflict …

DM: I don’t want to have a huge discussion about this but a lot of people are saying well hold on, you are cutting the Ministry of Defence’s budget substantially and they do quite a lot of that as well.

FM: They do but there’s a lot still can be got out of the Ministry of Defence in terms of cost savings, not in the front line but in terms of making it more efficient and Philip Hammond is absolutely focused on that and rightly so.

DM: How worried are you in the high halls of government about the economic situation and particularly when you’re crossing your fingers and hope things improve but if you look at the external factors, particularly the eurozone, and you say the reason why we are here and not where we wanted to be in 2013 is because of what’s gone on in the eurozone. Well it looks like it’s going to get even worse, what can you do about that?

FM: Well there’s a limit to what we can do about the external environment. We are in a global race and we need to make sure that Britain is as fit as it can be to win in that global race. We can’t change the eurozone, we can support, for example we’ve sent technical, offered technical assistance to Cyprus and that’s been accepted and we can help in those ways but …

DM: But that’s to help British citizens and service personnel who are there.

FM: No, no, that was actually to help Cyprus, the Cypriot government, to solve its problems and that’s been accepted and we can give help in that way but we can’t change the world economic environment. What we can do is to make sure Britain is as well placed as it can be and cutting corporation tax so it will be the lowest in the G20, that’s a big contribution and an employment allowance so that every employer, particularly small employers, get a benefit in the cost of employing people, that’s good too. Giving help so that the people that work hard and want to get on, who aspire to have a better life but who don’t see the rewards for it in the way the system has been working, these are things that make us better able to win in the global race so we can’t transform the external environment, what we can do is make Britain better able to win in that environment.

DM: So what do you say then within that about the global race, about our part in it, about the globalised society that we are, about the current noises being made about immigration and particularly migration from fellow member states of the European Union and we are a full blown member of the European Union, we accept the single market, we accept free movement of peoples but not perhaps if you are Romanian or Bulgarian?

FM: No, it’s not a question of that, it’s a question of having sensible controls, a sensible approach so that we don’t have what happened when we were the only major country that allowed uninhibited immigration from new accession countries and so that has changed the approach in Britain, so we are much more mainstream now with other countries.

DM: But do you think that most of them, wherever they came from within the European Union, be it France or Germany, some of the more developed economies, do you think they come here to sponge here on benefits or that they come here to work and contribute to society?

FM: I think they come for a variety of reasons and I’m not against immigration, none of us are against it, we are a nation of immigrants. Britain has developed enormously through immigration over the centuries and that’s part of us but like every serious country you have to control it and not be indiscriminate and not just allow uncontrolled immigration which was the case before so I’m very proud that under this government immigration has fallen, net immigration has fallen by a third. Again that is not a trivial reduction, that’s a significant change and we need to make sure we are prepared so I think the proposals that are being made at the moment for people to put forward a bond in some circumstances, for councils to be able to impose a residency requirement before allowing access to social housing, these are sensible proposals which will enable us to be very welcoming to immigrants but not to be …

DM: But what would you say to some of the businesses who say, already given what’s happening there are people with essential skills who we can’t get through the UK border at the moment and there are a lot of universities beginning to say look, your attitude to students is to just get the numbers down irrespective of the skills and capabilities they can bring to this country.

FM: Well that is not the case. There is no quota whatsoever on the number of foreign students coming to study in our universities and it’s great that we have universities that rank so high in the world. In that global race on higher education we are actually winning. Four of the ten top ranked universities in the world are British and so of course you get a flood of people wanting to come to those universities and that’s great for us from every point of view, both spending money here but also the projection of British influence that comes through lots of potentially influential people around the world having studied in Britain. It’s really, really good news and there are no constraints on numbers whatsoever. Perhaps we need to be slicker and quicker at dealing with visas and that needs probably, it can be better and I’m sure it will be but there are no inhibitions at all on the numbers of people coming to study at genuine colleges. We have actually got rid of some of the bogus colleges which were being used as a racket to get round immigration rules.

DM: Okay, Mr Maude, thank you very much indeed for your time. Francis Maude there, Cabinet Office Minister.