Staff numbers in the public sector

              The National Audit Office has entered the debate about public sector staffing levels and costs. They tell us the civil service actually cut its numbers by 1% in the last ten years, but put the real costs of employing people up by 10%. It was especially generous with promotions, creating many more senior positions.  The public sector as a whole increased its wages costs by 40% more than prices over the last ten years, with an increase of 13.7% in the numbers employed .

               The Office concluded that ” Organizations do not have comprehensive understanding  of their own staff costs or skills in order to support this cost reduction activity adequately”. What’s stopping them gaining this understanding quickly?

                They also conclude that there will need to be redundancies. It cannot, they say, all be done by natural turnover. It would still be a good idea to maximise the use of natural turnover, which is not currently happening.

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36 Comments

  1. lifelogic
    Posted March 11, 2011 at 6:36 am | Permalink

    The state sector in generally is over paying staff by some considerable margin relative to the private sector, even before the huge pension differential is taken into account. Diverting good people into the state sector, often to do little more than inconvenience or over tax wealth creators or think of new ways to tax, regulate or licence them.

    Is that really what we want from to recover from Brown’s appalling legacy?

  2. forthurst
    Posted March 11, 2011 at 8:34 am | Permalink

    Increasing costs with more highly paid posts could simply arise as a consequence of greater success in promoting diversity and inclusion, and the consequent need to subsequently create taylor made positions for uniquely qualified people. Of course, there are other responsibilities of local authorities nowadays such as climate change preparedness, for which we will all be thankful for someday, if not tomorrow.

    • Derek Buxton
      Posted March 11, 2011 at 12:48 pm | Permalink

      So “climate change” has to be factored in now has it. You should read the (word left out) stance of one Jill Duggan telling Australians how well our emission reduction scheme is working. She patently know (little-ed) about it and the interviewer makes the most of it. It is time to kill this scam once and for all, because that is all it is.

    • BobE
      Posted March 11, 2011 at 7:49 pm | Permalink

      Dear Forthurst, “climate change preparedness”
      Nothing little England can do will have any effect as the new master countries ignore the carbon religion.
      All we do is make ourselves more uncompetative.
      Please stop pretending mate.
      BobE

  3. English Pensioner
    Posted March 11, 2011 at 9:05 am | Permalink

    ”Organizations do not have comprehensive understanding of their own staff costs or skills in order to support this cost reduction activity adequately”.
    Expect lots of “consultants” with these “talents” being employed to train some newly recruited staff which will form groups within each organisation to provide “staff management”. These will be totally separate from existing HR or personnel departments who should already have the skills and knowledge. In addition, extra staff will be recruited to handle any redundancies, so please don’t expect to see any staff cuts in the foreseeable future!!

  4. Brian Tomkinson
    Posted March 11, 2011 at 9:12 am | Permalink

    The BBC quoted the head of the National Audit Office, Amyas Morse, as saying: “We do not feel that the culture of the civil service has yet taken information-led management and financial management in particular, to its heart”. Labour did its best to create a client state of public sector employees and benefit recipients. We need as determined an approach to undo the consequential damage. So far, the coalition has failed to give me the impression that they have either the experience or the determination to complete the job.

  5. waramess
    Posted March 11, 2011 at 9:13 am | Permalink

    The private sector suffers from exactly the same problem: left unchecked people will build empires and if the budget permits they award their people with high salary increases (which of course will force their own salaries up).

    The Civil (or not so civil) Service have been left unchecked for a long time and the only way to bring it back to reality will be redundancies. Trying to do the job through a policy of natural turnover will unlikely succeed because the skill set will never correspond. There are a vast number of non-jobs created by the empire builders and the people hired have not aquired the necessary skills to find a slot elsewhere.

    Empire builders do not easily give up the ground they have taken and I suspect they will not be scared into doing so by a bunch of inexperienced politicians. These people are professional operators and the only way to sort the problem out is to make entire departments redundant.

    DFID looks like a great place to start practicing.

  6. Richard
    Posted March 11, 2011 at 9:20 am | Permalink

    I am not someone who is prone to envy, but I keep hearing of people I know who have been made redundant from the public sector or who are considering whether to volunteer for redundancy and the amounts of money they are being offered is far better than the terms offered to staff working in the private sector, even in large PLC’s, and miles better than the terms offered to staff in SME’s where the statutory minimum is often all you get.

