## Notes from 11 June 2025 [[2025-06-10|← Previous note]] ┃ [[2025-06-12|Next note →]] ### Notes on "[Smaller, Better, Higher Paid?](https://policyexchange.org.uk/publication/smaller-better-higher-paid/)" This [[Policy Exchange]] [report](https://policyexchange.org.uk/wp-content/uploads/Smaller-Better-Higher-Paid_.pdf), published on May 29, 2025, offers a critical insider's perspective on the structure, costs, and workforce management of the [[Public Sector Reform in the UK|civil service reform in the UK]]. Stephen Webb, a former high-ranking civil servant himself, writes with a practitioner’s clarity. Notably, the report is self-critical of Conservative reforms despite being published by a conservative think tank. The report's core message is clear: unless the civil service undergoes serious restructuring (including pay reform, de-layering, and reducing headcount), it will remain overinflated, ineffective, and unattractive to talent. - It argues for a £5bn annual savings plan via smarter workforce management, not just austerity. - It pushes for better alignment of incentives — keeping top performers, letting go of weaker ones. - The tone is pragmatic, not punitive: the paper repeatedly affirms that most civil servants are conscientious and hardworking. #### [[Performance management and appraisal|Performance and dismissals]] - There's a compelling section (p. 9 and p. 33–34) on how performance is treated inside departments. - Fewer than 0.5% of staff are dismissed for any reason. - In some departments like the Cabinet Office or DfE, it’s _fewer than 1 in 1,000_. - He references the [[Civil Service Surveys|UK People Survey]], where only 41% of staff felt poor performance was addressed — that question has since been removed. - Crucially, he stresses that poor performers are often retained while the best (top of the distribution) are more likely to leave — a dynamic that "requires a conscious strategy to reverse." #### Grade inflation - Grade inflation is a major villain in this narrative. The report includes a stark _“Grade Pyramid” chart on page 6_ showing how the civil service has become middle-heavy. - Grade 6 and 7 roles expanded 121% since 2010. - Administrative Assistant and Officer roles dropped 45% over the same period. - Real pay _per grade_ fell, but the average _civil service pay bill_ remained flat. Why? Because more people are being promoted to higher grades. > A standout line: _“Promotion is now the main route to securing a significant pay rise.”_ - The author is particularly sharp on private secretaries: same responsibilities over the decades, but now inflated to SCS or even Director General levels. #### Pay structure and inequity Webb does not push a simple “cut pay” narrative. Instead, he zeroes in on internal inconsistencies: - **Uncompetitive for specialists**, **over-generous in low-productivity areas**: - “Pay packages that are uncompetitive in some areas and over-generous in others.” - Civil servants earning <£40k are set to retire with pension packages _higher than their salaries while working._ - Strong argument for **flexibility**, either: - Radical delegation of pay (more autonomy to departments), or - A return to **Single Employer** model to reduce transaction costs and friction. - He cites United Learning’s pension reform as a model: 10% pay rise in exchange for switching to defined contribution schemes. **Critical take:** Webb doesn’t advocate one over the other — he defends _either_, but only if done decisively and strategically. Nuanced, not ideological. #### Functional siloing and cross-government challenges One of the most elegant critiques is about **cross-departmental management** ("[functions](https://www.gov.uk/government/publications/government-functions/government-functions)"). > “_A profession that is semi-autonomous from parent departments has slightly different incentives…_” - The author shows how central functions — digital, commercial, HR — have expanded disproportionately. - Each ‘function’ pushes for its own agenda, creating complexity and over-regulation. - _Example:_ Cabinet Office commercial teams pushing for regular re-tendering → adds bureaucracy → discourages suppliers → paradoxically reduces competition. **Big-picture concern:** this setup weakens accountability. Risk lies with departments, but authority lies with central "function leads." ## Size and scope of policy teams The title of one section says it all: **“Too much policy – doubling the proportion of yeast doesn’t improve the bread.”** - Since 2016, the policy profession doubled in size — driven partly by Brexit, but not reversed after. - _Chart on p. 26–27_ shows: - Policy leads grew 2x faster than frontline staff in policing. - 3x in education. - 5.6x in counterterrorism. - The ratio of advice to delivery is now dysfunctional. Webb is saying: more policy = more noise = less clarity, not more impact. **Notable rhetorical move:** He stresses that reducing policy teams will _help_ ministers, not weaken them. Fewer policies = more focus. #### Leadership churn - Median time in SCS posts: under 2 years. - Permanent Secretaries are now appointed younger than in past generations (mid-40s). - Career tracks are increasingly narrow, focused on fast rotation between policy roles — with little time in corporate or delivery functions. **Result:** leaders with high _verbal dexterity_ but little embedded knowledge of their departments. **Impact:** This institutional memory loss may be a direct consequence of reforms meant to professionalize government. > “_Nobody outside HMT and FCDO has 15+ years in their current department._” #### Purchasing, commercials, HR - HR accounts for over 2% of civil service staff — twice the accepted benchmark. - Even as back-office transactions are outsourced, these functions keep growing. - Webb cites former senior officials calling for: - **60% cuts** in the Government Communication Service - radical cuts to HR and Commercial - Function leads in the centre (like in Cabinet Office) are seen as pushing reforms while shifting risks to departments. #### Final recommendations and political strategy Webb’s tone is technocratic, but the strategy is political: - **Cut 80,000 jobs**, return to 2020 staffing levels. - Target: - 50% reduction in SCS, - 40% in Grades 6/7, - 30% in Commercial, - 60% in Comms. - Use performance-based exit strategies — not just voluntary departures. - Reinvest savings into: - Higher pay for top civil servants, - Flexible pension reform, - Better spans of control. **One key insight:** Ministers often sign off on “reforms” but don’t monitor execution. Webb urges tighter political oversight to prevent the drift seen post-2010 austerity.