09 March 2015

Ian Watmore set up the Department for Innovation, Universities and Skills – and though he’s proud of what he achieved, he warns that such changes are much more expensive and complicated than people anticipate

In 2007, I was given the task (with four days’ notice!) of creating a brand new government department. The Department for Innovation, Universities and Skills (DIUS) ripped functions out of the former Departments for Trade and Industry and for Education, with the residual departments becoming BERR and the DCSF respectively. On day one, DIUS had a £20bn budget and good policy officials, but absolutely nothing else to support our five ministers. We had to build the department from the ground up – and fast!

We were assiduous in not spending money on branding and consultancy, and moved into existing property vacated by BERR. But we still had to create the “superstructure” of a government department: private offices for the ministers; a departmental Board; corporate functions such as finance, procurement, HR, comms, IT and operations; parliamentary offices and legal functions; and others that I have, doubtless, forgotten. We estimated at the time the net cost at around £14m; and that was after sharing services with others and being very frugal. Setting up the department was also amazingly distracting for a year or so, pulling attention away from our core business and the big issues we had to address. The opportunity cost of this is hard to quantify, but it must have been huge.

I think we were very successful against the odds – greatly helped by the fact that our new secretary of state John Denham and his ministers were incredibly understanding and helpful whilst all the change was being implemented. I suspect that other ministerial teams might have been less patient.

When the Department for Energy and Climate Change was created in 2008 – taking responsibility for energy from BERR, and the climate change brief from the environment department – we sent many of our best people over to DECC to help its secretary of state Ed Miliband and his people build their new department. Our team knew how to go about this task: they’d already been there, done that and got the T-shirt.

In the end, though – and working closely with BERR, which had its own challenges – we decided that it would be better if DIUS and BERR merged to create what is now the Department for Business, Innovation and Skills. So in 2009 we embarked on another organisational change.

Was it all worth it? Well the end game hasn’t been bad. Universities and science sit much better within an economic ministry than in the Department for Education, which had always been a ‘schools’ department and which largely ignored higher education. DECC gives important focus on the truly strategic issue of our age; DfE is more focused; and other moves such as the creation of the Ministry of Justice are not changes one would want to reverse. But it might have been less disruptive to move from DTI and DfE to BIS in one go, rather than in two steps.

Certainly, the disruption involved in departmental restructuring is huge, costly and lengthy. Such reforms are not a quick fix; in fact, they’re the opposite – requiring resources, understanding and time to get to a better place.

So at the end of all this I concluded that ‘machinery of government’ changes should only be considered when the end result is truly strategic; when the business case is compelling in the long term; and when the short- to medium-term dips in performance and increases in cost are properly understood. If all three of these are not in place, then I would say: No, think about it hard; and then say No again.

With this experience, I strongly welcome the recommendations of the IfG report today, and commend it to the political class and their advisers; both in the immediate aftermath of the election, and beyond.

Comments

I served in the DECC transition team, and hold a similar view. MoG changes can be worthwhile (the one to create DECC certainly was), but the ability for the PM to make the changes instantly is not sensible. I'd suggest six months' notice, with a very brief business case to be ratified by the PASC.

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