Policy Exchange think tank sounds alarm in run-up to Spending Review
A pre Spending Review report by free market think tank the Policy Exchange made headlines last week by highlighting the increase in Whitehall’s expenditure on contractors.
But the increase - from £610m in 2011-12 to £1.01bn in 2014-15 - is only one of the negative unintended consequences of the squeeze on civil service numbers over the past five years. Another is the change to Whitehall’s demographic profile: as another think tank, the Institute for Government said last week, there is no doubt that we have a civil servant that is “older and more senior than in 2010”.
In Whitehall Rules!, Policy Exchange draws a similar conclusion: “The whole workforce is now on average older and more top heavy in terms of management than it was in 2010, increasing annualised salary costs. In part this is because promotion has been the only way for civil servants to achieve a pay rise, but it is also because longer serving employees, who have benefited from automatic pay increases, cost more to let go.”
While we should be wary of stereotyping older people as technophobes, this could be bad news for digital. All other things being equal, a senior manager who has spent 30 years imbibing the culture of an organisation or profession is probably not the one one to embrace disruptive change.
Another problem is that, as majority of exits from the civil service have been voluntary, candidates for departure have tended to be those with high performers with skills most transferrable elsewhere. Exactly the sort of people who will be needed for the next stage in the efficiency programme.
“Without an injection of new talent, opportunities for radical public service reform from technology will be missed and it will be harder to ward against the risks.”
In order to compete with the war for talent while continuing to slash costs, the report calls on the government to:
- Devolve pay control to departments, giving individual managers greater flexibility over how they choose to deploy their HR budget to meet their organisational needs.
- Reduce the use of consultant and agency staff; provide permanent recruits where needed to plug longstanding gaps in capability and reduce staff costs over the long term.
- Carry out a zero-based review of each department, putting the best employees in strategically important positions, creating a flexible pool of talent and strengthening the link between individual activity and the department’s outputs.
- Reallocate spending on training to recruitment. It is difficult to convert average workers into high performing ones, and the civil service should prioritise investments in attracting and assessing the best external talent.
- Reallocate funding for the fast stream away from generalists and towards specialists to build a pipeline of talent in areas where there is currently a shortage.
It will be surprising if the chancellor does not give some of these ideas a nod in the autumn statement. After all, he is not exactly awash with alternatives.