Autumn Statement 2012

Statement for immediate use - Whitehall spending cuts

Today the Chancellor announced a 1% cut in departmental resource budgets next year followed by a 2% cut the year after. The Chancellor suggested that a substantial proportion of this could come from further reductions in Whitehall’s administrative spending.

Director of Research for the Institute for Government, Julian McCrae, said:

“Though the headline percentage targets may sound small, it’s worth remembering that government departments are still part way through major cuts and transformation programmes which have left Whitehall fragile.

“The Autumn Statement suggested an extra £800m administration reduction in 2014-15 for the ‘unprotected’ departments - the equivalent of around an extra 10% of cuts on top of those already planned in that year. Cuts on top of cuts will mean further structural changes inside departments - a huge management challenge if it is to result in a better performing civil service. 

“We have said in our recent analysis on Whitehall that some departments may have thought they were over the worst. A risk now is that, with more cuts on the horizon, the best talent in Whitehall will leave and performance and morale could dip. Whitehall’s leaders will need to work closely with change teams to motivate the best talent to stay the course.”

Facts on Whitehall headcount and cuts since the Spending Review:

  • There has been just under a 53,000 FTE (full time equivalent) reduction in civil service staff since the Spending Review (not including Scotland and Wales). Taken as a percentage (approx. 11%) this cut is nearly double the rate of reduction in the wider public sector.
  • Over 70% of civil servants work in the four largest departments: Work & Pensions (DWP), Defence, Justice and Revenue & Customs.
  • There have already been substantial cuts in these departments, for example the headcount in DWP has fallen by 15% and Defence by 17%.
  • Most of the other departments are much smaller, with the bulk of their staff working in Whitehall. Of these, headcount changes have varied widely ranging from a 32% reduction in DCLG, to an increase of over 17% in DECC (see table). 
  • Many of those departments are ‘fragile’ following the cuts and structural reform programmes - more cuts could result in a dip in performance and will require very careful management.