Downsizing Stormont

The Westminster coalition has been keen to avoid any substantial alterations to the machinery of central government. The prime minister believes that the current departmental structures are sufficient to deliver its objectives, and has been eager to avoid the constant reorganisations that became a feature of the New Labour government.

However, there has been a trend over the past few years for the UK’s devolved administrations to reformulate their administrative structures. In Scotland and Wales, politicians empowered by devolution came to believe that the systems of government they’d inherited had deep-seated structural flaws. Their solutions saw a reduction in the number of departments, and the introduction of a more flexible approach to government. In 2007, Scotland completely scrapped its rigid departmental system, replacing it with a series of directorates that focus on particular outcomes, and operate without their own HR, finance and other back-office functions. Wales has also restructured its departments over the years, under successive permanent secretaries (see interview with Derek Jones).

In Northern Ireland, however, there has been very limited change to government structures since their establishment in 1998. Political sensitivities heightened by decades of conflict, and the need for consensus when making any changes, have deterred politicians from trying to reshape the structures of government.

Things are slowly changing, though. Now that politicians in the region have proved that they can work together, the Northern Ireland Executive has decided it is time to re-evaluate the structures it has in place. In its Programme for Government, it committed to “agree to any changes to post-2015 structures of government in 2012”. It didn’t manage to meet that deadline, but work to reshape the Executive is ongoing – along with a broader reconsideration of the size of the Assembly, and the powers and the number of local authorities.

In order to prod things along, two weeks ago the Northern Ireland Office (NIO) published draft reform legislation: while it has left the decisions on how Northern Ireland’s government will look to the politicians, Westminster has been quietly lobbying for reform for the past few years. As civil servants in Northern Ireland plan to restructure their government and pass powers down to local bodies, CSW has looked at the scale of the challenge, and spoken to experts about how best to approach the task ahead.

A troubled birth

Northern Ireland’s departmental structure has not been designed primarily to deliver public services efficiently, but for reasons of political expediency, explains Professor Richard Wilford of Queen’s University, Belfast. Under direct rule there were six departments, but the Good Friday Agreement indicated there could be up to 10 departments, plus an office for the first minister and deputy first minister. The number of departments was being negotiated alongside the number of cross-border organisations, which was a far more contentious topic. The unionists insisted that there couldn’t be more cross-border areas of cooperation than departments, so the republicans insisted on the largest possible number of departments.

The areas of departmental responsibility were also formed primarily around the requirements of politics – the need to share departments out between the parties – rather than effective public service delivery, Wilford says. Indeed, he told the Northern Ireland Assembly last year that “it was a very clunky affair, and I do not think that there was any considered administrative reasoning about what went where”.

Beyond deciding who got what, politicians didn’t play much of a part in designing the departmental structures, Wilford says, and civil servants took the lead. This was problematic, he adds: “I interviewed officials from the first administration and there was no planning, no forethought as to what the departmental structure would look like. They were making it up as they went along in 1998 and the spring of 1999.” Civil servants were much more comfortable with a traditional departmental model rather than the more radical approach later used in Scotland, so “it became a conventional design by default; and once you establish a system, inertia kicks in. If it ain’t too badly broken, the view was that we don’t need to fix it”.

The Labour Government tried to reshape public administration in 2002, putting forward reforms to local authority boundaries at a point when the political parties had fallen out and direct rule had been re-imposed. According to Professor Colin Knox of the University of Ulster, this was partly a ploy to force Northern Irish politicians to re-engage with the peace process. “Our local politicians did not like the blueprint, drawn up by direct rule ministers, and essentially [Labour] said: ‘If you don’t like it, get yourselves back into devolved government’.”

That reform process, which was limited to local government, is now well underway (see box), but all sides left central government reform well alone in the aftermath of the return of power to Stormont. The only significant change has been an increase in the number of departments, with a new ministry established when justice powers were devolved.

What’s going on?
The status quo changed with the arrival of the coalition’s first Northern Ireland secretary, Owen Paterson, who made it his mission to “normalise” the province’s political institutions and reduce the size of the state.

