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Creating and dismantling government departments: How to handle machinery of government changes well

The direct costs of creating a new department start at £15 million.

panel on stage at the Institute for Government

The incoming – or returning – prime minister may want to stamp his or her authority on government by rearranging departments, but new research lays bare the total costs involved in creating new departments.

Creating and dismantling government departments finds the direct costs of creating a new department start at £15 million, with a further estimated cost of up to £34 million when including loss of productivity as staff adjust to the new organisation.

Moving policy areas between government departments – or creating completely new departments – is one of the prime minister’s key levers of power. But many of the most recent changes seem to have been made without proper forethought and have – in some cases – ended up costing more than any benefits returned.

The paper argues that while creating a new department can be useful to focus on a high priority issue or to bring together related policy areas, most changes are rushed through either to send a political signal or to reward allies. These changes can end up causing confusion and the hassle of setting up a new organisation distracts from the problem the government wanted to solve.

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