Brexit and departmental restructuring: an unnecessary distraction?

peter-waller

Theresa May’s new cabinet brought the first significant restructuring of Whitehall departments since 2008. In this post Peter Waller considers the pros and cons of these changes. He concludes that the downsides outweigh the advantages, suggesting that there were alternative options that would have allowed dedicated Brexit and International Trade ministers to join the cabinet without the difficulties involved in establishing new departments.

In announcing her new cabinet, Theresa May indulged in a certain amount of Whitehall restructuring. Two new departments were created – the Department for Exiting the European Union and the Department for International Trade.  To balance the books (at least in part) she abolished the Department for Energy and Climate Change, transferring its functions to the Business department. The Business department (now formally the rather turgidly titled Department for Business, Energy and Industrial Strategy) in turn lost responsibility for higher education and science policy, which returned to the education department from where it had come almost a decade earlier.

The new Prime Minister thus made the first significant changes to the Whitehall infrastructure since 2008, when Gordon Brown created DECC. David Cameron, whether by design or lack of interest, had maintained the departmental structure he inherited. So the 2016 changes found Whitehall needing to set up new departments, something it had not done for half a generation.

So are these changes likely to prove worthwhile? What are the pros and cons of marking a national turning point – which Brexit undoubtedly was – with new departments with a new focus?  Writing as someone who spent a high proportion of my Whitehall career in departments whose boundaries were constantly changing, I rather sadly conclude that in this area decisive action by Theresa May is likely to be rather more troublesome than the benign neglect of her predecessor.

So what are the downsides of the changes?

1/ Unfortunately the strongest argument against Whitehall restructuring is the dullest one, namely that it creates a mountain of additional work which could otherwise be avoided. Such time consuming issues include:

  • Recruiting staff. While many people will want to work in the new departments, they still have to be recruited. It might be relatively easy and relatively quick for the Cabinet Secretary via a few phone calls to recruit an interim Permanent Secretary and some Director Generals; and even to transfer some staff across in whole units. But building a department from scratch takes time. DGs have to recruit Directors; the Directors have to recruit Deputy Directors and so on. Interviews take time to organise. And new appointees are often prevented from moving to their new roles until their replacement has been recruited. The civil service commitment to open competitions is now embedded and there are not many shortcuts. A problem that DECC faced, not for its first few months but for its first couple of years, was that it had a beautiful organogram showing all the posts it needed but far too many of them were marked ‘recruitment pending’.
  • Resources. Any new department needs a budget. The Treasury will never agree to find all the necessary money, even if they might be marginally more generous, faced with the unexpected circumstances of Brexit. So there will have to be negotiations between departments over what resources can be transferred between them, as work moves around. Some of this may be relatively straightforward when staff are being transferred to carry out precisely the same function in a different department. But there is endless scope for arguing about how overhead costs are calculated.
  • Building an organisation. A new department needs a head office. It needs a departmental board, a press office, a finance function, an HR team and a range of internal processes. It even needs a new logo. And there may be a wide range of ‘pay and conditions’ issues to tackle when departmental boundaries change. When DECC was established it inherited staff from the Environment department and from the Business department which had very different staff structures and very different systems of pay and reward. So senior management and the HR team had to spend many months trying to bring those two systems together.

2/ Even with goodwill, Whitehall finds it almost impossible to avoid boundary issues. Some of these could be regarded as trivial as departments invariably try and avoid losing existing responsibilities while trying to take on new ones. But some boundary issues are much more significant. Will the new Brexit Department be better or worse placed than Defra (or even the Department for International Trade) to decide what relationship we need with the EU on agricultural issues? If an Ambassador to an overseas country currently splits their time equally between diplomatic issues and trade promotion, which department should they be assigned to? More fundamentally, is the role of the Brexit department to command or merely to co-ordinate the detailed approach to leaving the EU?

3/ It all takes time. There is no doubt that all these practical issues will be sorted in due course. But taken together, they will be a huge distraction from the main task of getting out of the EU efficiently and effectively. Clearly the greatest need is for the new departments to get together a group of talented people who can help their new ministers develop a strategy for the critical new few months and years. But if those people are spending their time in resource planning meetings and resource management meetings – and the creation of new departments will in practice require that – is that the best use of their time?

None of this means that there were no arguments for the Whitehall restructuring. The most obvious are:

1/ The new Prime Minister was able to demonstrate immediately that the government’s priorities had changed decisively; and that the successful negotiation of Brexit, coupled with a new focus on International Trade, was now critical. While the abolition of DECC could hardly be presented as positively, there was at least a nod and a wink that an aggressive climate change policy was now something of a luxury which should in future be of secondary importance to economic growth. In parallel, the Prime Minister got some positive headlines from putting acknowledged Brexiteers in charge of Brexit, though time will tell well that approach was clever or too clever by half.

2/ Alongside the presentational benefits, by creating two new departments the Prime Minister will ensure that Whitehall will be galvanised in a way which it might not otherwise have been. The risk of simply adding Brexit responsibilities to the existing remits of the  Foreign Office and the Business department  would have been that it was simply one more issue to tackle, however important, alongside an already full agenda.  In the new departments, in contrast, tackling the consequences of Brexit will be the be all and end all of Departmental activity.

3/ There seems little doubt that the new government will be able to rely upon the enthusiastic support of civil servants in the critical new roles. Most Whitehall civil servants may well have preferred to remain in the EU; and it may take some time for some of them to get over the shock. But the best civil servants want above all else to make sure that they work in areas which ministers are deeply concerned about. So there will be no shortage of high quality and ambitious civil servants wishing to work in tackling what is arguably the greatest challenge for the UK government since the Second World War. The senior level appointments have already been made at the Brexit department and are impressive.

But the downsides still seem to me stronger than the upsides. And the pity is that there were alternatives. In particular, it really should not be necessary for each cabinet minister to have their own department. Nick Clegg, for example, operated for five years as Deputy Prime Minster, working out of the Cabinet Office with significant support but without feeling he had to have his own department. So given that the Cabinet Office has always co-ordinated policy towards the EU, the relevant unit could easily have been reinforced and refocused on Brexit – with David Davis in charge as a full member of the cabinet. Similarly, there were already strong relationships between the FCO and the Business department over trade promotion issues with some officials reporting into to both departments – and a minister being shared. So Liam Fox could easily have become a second FCO cabinet minister. And the fact that he and Boris Johnson might not agree on everything will not be avoided by giving each their own department.

It is possible, of course, that behind the scenes, the two new departments will be a little less than full operational Departments – and the Brexit department effectively has its own demise inherent in its title. But that will not stop the need to develop all the trappings of independent departments as described above.

The die is now cast and the decisions taken. And Whitehall can be relied on to get on with it, however long it might take. And in doing so, older hands in Whitehall will no doubt reflect that it could have been much worse. They will recall no doubt earlier decisions such as the decision in 2001 to rebrand what is now DCLG as the Office of the Deputy Prime Minister (under John Prescott), a title which could clearly only last until Prescott moved on; a newly re-titled Industry department in 2005 which had to change its name within a week because of an unfortunate acronym; and the creation by Gordon Brown of a Department of Innovation, Universities and Skills in 2007 which he scrapped exactly two years later, requiring two sets of transitional change. The 2016 changes may have been unnecessary, but they are certainly not farcical.

About the author

Peter Waller left the civil service in 2008 after over 30 years, largely spent at the Department of Trade and Industry. He is now a member of honorary staff at the Constitution Unit.

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