What does civil service reorganisation mean for taxpayers?

by James Roberts, managing director


The dust has now settled on Rishi Sunak’s reshuffle. Last week, the prime minister sprung a reorganisation on an unsuspecting Whitehall: splitting up digital and culture, whacking business into trade and creating a new energy and net zero department. Some said the changes were long overdue, especially given the demands around energy policy. Many others were left asking what exactly was the point


But, most importantly, what does this all mean for taxpayers? 


On a basic level, they’ll have to pay for it. The Lib Dems put the cost at £60 million. The Institute for Government (IfG) are reported to have claimed the overhaul will cost around £100 million, pointing out it’s the biggest shake up since Brexit. But it’s difficult to find evidence for these claims. They appear to be based on a 2019 report suggesting the direct costs of creating a new department start at £15 million, though this in turn seems to be lifted from a 2010 report presenting the £15 million from an ‘IfG Cost Model’. Perhaps we’ll just agree - shifting officials about and giving them new lanyards will inevitably incur a bill.  


A right-minded government would find it easy enough to cover these costs. Instead of moving them down the road, why not relocate officials in the new departments out of London entirely? We’ve estimated £371 million of savings that can be found by moving 53,196 civil servants out of London. After all, Companies House has offices in Cardiff, Belfast and Edinburgh, HM Treasury has its new campus in Darlington, and the list goes on. Government departments should do far more to embrace this relocation and cut the size of Whitehall.  


Indeed, streamlining central government could offer taxpayers big savings. In our 2015 Spending Plan, we estimated that abolishing the Department for Culture, Media and Sport could save around £2.7 billion. But sadly for taxpayers, finding efficiencies does not appear to have been the main objective here. 


That said, there could also be wider financial benefits from the shake up. The new trade and business department under Kemi Badenoch has some of the elements of the ‘Office for Economic Growth’ that she proposed during the Tory leadership campaign. If her efforts can help boost growth, that’s good news for taxpayers. 

But it remains the case that the reorganisation will come with an upfront price tag. The PM wasted the opportunity to make real changes to the Whitehall machine, and save money in the process. With the public sector headcount ballooning (increasing by more than the size of the entire Tesco workforce since 2018!), Rishi is condemning us to a sustained cost of government crisis long after inflation has settled down. This may have been the Tories’ last chance to trim back our bloated bureaucracy, and they appear to have let it slip through their fingers.

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