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Authorities departments charged with attracting inward funding to the UK and selling British exports are going through important job cuts as a part of the forthcoming spending overview, Whitehall insiders have warned.
The proposed headcount reductions come regardless of repeated pledges by the chancellor and prime minister to draw extra traders to the UK and enhance financial progress.
One individual with information of the discussions stated employees within the Division for Enterprise and Commerce had been warned of headcount cuts of “30 to 40 per cent”, below proposals to merge two items concerned in selling the UK as an funding vacation spot.
A second individual stated there have been plans for a “brutal haircut” to export promotion groups within the “zero-based” spending overview, the place departments should begin with a clean sheet and justify their staffing ranges.
The Division for Enterprise and Commerce stated that it “didn’t recognise” the hypothesis of 30 to 40 per cent cuts, including that no last selections have been made on headcounts.
Nevertheless, officers accepted that the overview, which concludes in spring, was imposing powerful selections on all Whitehall departments.
A 3rd individual accustomed to the method stated that commerce unions had raised considerations in regards to the restructuring. The Public and Business Companies union, which represents greater than 190,000 civil servants, declined to remark.
Officers stated the cuts to inward funding staffing had been taking place in tandem with a merger between the 25-person Workplace for Funding — a joint Treasury, Quantity 10 and enterprise division physique arrange in 2020 — and the a lot bigger inward funding promotion directorate in DBT.
Sir Keir Starmer promised final October to “bolster” and “revamp” the OFI alongside the appointment of Baroness Poppy Gustafsson, co-founder and chief government of cyber safety firm Darktrace, because the minister for funding.
One individual accustomed to the restructuring stated that ministers deliberate to show the OFI, which had beforehand operated like a small group of cross-departmental “fixers”, into the principle company for selling funding.
The proposals comply with suggestions by Lord Richard Harrington in his 2023 overview of the UK funding panorama, wherein he stated the OFI wanted “to be given stronger backing from central authorities” as a part of a brand new enterprise funding technique.
Its beefed-up position may even embody strengthening hyperlinks with regional mayors, utilizing mixed authorities to assist draw up regionally based mostly funding propositions to draw traders.
Tom Pope, deputy chief economist on the Institute for Authorities think-tank, stated there was a powerful financial logic behind better use of mayoral mixed authorities to draw FDI.
However, he added, there was at present a “capability hole” in employees and experience at MCAs to ship the ambition.
Nevertheless, two insiders stated that regardless of its bolstered position, merging OFI with the enterprise division’s funding directorate would nonetheless result in a web discount in headcount.
“We’ve been informed it’ll imply diminished capability general, and no enlargement of headcount or providers,” stated the director of 1 UK regional commerce promotion physique.
The modifications to the funding directorate had been introduced to employees at an “all palms” name earlier this month, with a request for “as much as 40 per cent haircut” in general staffing numbers, in accordance with one account of inside discussions.
Jordan Cummins, the top of the CBI’s UK competitiveness division, stated that the problem was to each bolster the OFI whereas additionally making headcount reductions inside the division, which had been anticipated as a part of the spending overview.
“Deckchair shuffling as a part of the spending overview is barely the 1st step. Step two is making this new physique extra conscious of traders, useful to mayors and clear for companies. That begins with the funding minister setting out a imaginative and prescient for what she needs to realize,” they added.
UK commerce efficiency has been weak since Brexit in contrast with different G7 international locations, with UK commerce as a share of GDP now 3.5 per cent beneath pre-pandemic ranges, with items exports down by 20 per cent over the identical interval, in accordance with the Workplace for Nationwide Statistics.
The British Chambers of Commerce stated that it was trying to deepen partnership with the enterprise division with a purpose to enhance export and commerce promotions, citing research exhibiting the federal government assist for commerce led to corporations being extra more likely to export and survive recessions.
William Bain, head of commerce coverage on the BCC, stated the group could be apprehensive by cuts to export promotion actions. “That is the second, if you wish to improve progress and have a look at reversing current commerce losses, to be making a focused funding in export promotion,” he added.
The enterprise division stated that boosting commerce and funding had a significant position to play in delivering the federal government’s financial progress mission and the division would proceed to assist British enterprise to export and entice funding.
“We’re creating a brand new funding promotion company, that will likely be extra streamlined and nicely expert, to supply a greater service to our key traders and safe the funding our financial system must drive jobs and progress,” it added.
