Rearranging government departments isn’t risk-free for Tory leadership contenders

Incoming prime ministers often want to stamp their authority on government by creating, or changing the role of, Whitehall departments. In the crowded field for Conservative leader, a number of eye-catching commitments to shake up the landscape of government have already been made. But these changes, if not properly thought through, can end up becoming costly distractions rather than decisive successes.

Rearranging departments costs money

Dominic Raab has suggested folding DIT and DfID into the FCO – a proposal which is likely to have the support of senior officials at the FCO – in order to help pay for a significant reduction in income tax.

But our research shows that the upfront costs of moving teams between buildings and merging IT systems, and the longer-term impact of a dip in productivity, which often happens as the new organisation establishes itself, often result in these kinds of changes costing money.

To make significant financial savings by rearranging departments, a new prime minister would need to decide to stop government activity on particular issues altogether. Reducing the Government’s capacity to negotiate trade deals, or reducing how much the UK spends on aid, will help make savings – but simply moving the officials responsible for those policies from one end of Whitehall to the other will not.

Reshaping departments is never an easy task

Restructuring risks more than financial costs – it can hinder the smooth running of government.

Would-be prime ministers need to recognise that while civil servants are managing the project of creating new or reorganised departments, they will not be able to devote the same amount of attention to dealing with the issues the new body was created to address.

Changes to government departments are often announced with little or no notice or external consultation, not least because they affect the roles and powers of individual ministers. But this approach means that the changes are not treated as major government projects in the way that other significant reorganisations would be. We have argued previously that proper resources need to be provided for large-scale changes.

And there are often better ways of effecting change in Whitehall than rearranging departmental responsibilities. Mechanisms that encourage better cross-departmental working (by both ministers and officials); increasing the capacity of No10 and/or the Treasury to deal with particular issues; and building specialist skills can all help achieve the same objective as a departmental rebrand. 

Departments shouldn’t be rearranged just to send a political message

Rory Stewart has said he would create a First Secretary of State for the Union to revitalise the settlement between the constituent parts of the United Kingdom. While creating a new title can be a useful way to indicate a political priority, Stewart’s call for the new minister to have ‘real money and real power’ suggests that the role will have significant, and presumably costly, official support.

To justify that, there must be a clear plan for what the new First Secretary of State will be doing – and how they will interact with the existing departments responsible for the UK Government’s relationship with Wales, Scotland and Northern Ireland.

The Department for Exiting the EU (DExEU), created by Theresa May, clearly shows the risks of putting together a department to send a message. May wanted to show that she was serious about delivering Brexit, but DExEU initially created confusion as to who in government was responsible for decisions on Brexit and it duplicated the work of other departments.

But departmental restructures can be a good thing

While there are many pitfalls to be wary of when rearranging departments, there are still benefits to restructuring. If a prime minister has a clear priority that they want to focus attention on, then a new department – for example, the creation of the Department for Energy and Climate Change – can successfully achieve that aim. And those changes that are properly planned, such as the creation of the Departments for International Development and Work and Pensions, in 1997 and 2001 respectively, have proved to be – as shown by their longevity – fairly successful.

If the new Prime Minister decides that they really want to rearrange departments, then there needs to be a clear rationale for the change. Officials should conduct a full cost-benefit analysis of proposed restructuring and ensure that there are sufficient resources – human and financial – to support the reorganisation. Parliament should also be given the opportunity to discuss significant changes, rather than simply rubber-stamping them.

Promises to shake up the structure of government can help a would-be prime minister to create good headlines. If those promises are not thought through, however, then it won’t be long before the headlines become a whole lot worse. A distracting and expensive rebranding exercise will hinder, rather than help, the next occupant of 10 Downing Street.