19 January 2021

Moving the Treasury up north is condescending tokenism

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The Government wants to shift 22,000 civil servants out of London by 2030. In the first stage, Leeds, Newcastle and Teesside are reportedly now in the running to host a 750-person “Treasury North” campus.

This has sparked a regional tussle. Ben Houchen, the Tees Valley Mayor, has demanded that Teesside, not Leeds or Newcastle, be the home of Treasury North. Houchen wants Conservative Red Wall voters to be “rewarded” with a sliver of civil servants.

The demand for a town, rather than a city, reveals the absurdity of the entire project. For decades the global story has been the drive towards cities. The Chancellor risks a gigantic loss of expertise by attempting to work against the career and lifestyle desires of the next generation of civil servants. The result would be a loss of talent and lower quality of policy making and public services — having actual negative impacts on Red Wall voters and Conservative electoral prospects.

This was the experience when the Office of National Statistics relocated to Newport. The subsequent independent review of economic statistics found the relocation led to a loss of nine-in-ten London-based staff and erroneous data and diminished analytical capability. The review concluded that relocation had a significant “detrimental effect on the capability of ONS and the quality of its outputs over the past decade.”

Political symbolism should not be a relevant factor when deciding the location of civil servants. The key question should be attracting capable individuals, who can learn from each other in large numbers, creating “amalgamation effects”, and links with academia and the private sector.

Thankfully Britain already has a city that fits the bill. London provides a deep pool of talent. It attracts the best and brightest who seek career progression, across the private and public sectors, as well as social, entertainment, and cultural benefits.

Houchen’s other justification is to “change the mindset of civil servants”. This is a more robust consideration. Almost three-quarters of civil servants, particularly those on the frontlines, are located outside of London. But policy and senior decision making roles are concentrated in the capital. They are often rightly accused of being out-of-touch and monocultural.

Michael Gove, the Chancellor of the Duchy of Lancaster, made the same point the Ditchley Annual Lecture last year: “Wouldn’t it be better for those deciding how taxpayers’ money is spent to be living and working alongside those citizens across the country, from Mansfield to Middlesbrough to Merthyr Tydfil, for whom every pound in tax is a significant inroad into their income? Should we not also be better at recruiting our policymakers from those overlooked and hitherto undervalued communities?”

The key flaw in this logic is that a civil servant does automatically gain the ability to represent the entire country because they happen to not be located in London. A civil servant can only live in a single place, and unless Gove is suggesting that everywhere outside of London is the same, a relocation will do little to increase understanding. In any case, there is a big risk that ‘Treasury North’ just creates a ‘mini-London’: attracting the same sorts of people with similar views to those who live in central London.

There is also a danger that relocations make life harder for the private sector in an area. The Government plans to drop in with thousands of jobs paying high London salaries, both in policy roles and auxiliary jobs like building management, cleaning and IT. This will create pressures on the local labour market: leading to higher labour costs, making it harder for small businesses in the area, and crowding out other private sector activities. This means there are limited local benefits.

Shuffling around civil servants is unlikely to make much of a contribution to ‘levelling up’. An analysis by the Centre for Cities found the creation of MediaCityUK in Salford, Manchester which hosts the BBC’s northern hub, had a “negligible” effect on local employment – but did come with a decline in other media jobs in Greater Manchester between 2011 and 2016, indicating some crowding out.

Despite hopes to diversify local employment, the relocation also risks creating a Factory Town phenomenon, an area dependent on a single employer, the state. This is not healthy: towns with diversified economies tend to be more adaptive to economic change than ones over dependent on a single employer. It will then become impossible to undo because of pressures to never relocate civil servants for the risk of destroying a small town.

There is nothing new to the idea of moving civil servants out of London. It was first proposed by the Flemming Review in 1963, mocked in Yes Minister, became a repeated motif during the New Labour era and, most recently, even Labour’s John McDonnell proposed moving parts of Treasury to the north.

The Government should think more creatively about how to improve local decision making – by allowing communities to meaningfully take back control. The United Kingdom has among the most centralised governance in the world. Power and responsibilities – including the ability to raise revenue to ensure a link between local decision makers and the purse strings – must be decentralised far more deeply. This will allow for far greater policy experimentation and use of local knowledge and capabilities.

Shuffling civil servants around the country is little more than condescending tokenism – it risks lowering the quality of government, is unlikely to change culture or increase representativeness, and risks pushing up local labour costs. The focus should be on empowering local decision makers, rather than wasting time and effort shuffling around civil servants.

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Matthew Lesh is Head of Research at the Adam Smith Institute.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.