Spending review: GDS continues but big cuts ahead in Cabinet Office

The Cabinet Office is set for higher than average budget cuts in next week’s spending review, while the future of the Government Digital Service (GDS) appears to be secure – but smaller.

Chancellor George Osborne announced this week that seven more departments have agreed their spending review settlement with the Treasury – the Department for Energy and Climate Change, the Department for Work and Pensions, HM Revenue and Customs (HMRC), the Cabinet Office, and the Scotland, Wales and Northern Ireland offices.

But according to an email sent to staff by Civil Service chief executive and Cabinet Office permanent secretary John Manzoni, his department is going to be hit harder than the others.

“The chancellor has announced an average reduction of 21% across the seven departments. In reality the final settlement for the Cabinet Office could be higher than 21% and this will be detailed in the Spending Review next week,” said the email.

Another Manzoni email said: “We will need to be smaller, which means also considering how and when to exit some of our people.”

He has previously said that, “The good stuff happens when you put great people out in the departments. It doesn’t happen when you put great people in the centre,” so it seems that the spending review is the catalyst for that shrinking of the Cabinet Office.

It appears that GDS has had its core budget agreed and will continue – despite speculation to the contrary over the summer when its former chief Mike Bracken announced his surprise resignation.

But GDS will have to take its share of the wider Cabinet Office cuts. Insiders suggest those cuts “could bite quite hard” but the details are under wraps until after Osborne’s autumn statement on 25 November.

GDS’s budget for the year to March 2015 was £58.345m. The biggest chunk of that was allocated to the Gov.uk website, which received £17.1m. Gov.uk has completed the costliest and most resource intensive phase of its development – the migration of all government and agency websites – and is now in more of an ongoing maintenance mode, so its budget seems feasible to be reduced.

GDS has always carried a large number of contractors on short, fixed-term contracts – 210 of them, compared to 425 full-time staff – so an obvious response would be to let those contracts naturally expire and not to replace them, protecting permanent civil servants from the worst of any cuts.

The full post-spending review business plan for GDS is expected to be published in December.

According to an article on the Spend Matters website, the Crown Commercial Service (CCS) – also part of the Cabinet Office – is already planning for job cuts. Matt Denham, commercial delivery director, reportedly told a procurement event in London earlier this month that changes in CCS will see its strategic category management team reduced by half from its current 270 staff.

My bet is that Osborne will highlight digital transformation as one of the key elements of meeting his ambitious austerity targets – probably singling out HMRC’s plan to shut 137 offices and move to 13 regional centres by 2021 as an example, a move enabled by its digital strategy.

As such, GDS will still be central to meeting those targets – but seems likely to be doing so as a smaller, more tightly focused organisation.