    Who decides how much of our money can be generously given to staff in the public sector above and beyond statutory levels ?

    There are also many examples in the public sector of redundancy on Friday followed by starting back on Monday as a part time consultant on a generous day rate or moving straight into a similar job with another govt body.

    Gordon Brown in 13 years, created a huge new class of people-“the salariat”-who depend entirely on the state for their livlihood and it isnt going to be easy to prise them out from their entrenched positions.

    • StevenL
      Posted March 12, 2011 at 12:51 am | Permalink

      This kind of thing was rife in the local government reorganisations in the Thatcher and Major years too. I know of one person who was made a manager by her husband, then both were made redundant at 50 with a top up on their final salary pensions to a full 40 years service.

      Over a decade later she has her state pension too and still works there on ‘flexible retirement’ having accumilated yet more redundancy rights. He works as consultant in a different council for £30 an hour or so.

  7. Rodney Dawkins
    Posted March 11, 2011 at 9:21 am | Permalink

    It is very telling that BT – a virtual monopoly business can barely stay afloat today despite incredible margins, because the original privatisation deal insisted on carrying with it, a public-sector class pension liability.

    This highlights the potential problem of misallocation of funds that happened under Labour’s economic bubble term – a period, as you say, when they swelled the public sector with no concern for the extreme difficulty and challenge facing genuine British business.

  8. Dick the Prick
    Posted March 11, 2011 at 9:43 am | Permalink

    Hang on – so there was a 1% reduction in staff numbers at the same time that Quangos ballooned and also an increase in seniority without an understanding of their skill sets giving rise to a 10% increase (assume real) in costs over the same period? Am I missing something here?

    And this is a peach ‘Organizations do not have comprehensive understanding of their own staff costs or skills in order to support this cost reduction activity adequately’ – well who does then? Maybe we should ask them, eh?

    I thought the transition from personnel to human resources was supposed to keep an eye on such things. This is one of those analytical products that the more you dig the more depressing it becomes. Good grief.

  9. alan jutson
    Posted March 11, 2011 at 9:55 am | Permalink

    “Organisations do not have comprehensive understanding of their own staff costs or skills in order to support this cost reduction activity adequately”

    What an absolutely damming statement.

    Proof in any was needed, that money is no object, as you simply ask for more every year.

    No wonder little headway is being made in cutting costs, the Civil service/Local Authority personel do not have a clue, and most politicians (JR Excluded) do not have a clue about the costs of running anything, let alone cost cutting, time management, customer service, and value for money.

    This is the situation you get when so many people have never, ever been employed in a competitive private industry or business.

    Doubtless we will now get very expensive redundancy packages on offer, together with fully paid up pension entitlements for those who are close to retirement age.

    The situation is an absolute disgrace, and a slap in the face for all hard working tax payers.

    The more you dig out the facts, the worse it gets.

    I guarantee this is only the tip, of a very, very large iceberg.

    Keep digging John, this fiasco really does need to be exposed.

  10. Jonathan
    Posted March 11, 2011 at 9:56 am | Permalink

    Do we know if these are total staffing numbers; including outsourcing that was performed internally 10 years ago? If it doesn’t include the number of jobs that have been contracted out then there probably isn’t a drop at all.

  11. Neil Craig
    Posted March 11, 2011 at 11:23 am | Permalink

    I have been told by somebody in the civil service that she regularly sees jobs advertised internally and that those in the “environment” ofice work are consistently about 3 grades better paid (& technically easier) compared to other areas. Personally I think almost all eco jobs are pure makework and could be entirely abolished but if they have to be done t6hey should be done at normal costs.

    If we assume the purpose of most government programmes is to pay government employees and their friends the “environmental” spending can easily be explained as the reducto ad absurdum of government parasitism.

    • Kevin Marshall
      Posted March 12, 2011 at 10:53 am | Permalink

      If true that the environment department staff are on higher pay grades than staff in other departments, it should come as no surprise. The climate change issue – which dominates environmental debate – is based upon the idea that there are a select group of expert scientists with knowledge beyond the comprehension of the uninitiated. I have worked on a big company software system for many years. In the early years it was the same situation – a little more knowledge than the “non-experts” could demand a large salary premium. The difference with climate change policy is that the premium is more due to shutting out opinions than actual understanding of science or policy.

