It is easy to see the ‘push’ benefits of relocating civil servants out of London. Occupancy and labour costs will be lower (although this will be partly offset by the costs of implementing the proposals). It also provides an opportunity to offer higher quality accommodation that meets a wide variety of objectives, including improved energy efficiency, lower running costs, layouts better suited to collaborative working, and ‘wellness’ features that improve the health and wellbeing of staff.
The ‘pull’ benefits are perhaps even higher up the Government’s list of priorities, given its ‘levelling up’ agenda to boost economic growth in regions outside of London and the south east, particularly in the north of England, and to make policy and decision-making less London-centric.
20% of all civil servants are based in London, which accounts for a corresponding 20% of the overall stock in the central estate. Given London’s size and status, this does not appear unduly weighted towards the capital, when one considers that 25% of UK output is generated there.
But of course, the objective is to help increase the level of output contributed by the rest of the UK. There are sound economic arguments for this, and it is one of the keys to raising the UK’s woeful productivity performance as the economy rebuilds post-COVID-19.
The original Lyons project gives cause for optimism on the potential benefits to the regional economies. Research in 2015 by the Spatial Economics Research Centre found that the Lyons strategy did indeed benefit local economies. It estimated that for every 10 civil service jobs that relocated to an area, 5.5 local private sector jobs were created (although there was some crowding-out of the manufacturing sector).
The over-centralisation of government decision-making in London is widely acknowledged as a problem for the UK (and England in particular). Although a fifth of civil servants are London-based, the picture looks very different when considering the seniority of roles. According to the Institute for Government, 68% of senior civil servants are located in the capital, whilst only 9% of the less senior grades are located there. In the northern regions, the picture is reversed. The North East, for example, accounts for 7% of all civil servants, but has only 2% of senior civil servants.
The relocation strategy is targeted across all civil service grades with an objective that many senior grades are relocated. This is a vital element for the success of the project, but the decision-making process must also be devolved. The Government’s proposal is unlikely to succeed by simply relocating large numbers of civil servants to some selected cities in the north, if key decisions continue to be taken in London.
In reality, there is likely to be a natural limit to how much relocation can occur. London remains the nation’s capital, and it is perhaps inevitable that the most important policy decisions will be taken there. Many of the senior roles will still need to be in London for much of the time, and there will probably be resistance to the proposals. The risk, therefore, is that it will be predominantly the lower level jobs that will move, potentially undermining the concept.
Then there is the question of which towns and cities should benefit, and there will inevitably be winners and losers. The agglomeration of skills has always been a key ingredient of economic success, both for organisations and places. Successful places build on their existing strengths, specialisations and skillsets, and it can be difficult to artificially create them.
Choosing the optimum locations will be a fine balancing act - the wrong choices could be detrimental to the civil service whilst not providing the hoped-for economic benefit. HS2 may well influence where the new regional civil service hubs are based. Rapid access to London could be an advantage if senior civil servants are required to attend meetings in London on a regular basis.
But perhaps there is a more fundamental question mark over this approach, to uproot jobs from one part of the country to another. Is this concept now outdated, given the increase in home working and speculation as to how the entire office model and its role in supporting businesses might evolve?