Cabinet Office ‘has questions to answer’ on impact of civil service relocations

NAO staff urge MPs to quiz department on how it will evaluate economic benefits of drive to move jobs out of London
NAO chief analyst Ruth Kelly. Photo:

By Jim Dunton

14 Dec 2022

Watchdog MPs have been urged to interrogate the Cabinet Office on how it will evaluate the economic impact of moving 22,000 civil service jobs out of the capital by the end of the decade.

The suggestion came in a Public Administration and Constitutional Affairs Committee session probing the future of the government’s property estate and the Places for Growth agenda, which aims to locate more departmental jobs away from London.

Senior officials from the National Audit Office were the first to give evidence to the inquiry. But many of the questions posed by MPs at yesterday’s session were met with the response that departments have yet to make particular information publicly available.

NAO chief analyst Ruth Kelly was asked what tools were available for departments to demonstrate the economic benefits to the regions of relocating civil service roles away from the capital, flagged as part of the levelling up agenda.

“There are a number of mechanisms for how that could work,” she said. “But we haven’t seen anything published on that causal chain.

“It is technically very challenging to evaluate policies that are designed to encourage local economic growth. Outcomes can be affected by many policies and many circumstances. So it’s hard to disentangle the specific impact of that one policy.”

She encouraged PACAC members to quiz Cabinet Office staff on their plans.

“What I think would be a really good question to explore with the department, because we haven’t seen anything public on this, would be how are they planning to test this out,” she said.

“Are they collecting the right information and is there a clear plan for how they’re going to evaluate the success of these measures in terms of the long-term regional economic growth impact?”

In a separate example of good practice in regionally focused programmes, Kelly said the Department for Levelling Up, Housing and Communities was “carrying out feasibility studies” for evaluating the success of the Levelling Up Fund in relation to local economic growth.

In a sign of further hot topics Cabinet Office leaders and other senior officials are likely to face at future sessions, MPs asked how the NAO would expect departments to demonstrate “reasoned and transparent decision-making” in relation to the locations chosen for their new regional bases.

Former shadow chancellor John McDonnell said eyebrows had been raised because one department’s regional hub “was located close to the constituency home of the secretary of state”. He added that the Treasury had picked Darlington for its northern base at a time when PM Rishi Sunak was chancellor. Sunak’s Richmond constituency is next door to Darlington.

“We banish all cynicism and scepticism from the considerations of this committee, of course,” McDonnell said. But he asked the NAO team:“If you were reviewing where departments were choosing to locate new regional hubs and headquarters, what would you be looking for to demonstrate reasoned and transparent decision-making?”

Siân Jones, who is director for cross-government value for money at the NAO, said the watchdog would want a compelling evidence base to back up decisions.

“From an audit perspective, we would definitely expect to see a really robust business case; thinking about the Treasury green book and what it says about approvals for projects or programmes. We would expect it to be set up as a project or programme,” she said.

“A business case generally forces officials to think through the costs and benefits of what they’re doing; the different options; and then also compels them to lay out their logic and thinking as to a location.”

Chief analyst Kelly added that the cost of the estate would also be a factor, alongside “broader things such as the regional labour market” and whether required skills were likely to be available.

McDonnell also asked what data the NAO had on staff commuting from the capital to new regional headquarters and on the number of meetings attended by ministers and senior officials at departmental second HQs.

Kate Caulkin, the NAO’s director for people and operational-management insights, said there was no published data. But she said departments may hold figures that had not been shared with the NAO.

This article was updated at 10.29 on 15.12.22. A previous version stated that Kelly had said DLUHC had questions to answer about the Levelling Up Programme, rather than the Cabinet Office

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