Innovating through machinery of government changes

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

2. 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

3. Five key findings

4. % 1. Department changes are costly… £15,687,500 £15,289,600 31,041,700 £173,374,300 48% 81% First Year 32% Recurring 14% 11% Indirect 9% DECC DIUS Defra DWP Costs based on interviews with senior civil servants, Department annual reports and documentation of change, Civil Service Statistics and Select Committee Hearing Minutes.

5. 9 … with differential pay affecting departmentsfor years to come. Costs of DEFRA as calculated at the end of it’s first year. 10,000,000 31,041,700 “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 15,000,000 6,041,700 Accommodation HR Systems Integration IT Investment First Year Recurring Indirect Total IT integration Differential Pay Settlement Productivity Costs based on interviews with senior civil servants, Department annual reports and documentation of change, Civil Service Statistics and Select Committee Hearing Minutes.

6. 0 2. The main driving factor is politics… Drivers of MoG Changes as cited by senior civil servants (% of MoG changes,1980-2008) “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 Job creation/empire-building 39% Policy Cabinet formation 18% PM interest 18% Politics 48% Minister Departure 12% Signalling 10% Delivery Media Reporting Stakeholder Pressure 4% Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

7. 3 … even though many changes also have policy or delivery rationales. “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 No. of times theme is cited

8. 0 3. There is limited to no planning in advance of department changes Top issues cited by senior civil servants (% of MoG changes,1979-2009,in which issue was raised) Resistance to change 81% No Planning/Shock 62% “[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 Home loyalties 43% Cultural Challenges 38% Staff Morale 38% Anger 29% Superficial planning 29% Delivery Risk 29% No Support 29% Disruption 24% Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

9. 7 4. Transition teams have insufficient time to prepare. Senior civil servant recollections of MoG change process (% of MoG changes,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 10 7 3 10% 50% 43% 33% 0-4 days 1 week > 10 days Merger Demerger New 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. 9

10. . 5. Making changes better requires greatercentral support. 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 Clear guidelines 39% 7 Central capacity in org. planning 33% 6 Differential pay easing 33% 6 IT - common platforms 33% 6 Central support re shared services 28% 5 Support with resource transfers 28% 5 Annouce earlier 22% 4 Results based on codification of 18 senior civil servants involved in department level machinery of government changes between 1979-2009.

11. 0 4 recommendations for better MoG changes 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.

12. For discussion:Changes by the current administration

13. High impact/low profile changes so far

14. High impact/low profile changes so far Possible changes

15. The emerging picture? No. 10 Treasury Cabinet Office Security Opera-tions Civil Society Const. Reform Defence DECC DCLG Health MoJ Foreign Affairs Defra Scot/Wales/NI DWP DFID Transport Education Home Office BIS Operations

16. Extra slides For Q&A

17. 11 Department reconfigurations, 1950-2009 Depts affected Total Number of Departments 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

18. -1 Labour expands while Conservatives consolidate # Departments Affected Net Change Brown Blair Major Thatcher Callaghan Wilson 2 Heath Wilson 1 Douglas-Home McMillan Eden Churchill Conservative Labour Average Labour Conservative Average 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.

19. 0 Department reconfigurations are common after leadership changes Conservative Labour 1950 1951 1955 1959 1964 1966 1970 1974 1974 1979 1983 1987 1992 1997 2001 2005 1951 1955 1957 1963 1964 1970 1974 1976 1979 1990 1997 2007 Post-appointment department changes Post-election department changes Figures in red are for emphasis only and indicate the years when new PMs abstained from reconfiguring departments.

20. 4 Prime Ministers changes by term Rest of Term Brown 11 11 First 2 Years Blair 5 19 Major 3 6 Thatcher 2 9 Callaghan 1 1 Wilson (2) 6 6 Heath 12 14 Wilson (1) 7 28 Douglas-Home 7 7 Macmillan 2 13 Eden 3 3 Churchill 1 8

21. Legislative process for select MoG changes