Study shows government will struggle to make more cuts without radical new thinking

For over three years the Institute for Government has documented how the departmental cuts programmes have been tackled in government departments and identifies essential recommendations to help them prepare for the prospect of further reductions.

Government departments are working hard to make tough savings on an unprecedented scale but departments are fragile, morale is at risk and leaders will need to work very differently if more cuts are to come, according to the Institute for Government.

Whitehall is changing beyond recognition

54,000 staff have been cut from the Civil Service in 18 months, more than was achieved over four years in the 1980s. Many departments are now fundamentally changing how they work to maintain their effectiveness and, in some cases, building whole new capabilities, changing the face of Whitehall as we know it.

Cuts have been described by civil servants as “salami slicing…with some great big chunks”, but further savings will instead require radical new ways of working across Whitehall silos.

Despite many of the departments acting rapidly to make savings, the study shows how the Civil Service still faces a unique set of challenges. Dual leadership between ministers and civil servants and its inability to nail down its core mission for the long term means it is unlike any private sector organisation.  There is no literature to guide leaders trying to make major changes in their departments. The report says this combination of factors puts the civil service change programme at risk:

 “Whitehall is at a turning point; the rapid pace of change to date belies a deeper fragility and challenges ahead. Two out of three large change programmes fail to achieve their aims in the private sector and there are reasons to think Whitehall may fare worse” – the report says. It adds:

 “Most departments have struggled to find the capacity and capability required to lead departmental reorganisation on top of ministerial and other priorities.”

The report highlights departments’ experiences of leading change, positive and negative experiences and identifies where it has been more challenging and why.  Some departments are not confident that they could meet any further demand for cuts, others were anticipating more savings and are already putting teams in place to plan for them. The study concludes that leaders in Whitehall will need to take responsibility for improving morale and rewarding those who are making changes happen. Their actions will need to match their rhetoric, it says.

James Page, Institute for Government Programme Director and lead author said:

“Our study shows 17 departments have approached their cuts in 17 different ways; some with greater success than others. They are only part-way through and, with more cuts on the horizon, the stakes are high. It’s important to take stock of what works and the major risks ahead. Departments need to find effective ways of planning for the difficult choices and trade-offs they will face, beyond just immediate priorities. It is essential that leaders throughout Whitehall work together more effectively across departmental boundaries to find the best options for savings and new ways of working. And, with the danger of declining staff engagement, the onus is on leaders to ensure the motivation and capability is there to see them through.”

Three major risks – common barriers to successful change

Fragile leadership coalition

The change process must be resistant enough to survive changes of ministers and permanent secretaries. ‘Salami-slicing’ is no longer an option. Several departments will need to look at more radical ways of delivering services and ministers will need to make difficult political choices.

Departments still working in isolation

Leaders in several departments have said it will not be possible to make further large-scale cuts solely within their own departments’ budgets, but barriers to joined-up working remain and the spending review process only reinforces this.

Falling staff engagement

A decline in staff engagement would make longer-term support for change extremely difficult. The experience so far has been draining for staff at all levels. Motivating and keeping staff who have the skills will be tough, with many seeing a bleaker future than when they joined with little prospect of improvement. The variable ability of leaders and managers to support their teams has been shown up by the hard realities of downsizing.

Our recommendations

  1. Give those below ministerial, permanent secretary and director general level more responsibility to counterbalance turnover at the top part-way through a large scale change programme.
  1. Plan for the next round(s) of change now and work beyond boundaries.
  1. Give corporate functions a more strategic role - HR, finance, internal communications and IT need to be recognised and valued for the role they play.
  1. Set a positive direction and get tough on engagement and changing behaviour. Leaders need to be able to explain what the future ‘deal’ is for staff in the department.

The Cabinet Secretary and the Head of the Civil Service will play a critical role to:

  1. Tackle the barriers to departments working together to make savings. Breaking the deeply ingrained cycle of siloed working requires committed leadership from The Head of the Civil Service, Cabinet Secretary and Civil Service Board.
  1. Reinforce staff engagement as a top priority in departments. This requires the Head of the Civil Service and Permanent secretaries to show personal commitment and act on the Civil Service People Survey results.
  1. Recognise and reward specialist change skills and expertise. The Civil Service Reform Plan recognises this as a skills gap, but without explicit reward and recognition for the work of change teams and other groups, there is a risk that hard-won skills and experience will dissipate.