Tom Gash is the Director of Research at the Institute for Government, and worked previously as a senior policy adviser in the Cabinet Office’s Strategy Unit.
In Britain, general elections are frequently followed by major restructuring of the departments of state that manage government’s £700bn of public expenditure. But Reshaping Government, published today by the Institute for Government, shows that prime ministers should not rush into changes in 2015; indeed, we argue that the Prime Minister should be forced to justify publicly why any proposed changes serve the public interest, and to submit a business plan for scrutiny in Parliament.
New and returning prime ministers have long seen restructuring as a way of signalling their priorities to the electorate, governing more effectively, and keeping ambitious colleagues happy.
In 1970, Edward Heath reduced the number of Whitehall departments to its lowest level in the post-war era (17) by merging several departments and creating two new ‘super-ministries’ in a move that, he hoped, would symbolise and enable a new, more streamlined approach to governing.
In 1997, Tony Blair created a new Department for International Development (split out of the old Foreign Office) to signal the importance that he and Clare Short, his new Secretary of State, attached to the issues; he expanded the role of the Department of National Heritage (and renamed it the Department of Culture Media and Sport) and created a sprawling Department for Environment, Transport and the Regions (formed by merging the Department for the Environment and the Department for Transport), largely to satisfy the ambitions of John Prescott, then Deputy Prime Minister
In 2010, David Cameron made fewer changes – but he still slimmed down the Department for Children, Schools and Families (renaming it the Department for Education) and moved a few functions from one department to another. There were also major restructurings within departments. Many arm’s length bodies – or quangos, as they are not-so-fondly known – were merged or taken back under more direct ministerial control.
More changes will probably follow in 2015, but precisely what happens will depend on who wins. Another coalition might limit the prime minister’s room for manoeuvre, but various ideas have found support in different quarters – including the abolition of the Departments for Culture, Media and Sport (DCMS) and for Communities and Local Government (CLG); the creation of a new infrastructure department; the splitting of the Department for Energy and Climate Change (formed in 2008); and the merging of the Scotland, Wales and Northern Ireland Offices.
There are theoretical arguments for and against these changes. But what is the track record of restructurings in practice? The Institute for Government looked at the history of these reforms – and what we found should make any government think twice before rushing into structural change.
In the UK, decisions about restructuring are often incredibly rushed, frequently being tied to the frenetic process of cabinet formation. No time is allowed to plan for the practicalities of restructuring – with new departments often coming into being as little as four days after their announcement. In the rush, mistakes are made.
Changes usually cost far more than expected. In four recent restructurings, direct costs ranged from £14m to over £150m. The big financial costs were from ‘levelling up’ salaries of staff (or paying for lawyers to avoid doing so); aligning IT systems; rebranding, and relocation. But the level of disruption was even more worrying. Many involved in dealing with the changes argued that they distracted large parts of the new department from the day job for up to a year.
Reformers also over-estimate the long-term savings from absorbing smaller departments into bigger ones. Many of the smaller departments, such as DCMS, already share buildings and back office functions with larger ones. So big savings can only be made if government is prepared to make tough decisions and cut funding to frontline services. These savings can be made without the costs and disruption of restructuring.
In the heat of decision-making, prime ministers too often forget that departmental restructuring requires trade-offs. Areas such as skills policy have passed between departments repeatedly –- but the effect has largely been to replace problems in one area (for example, weak co-ordination with employment services) with problems in another (such as lack of join-up with education policy).
Changes conceived largely as political signals or for party management purposes, meanwhile, quickly become redundant as priorities and personalities change. The creation of the Department for Innovation, Universities and Skills in 2007 may have allowed John Denham to join the Cabinet, but it was merged into a new Department for Business, Innovation and Skills just two years later, leaving little legacy except a multi-million pound bill for the taxpayer.
Of course, in some cases, restructuring is necessary and successful. The creation of the National Heritage Department in 1992 (later re-named Culture, Media and Sport in 1997), the establishment of the International Development Department in 1997 independent of the Foreign Office, and the creation of the Department of Work and Pensions in 2001 have all endured for long enough to justify the initial costs of change.
But most successful changes have had common features. They have not been surprises, suddenly announced to achieve maximum political impact and/or to deal with party and personnel management. Successful moves have generally been floated and discussed in advance to allow a proper discussion of the advantages and disadvantages – either before a general election or, ahead of changes, when a government is in office.
Consequently, the Institute’s paper argues that a prime minister should only pursue restructuring after extensive discussions and following production of a business case assessing the operating rationale for the change, setting estimated costs and benefits, discussing alternatives to structural change and implementation issues. This will require improved central capabilities to advise on such changes.
Without copying the rigidity of the American system, Parliament should also be involved – with relevant select committees scrutinising any proposals, and the Commons having a vote on substantial reforms. Because changes should be considered and planned in advance, any new government elected in May should not make structural changes to departments in its first weeks unless its plans have been announced and debated before the election.
There is also a case for far more fundamental changes to the way that government works. Structural reforms often aim to compensate for two of Whitehall’s enduring weaknesses: its well-documented struggles to maintain focus on long-term priorities in the face of daily events, and its weakness in co-ordinating policy and implementation effectively across departments. But repeated restructurings have not addressed these fundamental problems.
So we argue that an incoming government should tackle them head-on, and minimise disruptive restructurings unless there is a very strong case for change. Political and civil service leaders must encourage collaboration and long-termism. And reforms to processes such as the spending review and cross-government performance management which would help ensure that departments work together to get the best possible services for taxpayers.
In short, restructuring can sound like a quick fix to some of government’s problems. But it isn’t.
The new Institute for Government report, published today, is available via their website.