Both Wilford and Knox argue that there is strong popular support for reform. “It chimes with the austerity times we’re living in,” Wilford says. Certainly, for a region with just 1.8m people, Northern Ireland does have an enormous number of public bodies. “We’ve got all of these tiers of departments, non-departmental public bodies, local government and trusts,” Knox adds. “Why do we need all of these structures?”

The Executive therefore began to assess its political institutions, as did the Assembly. Ministers have conducted a number of reviews into various aspects of the political system, including dual mandates (members with elected positions in both Westminster and Stormont), the number of assembly members, and the possibility of establishing an official opposition.

When it came to the topic of how many departments Northern Ireland should have, the Assembly wasn’t particularly decisive. Its Assembly and Executive Review Committee looked into the topic, but couldn’t agree on any formal recommendations.

Eventually, last year the Democratic Unionist Party first minister and the Sinn Féin deputy first minister did publicly call for one department to be abolished: the Department for Employment and Learning. Funnily enough, this department is one of the two run by the non-sectarian Alliance Party: its leader publicly criticised the plan and, ultimately, the decision was postponed.

The publication of a draft bill by the NIO has kick-started the process again, but it is going to be a sensitive and difficult problem to resolve. “The way ministers are appointed in Northern Ireland is on a strict proportionality basis, and it’s tended to mean that each department is more independent than it would be otherwise because they’re all answering to different parties,” explains Professor Patrick Dunleavy from the London School of Economics. Further, “whenever you have a reorganisation, everyone invests in what economists call rent-seeking, which is protecting their job and division,” he warns.

Sir John Elvidge was head of the Scottish Civil Service in 2007 and led the programme to restructure its executive. He explains that in any restructuring process, “you undoubtedly do get attachments to existing structures, and there’s no doubt that it is hard for [party] leaders to make structural changes against the will of the powerful and experienced members of their cabinets”. Nevertheless, while there is “an element of negotiation with ministers whose responsibilities will be affected, there’s normally a way of reconciling the interests, on the assumption that there’s a clear logic to the change”.

Top tips
Typically, UK governments do not handle machinery of government changes well. A National Audit Office (NAO) publication from 2010 analysed more than 90 reorganisations of central government departments and their arm’s length bodies between May 2005 and June 2009 – more than 20 a year. It estimated the gross cost to be £780m, an average of £15m – but Dunleavy wrote a report for the Institute for Government on the topic, and says that big changes can be still more costly: he believes the reorganisation of the DWP cost £180m.

Further, the NAO report says that “the value for money of central government reorganisations cannot be demonstrated given the vague objectives of most reorganisations, the lack of business cases, the failure to track costs, and the absence of mechanisms to identify benefits and make sure they materialise”.

Meanwhile, the Northern Ireland Assembly and Executive Review Committee has published six principles that it thinks must be adhered to when Northern Ireland restructures its departments. The committee says that no two departments should have overlapping responsibility; functions must be grouped into manageable organisation sizes; administrative efficiency should be subject to a full cost-benefit analysis; there should be “planned and timely decisions” to establish new structures; final decisions must be consistent with the reform of other parts of government; and customer-facing services should be grouped and organised to ensure a better service to the public.

In Scotland, Elvidge scrapped departments entirely; but he says that even if departments are retained, the restructure should be “about responding to shifts in the weight of government activity, and the need to devote resources to particular things or get a stronger focus on particular issues.”

Common problems
Even if the approaches advised by Elvidge, Dunleavy and the NAO – which has also set out best practice guidelines – are followed, it will be difficult to avoid all the risks of restructuring. One problem is staff morale, Dunleavy says, citing the short-lived Department for Innovation, Universities and Skills (DIUS). That department “spent a whole year trying to persuade staff they were doing great, that there really was a strong link between innovation and skills, and defining a corporate vision”. Then DIUS was abolished; Dunleavy warns that such reversals can “make staff quite cynical”.

