Innovating through machinery of government changes

Looking at the drivers, costs, process and outcomes of changes to government departments and arms-length bodies.

1

IFG/LSE Joint Report

• 43 departments were affected by mergers and demerges from 1979-2009

• Over 30 in-depth interviews• 23 UK current and former senior civil servants• 7 private sector experts• 3 Canadian former and current senior civil

servants• 1 Australian civil servant• 1 UK politician

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Five key findings

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1 Department changes are costly.

Restructuring costs are at least £15-£20m and can be substantially more where pay differentials are great.

2 The final driving factor to change is usually political.

Administrative and policy rationales may be present but political factors usually act as the tipping point to change.

3 There is little to no planning done by politicians in advance of the change.

The Cabinet Office has insufficient time, skills and resources to properly advise on changes.

4

Transition team officials have insufficient time to prepare before effecting the changes.

Most teams given 0-4 days to effectuate change.

5 Departments need more support during changes.

Cabinet Office support is largely with budget arbitration.

1. Department changes are costly…

Costs based on interviews with senior civil servants, Department annual reports and documentation of change, Civil Service Statistics and Select Committee Hearing Minutes.

89% 91%

19%

5%

DWP

£173,374,300

14%

81%

Defra

31,041,700

32%

48%

DIUS

£15,289,600

9%

DECC

£15,687,500

11%

% of Administrative

Budget20% 22% 18% 3%

Indirect

Recurring

First Year

… with differential pay affecting departmentsfor years to come.

5

Total

31,041,700

Indirect

10,000,000

Recurring

15,000,000

First Year

6,041,700

Productivity

Differential Pay Settlement

IT integration

IT Investment

HR Systems Integration

Accommodation

% of Administrative Budget 4% 9% 6% 18%

“The one thing that dogged us for about 6 months was differential pay.

MAFF was in the bottom quartile in Whitehall paylink and DETR, because

they had the money and frankly because they had made some poor decisions with the trade unions, were in the top quartile – put those two together and you get an

industrial dispute.”Former Senior Civil Servant, Defra

“The one thing that dogged us for about 6 months was differential pay.

MAFF was in the bottom quartile in Whitehall paylink and DETR, because

they had the money and frankly because they had made some poor decisions with the trade unions, were in the top quartile – put those two together and you get an

industrial dispute.”Former Senior Civil Servant, Defra

Costs of DEFRA as calculated at the end of it’s first year.

Costs based on interviews with senior civil servants, Department annual reports and documentation of change, Civil Service Statistics and Select Committee Hearing Minutes.

2. The main driving factor is politics…

Drivers of MoG Changes as cited by senior civil servants (% of MoG changes,1980-2008)

23%

29%

Politics48%

Policy

DeliveryMedia Reporting

Stakeholder Pressure

4%

Signalling 10%

Minister Departure 12%

PM interest 18%

Cabinet formation 18%

Job creation/empire-building 39%

Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

“The most common circumstance is the process of cabinet making.

Most of the biggest changes in the last 10 years with exception of MoJ have been as

a result of meeting the needs of colleagues for a job.”

Senior Civil Servant, CO

“The most common circumstance is the process of cabinet making.

Most of the biggest changes in the last 10 years with exception of MoJ have been as

a result of meeting the needs of colleagues for a job.”

Senior Civil Servant, CO

… even though many changes also have policy or delivery rationales.

7No. of times theme is cited

“Personalities came into it in a big way but the argument

for the new division was delayed by personalities for

some time and that was overcome and with some

hardship to individuals but it was much more a policy

change.” Former Cabinet Secretary

discussing MoJ

“Personalities came into it in a big way but the argument

for the new division was delayed by personalities for

some time and that was overcome and with some

hardship to individuals but it was much more a policy

change.” Former Cabinet Secretary

discussing MoJ

3. There is limited to no planning in advance of department changes

8

Home loyalties

No Planning/Shock

Resistance to change

Staff Morale

Cultural Challenges

Anger

Superficial planning

Delivery Risk

No Support

Disruption

81%

62%

43%

38%

38%

29%

29%

29%

29%

24%

Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

Top issues cited by senior civil servants (% of MoG changes,1979-2009,in which issue was raised)

“[X] had already been asked to be SoS for that Department. He was in the car half way down Victoria Street [en route] to his department when he was called back and told:

‘Actually we’ve changed our mind. You’ve got [Department A] and [person Y] wants [Department B]…’

[Y] wanted [B]...So they just put it together. There was no examination of any kind at all. It was just done. And most MoG changes are just like that”.

