Public spending watchdog the National Audit Office has called on the Cabinet Office and HM Treasury to boost the workforce planning guidance they provide to departments to drive further improvements.
The recommendations come in a new NAO report that draws lessons from previous work and highlights the need for better planning to secure the £45bn annual efficiency savings anticipated from digital transformation and artificial intelligence.
While government departments have delegated staffing responsibilities as employers, the Cabinet Office oversees the 500,000-plus civil service workforce as a whole, issuing guidance and sharing good practice on workforce planning.
HM Treasury, meanwhile, influences workforce planning through its public-spending oversight, setting expenditure limits and approving departmental budgets.
In its report, the NAO makes eight core recommendations for departments – including strengthening organisational resilience by addressing staffing shortfalls early and building more robust data systems to enable better workforce planning.
However, it sets out specific areas in which it believes that the Cabinet Office and HM Treasury could go further in providing departments with direction.
The report recommends the Cabinet Office and HM Treasury should set out “clear expectations” for what departments must include in their workforce planning to address current areas of weakness. It says workforce planning expectations should include how staffing needs to change as a result of AI and digital adoption and “well-evidenced workforce modelling” based on reasonable assumptions and different scenarios.
According to the NAO, the recommendation is intended to “improve the quality and consistency of workforce planning across government”, building on principles and targets set out for departments as part of the 2025 Spending Review. “The recommendation extends this principle to expectations for raising the overall quality of workforce planning, by addressing known weaknesses,” the report says.
The NAO also calls on HM Treasury and the Cabinet Office to embed workforce planning requirements into future spending reviews and annual strategic plans.
A further recommendation for HM Treasury is that it updates the Government Efficiency Framework to include guidance to departments on how adopting digital technologies can reshape workforces to deliver significant efficiency savings.
The NAO says the department should consult with the Cabinet Office and the Department for Science, Innovation and Technology to develop this guidance, which aims to cover how departments will be expected to calculate estimated workforce efficiencies and cost savings from digital adoption, and report efficiencies that are realised to HM Treasury.
Consultancy spend and AI tips
Elsewhere, the report suggests ways departments could reduce their reliance on external consultants – which cost central government an estimated minimum of £1.36bn in 2022-23, the most recent year that figures are available for.
The NAO argues that stronger workforce planning could help departments reduce reliance on consultants by addressing underlying skills and capacity gaps, while ensuring consultancy is used only where it offers genuine value.
It cites savings achieved by the Ministry of Defence in 2022-23 as due in part to “improved strategic workforce planning and requirements to consider internal staffing first”.
On digital and AI, the report says departments must ensure their productivity assumptions are “well evidenced and realistic” and be aware of emerging risks, such as over-reliance on automated systems, loss of institutional knowledge and reduced opportunities for on-the-job learning due to automation.
It says government workforce planning must move “from a headcount to a skills focus” and that the pace of change with digital and AI will mean workforce plans require “regular updating and adaptation, with scenario modelling and real‑time adjustments”.
NAO head Gareth Davies said total public sector headcount was 6.2 million at the end of 2025, up from 5.6 million at the end of 2019 – and that the public sector’s total staffing costs were £260bn in 2024-25.
“Good workforce planning is central to the government’s ability to deliver effective and resilient public services,” he said. “As AI and other digital technologies reshape how organisations operate, it’s clear the government needs to be on the front foot by making sure it has robust plans for the workforce, skills and capabilities it needs now and in the future.”
Sir Geoffrey Clifton-Brown, who chairs parliament’s Public Accounts Committee, said the NAO report showed that government workforce planning must move beyond headcount targets and focus on the skills needed to harness digital and AI technologies.
“My concern is that government is not moving at the pace required,” he said. “The government must accelerate digital and AI literacy across the workforce and support large-scale reskilling where existing roles change or disappear, otherwise the opportunities offered by AI will be missed and the public sector will struggle to keep up.”