Capability Building in Government: What are the lessons from Blair’s Capability Reviews?
By Ruth Puttick
The UCL Institute for Innovation and Public Purpose (IIPP) and Bloomberg Philanthropies are developing a Public Sector Capabilities Index. The aspiration is to measure where city government capabilities are strong and where skills must be built up. It will focus on city governments, but as part of its development, we are keen to learn from parallel sectors and historical attempts at capability building. This blog explores the public sector reforms and restructuring of government carried out by New Labour in the UK.
What happened?
Civil service reform was a core component of “New Labour” during Tony Blair’s leadership from 1997 to 2007. During this time there were various initiatives, including the 1999 Modernising Government white paper, which aspired to create a ‘joined up’ government and ‘learning labs’ to promote public service innovation.
A key legacy of this era was the reorganization of the Prime Minister’s Office, with the introduction of a Strategy Unit, Communications Unit and Delivery Unit. In 2001, the Prime Minister’s Delivery Unit was set up to provide a “‘rigorous and relentless focus on a relatively small number of the Prime Minister’s key priorities” (Barber, 2008). With a team of 40, it had some notable impacts, including reducing A&E waiting times and improving the punctuality of trains, although some targets were missed. The Prime Minister’s Delivery Unit has inspired others to be created around the globe.
Of interest to the development of the Public Sector Capabilities Index is the Blair government’s introduction of Departmental Capability Reviews. The Delivery Unit was already tasked with assessing the performance of Government departments, but in 2005, the Cabinet Office Secretary, Sir Gus O’ Donnell, announced for the Delivery Unit to enhance its role by looking at the capability of departments to deliver. This was in response to the Delivery Unit recognizing that “departments were not really up to driving the kind of agenda that [the Delivery Unit] were setting them” and so to deliver outcomes, departments needed to be strengthened.
The Delivery Unit’s capability reviews aimed to both assess capabilities in different areas and then develop an action plan for improvement. Figure 1 shows the ‘model of capability’.
The first Capability Reviews began in 2006. It focused on three areas of management capability: leadership, strategy and delivery. The review team comprised people from inside and outside Whitehall and drew on evidence provided by departments, interviews and workshops held over 3 weeks. The review team produced a report that scored each department with the scores moderated by an independent panel. Departments were graded in each capability category as either Strong, Well Placed, Development Area, Urgent Development Area, or Serious Concerns. Figure 2 summarises the review process.
The Capability Reviews went through a review and refresh during 2008 to 2010. By 2010, the Capability Reviews were deemed to be easily “gamed”, as “Departments knew the exam questions and were beginning to find ways of answering them”. Coupled with the onset of austerity, the expensive external assessment of the Capability Reviews was deemed unnecessary. In May 2010, the Coalition Government abolished New Labour’s approach to performance management. It replaced Capability Reviews to Capability Action Plans, but these were significantly different with no scores, no cross-cutting review, and no external moderation.
What was the impact?
The Capability Reviews were the first organisational capability assessment framework in the UK to systematically assess the organisational capabilities of individual departments and to publish results that could be compared across departments. In 2009, all departments were re-reviewed and 95% of the areas that needed urgent development had been addressed. In terms of progress, noticeable advancements had been made in leadership, and the use of evidence and analysis in policy making.
What can we learn?
There are several lessons we can take from the development and eventual decline of Departmental Capability Reviews, including:
- The tone and language of the assessment from any government review needs careful consideration. For the Capability Reviews, it was described as a “Goldilocks problem” — “too hot” for some and “too cold” and not sufficiently strong and robust for others.
- Relationship management was essential, with careful navigation and engagement with senior government stakeholders, so that those leading departments did not perceive it as a direct criticism or a threat.
- The composition of the review team was important. For the Capability Reviews the external experts and internal staff involved helped provide credibility and foster buy-in (Sunningdale Institute, 2007).
- An independent evaluation of the entire process provided a stock take of progress and highlighted areas for improvement (see Sunningdale Institute, 2007).
- Moderated, published, and comparable scores provided incentives and competitive pressure for departments to improve. This was lost in the move to self-assessments during the final years.
- The electoral cycle must be considered. With the Capability Reviews, senior officials did not wish to receive reviews that would “reflect poorly on them in the eyes of the incoming government”.
Get involved
In mid-2025, we will publish our findings on how dynamic capabilities can be assessed and fostered. In doing so, we hope to help city governments and their partners be more intentional and strategic when investing in the right skills and competencies to deliver better services and resident-level impacts.
If you have ideas or feedback, we would love to hear from you. Please contact Ruth Puttick, r.puttick@ucl.ac.uk.
