Give civil servants a chance to take risks

There must similarly come a point where senior civil servants turn their backs on open debate and decide their future will be much more assured if they become political.

Reading the National Audit Office report into the privatisation of QinetiQ, which was published at the end of last week, it is easy to see how it would push civil servants in this direction. It is obvious that the business was underpriced when a slice was sold to private equity.

It follows that the return to the Exchequer was not as much as it might have been when the business was eventually floated.

But this is a verdict blessed with the advantage of hindsight. It conveniently ignores the fact that IPO pricing is more of an art than a science even when carried out by the experts - witness the shares of Sports Direct, which now stand at less than one third the price at which they were floated earlier this year.

It ignores even more the uncertainty which attaches to the value of a business which is being carved out of the public sector and has to be substantially reshaped to cope with life as a listed company.

Some officials may have made a wrong call but it should not be a career threatening experience.

Yet it so often is. The danger in a report like this, or more specifically in the witchhunt which follows in the media and Parliament as the scapegoats are identified and censured, is that the original loss to the Exchequer is compounded several times over by the way in which these criticisms inevitably make the civil service even more risk averse.

Why should a civil servant take a chance and do what he or she believes is the right thing if the downside is that their career will be destroyed if it subsequently turns out to be wrong.

One of the key challenges Britain faces in today's world is the need to improve the quality of our government, but this kind of thing risks making it worse.

The civil service is already under considerable strain because it is no longer the automatic first choice of career for the brightest and best graduating from our universities.

It suffers further attrition as middle-ranking staff jump ship for the more-lucrative career prospects in the City.

It will become utterly hopeless if those few who stay walk in such fear of criticism that they will no longer take a chance on anything.

Risk aversion is the core problem in the civil service. These reports, how ever justifiable they may be on a caseby-case basis, have the collective effect of making us much worse governed.

We badly need a change of tone in politics and the media so that people will once again be allowed to make mistakes.

IN AN ideal world, a bidder like BHP Billiton would abandon its attempt to take over Rio Tinto in the face of this weekend's trading update and massive dividend increase, which shows that the group is perfectly capable of meeting the massive surge in world demand for its iron ore and aluminium products, and is worth a massive amount more than BHP has initially offered.

Unfortunately, it is all too rare for hostile bidders to abandon the chase. With so much testosterone in the air, discretion is rarely the better part of valour - even when the cause looks lost.

The other reason for wishing this bid had never happened is that hostile bidders always underestimate the complexity of what they are taking on, and with mammoth deals that can be disastrous.

Look at BP. Its US bids were brilliantly executed acquisitions, but the challenge of managing what was taken over was what ultimately sank Lord Browne when the Texas refinery blew up.

Or take Vodafone's takeover of Mannesmann.

Again, it was a brilliant deal on paper. However, it has taken the better part of seven years to get it integrated.

The production targets for iron ore, the extra savings from the takeover of Alcan, the general air of a management that is in control all serve to underline why BHP wants to acquire Rio Tinto.

What is not at all obvious is how it works the other way round. What's in it for Rio?