Senior Civil Servant, CO

“[X] had already been asked to be SoS for that Department. He was in the car half way down Victoria Street [en route] to his department when he was called back and told:

‘Actually we’ve changed our mind. You’ve got [Department A] and [person Y] wants [Department B]…’

[Y] wanted [B]...So they just put it together. There was no examination of any kind at all. It was just done. And most MoG changes are just like that”.

Senior Civil Servant, CO

4. Transition teams have insufficient time to prepare.

9

40%

57%67%

33%

Demerger

7

43%

Merger

10

50%

10%

New

3

Senior civil servant recollections of MoG change process (% of MoG changes,1979-2009)

1 week

> 10 days

0-4 days

Preparation Time: Time given to Senior Civil Service and Transition Teams to prepare Department for change in advance of first day of business.Time Required to Refocus Department: Time taken to configure Department business processes, culture and systems toward new change mandate.Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

“I don’t see why you couldn’t have had more planning around DECC. It didn’t have to be done over night and it might have just helped the

birth pains of the brand new Department. They had no IT... The first few weeks were really difficult

because all the staff were in the wrong place. The ministers were in a

[different] building...

I know somebody who went to see [the Minister] and said it was a bit

like going back to WWII. There were messengers coming in with bits of paper because they didn’t have IT connected and so on. If they had been given a month instead....”

Former Senior Civil Servant, BERR

“I don’t see why you couldn’t have had more planning around DECC. It didn’t have to be done over night and it might have just helped the

birth pains of the brand new Department. They had no IT... The first few weeks were really difficult

because all the staff were in the wrong place. The ministers were in a

[different] building...

I know somebody who went to see [the Minister] and said it was a bit

like going back to WWII. There were messengers coming in with bits of paper because they didn’t have IT connected and so on. If they had been given a month instead....”

Former Senior Civil Servant, BERR

5. Making changes better requires greatercentral support.

10Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

6

6

Central support re shared services

Annouce earlier

6

Differential pay easing

4

IT - common platforms

5

Support with resource transfers 5

7Clear guidelines

Central capacity in org. planning

39%

33%

33%

33%

28%

28%

22%

Top themes cited by senior civil servants which would ease the process of MoG changes.

“I have not found the Cabinet Office helpful in

any machinery of government change I

have been involved in.

[Department X] or [Department Y] or when

[Department Z] was created. Ultimately, it

came down to sorting that for ourselves.”

Former Senior Civil Servant, Defra

“I have not found the Cabinet Office helpful in

any machinery of government change I

have been involved in.

[Department X] or [Department Y] or when

[Department Z] was created. Ultimately, it

came down to sorting that for ourselves.”

Former Senior Civil Servant, Defra

4 recommendations for better MoG changes

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1 month prior:

Announce changes and begin planning

1 month prior to 2 months post:

Support from the centre

6 months post:

Affirmative resolution on change

18-24 months post:

Post-change assessment

Unlink from reshuffles and announce 1 month creation.

SoS, PS and CO prepare business plans for change

CO provides a scratch team to set-up interim HR, facilitate IT and finance systems changes.

CO provides organisational change expertise

Affirmative parliamentary resolution before substantial change work begins

Business plans including costs of the change available in advance of the debate

Department Select Committees and NAO audit the change against the original business plans 18-24 months post-change.

FOR DISCUSSION:CHANGES BY THE CURRENT ADMINISTRATION

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High impact/low profile changes so far

13

High impact/low profile changes so far

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Rumoured Who Title Responsibilities Department

OGC Reform/ PMSU/ PMDU gone? Francis Maude

Minister for the Cabinet Office ICT/Cabinet Office units CO

Universities to Education Vince Cable Business Secretary

Trade, competitiveness, competition policy, consumer protection BIS

Operations Director Lord Browne TBD

Scrutinising performance of all Whitehall CO

Possible changes

The emerging picture?

