Ministries’ funding to be contingent on plans to relocate roles around UK in attempt to bring policy making closer to communities
Whitehall departments will be required to set out plans to move thousands of staff out of London as part of their bids to secure funding from the Treasury at the spending review.
The proposal to relocate civil service jobs to a dozen towns and cities across the UK is aimed at bringing the development of government policy closer to the communities it affects.
Around one in five – or 100,000 – civil servants are based in London, with about 70,000 working in the north-west of England. There are 513,000 full-time civil servants in central government, up sharply from a recent low of about 380,000 in 2016.
The government claims the relocation plans could bring more than £700m of economic benefit to towns and cities including Leeds, Glasgow, Cardiff and Bristol by 2030. The ‘Places for Growth’ plan to move 22,000 officials outside the capital was first announced by Rishi Sunak as chancellor in 2020 as part of the Conservatives’ levelling up agenda.
However, Labour has now picked up the scheme as part of its attempts to reform the state, which also include plans to cut more than 10,000 jobs, amid concerns the civil service had become too big and unwieldy after expanding with the demands of Brexit and the Covid pandemic.
In an attempt to inject some urgency into the process, the Cabinet Office minister, Pat McFadden, will write to all Whitehall departments to tell them their funding allocation in June will be contingent on submitting their plans.
Alongside the spending review, the first ever strategic workforce plan for the civil service will be published, looking at the size and shape of Whitehall and whether it is fit for modern government.
“We’re keen to go further to enhance the impact of government in places across the country, so that the civil service has an active presence in communities across the UK and contributes to local growth and job creation,” a government source said. “The plans will see more roles working closer to frontline services, facilitating greater understanding of the real issues facing local services and people, and how central government policy can support them. Central government can’t solve the issues facing local communities from Whitehall alone.”
Civil servants working in regional offices outside London will continue to be expected to spend at least three days a week in the office. The government is introducing greater use of performance-related pay for senior staff and improved performance management across the civil service, with fast-track exits for poor performers.
Treasury threatens Defra with £4bn bill
Whitehall officials have been at loggerheads over the fate of Thames Water since the Treasury told the environment department that it would have to meet the cost of a multibillion pound temporary nationalisation.
Britain’s biggest water company recently came within days of running out of money. Thames is in a desperate race to find a buyer willing to inject cash, with the US private equity firm KKR in pole position.
However, should that takeover fail, the heavily indebted utility could collapse into state hands via the special administration regime (SAR). Existing budgets at the Department for the Environment, Food and Rural Affairs, which insiders describe as already stretched, would have to be used to meet the burden of keeping Thames Water afloat if bids to save the company fail, according to sources.
That pressure to find a private sector solution rather than a state rescue is helping to force through KKR’s bid uncontested, with potential long-term challenges and associated costs not being given serious consideration, sources close the bid and Whitehall insiders said. Some estimates have suggested temporary nationalisation could cost as much as £4bn over 18 months, a figure used by senior Treasury officials in discussions with counterparts at Defra, sources said. With Defra’s annual budget for last year totalling £4.6bn, the costs could be crippling.
Departments have spent months waiting to hear what the chancellor’s spending review will mean for their budgets. This is to be revealed by Rachel Reeves on 11 June. She unveiled big cuts to overall Whitehall spending at her spring statement. The Thames issue is causing what one source termed a “binary choice” for regulators and central government: higher customer bills but a recapitalised utility versus what another called “potentially catastrophic cuts” to Defra’s budget. This need not be the case if the Treasury were to take a different approach, several sources said.
