By Tim Fish

14 Nov 2012

With further cuts looming on the horizon, the Institute for Government has analysed three years’ worth of departmental efficiency programmes and recommended a new approach be adopted. Tim Fish reports.

The 2010 Spending Review was designed to eliminate Britain’s structural deficit by the end of the Parliament, but the government admitted earlier this year that the length and depth of the recession means that further spending cuts will be necessary in the next Parliament. Indeed Sir Jeremy Heywood, the cabinet secretary, said in June: “We are 25 per cent through fiscal adjustment. Spending cuts could last seven, eight, ten years.”

Further cuts will undoubtedly hit Whitehall administration budgets hard, whether they come in the next Parliament or – as some Tories would like – as adjustments to the existing spending review. And a new report by the Institute for Government (IfG) argues that planning for these cuts must begin immediately: with the civil service reeling from one-third cuts in its budgets, the danger is that further economies cut into bone rather than fat.

Having analysed three years of administrative cuts, the IfG has come up with a series of recommendations for how Whitehall should approach further efficiencies. The recommendations have three tiers: those that can be implemented by individual departments; those that must be implemented by departments working together; and lessons for the leadership of the civil service.

First, the report says that high turnover among ministers, permanent secretaries and directors general makes further change “fragile”; and that the process is too dependent on a few individuals, which can cause it to stall when people leave. Therefore, the IfG recommends that director and deputy director cadres should be more deeply involved in departmental change programmes, creating a “sustainable leadership” base.

The report’s author, James Page, told CSW that ministers and permanent secretaries must also be more hands-on when bringing about change in their respective departments. It is “absolutely essential” to have “top-level leadership” behind the change agenda, he said, because if it is run only from the HR department or from corporate services then it’s hard to get “buy-in” across the department.

The current round of administrative cuts were not properly planned, the IfG believes, and back office functions such as HR, finance, internal communications and IT were not given enough of a say in their planning. Therefore, it calls for more strategic planning for the next round of cuts – focusing on long-term reform rather than the easy wins – with a greater number of people in the civil service professions given positions on departmental boards.

The report also calls for civil service leaders to better explain their plans to staff. Page told CSW: “The role of internal communications – often the ‘Cinderella service’ to the press office – actually is a critical success factor to getting your staff through the big changes, communicating with them really effectively and not just pushing information out.”

Further, the IfG challenges departments to work more collaboratively when cutting spending. They must break out of their siloed way of operating, it argues. In response, Sir Bob Kerslake, head of the civil service, told CSW that overcoming barriers to departments working together is more of a cultural than a structural problem; one that requires changing the attitude that existing practices are just “the way things work around here”. He added that he wants a “presumption of collaborative working across departments on common issues.”

Kerslake stressed that stronger shared services will ensure closer collaboration. “I think you can see some examples of this happening already – for example, sharing of internal auditing and sharing of HR in related services,” he said. “I think you can see some very good examples of collaborative policymaking as well, but it has got to become more consistent, more part of the way we do business in the whole of the civil service.” There will be more announcements on this area soon (see Stephen Kelly: news p2, interview p7).

Meanwhile, Jonathan Slater, director-general of transformation and corporate services at the MoD, said that “clearly as resources get tighter, it is beholden on us all to look at how we can improve efficiency by sharing functions across government, whether that is back office services, the buildings we operate out of; anything that enables us to protect frontline services by reducing the cost of administration through sharing it rather than having to have our own.”

He added that although in the past departments have operated under their own initiative to find areas where they can work with each other, this is changing as the leadership of the civil service pushes for a more structured and comprehensive approach to collaboration.

“Bob Kerslake’s approach as head of the civil service has been to push [the cross-department collaboration] agenda more consistently across Whitehall. The Civil Service Board that he is chairing is looking right across Whitehall at what is the best way of organising shared services across departments,” Slater said.

The Civil Service Board, a grouping of permanent secretaries chaired by Kerslake, is looking at the best way of implementing civil service reform and organising shared services across departments. The IfG calls on the board to provide strong leadership and break the “deeply ingrained cycle of siloed working”. Kerslake told CSW that stronger corporate leadership is required to ensure closer collaboration. “I think we have to adopt some of the characteristics that you would see in a single organisation, whilst recognising that we are not like one company or one local authority,” he said.

As Kerslake said at the launch of the IfG’s report: “The key part of the improvement agenda, a key part of the corporate model, has to be a unified civil service that finds the best and applies that across the whole of the civil service.”

Certainly, the IfG report is a strong challenge to the civil service for when the next round of cuts are required. For Whitehall has just endured a deep set of cuts that have chopped away the fat that inevitably accumulates during periods of plenty – and in some areas, taken out some key muscles too. Unless a further austerity drive is carefully planned and accompanied by deep organisational reforms, the next axe will either weaken capabilities or fall on services. “In many ways,” says Page, “the danger really is that the civil service just uses blunt measures to balance the books rather than actually making the best choices by planning ahead and looking at this much more strategically.”

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