Andrew Haldenby

What you need know ahead of the Spending Review – Civil Service

What you need know ahead of the Spending Review – Civil Service
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This is the fifth of our posts with Reform looking ahead to the Spending Review. The first four posts were on health, education, the first hundred days and welfare.


What is the budget?

The Civil Service accounts for 527,000 out of the total 6.1 million people employed in the public sector (as at March 2010).  The total annual cost of employing these civil servants is approximately £13 billion.


Where does the money go?

Mostly on people. The Civil Service headcount has grown by nearly 5 per cent in the last decade from 504,000 in 1999.  Nearly three quarters of all civil servants are employed by four departments: the Department for Work and Pensions (134,000), HM Revenue & Customs (87,000), the Ministry of Justice (85,000) and the Ministry of Defence (77,000).  About half are in “management” positions and half in “administrative” roles.


Is the money well used?

The evidence is that it is not.  The key watchman of Whitehall – the National Audit Office – has shown beyond doubt that central government makes insufficient effort to manage its staff, understand its costs or buy things on behalf of the public at good value.

Just before Easter, the outgoing MP responsible for the NAO, Edward Leigh, reported that the Civil Service was just as institutionally wasteful this year as 10 years ago. He summed up his decade in the post: “We have been impressed by some talented people who know what they are doing and are determined to do it well, but more frequently we have been shocked by the failure to apply basic management disciplines to major projects and programmes."


A 2007 Public Administration Select Committee report identified the root cause of poor cost control:  “The Civil Service faces a widespread perception that its leaders are unaccountable for poor performance.”  The Civil Service's internal judgments, the Capability Reviews that have been published since 2006, have identified major weaknesses in every department.


There are excellent managers in the Civil Service who focus on performance and value for money but they do it despite the system, not because of it, and they are the exception not the rule.


Is the Civil Service already making savings?

Following the findings of Sir Peter Gershon’s efficiency review in 2004, Gordon Brown announced plans to reduce the Civil Service workforce by 84,000.  Headcount has fallen since, by about half this amount, from 570,000 in 2004 to 527,000 today.  But the NAO found that only a quarter of the savings reported by departments were real, at best.


What is the Government doing?

Speaking at a Reform conference on 7 July, Francis Maude, the Minister in charge of Civil Service reform, set out his “tight-loose” approach: “tight” central control of Civil Service headcount and procurement, balanced by “loose” decentralisation in public services.


The “tight” central grip is following directly in the footsteps of Tony Blair and Gordon Brown.  It may save some costs in the very short term.  But it will incur much greater costs in due course as, once again, civil servants feel that good management is someone else’s job.


Lord Browne of Madingley has been appointed to overhaul the running of departmental boards, including bringing in big hitters from business to give the boards real “teeth”.  This may improve the running of departmental boards, but it will not tackle the real problem which is that no one knows who is really responsible for the proper functioning of departments.  The extent to which responsibility and accountability lies with a Minister, with a Permanent Secretary, or collectively with a departmental board is unclear. 


The best idea in the Cabinet Office draft structural reform plan published on 27 July is to put Permanent Secretaries on fixed term contracts.  This follows the model used successfully in New Zealand and would be an improvement on the current system.


So what is real reform?

The Civil Service is expensive, but the real issue is that it is not good at its job. The root cause is the lack of accountability for performance.  The Cabinet Office structural reform plan makes not one mention of accountability.  Instead, the Government’s approach centralises more decisions on headcount, procurement and governance. 


As with all areas of the public sector, politicians shouldn’t take a personal view on the size of the Civil Service.  They should make it accountable and then leave it to get on with its job.  Bringing in big hitters from the private sector will not change the predilection to spend rather than save.


Real reform in the Civil Service means making it accountable for every penny it spends and every person it employs.  Reform has recommended that democratically elected politicians should be able – openly – to hire and fire senior officials, on the Australian model. Officials themselves would become visible and accountable, contrary to the current doctrine of ministerial accountability.  

Andrew Haldenby is Director of Reform


Further reading

Cabinet Office (2010), Draft structural reform plan.


Darwall, R. (2005), The reluctant managers, Reform.


Haldenby, A. et al (2009), Fit for purpose, Reform.


House of Commons (2007), Skills for Government, Ninth Report of Session 2006-07, Volume I, Public Administration Select Committee.


National Audit Office (2007), The Efficiency Programme: A Second Review of Progress.


National Audit Office (2008), The use of sanctions and rewards in the public sector.


National Audit Office (2008), Good Government.


Office for National Statistics (2010), Civil Service statistics.


Open letter by Edward Leigh MP to his successor as Chair of the Committee of Public Accounts, 28 March 2010.


Reform (2010), The first hundred days.