Leading Article: Yes and no, Sir Humphrey

THE Government wants civil servants to be entrepreneurial and competitive, but not to become carried away with money-spinning ideas. Yes, they may battle with the private sector to continue keeping the records of vehicle licences. But no, they will not be allowed to diversify into repairing cars. State provision should be market-tested, but existing private provision is not to be state-tested.

That was the message yesterday from Stephen Dorrell, Financial Secretary to the Treasury, in a speech on the future of Britain's Civil Service. Given his ground rules, it is clear that the British public sector is likely over time to find itself responsible for fewer activities, since it will not be entitled to tout for much new business. The private sector will slowly chip away at the public realm, just as it has in industries ranging from the manufacture of steel to the exploitation of gas reserves.

There is good sense in Mr Dorrell's stance. The Labour Party itself insists that public bodies should confine themselves to certain clear roles. It would seem odd for the taxpayer to become an investor in a myriad of activities not normally considered within the bailiwick of the public sector, just because civil servants found they could outdo private businesses.

But it also demonstrates that Conservative antipathy to state provision goes well beyond arguments of public inefficiency. The Tory stance is firmly based on the view that private is intrinsically better, and that the legitimate activity of the state is necessarily limited and diminishing.

In this light, Mr Dorrell's speech is unlikely to improve the morale of civil servants, many of whom see themselves as losing an empire without finding a role. Increasingly, they are going to have to satisfy themselves with the task of spending the taxpayers' money efficiently, even if that means putting their colleagues out of a job because the best buy is private.

But Mr Dorrell, one of the Government's more promising ministers, should not be chastised for that. Insecurity is the inevitable result of the biggest shake-up in the Civil Service in a century, which promises great financial savings. Where his speech can be faulted is in failing to tackle widespread concern about the erosion of Civil Service values entrenched for nearly 140 years, since publication of the Northcote-Trevelyan report.

Like other ministers, Mr Dorrell seems to take for granted the endurance of principles such as integrity, political independence and accountability that have been the hallmarks of the British Civil Service. Evidence provided to the Scott inquiry demonstrates that all is not well with the Civil Service ethos. The financial impropriety of some quangos and their undemocratic nature highlight other problems. Politicisation of the senior posts in the Civil Service has broken with past notions of impartiality. These are serious issues that greater efficiency in public services, though a valuable improvement, has not addressed.