Rachel Reeves's civil service cuts must be a spur for reform

Rachel Reeves has confirmed that the government wants to save 15% from civil service budgets, which she hopes will release £1.5-2bn to help her out in a tight fiscal spot. There is nothing new in asking the civil service to find efficiencies and make cuts – all governments have tried, but not all have succeeded.

The chancellor has set out her savings plans in the right way

The chancellor made two good initial decisions. The first was to think long term and link cost savings to the three-year spending review period. This shows that she is serious and that the government’s plans for the civil service are more than a presentational gimmick. That is good on its own terms – ministers and civil servants need continuity to help them make the best decisions over where cuts should fall and efficiencies can be found. But it also sends the right signal to officials that this is something to take seriously. Departments will have heard a clear message that the Treasury will be holding them to account for releasing savings.

The second good call was to resist – despite every temptation and media interrogation – setting a headcount target for civil service cuts. Reeves did under questioning talk about around 10,000 jobs going, but that was not a target and is anyway tiny relative to the total size of the civil service.

Government after government has tried headcount targets and they do not work. Targets have been missed, and in the meantime trying to achieve an arbitrary reduction in the number of civil service employees is distorting and counterproductive. Budget cuts of 15 per cent will lead to fewer civil servants, but ministers have rightly decided that should be a downstream effect, not the up-front objective, of finding efficiencies and making cuts. The media will continue to try to find a headcount number, but ministers and their advisers need to hold their nerve and focus on pound savings.

‘Back office’ savings at this scale are a fiction

The government should get less credit, though, for claiming that savings could be found from ‘back office’ functions like human resources, communications and policy work. There is room to slim down and de-duplicate in these areas, but nowhere near enough to save the sort of money the chancellor needs. Cuts will hit ‘frontline’ services – like jobcentres and probation officers – because that is much of what the civil service does. It would anyway be wrong to exclude those parts of the state from financial scrutiny. That is where some of the biggest savings might be found, as technology allows services to be delivered in more efficient ways.

But even with the most ambitious financial targets hit, the chancellor is not going to extract much money from the civil service. It is a small part of the state, dwarfed by the NHS, spending on schools, other public services and local government. The real focus here should be on using ministerial enthusiasm for efficiency to make the civil service more effective.

A better, cheaper civil service is possible

Ministers, and Chris Wormald, the still-new head of the civil service, should prioritise improving overall performance. Some of the interventions needed, like removing poor performers, will actually help to reach the 15 per cent target. A few rounds of compulsory redundancies, as functions are removed or teams slimmed down, will help give a sharper edge to performance management. 

Other much-needed changes will be tougher to achieve when budgets are tight. Recruiting, retaining and rewarding the best performers does need a bit of cash. Modest financial encouragement for officials to stay in their jobs for longer, to reduce staff churn and develop more specialised expertise, is important. Bringing in talented people with marketable skills from outside also requires salaries that are, if not directly competitive with the private sector, then at least not insultingly low. In making these decisions around resourcing, ministers and civil service leaders also need to keep an eye on resilience, long-term capacity and future needs. It was of course hard to anticipate, but one of the lessons of the coalition government cuts from 2010-15 was that some departments lost people and capability that was then almost immediately needed for Brexit.

For savings to be made, and for reforms to actually happen, the government also needs to improve accountability for civil service capability. The prime minister, chancellor and Pat McFadden at the Cabinet Office, need to hold Wormald to account for the reforms needed, and give him the authority he needs to direct permanent secretaries across government to do what is needed. 

Cuts programmes are difficult and painful to navigate. But they are also a period of flux, which creates a chance to do things differently. Ministers have said that is what they want – they now need a plan to deliver it.