IFG - Costs of creating a new government department revealed
The incoming – or returning – prime minister may want to stamp his or her authority on government by rearranging departments, but new research lays bare the total costs involved in creating new departments.
Creating and dismantling government departments finds the direct costs of creating a new department start at £15 million, with a further estimated cost of up to £34 million when including loss of productivity as staff adjust to the new organisation.
Moving policy areas between government departments – or creating completely new departments – is one of the prime minister’s key levers of power. But many of the most recent changes seem to have been made without proper forethought and have – in some cases – ended up costing more than any benefits returned.
The authors argue that, while creating a new department can be useful to focus on a high priority issue or to bring together related policy areas, most changes are rushed through either to send a political signal or to reward allies. These changes can end up causing confusion and the hassle of setting up a new organisation distracts from the problem the government wanted to solve.
Tim Durrant, Institute for Government associate director, said:
“Whoever becomes prime minister may want to signal change by moving departments and creating new ones. Instead of making rapid changes and expecting the new department to be up and running immediately, the incoming prime minister should think through what exactly the new department should do, spending time and money to get it up to speed.”
Gemma Tetlow, Institute for Government chief economist, said:
“Jeremy Corbyn has previously suggested two new departments – for labour and housing – and senior Conservative figures, like Dominic Raab, have suggested merging international development into the Foreign Office. But unless these changes are properly planned, the costs can largely outstrip the benefits.”
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