Mel Stride’s civil service savings are more signal than substance

All politicians want to save money by cutting the civil service, but few manage to do it. In recent years only Francis Maude, Cabinet Office minister from 2010-15, meaningfully reduced its size and cost, squeezing more value out of the state but leaving it less prepared for the rigours of Brexit and Covid that followed.

It is simplistic to set a target to return to 2016 staffing levels

Mel Stride, the shadow chancellor, told the Conservative party conference that he wanted to return the civil service to the headcount level of 2016, when Maude’s work finished and the Brexit-led expansion of the civil service began. Stride claims this would save £8 billion a year by the end of the Parliament, which would be a major cut of around 30% to the civil service pay budget.

The challenge for the Conservative party is that we are not in the same world as in 2016. The civil service now staffs new, permanent government functions post-Brexit, for example – including border controls and customs arrangements, environmental and financial regulation, as well as trade and other international negotiations. Recent increases in staff numbers have also been fuelled by unavoidable pressures on frontline services. Prison officers, those processing asylum applications in the Home Office and JobCentre staff – all recruited in large numbers in recent years – are all civil servants. The government simply does more, and is under different pressures, than in 2016. Setting such a target is too simplistic.

A headcount target is wrong for another reason. Ministers – and shadow ministers – should focus on the money saved, not the people lost. The moment the civil service is geared towards a headcount target its incentives become skewed. The cheaper, easier-to-lose people go, the more expensive entrenched people stay. Talented people with the most options are mobile, less effective performers will tend to remain. Efficiency-seekers should target ‘pounds, not people’.

There is money to be found in civil service efficiencies

It is important to emphasise that there is undoubtedly scope to cut civil service numbers and save some money. It has, after all, been growing almost continuously since 2016. The central policy function has more than doubled since that time, outpacing the new functions accrued by successive governments, and it is not clear why the remarkable growth seen during the emergency of the pandemic has not unwound. Civil servants themselves report duplication and unnecessary overhead, with a profusion of co-ordination teams, taskforces and implementation units, especially at the centre. And new technology will change the nature of civil service work and reduce costs, especially in the biggest departments.

Whether that gets to £8 billion per year is dubious, though. While there is efficiency to be squeezed, logic and history tell us that the savings will be relatively small. And making civil servants redundant is itself extremely expensive. A more plausible objective would be to save £1-2 billion per year, or £5-10 billion cumulatively over the course of a Parliament. Further savings will require real changed priorities, and real cuts – with politicians explaining clearly what functions they are proposing government should stop performing.

Stride’s announcement is more about vibes than finding value

Of course, this is all a fantasy numbers game. What the shadow chancellor is really doing is signalling a direction of travel and making a political case. Nobody expects him to be implementing civil service cuts in this Parliament when his party is out of government and polling at historically low levels. Everything will be different by the end of this Parliament and the next election. Stride’s announcement refers to current civil service numbers and budgets, while the Labour government also wants to cut the cost of the civil service. Redundancy programmes and hiring freezes are happening now, and the spending review set ambitious reductions to departmental administration budgets.

Those targets may work, or civil service growth might continue to flatline, as it has in recent quarters. But it is unlikely to look the same in 2029 as it does now. Stride’s plans are about the political vibes, not finding value. That task would require hard and detailed slogging in government.