  12. John B
    Posted March 11, 2011 at 1:06 pm | Permalink

    Non-profit organisations with pay grades and reward according to length of service rather than merit understand very well their staff costs.

    Senior posts depend on the number of subordinate posts reporting to them. In order to achieve seniority and higher pay grade, a manager needs to increase his/her establishment. More posts are justified by too much work for existing compliment, this work over-load is achieved by slowing down speed of throughput.

    A new senior post pushes all those above it up one level, and of course a new senior post needs its own reportees, so the system feeds itself.

    It is why the concept of efficiency, reducing payroll and increasing output is anathema to any State public ‘service’ – better described as Public Self Service – and not in the best interest of those employed in it.

    Solution: fire 75% of senior managers and 50% of the rest and tell the remainder to get on with it or quit or be fired too.

    • StevenL
      Posted March 12, 2011 at 12:56 am | Permalink

      Got it in one. You also get salary grading brownie points for ‘networking’ and ‘co-ordinating’ and the like these days. In other words, having pointless meetings with your opposite numbers in other departments and public sector organisations.

  13. J leslie smith
    Posted March 11, 2011 at 1:45 pm | Permalink

    Public Sector costs once fully audited, are likely to the costs scandel of this decade.
    Our Politicians are dealing with a Major Professional Mafia. ( who talk to each other a lot.!!!) The primary aim of these Guys, ( wjo are intelligent and quailfied people) is to hold or expand Sector/Departmental their budgets, annually, at any cost. They are Masters of political manipulation and spin to the Media. Their attack, once it comes, will be like a laser, coordinated and beamed directly at the Coalition. Its ferocity will be something to behold. These people live for their apparent staus in the Public Service World, their titles, budgets, size of desks and offices, whether they can travel 1 st Class on trains, or not. They have the latest lab tops, blackberrys and MP 3s too. I used to see them, all climb onto the train for London, when I used to travel from Newcastle. They also dress slightly differently to the rest of us, making sure at all times, you can see that they read “The Guardian” They are a “Closed Socialist Army” quite determined that the Private Sector will pay in spades, for their cossetted and priviledged life style. Their Gold Plated Pensions will be protected by major ongoing Country wide strikes – pure and simples – Simples!!! They hold the rest of us in pure contempt.

  14. Winston Smith
    Posted March 11, 2011 at 3:02 pm | Permalink

    Mr Redwood, this is all very well, but what is the Government doing to scrap pointless regulations and the legislative burden on public (as well as private) bodies? They have recently added a great deal more with the quite ridiculous Equality Act. All these regulations require administration; hence, more people added to the State payroll.

  15. David John Wilson
    Posted March 11, 2011 at 3:19 pm | Permalink

    The major worry seems to be that while the civil service is reducing the number of administration staff who are the lowest wage earners the number of middle managers is increasing rapidly. They are presumably doing the jobs previously done by the administrators at half the cost
    The other major worry is the number of middle managers who retire at around 55 on full pension having served their minmum number of years. The next week they reappear working on a contract for three days a week and earning the equivalent of their previous salary on top of their pension.

  16. Peter Turner
    Posted March 11, 2011 at 4:25 pm | Permalink

    When work loads remain the same or, indeed, continue to rise then the only way to reduce staff is to examine what is being done, why it is being done and how can we do it differently. This may well mean re-allocating responsibilities (i.e. treading upon someone’s toes), introducing new technology (i.e. de-skilling old methodology) and requiring flexibility (possibly inverting the hierachical pyramid and introducing matrix management accross hierachies). One thing that must be recognised is that a bureaucracy is not a suitable organisation structure when change, development, thinking outside of the box, flexibility and a dynamic enviroment are paramount.

  17. zorro
    Posted March 11, 2011 at 7:43 pm | Permalink

    In the actual Civil Service, there are fewer people employed, but there has been an unwarranted explosion in senior management grades with no previous connection/experience of the department they are now in….. There are, in some cases, far fewer operational officers than in previous years, but more ‘middle managers’ with no valid experience.

    People are being offered voluntary release when very close to retirement…. Operational posts are being removed which will lead to greater costs on the taxpayer because of certain laws not being enforced effectively.

