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There’s good reason to reform Whitehall – but the government needs to know what it wants to achieve

Tim Durrant weighs up the Johnson government's rumoured changes to Whitehall departments.

With reports suggesting that the prime minister wants to make big changes to Whitehall in the new year, Tim Durrant weighs up the rumoured changes.

The new government, with its large majority, has already made noises about significant reforms to the way Whitehall works. We welcome the energy and fresh thinking that the government seems likely to bring to these issues. The questions it is raising around pay and reward, staff turnover, accountability, professionalism and external recruitment are all issues that the Institute considers immensely important. The civil service has made great improvements but many points of weakness remain. This has been the core of our work for many years and we will continue to discuss these questions in detail in the new year.

One of the most immediate reforms that the prime minister, Boris Johnson, is likely to make is a big shake-up to the layout of Whitehall after the UK leaves the European Union at the end of January 2020. Changes of these nature may be designed to slim down the number of Cabinet posts and reset the government’s agenda once it has dealt with its biggest priority.

The proposals attempt to answer old frustrations about existing departments or to help advance new priorities. Bringing together related policy areas or increasing focus on a particular priority can be good reasons to rearrange departmental structures. However, a month and a half is not long to prepare for changes on the scale mooted, even if individually each can be justified. Each proposal raises questions that politicians and officials need to think through.

1. Merging the FCO and DfID? Be clear what problem this is intended to solve

One of the most controversial ideas mooted is to merge the Department for International Development (DfID) back into the Foreign and Commonwealth Office (FCO), reverting to the pre-1997 arrangements. This has been favoured by some on the right of politics for some time. Foreign secretary Dominic Raab suggested this merger when he ran for Conservative leader earlier this year.

The concerns are that aid policy has become divorced from the UK’s wider foreign policy, that the commitment to spending 0.7% of GDP on aid has given DfiD a budget over five times that of the FCO, and that DfID has struggled to spend this money well or account for its success.

But despite some shared interests, the two departments do very different things. Foreign Office staff are adept at understanding the politics of countries around the world, while DFID staff are programme managers with development expertise. There is no guarantee that the Foreign Office could spend money more effectively than DfID. Justine Greening, a former Conservative international development secretary, told us that “other departments, particularly the Foreign Office, didn’t always spend the aid wisely… They would sometimes be prepared to put money into quite nugatory, non-strategic projects that weren’t really going to change anything.”

When the Canadian government undertook a similar merger a few years ago, it found it led to unintended consequences: rather than foreign policy leading development policy, the opposite happened, due to the larger budget and staff numbers of the former international development ministry.

If politicians are concerned that the aid budget is too big, or not well-focused, they can change that without folding DfID back into the FCO, although that would require primary legislation, as the aid budget is set by the International Development (Official Development Assistance Target) Act 2015.

2. Forcing government to resolve the trade-offs between trade and business policies is a good idea

Another suggested change is to combine the Department for International Trade (DIT) with the parts of the Department for Business, Energy and Industrial Strategy (BEIS) responsible for managing the government’s relationship with business. This would be a high-powered rebirth of the Department for Trade and Industry, which Gordon Brown split up in 2007: the secretary of state would be responsible for negotiating trade deals with the USA, Australia and others, a responsibility which DTI did not hold while the UK has been a member of the EU.

Combining this negotiating role with support for business would force ministers to confront some of the potential contradictions in wanting to be open to global trade while supporting British producers. One minister would have to decide whether the government wanted to reduce barriers to trade in order to open up another country’s market, or maintain them to protect UK firms from being undercut by foreign competitors. Such a department would also deal with one of the complaints against Theresa May’s government, that businesses’ concerns were not heard by those negotiating the trade deals that would affect them.

Reports suggest that this department may also take on many of DCMS’s responsibilities, particularly the digital and media agendas (including of course the future of the BBC). But that leaves questions about the rest of DCMS’s brief: culture, sport and the planned Festival of Britain; wherever these go on Whitehall, they will need to time to adapt to their relocation.

3. Folding DExEU back into the Cabinet Office makes sense

DExEU was created to oversee the UK’s negotiations to leave the EU. Now that process is nearly complete, getting rid of the department and handing negotiations over the future relationship with the EU to the Cabinet Office serves both a practical and a PR purpose. The Cabinet Office reports directly to the prime minister, meaning he will be able to keep a closer eye on the negotiations on the future relationship with the EU. The government will still need to work to ensure that the new trade and business department does not work against these negotiations by pushing for a more distant relationship with Brussels to allow a closer trading arrangement with the USA, for example. But the minister in charge of the Cabinet Office is well-placed to ensure that the negotiations with the EU take into account priorities from across government. This minister will need to be a trusted lieutenant of the prime minister, to avoid the lack of trust that characterised the first phase of the negotiations.

