The Civil Service workforce and
administration budgets
79. In addition to the overall targets for efficiency
savings measured in monetary terms and set as part of the 2004
Spending Review, departments were also set targets at that time
for reductions in the Civil Service workforce—and for military
posts in administrative and support functions in the case of the
Ministry of Defence—arising out of the efficiency programme.
The overall target was for a gross reduction of 84,150 posts by
April 2008, with a net target of 70,600 posts and the remaining
reduction accounted for by reallocation of staff to "front-line"
tasks.[162] The Chancellor
of the Exchequer told our predecessors at the time these reductions
were announced:
We have accepted the numbers [of reductions in posts
recommended by Sir Peter Gershon] until 2008—but he also
said that to go further than that would put the delivery of public
services at risk … Once these changes are made, I think people
will know that that is the limit of what we are proposing for
this period of time. I hope that, having made all these changes,
other political parties will think twice about giving the impression
or continuing to suggest that the public service workers who are
doing the jobs should be made redundant, given Sir Peter's recommendation,
following a great deal of work, that this is the limit that could
be achieved until 2008.[163]
80. At the time of that Spending Review, the Government
estimated that headcount reductions would account for between
10% and 15% of the overall financial targets for the efficiency
programme.[164] The
2007 Budget stated that a gross reduction of 60,591 posts had
been reported to December 2006, with 9,703 of that figure attributable
to reallocations to "front-line" roles and 50,888 resulting
from reductions.[165]
At the time of our evidence on that Budget, Mr Oughton characterised
the progress as "good", while acknowledging that "there
are some remaining challenges", particularly those associated
with those departments which had a significant amount of their
headcount reduction target up to April 2008 still to achieve.[166]
81. Five main concerns about the workforce reduction
element of the efficiency programme have been highlighted during
our consideration of the programme in the course of this Parliament:
- that the targets related to
reductions attributable to the Gershon efficiency programme, and
could be off-set by increases in Civil Service numbers arising
from other developments, such as what are classified as new policy
burdens;[167]
- that there remained some unresolved measurement
and verification issues, including the use of early baselines—so
that reductions secured before the programme began could be scored
against the final total;[168]
- that there was no agreed definition of "front-line"
posts, leading to uncertainty about net reductions attributed
to re-allocation of civil servants to such posts;[169]
- that an undue focus on headcount reductions could
simply lead to a shift of resources from direct employment to
the use of consultants;[170]
and
- that workforce reductions could have a direct
and detrimental effect on service quality and delivery.[171]
Partly reflecting such concerns, we recommended in
our Report on the 2006 Budget that, "in seeking to embed
a culture of efficiency in Government departments during the period
covered by the Comprehensive Spending Review, the Government places
greater emphasis on delivering and reporting on targets for continued
reductions in departmental administration budgets rather than
on workforce reductions attributed to efficiency projects".[172]
82. In evidence to us in December 2006 on that year's
Pre-Budget Report, the Chancellor of the Exchequer appeared to
imply that further targets for Civil Service workforce reductions
up to 2010-11 would be set:
As far as the jobs are concerned, we have published
our figures for Civil Service job reductions and there are 85,000
job reductions going to take place; 45,000 jobs have gone and
another 40,000 jobs are still to go. Obviously, for the years
after 2008 we will publish figures later … There will be
more jobs to go. I can assure you that in the next spending round,
once we [have] met the Gershon targets, we will have to reduce
Civil Service numbers further.[173]
83. The Chancellor of the Exchequer's assurance that
Civil Service numbers would continue to fall up to 2010-11 was
probably linked to his announcement made in the 2006 Pre-Budget
Report that, "for the years to 2011, I have reached agreement
with Secretaries of State … to cut their administration budgets
by 5% a year" in real terms.[174]
84. In the 2004 Spending Review the Government also
made a commitment to bear down on administration budgets. In the
2004 Budget, the Chancellor of the Exchequer announced that the
Spending Review would cap the administration costs of all departments
at or below the 2005-06 nominal level, representing a real terms
reduction of at least 5%.[175]
The Security and Intelligence Agencies and the Foreign and Commonwealth
Office were subsequently exempted from reductions at this level
because of additional spending on "vital security needs".[176]
The baseline for these reductions was the first year for which
spending was available for allocation as part of the 2004 Spending
Review; the Government did not follow its more general practice
of using the last year preceding the period available for allocation
under a Spending Review as the baseline for the purposes of determining
increases or reductions in percentage terms. Also, at the time
of the 2004 Spending Review, a number of changes were made to
the classification of services, so that some expenditure that
had been within administration budgets was moved outside into
programme budgets, including the costs of immigration control
and domestic security.[177]
85. The Chief Secretary indicated that further changes
between administration budgets and programme budgets were unlikely:
I do not think there is very much scope for that.
There is recognition of what counts as administration budgets
and what does not. … It is not true that departments can
willy-nilly change classifications.[178]
The Chief Secretary also indicated that he believed
that the target of a 5% reduction a year in real terms in administration
budgets in the years 2008-09, 2009-10 and 2010-11 was achievable:
We think it is important to do everything that we
can to bear down on administration spending and to be more efficient,
and I think we will be able to get to a position where administration
spending actually counts for the lowest proportion of spending
than it has done for a very long time as a result of these changes
and spend less on administration and so release more for priority
areas, programmes and others.[179]
He also implied that no exceptions would be made
to the targets for reductions in administration budgets, not even
for the Department for International Development which is likely
to see a sharply rising overall budget over the period.[180]
86. To place the ambition implied in annual real
terms reductions in administration budgets of 5% in 2008-09, 2009-10
and 2010-11 in context, Table 12 sets out the current expectations
of the annual average rate of growth of administration budgets
over the preceding three years covered by the 2004 Spending Review.
Table 12: Administration budgets by departmental
group, 2004-05 to 2007-08, £ million