    The explosion in actual jobs has been within the wider public sector (councils). Equality type legislation amongst others has created the massive increase in non operational jobs. There has also been wide scale ‘social engineering’ in recruitment. Qualifications are no longer required to join the Civil Service, just ‘competencies’.

    A more rigorous examination of recruitment practices within the wider public service over the last decade or so would be most illuminating. Please also do not forget the scandalous amounts of money spent on contractors (especially IT ones), particularly within the Civil Service.

    zorro

  18. Andrew Smith
    Posted March 11, 2011 at 9:30 pm | Permalink

    According to a well known recruitment agency, government and its offshoots need a large additional number of accountants so they can prepare to reduce the head count. It seems the existing staff are incapable of reorganising their affairs, no one in seniority has ever had to deal with a budget cut, and the darlings are in a tizz.

  19. English Pensioner
    Posted March 11, 2011 at 10:29 pm | Permalink

    Just as the government proposes to bring in outsiders on a “pay by results” basis to try to get some unemployed back to work, perhaps they should do much the same with the Civil Service & Local Government.
    I’m sure there are companies which would take on the task of going through each department and finding ways of reducing staff if they got, say, half the money saved in the first year. A sort of reverse Head Hunter in fact!

  20. StevenL
    Posted March 12, 2011 at 12:46 am | Permalink

    Yes, they’ve promoted themselves into all manner of faux managerial positions and weird and wonderful ‘strategic’ roles. Councils are full of people on £40k+ who are as thick as two short planks and do nothing of use. If anything, they just waste everyone elses time insisting they attend ‘awareness’ courses and things.

    The layers of management write reams of documents about ‘strategic leadership’ and the like. They hold endless meetings about the latest craze. But they don’t actually manage anyone. Basic things like punctuality are not managed and performance reviews are just a paper exercise. Standard practice for layabout unionised council officers who get disciplined is to take a greivance in return against their manager.

    Hence it’s not worth the hassle, you might as well just let them do what they like and try and climb the greasy pole by talking out of your rear end.

    • David John Wilson
      Posted March 13, 2011 at 11:36 am | Permalink

      My experience of working for ten years for a government agency entirely support the views being expressed in this thread.

      Having worked for private industry previously I was used to setting challenging objectives. The first time I set mine in the agency i was criticised that they were far too challenging.

      At the subsequent performance review I insisted that each of my objectives was reviewed in detail with the result that it was agreed that I had met or exceeded evey objective. My manager at the end of the review announced that I had been given an average grading (which had of course been worked out before the review). I then challenged this as differing from what we had just agreed that I had achieved. This sent the whole system into melt down as he had to go back to his manager.

      For the last five of my ten years I worked in a department of about twenty five people. The agency would have been more efficient if that department had simply not existed as its very few useful functions could easily have been performed by the other members of staff from whom it required weekly detailed reports in the time it took them to produce and discuss those reports.

  21. David Price
    Posted March 12, 2011 at 6:44 am | Permalink

    How on earth can a competent and effective manager not know what his staff costs and what their skills are? And you want these people to be treated significantly better than they allow those in the private sector to be treated?

    The current leadership expect the existing management structure to effect a cost and staff reduction that minimises services impacts and attendent costs of change. Clearly a large part of the problem is the existing management structure so that expectation is with the fairies.

    Something decisive needs to be done quickly otherwise more people in the public sector will lose their jobs and costs will mount than is necessary. I suggest very quickly establishing the precedent that public sector jobs are not for life. If the NAO assertions are true then fire for cause some of the senior types, the rot is set from the top so you need to start there. No golden handshake since they have failed and they have their generous pensions anyway. No re-employment as consultants, simply terminate their contracts.

    BTW don’t hire some external gunslingers to do this at unnecessary and considerable expense. Ministers need to grow a pair and deal with it themselves, otherwise what is the point of them. I do however suggest getting all those lawyers who currently waste our money gold plating EU regulations and producing apparently unenforcable laws to establish out a defensible legal footing for these actions. If they can’t do that then fire them as well.

