The Government’s case for civil service relocation doesn’t stack up

Last week, the Communities Secretary confirmed that Wolverhampton would become MHCLG’s second headquarters, with 500 roles to be based in the West Midlands by 2025. These are the first stones of what the Government hopes will be an avalanche: the Chancellor is aiming to move 22,000 civil service positions out of London. Overall, that means roughly 1 in 4 civil service positions in London [1] are to be packed up from SW1 and re-distributed across the UK.

The intention here is laudable: the over-concentration of government in London is a longstanding problem. Sadly, a glance at the history books tells us that initiatives like MHCLG HQII are only likely to make a limited contribution to the Government’s levelling up agenda. Partly that’s because most civil servants are already outside London. Partly, it’s because the economic and cultural case for relocation has been overstated. To ensure a fairer and more transparent process, an independent body should be tasked with devolving jobs in a considered, long-term manner.

Westminster to anywhere?

Efforts to relocate civil service jobs out of London are nothing new. Both major parties have been issuing plans to shift civil servants out the capital for almost sixty years.

This potted history serves as a reminder that civil service relocation efforts have been on-going for decades and the ambitions of Flemming, Hardman and Lyons have steadily been realised. This is often forgotten in the current debate and reflected in reaction to MHCLG’s “historic” move from Whitehall to Wolverhampton.

The interactive map below shows the percentage of government department employees by region across the UK.[2] [3] It reveals, for example, that roughly two-thirds of Education and Home Office roles are already found outside of London, and less than 10% of Work and Pensions and Defence roles are located in the capital. Of course, this tells us little about the type and seniority of posts in London, something which critics rightly point out is key to the problem. Nevertheless, it is important to remember that even before the next great migration begins, 80% of civil servants are not based in London.

The current Government’s plan for relocation is based on two main arguments. First, areas outside London and the South East are deprived of the economic benefits of having government departments on their doorstep. Second, the cultural argument for addressing the marginalisation and under-representation of communities outside the capital in the policymaking process.

Relocation, relocation, relocation – the economic argument

People making the economic case for moving jobs out of London argue that doing so could reduce spatial inequalities through the multiplier effect of higher spending in selected localities and regions. A recent proposal from the Northern Policy Foundation suggests that the average Gross Value Added[4] per job moved from London would be £50,000 in today’s prices, whilst for every 10 public sector jobs relocated, 11 would be created in the private sector. As an example, creating a ‘crime cluster’ – relocating nearly 8,500 jobs in the Home Office, UK Border Force and more to Newcastle – could lead to an ‘estimated economic impact’ of between £510-950 million. This would, in theory, be a welcome boost for local areas,  bringing in well-paid public sector roles (the median salary for a civil servant in 2020 is £28,180) and draw additional long-term investment. Additionally, it would reduce the ‘pull’ of London for those looking to enter and progress in the civil service, spreading opportunity more fairly.

There is a necessary question of practicalities to consider at this point. Would every department move to the same region or city, or scatter across the country? The former would provide the strongest economic shot in the arm through clustering, private sector job creation and access to a larger talent pool. But this ‘winner takes all’ approach would almost certainly hit a political roadblock when selecting a city or region. A scattering approach would water down the potential economic benefits of relocation. For example, a study of the German government’s relocation programme in the 1990s did uncover noticeable evidence of multiplier effects and agglomeration, but this was because it entailed a ‘massive relocation’ of 15,000 government jobs (many of which were senior) from Bonn to Berlin, and just one in five of Berlin’s postcodes received relocated jobs. Put another way, fragmentation across the country would not, in the words of the Institute for Government, “be a panacea for overcoming economic inequality between regions”.

Ultimately, evidence on the associated localised benefits of relocating public sector jobs is inconclusive. One study has shown that increasing public sector employment by as much as 50% reduces the local unemployment rate by just 0.6%, with improved labour market conditions drawing new workers into the area. Elsewhere, the Centre for Cities has pointed to the ONS’ relocation to Newport in mid-2000s, finding that the move did “little for Newport beyond the actual jobs themselves” and could even have reduced the quality of the ONS’ work due to a weakened talent pool in the new labour market.

The chosen site for relocation matters enormously, the Centre for Cities has argued, whilst both the study of the German government’s relocation discussed earlier and analysis of the Lyons Review found that agglomeration effects were highly localised around the relocation site and disappeared sharply over distance. We might reasonably expect this phenomenon to become even more pronounced following rapid take-up of homeworking during the pandemic, with workers making reduced use of any new government “hub” buildings. Additionally, any large-scale relocation could conceivably lead to displacement effects and upward pressures on housing costs in the receiving locality.

