15 March 2004

20,000 Civil Service jobs should move from London with more to follow

Sir Michael Lyons challenges Government to mainstream decentralisation of public sector activities out of London as a means for improving public service efficiency, regional competitiveness, and devolution. The final report from his Independent Review of Public Sector Relocation ‘Well Placed to Deliver? – Shaping the Pattern of Government Service´ - was published today.

In his report to the Chancellor, Gordon Brown and the Deputy Prime Minister, John Prescott, he confirmed that departments have identified some 20,000 jobs that could move out of London and the South East and recommended that they should urgently take forward their relocation plans in the context of the forthcoming Spending Review. A further 7,000 posts would no longer be required, as a result of efficiency measures. Potentially, over £2 billion could be saved over 15 years as a result.

Sir Michael made ten key recommendations. As well as departments’ moving quickly to implement their relocation plans, some of the recommendations were that:

Government should be prepared to make the necessary investment;
there should be a strongly enforced presumption against London and the South East for new activities and many other functions;
London headquarters should be radically slimmed down;
there should be greater coordination between departments in relocating activities; and
Government must take responsibility for the whole pattern of its locations.

Full details of Sir Michael’s recommendations are attached at annex a.

Commenting on his report, Sir Michael Lyons said:

“I am grateful to departments for their cooperation. I believe that a new pattern of government service will contribute significantly to Government’s policies for the reform of public services, improving regional growth, national competitiveness and devolution. Government needs to take firm action to recast the pattern of its business in a way that better meets the needs of the nation in the new century. I am certain that Government can meet that challenge.”

Sir Michael argues that the pattern of government has to be reshaped. The concentration of national public sector activity in and around London is no longer consistent with Government objectives. It does not reflect the large cost disparities between London and the rest of the country. Neither does it correlate with the benefits of dispersal for the efficient delivery of government business or for the regional economies.

Sir Michael acknowledges that as the capital, London needs a governmental core supporting ministers and setting the strategic policy framework. However, in every other respect, the status quo is open to challenge. And, if Government wishes to make a significant impact on the pattern of its locations across the country, it will need to take firm action in the coming years.

Notes for editors

1. In April 2003, the Chancellor and Deputy Prime Minister asked Sir Michael Lyons, Director of the Institute of Local Government Studies at the University of Birmingham, to conduct an independent study into the scope for relocating a substantial number of public sector activities from London and the South East to other parts of the United Kingdom.

2. Departments have identified about 27,000 posts which could go from London and the South East. Of these, 19,700 are candidates for relocation, whilst 7,500 are expected to disappear as part of efficiency improvements.

Department	Approximate number
Chancellor’s Departments*	3,100
Department for Work and Pensions	4,200
Ministry of Defence	3,900
Home Office	2,300
Department for Constitutional Affairs	1,600
Department of Health	1,100
Department for Education and Skills	800
Other departments	2,700

* The Chancellor has indicated since the review that he expects some 5,000 posts from his departments to be relocated

3. Sir Michael Lyons is Director of the Institute of Local Government Studies and a Professor of Public Policy at the University of Birmingham. He leads the department as part of the wider School of Public Policy on a part-time basis and has a series of other public and private responsibilities. Most notably, he is the non-executive Chairman of the English Cities Fund. He is Chairman of West Midlands Music Radio Ltd and a non-executive director of three companies: Wragge and Co, Parkman Group plc and Carlton Television (Central Region).

4. Sir Michael was knighted in January 2000 for services to local government after serving as the Chief Executive of three major local authorities: Birmingham City Council (1994-2001); Nottinghamshire County Council (1990-1994) and Wolverhampton Borough Council (1985-1990).

5. Sir Michael is a member of the Treasury's Public Services Productivity Panel and works closely with SOLACE, KPMG and Lagan Technologies Ltd. He also chairs the City of Birmingham Symphony Orchestra. Recent activities include membership of the Independent Fire Service Review, which produced its report (the ‘Bain Report’) in December 2002.

6. Copies of the final report may be found on the HM Treasury website

7. Non media enquiries should be addressed to the Public Enquiry Unit: 020 7270 4558.

8. Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

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Annex A

Recommendations of the Independent Review of Public Sector Relocation

1. Departments have identified more than 27,000 jobs that could be taken out of London and the South East, including up to 20,000 jobs for dispersal as a first tranche. Plans for these dispersals should be taken forward urgently as part of Government’s forthcoming spending review.

2. Major dispersals are unlikely to offer a quick payback and they incur considerable costs up front. Government must be prepared to make the necessary investment. Equally, there is a strong case for sharper incentives to encourage departments to seek the benefits of locations out of London and to keep their presence in the capital to a necessary minimum.

3. Departments should implement their relocation plans alongside efforts to align their pay with local labour market conditions. My review has demonstrated that failure to make progress on flexible pay will limit the efficiency gains from dispersal, and could undermine the economic benefits for receiving locations.

4. Whitehall headquarters should be radically slimmed down, reflecting a clearer understanding of what is really needed in London, and of the distinction between policy and delivery.

5. There should be a strongly enforced presumption against London and South East locations for new government bodies and activities; for functions such as back office work and call centres which do not need to be in London; and for bodies and functions whose effectiveness or authority would stand to be enhanced by a location outside London.

6. Cabinet needs to give continuing political impetus to the locational agenda. Leadership should be provided by a Cabinet Committee and, in the short term at least, a lead minister. These arrangements should be supported by a small, short life unit at the centre, to act as a ginger group, to monitor and report on progress with dispersals, and to ensure that best practice is disseminated and embedded.

7. Permanent secretaries and other public sector chiefs are responsible for managing their departments’ resources, accounting to ministers and to Parliament. Locational considerations must be an integral part of these responsibilities. The aim should be to mainstream the locational aspect of business planning.

8. Government must take responsibility for the whole pattern of its locations, developing a strategic framework of guidance for departments and ensuring a mechanism for reviewing and, where necessary, challenging departments’ locational preferences.

9. The Government office portfolio must be much more tightly managed. In particular, exits from London should be coordinated to ensure overall value for money and to strengthen individual relocation business cases.

10. The civil service needs a more coordinated approach if it is to minimise the costs and the adverse impacts on staff associated with relocation and redundancy.