    • David Price
      Posted March 12, 2011 at 2:16 pm | Permalink

      Having just read bits of the Civil Service Management Code I realise I may have breached the 2011 Equality Duty which of course is paramount and overrides all other concerns (such as actually doing the job properly). For avoidance of anti-diversity and discrimination my first paragraph above should of course have read;

      [I]How on earth can a competent and effective manager not know what [B]his or her[/B] staff costs and what their skills are? And you want these people to be treated significantly better than they allow those in the private sector to be treated?[/I]

  22. Electro-Kevin
    Posted March 12, 2011 at 10:12 am | Permalink

    Certain departments were set up to deal with specific problems. Unsurprisingly those problems then have a tendency get worse.

    When the raison detre of a department is to deal with a problem don’t be surprised when that department keeps the problem alive – to cure that problem would be like a Turkey voting for Christmas.

    The one saving grace of the austerity measures – we thought – was to finally be free from meddlesome, leftist and socially corrosive government departments.

    In suggesting ‘natural wastage’ one suspects the Tories are about to renege yet again and fail to challenge directly those vested interests who have caused such grave damage to our country.

  23. Kevin Marshall
    Posted March 12, 2011 at 11:12 am | Permalink

    “Organisations do not have comprehensive understanding of their own staff costs or skills in order to support this cost reduction activity adequately”

    There are two implications of this statement.
    1. Staff are far from being optimally employed. There is therefore a huge potential for reducing numbers without reducing output.
    2. When someone claims that cuts in numbers will have a drastic effect on services provided, they will do from a lack of knowledge. This is particularly true of someone who is outside the central management structures of the organization in an instant reaction to any change proposed.

    The problem of getting the highest level of service for the lowest cost is an optimization problem. To get the optimal results requires dynamically and optimally using the limited knowledge that is available. The New Labour doctrine of spin selectively used knowledge to gain political advantage. The result was that we have a deficit not of knowledge, but how to use that knowledge to the achieve the best outcomes. The managers in place need to learn new skills on effectiveness.

  24. REPay
    Posted March 12, 2011 at 1:51 pm | Permalink

    Reading this I now realize that Yes Minister was not a comedy but a hard-hitting documentary. Sir Humphrey/Spendlove/Doolittle are in control and the politicians are revolving door PRO’s who have no real impact on this self-serving kleptocracy that is beggaring us. We occasionally have the right PR men in those revolving door jobs but to counter them there is the whole BBC and half the rest of the media.

  25. Bazman
    Posted March 12, 2011 at 7:45 pm | Permalink

    It is true that the cost of employing people is expensive, so just sack them all and then re-employ them using agencies that cost a fortune. Nurses are a prime example. Council workers? Raking it in! Gold plated pensions with an average of £7500 a year combined with low wages? Natural turnover often means not replacing very necessary people. Political dogma and right wing fantasy.
    The more I read the nitwit contributions to this site the more I feel the need to launch a Fatwa against right wing stupidity. Did the banking crisis just fly over the heads of these people like cardboard over Paris? This is coming from a man with very little education. How much are you on? Where do you live? Personal? You bet!

    • lifelogic
      Posted March 14, 2011 at 2:33 pm | Permalink

      Gold plated pensions in the sense of being ten times those of the average private sector worker who funds them but cannot fund his own.

      Yes we all know of the banking crisis and the huge failure of Gordon Brown and the state sector to regulate it properly. And we know of the huge over borrowing and spending by brown which exacerbated it all and Brown’s botched bank rescue schemes.

      Anyway do you have any actual solutions to propose yourself?

      • Bazman
        Posted March 15, 2011 at 9:28 am | Permalink

        So you want something regulated? Won’t the market sort it out? The solution is to break up the banks.

  26. Agenda bender
    Posted March 16, 2011 at 1:19 am | Permalink

    Critics of privatisation often cite the profit-motive as a reason why privatised services will inevitably cost more. However lack of a profit-motive in the public sector causes costs to spiral out of control simply because there isn’t a vested interest to control them. Indeed, it is often the opposite, I have heard reports of needless overtime and procurement in order to ensure that the remaining budget is used up.

  27. hey ho
    Posted March 16, 2011 at 10:57 pm | Permalink

    http://www.publicsector-efficiency-expo.co.uk/seminar-speakers/

    I was there (accidentaly) and boy oh boy would you be staggered, so many public sector staff sitting around having endless coffee on their day off from whatever they are supposed to do for a job, chatting about the weather, chattting about the kids, chatting about how hard it is being in the public sector

    If I was Eric Pickles I would ask for a list of the delegates and sack every last one of them as they are clearly not needed

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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