Leading article: Sir Humphrey won't like it, but reform must come

Long before Yes Minister became a British, and then an international, television success, the terms Civil Service and reform, used together, were wont to raise scornful laughter. To this day, the senior levels of government service retain, not always justly, this image of institutional immutability. A report out today, couched as an open letter to the heads of the Civil Service, Sir Jeremy Heywood and Sir Bob Kerslake, wants to change that. It has much to commend it.

The Institute for Government, an independent think tank, takes as its starting point the swingeing spending cuts that all departments – with the exception of health and international development – are having to make. Rather than bewailing the decline in quality and services many believe these will mean, however, the institute sees a chance to do things differently – even, perhaps, to do them better.

This, at least, makes for some positive thinking, even if many of the difficulties the institute identifies go back a very long way. Tensions between ministers and their senior civil servants, for instance, are not necessarily a bad thing. They can be productive rather than destructive, and they can warn of political trouble ahead. Both sorts of tension have their uses.

One of the institute's chief points – not new, but worth reiterating until it is actually heeded – is that there is a limit to the cuts that can be made by bureaucrat's favoured method of salami-slicing. It is time instead to look at more radical ways of restructuring, and streamlining, with top civil servants required to think outside their particular department. The way some Foreign Office spending has been hived off to the Department for International Development might be an example – but perhaps not one the institute has in mind, as it just moves the same money around.

Overlapping within and between departments is certainly a defect that needs to be tackled. That it has so often been neglected, however, is because addressing it threatens entrenched empires and thus morale. It requires political will from ministers, and managerial will from the very top of the Civil Service, at a time when both see other priorities. Institutional reform is rarely seen as "sexy".

Two other points of the institute's thinking also tread on some sensitive toes – which is why they deserve to be taken seriously. One is a call for Civil Service departments to improve the way they work with non-government or hybrid organisations. This is a requirement as urgent as it is basic. The risks inherent in the proliferation of what the institute calls "arm's length bodies" were illustrated well in the malfunctioning of the Border Agency, where the lines of responsibility were disastrously blurred. But there are many examples, and the more departments try to save money by buying in various services, the more there are likely to be.

The other recommendation is that there should be far more senior civil servants qualified in finance, whether to foster accountability or to negotiate contracts effectively. Such a demand might be seen as elementary, were it not for all the misfired computer contracts and massive overspends in military procurement. Permanent secretaries, it says, should be personally held to account. Cue applause.

Sceptics will respond to all this by saying that they will believe in Civil Service reform only when they see it. That at last someone – the Institute for Government – recognises not only the need for change, but the shape it should take, marks a measure of progress and deserves to open a public debate.