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MoJ

Home Office

DWP

Defence

DFID Education

BIS

DECC

Transport

Foreign Affairs

HealthDCLG

Defra Scot/Wales/NI

Operations

Civil SocietySecurity Const.

ReformOpera-tions

Cabinet Office

Treasury

No. 10

EXTRA SLIDES FOR Q&A

16

3

1

7

11

3

7

5

3333

12

1

7

11

11

4

10

2

5

7

3

1

7

23

1

6

1

0

5

10

15

20

25

30

7978777675747372717069686766656463626160595857565554535251 09080706050403020100999897969594939291908988878685848382818050

Total Number of Departments

Depts affected

Department reconfigurations, 1950-2009

913

83

137

2814

6

19

619

11

Churchill

Eden

McMillan

Douglas-Home

Wilson 1

Heath

Wilson 2

Callaghan

Thatcher

Major

Blair

Brown

Labour Average

Conservative Average -11

-2-1

3-5

-24

1-3

21

-2

0

# Departments Affected Net Change

LabourConservative

Note that the averages calculated for Labour and Conservatives are averages for the political parties over this time period. They do not reflect premier tenures.

Labour expands while Conservatives consolidate

55

2

1

6

11

77

2

3

1

19551951 1964 19901974 1979197619701957 200719971963

7

5

33

2

6

11

5

77

3

1

19511950 1964 20011983 200519971955 1970 1974 197919741959 199219871966

Post-appointment department changes Post-election department changes

Labour

Conservative

Figures in red are for emphasis only and indicate the years when new PMs abstained from reconfiguring departments.

Department reconfigurations are common after leadership changes

Prime Ministers changes by term

20

14

3

7

2

21

11

7 81Churchill

Eden 33

Macmillan 132

Douglas-Home 77

Wilson (1) 287

Heath 1412

Wilson (2) 66

Callaghan 11

Thatcher 92

Major 63

Blair 195

Brown 1111First 2 YearsRest of Term

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Methods of Reform Process Examples LoopholesFormal dissolution and transfer of statutory functions to another department or departments

Secondary Legislation: Proceeds by Order in Council subject to the affi rmative resolution procedure

Ministry of Overseas Development

The choice between negative and affi rmative resolution procedures is not clear cut: (Poll itt 1984)

Examples: Department of Trade and Industry in 1983 was created via a "merger" and Transfer of Functions Orders were utilised instead of dissolving its former parts; Department of Economic Affairs was dissolved via a Transfer of Functions Order rather than using the affi rmative resolution procedure.

Transfer of statutory functions from one department to another

Secondary Legislation: Transfer of Functions Order under the negative resolution procedure

Civil Service Department

Department of Trade

Department of Trade and Industry

Transfer of Functions regularly delayed: (PASC 1995)

DCLG: Created May 5, 2006; Order July 31, 2006ODPM: Created May 29, 2002; Order November 4, 2002Defra: Created June 8, 2001; Order November 12, 2001DEE: Created July 5, 1995; Order December 4, 1995

Transfer or cessation of non-statutory functions

No need for the use of statutory instruments in this case

None identified None required

Cessation of statutory functions

Primary Legislation: Approval of both Houses

None identified Delayed legislation: Poll itt 1984 claims there are countless examples of statutory functions fall ing into disuse and waiting to be formally eliminated in revising legislation.

Creation of new statutory functions

Primary Legislation: Approval of both Houses

Department of Constitutional Affairs: Constitutional Reform Act of 2005 confirmed changes to the judiciary.

Bodies may be created administratively and then subsequently become statutory or created by administrative action pending statutory authorisation: (Poll itt 1984)

Example: Department for Constitutional Affairs was effectively created in 2003 but not confirmed until 2005.

Creation of new government bodies under new Secretaries of State

Secondary Legislation: Proceeds by Order in Council subject to the negative resolution procedure

Department of Economic Affairs

Welsh Offi ce

None required

Legislative process for select MoG changes