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UK faces enormous challenges, says top civil servant UK faces enormous challenges, says top civil servant
(about 4 hours later)
  
Politicians face "enormous challenges" on the economy, the EU and the future of the UK itself, Britain's outgoing top civil servant has warned.Politicians face "enormous challenges" on the economy, the EU and the future of the UK itself, Britain's outgoing top civil servant has warned.
Flagging up a referendum on Scottish independence, he told the Telegraph "whether to keep our kingdom united" would be one of the key issues.Flagging up a referendum on Scottish independence, he told the Telegraph "whether to keep our kingdom united" would be one of the key issues.
Scotland's First Minister Alex Salmond welcomed the remarks and said UK parties had their heads "in the sand".Scotland's First Minister Alex Salmond welcomed the remarks and said UK parties had their heads "in the sand".
He has pledged a referendum within the SNP's four-year term in office.He has pledged a referendum within the SNP's four-year term in office.
In the article, Sir Gus, who steps down as cabinet secretary on 1 January, writes: "Over the next few years there will be enormous challenges, such as whether to keep our kingdom united and how to make the EU operate in the best interests of its citizens.In the article, Sir Gus, who steps down as cabinet secretary on 1 January, writes: "Over the next few years there will be enormous challenges, such as whether to keep our kingdom united and how to make the EU operate in the best interests of its citizens.
"But it is today's economy which poses arguably the biggest challenge.""But it is today's economy which poses arguably the biggest challenge."
'Buried in the sand''Buried in the sand'
Mr Salmond has said he will call a referendum on independence in the second half of the SNP's term at Holyrood but UK PM David Cameron has said he is committed to keeping the United Kingdom together.Mr Salmond has said he will call a referendum on independence in the second half of the SNP's term at Holyrood but UK PM David Cameron has said he is committed to keeping the United Kingdom together.
BBC News Channel chief political correspondent Norman Smith said Sir Gus appeared to be signalling that the three biggest UK parties, the Conservatives, Lib Dems and Labour - who are all in favour of keeping the UK together, were not prepared to make the case for keeping the union.BBC News Channel chief political correspondent Norman Smith said Sir Gus appeared to be signalling that the three biggest UK parties, the Conservatives, Lib Dems and Labour - who are all in favour of keeping the UK together, were not prepared to make the case for keeping the union.
One of the "enormous" challenges to which Sir Gus O'Donnell refers, is the Scottish National Party's plan to hold a referendum on independence.
Scotland's First Minister Alex Salmond said the vote would be held in the second half of his five year term, which started in May 2011.
If a majority of Scots say "yes" to independence then Mr Salmond would claim a mandate to end Scotland's 300-year-old political union with England.
If a majority of Scots say "no" then the UK would presumably remain intact.
The Westminster government wants Scotland to stay in the UK and its civil servants will be pursuing this objective.
The Scottish government favours independence and has instructed its civil servants to draw up detailed plans for this.
What's interesting is that this happens within a unified UK home civil service which is currently headed by Sir Gus, who is answerable to the Prime Minister.
Not that the SNP feel this has compromised their work on independence. In fact, Mr Salmond has praised Sir Gus for being "extremely fair" in recognising the Nationalist's mandate.
Another senior figure in the SNP said it was a tribute to Britain's sense of fair play that civil servants could serve governments of very different political persuasions at the same time.
Responding to the article Mr Salmond said: "Sir Gus is right to recognise the importance of the constitutional issue, and the SNP government are up for the challenge of building and winning the case for Scottish independence - unlike the Westminster parties, who seem to have their heads buried in the sand."Responding to the article Mr Salmond said: "Sir Gus is right to recognise the importance of the constitutional issue, and the SNP government are up for the challenge of building and winning the case for Scottish independence - unlike the Westminster parties, who seem to have their heads buried in the sand."
Sir Gus also said he was proud of the "thorough, evidence-based analysis" carried out under the previous Labour government - while he was permanent secretary at the Treasury - which informed the decision not to join the euro.Sir Gus also said he was proud of the "thorough, evidence-based analysis" carried out under the previous Labour government - while he was permanent secretary at the Treasury - which informed the decision not to join the euro.
And he called on the civil service - of which he is the head - "to become a central part of [the economy's] recovery and growth".And he called on the civil service - of which he is the head - "to become a central part of [the economy's] recovery and growth".
"There is, of course, some cultural inertia to overcome, but there is a voracious appetite among departments to take on this challenge... We know we need to deliver better for less," he said."There is, of course, some cultural inertia to overcome, but there is a voracious appetite among departments to take on this challenge... We know we need to deliver better for less," he said.
The outgoing cabinet secretary also touches on the issue of red tape and bureaucracy, and suggests MPs are too quick to create new legislation and regulations to solve problems.The outgoing cabinet secretary also touches on the issue of red tape and bureaucracy, and suggests MPs are too quick to create new legislation and regulations to solve problems.
Of the 1,200 regulations that have been examined so far, civil servants have recommended scrapping over half of them.Of the 1,200 regulations that have been examined so far, civil servants have recommended scrapping over half of them.
Ministers and officials should be "prepared to take more risks" and "learn from failure", he adds.Ministers and officials should be "prepared to take more risks" and "learn from failure", he adds.
Sir Gus became cabinet secretary in 2005 and when he steps down the post will be split into three.Sir Gus became cabinet secretary in 2005 and when he steps down the post will be split into three.
Number 10 permanent secretary Jeremy Heywood will succeed him as cabinet secretary.Number 10 permanent secretary Jeremy Heywood will succeed him as cabinet secretary.
His role as head of the civil service will go to Bob Kerslake, currently permanent secretary of the Communities and Local Government Department, while the role of permanent secretary at the Cabinet Office will go to Ian Watmore, ex-chief executive of the Football Association.His role as head of the civil service will go to Bob Kerslake, currently permanent secretary of the Communities and Local Government Department, while the role of permanent secretary at the Cabinet Office will go to Ian Watmore, ex-chief executive of the Football Association.