In the thick of it – the cultural argument

The second argument for relocation – and the one touted most prominently by today’s ministers – is about culture and representation. As Cabinet Office permanent secretary Alex Chisholm told MPs, there is a desire to ‘reduce London-centricity’ in the civil service. Superficially, this is a persuasive argument. Many feel that officials are too heavily influenced by London-based organisations and a metropolitan way of thinking. Equally, certain civil service jobs are overly concentrated in Westminster, with 63.8% of policy roles in London and 4.6% of London-based roles sitting in the highest grade, compared with 0.7% outside the capital. Advocates of relocating these roles argue that those who fill them are a monolithic well-educated metropolitan-minded graduates who are too disconnected from the policies they are delivering.

The London-centric skew of politics and policymaking is an issue and that should change. However we should be sceptical of the idea that relocation would improve the chances of policymakers doing more for “left behind” communities. Michael Gove has said that civil servants should be “closer to where the action is”, but what evidence is there that changing the postcode of a government department would improve decision-making? Speculation has focused on York as the location of a major new government hub, whilst the Northern Policy Foundation listed Newcastle and Liverpool as possible candidates for receiving government departments. The implicit assumption here is that a civil servant in York can better understand the people and communities the Government wants to level-up than a civil servant in London. This is at minimum a dubious claim. Far more importantly, we should ask whether a Northern relocation would restructure recruitment into the civil service with, for example, more staff coming in from non-professional socio-economic or non-graduate backgrounds.

Similarly, if relocation is slated as an opportunity to increase diversity in policymaking, should the Government be focusing on more than just geography? For example, whilst ethnic minority representation in the civil service has increased from 9.2% in 2010 to 13.2% in 2020, there has been consistent underrepresented in top civil servant positions (SCL & G6&7). Concerns have also been raised about accessibility of civil service employment for those without A Level or degree-level qualifications; civil service apprentices currently make up just 1.6% of the total workforce. An explanation from the Government on what relocation would actually do for diversity and decision-making has been lacking.

Even if the plan for relocation is simply a matter of principle, it still does not answer why the Government wishes to prioritise Northern cities and towns. If the logic is to level up, the policy should involve identifying specific localities and stimulating them through intervention in the labour market. But here the country does not neatly divide in two as the Government would like. London has experienced the most severe increase in  unemployment during the pandemic, with the rate currently at 6.9%. It seems perverse to suggest moving government jobs out of London when the capital’s labour market is faring worse than the rest of the country. Ultimately, relocation should boil down to an assessment of the characteristics of the local labour market, including the ratio of public-private sector jobs, and the quality of the talent pool: requiring a more nuanced approach than drawing a straight line separating North from South. Absent that serious analysis, the suspicion will linger that relocation pledges are at least partly motivated by party political interests.

Finally – and perhaps most significantly – how much public support is there for the move? On the face of it, there is some appetite: polling commissioned for the Northern Policy Foundation found that 70% of Northerners supported moving some Government departments to the North. But this isn’t especially informative and it isn’t particularly hard to imagine that if this survey was replicated for other parts of the UK, it might elicit at least similar levels of support. More concerningly, the same poll showed 57% didn’t know if a northern relocation would have a positive impact on their livelihoods, whilst polling for the Centre for London in 2018 found that 40% of non-Londoners thought relocating London-based institutions would not make the country fairer.

A fairer solution

The “do nothing” solution – keeping a disproportionate number of senior and policymaking civil servant roles in London – is not the most desirable one. Yet neither is a solution based on moving a significant number of civil service jobs to the North of England for political ends.

If the Government were to pursue a fairer and more effective solution, what might that look like? One option could be the creation of an independent body to oversee relocation over the next 5-10 years.  This body, which would bring together people with experience of local government and economic development, independent experts and representatives of the major parties, should take a long-term view of this issue, looking beyond short-term electoral cycles.

The body could start by reviewing the long history of civil service reform, learning lessons and expanding the evidence base on public sector job relocation. Its recommendations should be presented to Parliament. The body might then start a competitive tendering process, with local and combined authorities and Local Enterprise Partnerships eligible to bid and make the economic and social case for why they would benefit most. Additional government funds could even be attached to successful bids, aimed at regeneration and development of local infrastructure and businesses.

Of course, competitive processes have their flaws. For example, the quality of bids are dependent on the skillset and resources of local officials, an issue highlighted in bids for regeneration funding and something we recognised in our recent report on creating healthy high streets. But taking the politics out of civil service relocation and proceeding strategically and systematically will do more good than chasing headlines.

[1] Figure is based on Cabinet Office annual Civil Service Statistics, 2020, and excludes Northern Ireland Government positions.

[2] Figures for each department include sponsored bodies and agencies, as listed in Cabinet Office’s annual Civil Service Statistics, 2020. For example, Education includes the Department for Education, the Education and Skills Funding Agency, the Institute for Apprenticeships and Technical Education, the Standards and Testing Agency, and the Teaching Regulation Agency.

[3] Figures list domestic civil servants only and those reported to be located in a specific region according to Cabinet Office’s annual Civil Service Statistics, 2020. There are 5,170 overseas roles and 3,480 not reported.

[4] Gross Value Added measures the value of good and services produced in a defined geographic area.