In the past few weeks, the tone of the Prime Minister’s messaging regarding the fiscal situation he and his government have inherited has been bleak.
The message — which Sir Keir and his front bench have been reiterating at every opportunity — is that fourteen years of reckless Conservative rule have left the nation’s finances in such dire straits that it falls upon the government to hit the reset button. That reset, we are told, will come in the Chancellor’s October fiscal statement.
“I will be honest with you,” Sir Keir said in an address to the nation last month in Downing Street’s rose garden: “There’s a budget coming in October, and it’s going to be painful.”
Although speculation has been rife about what exactly will be announced in the Autumn Statement, Rachel Reeves (who actually has the task of delivering the statement) has made clear that nothing will be off the table and that savings in the public finances will be expected to be made everywhere. That includes within government departments.
Reeves has reportedly told government departments in Whitehall to seek out extensive cost-cutting proposals, with some departments told they must find as much as £1bn in savings. Reeves’ vision for a streamlined, more agile civil service should be welcomed. In fact, there are broader opportunities for her to use the statement as a moment to set expectations around longer-term civil service reform.
This blog will turn to three measures which Reeves could introduce to save money across Whitehall, and the statutory changes her budget might also announce to aid her cost-cutting proposals. In the long run, this might serve to produce a more efficient and more resourceful civil service.
‘Chequebook government’: the perennial issue of government contracting
There is a lot of speculation that the Chancellor could set an expectation within government departments to minimise their use of external contractors. The civil service’s current expenditure on contractors is eye-watering: with statistics suggesting that £3.4 billion of public money was paid out to private consultants last year alone.
Every civil servant has their own anecdote of working with expensive private contractors, ranging from the faintly complementary to the most egregious indictment. The use of private contracting is not uniformly negative, of course. For some functions, such as feasibility testing and construction for massive infrastructure projects, it is unavoidable. But a gradual culture within Whitehall to contract out for even the most basic of backroom processes has resulted in an infantilization of permanent staff within the civil service, and an enormous expenditure on contracting agencies.
In addition to instructing departments to limit the use of external contractors, the Chancellor could also choose to bring in structural reform that stymies the use of contractors as a first port of call. Last year, spending controls that applied to planned expenditure by public bodies on consultancy services were quietly scrapped by the previous government. The change meant that the threshold of contracts that required central authorisation rose to £20m from £600,000. Building on her current statements, the Chancellor could go further by:
- Reinstating the threshold to the previous £20m level or at least adjusting it up from its present £600,000 baseline. Such a change would improve the central government’s oversight of the use of contractors by other departments, and lead to greater cost efficiency and transparency.
- Legally mandating contractors to appear at Public Accounts Committee hearings on sums awarded over a defined threshold, say £5m. Doing so would improve transparency around the use of public money and make contractors more accountable. This should also include stricter accountability for government departments when they publish details of consultancy contracts beyond the 90-day limit, an expectation established by the Crown Commercial Service in 2017.
Fixing departmental ‘churn’ by revisiting the Constitutional Reform and Governance Act 2010
One issue the Chancellor could mandate departments to address is reducing staff turnover — what is known on Whitehall as ‘churn’, the slightly queasy nomenclature given to the constant movement of officials either transferring from one government department to another, or out of the civil service completely.
Churn occurs in the civil service for a multitude of reasons, but it matters because it has a massive consequence in terms of how much time and money departments spend on recruitment. To reach the next rung up in the civil service, candidates must often wait for a new role to open up in their broader team, submitting an application and then running the gauntlet of a rigorous interview process, all set to a glacially slow timeline. One Public Accounts Committee report earlier this year put the estimated timeline of advertising a job to completing basic pre-employment checks at an average of 99 days. For candidates who require the highest level of security clearance, it can take an additional 171 days on average to complete their security checks. For reference, that’s three times the amount of time that Liz Truss was Prime Minister.