4. Reform to the Home Office is long overdue – but must be tackled carefully

Another change being floated is to spin out immigration and border control from the Home Office, something we have previously argued should be considered. That department, as it stands, is not ready to handle the ending of free movement after the UK leaves the EU. The government will need to decide what functions would move to a new department. At the moment the proposal is unclear: it could simply be the immigration directorate in the Home Office, but with an expanded ministerial team and cabinet post. But a new department could involve policy areas, for example social integration, that sit in other parts of Whitehall, a model used by countries including Canada.

If a new department is responsible for immigration and the border then there is a crucial question of whether it will cover how goods cross the border, or just people. Making a single department accountable for two of the biggest post-Brexit changes – immigration and border preparedness – would be to give any new secretary of state a very complex job, and the disruption from any departmental changes could reduce the likelihood of hitting key deadlines. It is also impossible for a single department to have total control over border readiness, given the sheer scale and range of departments and public bodies currently involved. Resolving these questions later, once the future relationship between the UK and EU is clearer, may be a more sensible approach.

5. A dedicated structure to deal with climate change is a good idea – but a new department may not be necessary

Theresa May got rid of the former Department for Energy and Climate Change when she became prime minister. Since then, climate change has risen up the political agenda, the government has set the UK a target of net zero emissions by 2050 and will want to show it is taking the issue seriously ahead of hosting the UN Climate Conference in Glasgow at the end of next year.

However, this is an issue that cuts across all of government policy. Creating a standalone department can bring attention to an issue that the government thinks is important. But if it is relegated to an under-powered department that has no ability to compel change in other areas of policy, the department will fail. During the election campaign, both the Liberal Democrats and the Greens proposed a new senior ministerial role in the Treasury with responsibility for climate change.

A minister in a central role, as suggested by the opposition parties, and perhaps supported by a powerful Cabinet committee like the one that drove preparations for a no deal Brexit, would be closer to the prime minister, who will need to retain ultimate leadership to keep up the momentum on this issue. Someone trusted and empowered by the prime minister may be more effective at bringing about the wholesale change needed to achieve net zero emissions than a departmental secretary of state who cannot make their colleagues confront the difficult choices required.

6. The Union is going to be the big issue of 2020 politics – a department to support it may be a good idea

Another potential addition to Whitehall is a new Department for the Union, bringing together the existing ‘territorial’ offices of the UK government dealing with Wales, Scotland and Northern Ireland. The prime minister has talked repeatedly about how important the Union is to him, and questions around its future are likely to grow louder next year as the Scottish government pushes for another independence referendum.

A new secretary of state role may allow the government to make the case for the Union more effectively in the devolved nations, which we have previously argued it should do. And bringing together responsibility for all devolution outside England into one department would enable the government to take a more strategic approach to which powers the devolved governments can exercise, while also considering the impact on England, both of which we believe are essential in the coming years.

But there is a political risk here. Any move to merge the three current territorial offices could be criticised by nationalist parties as proof that the UK government does not care about the devolved nations. As well as the referendum question in Scotland, the UK government needs to show it is serious about getting the Northern Irish assembly and government up and running again, as well as planning for the eventuality that this does not happen any time soon. Given the unique circumstances in each of Wales, Scotland and Northern Ireland, a one-size-fits-all approach may not work.

New departments may help tackle difficult issues, but they are not a cost-free choice

Departmental change is always costly and disruptive. That is not a reason not to do it, but it is something that the prime minister should bear in mind. Announcing changes to six or seven departments on 1 February 2020 would be the biggest restructure of Whitehall in one go in decades. Previous Institute research suggests that the upfront costs of restructuring a department can be around £15m, before losses to productivity are taken into account.

A reorganisation on this scale – larger than any in recent decades – will inevitably take time to realise benefits, as ministers and civil servants work out what their new roles are and how they can achieve the government’s priorities. And rearranging siloes does not negate the need for politicians and officials to work across departmental boundaries. Reorganising may help deal with priority issues, but is a big undertaking in its own right and should be fully thought through. 

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