Elvidge agrees that restructuring “certainly does have an effect on morale”: where departments are merged, he says, the effect tends to be negative. However, “if you’re pulling functions out of larger units, it can have a positive effect on people who feel that their function is enjoying greater significance”. In Scotland, restructuring “had a huge positive boost on morale; it energised the organisation very powerfully because it’s more of an all-in-it-together approach”.

A second problem is that reorganisations tend to lead to a staff exodus; though the Executive hopes to make savings, so this might not necessarily be a problem for the organisation. “Quite a lot of experienced people take reorganisation as an opportunity to leave,” Dunleavy says. “If they feel that the new organisation isn’t structured in the right way and things they’ve spent years of their life building are jeopardised, they leave.”

Systems integration can also prove problematic, Dunleavy warns. There can be many problems with merging different departments IT systems, and different pay scales can be a source of difficulty – although in Northern Ireland pay is set centrally.

Clumsy reorganisations can be distracting, Elvidge says. “Reorganisations absorb managerial energy, and that energy cannot be spent on driving policy at the same time. There’s always an opportunity cost to reorganisation, so it’s just a question of whether the gain in terms of the effectiveness of government is greater than the opportunity cost from disruption.” He recommends restructuring at the beginning of a new administration, because it’s easier to assimilate machinery of government changes then and departments are already readjusting to a new government.

Dunleavy argues that reorganisations can affect service delivery, and has just published a book researching productivity in the public sector. In it, he says, he argues that “reorganisation almost always has a very bad impact on productivity”. However, Elvidge disagrees, saying that “in all of these reorganisations, you’re generally not changing your delivery structures below the top level, so for most people, their working relationships don’t change. There shouldn’t be a huge threat to delivery, and often these changes are made in the expectation that delivery will be improved”.

But what are we reorganising into?
There is disagreement in Northern Ireland on exactly what the future structure of the administration should be, but the Assembly Executive and Review Committee did find some areas of commonality. There was, for example, agreement on the need for a dedicated department for the economy. Wilford also called for this while giving evidence to the committee, and explains that “economic responsibilities are currently distributed rather widely across the Executive”. The committee also said that the parties agree on the retention of the departments for health, justice and education; on combining the agriculture and rural development department with the environment department; and on creating a new department for communities and social housing. These areas of consensus will see Northern Ireland look much more like Whitehall; as Elvidge notes, “if you look around the world, departmental structures have a striking similarity”.

A final area of agreement concerned reform to the Office of the First Minister and Deputy First Minister. The office “was created very much as an afterthought – it wasn’t included in the Good Friday Agreement itself,” Wilford explains. It therefore currently has a number of its own delivery responsibilities, such as regeneration of infrastructure, social investment and equalities; Wilford believes it should be “modelled along the lines of the UK Cabinet Office, with a strategic policy hub role”. Elvidge comments that in Scotland he worked hard to avoid any rift “between the centre and those bits of government that are concerned with specific delivery. We always had a centre of a kind, but it’s always been deliberately a light-touch centre”.

That areas of commonality have been found suggests that some reforms will be achieved; Wilford envisages progress by 2015. The head of the Northern Ireland Civil Service, Dr Malcolm McKibbin, has somewhat subverted the current departmental system anyway by appointing senior responsible owners (SROs) to each priority set out in the Programme for Government – even where they cross departmental boundaries. This is more in-keeping with the Scottish approach, and seeks to overcome the silo-thinking that can occur in a highly regimented system.

Politicians still need to agree on how restructuring will affect ministerial positions, and ensure that all points of view are carefully balanced in a system built around a requirement for consensus. But when civil servants start to find ways around the constraints of a departmental system it indicates that, among officials at least, there’s a readiness to reform the existing structures.

However, last time, the shape of the Executive’s structures were decided by horse-trading and the need to balance each party’s portfolio. The danger is that as the negotiations get down to the details, the aims of efficiency and effectiveness are once again subverted in the interests of securing agreement from the two long-divided communities of Northern Ireland.