Even once this process is finished and the successful candidate is finally in position, there’s no guarantee they will stick around for long. Indeed, it has become an unspoken expectation within government that ambitious high performers will inevitably ‘ping-pong’, i.e. switch roles every one or two years to a different department in order to progress. The sad consequence of such a situation is that departments regularly lose good employees, and that civil servants are forced to spend more time and money on recruitment to constantly backfill roles.
As most government departments do not keep records on how much money is spent on running recruitment campaigns, we can only rely on anecdotal evidence to understand the large sums that could be saved. Early-career colleagues might move around every six to twelve months — a stint that is often shorter than the time it took to recruit them. Taken together across all government departments, this represents a very deep sink of both money and time.
Though the solution is multi-faceted, and must contain some component of reforming the pay structures of the civil service to make staying put in a role financially worthwhile, there are some things the Chancellor could do in her statement to bring this situation under control:
- Revisiting the Constitutional Reform and Governance Act 2010 might be one consideration. This Act, amongst other things, provides the statutory basis for the management of the civil service, including setting out its parameters for standard recruitment practice. Inserting into the Act a measure that provides a maximum time ceiling for recruitment into a position, and crucially making each Permanent Secretary directly responsible for this, would be an across-the-board reform affecting all departments that would make the recruitment of civil servants a more standardised and efficient process.
- The Chancellor could introduce the expectation that all departments keep tabs on the amount of expenditure on recruitment. This is not current practice. Doing this would also create an incentive for departments to keep costs low and back-office processes as efficient as possible. Without the legal requirement of tighter financial reporting, timelines can easily slip with recruitment campaigns left to drift on and on.
Introducing minimum-term limits on civil service positions
Stopping the continual churn of staff once they are in position should also be a priority, especially in the most senior of positions where the issues outlined above are exacerbated. The Chancellor might borrow from other reformists who have written about this subject. In 2023, Lord Maude published a Review of Governance and Accountability in the Civil Service which put forth the argument that senior officials should be constitutionally obliged to undertake four-year contracts when serving ministers. Such a practice does already exist in government, most notably in the foreign service, where postings are for a fixed-term.
Building in a statutory requirement to keep senior officials in post for a certain length of time, Lord Maude suggested, would again cut the amount of ‘ping-ponging’ at the most senior levels and incentivise individuals to stick around in roles. It would also allow recruitment processes to be more predictable for those hiring and applying. Such a reform would not only lead to improved competence, but it would save significantly on recruitment and constant training processes for new staff (particularly when those processes are outsourced to contractors, as outlined above).
Of course, the introduction of mandatory minimum fixed-term posts across Whitehall would not be without detractors, with some likely to argue it would suppress individual liberty in the job market, and that it would stop employees from removing themselves from toxic workplaces, or where individuals simply find themselves in a role that doesn’t suit their skillset. These arguments are not without merit, but if the Chancellor is to be genuinely bold when it comes to reducing costs across the civil service, establishing some new Whitehall recruitment standards should not be off the table.
Concluding remarks
The civil service is far from a perfect bureaucracy. Many governments have recognised this and come up with their own set of proposals to address its deficiencies.
Ahead of her Autumn Statement, the Chancellor has already begun to trail some new practices that she will expect Whitehall departments to adhere to. But she has a chance to go further. As outlined in this blog, she could establish strict new constitutional and legal norms that bind Whitehall departments to establish new ways of working that erase deep-seated practices. As well as saving money and helping to fill the much-touted ‘black hole’ in the public purse, it might also result in a more streamlined, efficient civil service. That can only be a good thing.
Jai Jethwa.
Jai Jethwa holds a BA in Politics from the University of York. He has worked as a public affairs consultant and in the BBC’s central press office, as well as in the civil service in the Cabinet Office and the Department for Transport.
The Constitution Society is committed to the promotion of informed debate and is politically impartial. Any views expressed in this article are the personal views of the author and not those of The Constitution Society.