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Paul Gosling reports on the Government’s desire to relocate civil service staff out of London, to the regions and nations of the UK.

Fleet Street used to be synonymous with the British newspaper industry. Not any more. Its last media occupant, Reuters, has just moved out. Could the same fate now befall Whitehall? Improbable perhaps, but not impossible given the urgent review currently being conducted by Sir Michael Lyons.

Lyons is suddenly one of the Government’s favourite academics – director of the Institute of Local Government at Birmingham University; a former Labour councillor and chief executive of Birmingham City Council; a member of the Bains commission on the future of the fire service; tipped by some to become a peer and government minister; and now charged by the Chancellor of the Exchequer with finding new regional homes for some of the civil service.

The initial findings from Lyons are that 20,000 government jobs could be dispersed from London and the South East to the regions. For this we should read areas of highest unemployment and lowest costs – the North East of England, South Wales, Northern Ireland, parts of the North West and Scotland.

Cost Reduction
According to the Chancellor, the driver for this dispersal is cost reduction. Announcing the review, Gordon Brown said: “It is essential that, in our determination to improve the quality of public services and secure a good deal for the taxpayer, we also look at alternative ways in which public services might be delivered including relocation to the regions and nations of the United Kingdom.”

But the move fits in with Government policy for other reasons, too. John Prescott – in charge of regional policy – jointly sponsored the review, talking of the need “to improve the regional balance of economic activity”. Indeed, a report from influential think-tank the Institute for Public Policy Research argues that the focus of regional policy should be to boost local economies by creating jobs first – rather than the existing approach of improving labour skills to attract employers. A major programme of devolution of civil service jobs fits precisely with such an approach, potentially boosting regional economies.

London Loses Its Advantages
The traditional reasons for basing much of the civil service in the heart of London have been eroded in recent years with improvements in communication technologies. Many meetings between ministers and key administrators and advisers already take place over video-conference links, for example. And the cost of phone calls has fallen dramatically in the last two decades.

Lyons’ interim report disclosed that the average annual cost of office accommodation per worker in one government department is £10,230 in London, compared with £6,800 in the rest of the UK. And this latter figure itself is an average across other locations, rather than the cheapest available. Office rental costs are twice as high in London as in Manchester.

Then there are the other overheads of paying London weighting, problems in recruiting and retaining key staff and even the cost for the Government of subsidising homes in the capital to attract workers. Average house prices in London are, at £239,000, three times higher than those in the North of England. Staff will typically take twice as long to commute to work in London as in more northerly major cities, while the cost of travel tickets is much higher in London.

Who Will Move, and Where?
The 20,000 figure for relocating staff is the target set by the Chancellor and Lyons believes that this can not merely be met, but perhaps exceeded. The key question, of course, is just which jobs are likely to move and to where. Lyons himself is implicitly highly critical of previous location decisions under which most call centres – which might be placed in any UK region – have been located in the South East, where costs are the highest in the country. We can expect many of these comparatively lower wage jobs to relocate, with call centres evolving into more multi-disciplinary and cross-departmental government contact centres.

It is not unique to move major chunks of the civil service to lower cost regions. Large numbers of Contributions Agency staff are based in Newcastle-upon-Tyne, the Planning Inspectorate was relocated to Bristol, the Manpower Services Commission moved to Sheffield, Customs & Excise transferred many of its functions to Southend-on-Sea, Liverpool and Manchester and the NHS Executive head office moved to Leeds.

But this experience – much of which took place in the 1980s and early 1990s – has flagged up important warnings. In particular, the stories of health officials commuting regularly between offices in Leeds and Whitehall have become infamous. Similar experiences blighted Customs & Excise. Lyons’ initial report implies departments have failed to take advantage of the most recent technological developments in video-conferencing and Internet based systems to reduce the need for physical meetings. His final report is bound to suggest a much greater commitment to communication technologies.

Flawed Relocations
Yet the report also shows the extent to which previous relocations have been flawed, or at least superseded. While there have been several earlier attempts at dispersing the civil service away from the capital, these were influenced either explicitly or implicitly by the requirement for new offices to be convenient to London. Consequently, while only 13% of the workforce of the Department for the Environment, Food and Rural Affairs is located in London, another 20% (over 6,000 people) is based in the rest of the South East. Similarly, a mere 4% of the military staff of the Ministry of Defence and 8% of its civilian employees work in London, yet nearly 60,000 of its quarter of a million total staff are based in the wider South East.

Effect on South East
It is therefore very possible that the South East in general will be at least as affected as London by the final Lyons’ recommendations. Superficially it appears peculiar that almost twice as many civil servants work in the South East (excluding London) as in the North East, when conversely the unemployment rate in the North East is twice as high as that in the South East.

But it must be noted that the total population of the North East is 2.5m against 8m in the South East and – the main civil service trade union, the Public and Commercial Services Union (PCS) points out – this is the main flaw with the proposal to redistribute the civil service. About 40% of the London and South East jobs are based in local offices where civil servants have to meet their “clients”.

Union Concerns
The unions have other concerns. A spokesman for the PCS said: “We recognise the regenerational benefits which come with relocation, creating jobs in the regions. But our concerns are that firstly any relocation and moving of people must be done on a voluntary basis. And it should not be just about driving down pay levels and introducing regional pay by the back door.” He added that the PCS was particularly unhappy about what he called the “breakneck speed” at which the review was being conducted.

That pace makes it difficult for the unions to assess their members’ attitude to a move, which the Government claims is in part inspired by what is best for the workers themselves. But, like much else in the public service reform programme, the review has the breathless air of an initiative that the administration believes simply must be driven through urgently if the voters are to see improvements by the time of the next election. Uncomfortably for the Government, it also makes it much harder to maintain a partnership with its own staff and their unions.

Paul Gosling is a freelance journalist

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