Yesterday, (Tuesday 16 June), the Prime Minister announced to Parliament that the Foreign and Commonwealth Office (FCO) and the Department for International Development (DFID) will merge to form the Foreign, Commonwealth and Development Office (FCDO). 

This Insight gives some background to this change and answers some common questions about departmental reorganisations, also known as ‘machinery of government’ changes.  

What is changing? 

The FCDO will be established in September 2020. It will be led by the Foreign Secretary and combine the functions of DFID and the FCO. 

DFID was established in May 1997. A department with many of its functions has existed under different names on and off since 1964. The FCO has existed as a separate department since 1782, originally called the Foreign Office. 

Why are departments reorganised? 

The Prime Minister has almost complete discretion over how to organise government departments.  

Boris Johnson justified the merger of DFID and FCO by saying it would: “unite our aid with our diplomacy…[to]…strengthen our position in an intensely competitive world…” Merging DFID and the FCO has been his aim for some time. Johnson appointed a joint ministerial team to the FCO and DFID in February 2020 (although they had different Secretaries of State). This was interpreted at the time as prefiguring the merger

Three former Prime Ministers (Tony Blair, Gordon Brown and David Cameron) have criticised the decision to merge DFID and the FCO

Some reasons for reorganising departments, usually related to the ideological priorities of the government, are: 

  • Increasing focus on a specific issue that the Government wants to indicate is a priority. For example, the creation of the Department for Exiting the European Union in 2016. 
  • To bring together similar policy areas. For example, the creation of the Department for Energy and Climate Change in 2008.  
  • To encourage collaboration between different policy areas. For example, bringing higher education into the Department for Business, Innovation and Skills in 2009 to encourage the alignment of businesses, university education, research and innovation.  
  • To improve the delivery of government services. For example, the creation of the Department for Work and Pensions in 2001 combined job seeking support services with pensions and benefit administration. This is a rare example of a departmental reorganisation that was long planned, with various options formally reviewed and tested. See the Institute for Government’s (IfG) Creating and dismantling government departments, p6 for a full description of the process used. 

There are many political reasons why a Prime Minister might choose to rearrange departments. A discussion of these can be found in Creating and dismantling government departments, pp.7-9. 

Is there a limit on how many reorganisations can happen? 

Prime Ministers can reorganise departments as frequently as they like. But creating new departments is costly. The IfG estimates the initial process of setting up a department can cost £15 million. The lost productivity as staff adjust to a new organisation can cost an addition £34 million. 

Another constraint on departmental reorganisation is that there can only be 21 salaried Cabinet Ministers, according to the Ministerial and other salaries Act 1975 (more people can attend Cabinet).  

This means there is a limit on the number of departments that can be headed by a Secretary of State level appointment. A Prime Minister who created many new departments would only be able to appoint a Cabinet Minister to lead 21 of them.  

The Cabinet Manual provides the background on this issue. Our briefing, Limitations on the number of Ministers, provides further information. 

The IfG has a useful graphic illustrating the major reorganisations that have happened over the past 40 years in Creating and dismantling government departments, p3

Is there a formal process for reorganising departments? 

The Cabinet Office’s Machinery of Government Guidance explains how departmental reorganisations should occur once the Prime Minister has decided on a change. 

Key administrative steps in the creation or merger of departments, following the Prime Minister’s decision, are: 

  • The appointment of a Permanent Secretary (the most senior civil servant in a department). This person will lead the organisational transition and plan the operation of the new department. 
  • The drafting of a Transfer of Function order (a legislative tool laid before Parliament that is normally approved without a vote). These orders reassign the responsibilities of Secretaries of State. For example, the Order laid when the Department of Business Energy and Industrial Strategy (BEIS) was created in 2016 merged the Department for Business Innovation and Skills (BIS) and the Department for Energy and Climate Change (DECC) into BEIS. It did this by transferring functions from the Secretary of State for BIS and the Secretary of State for DECC, to the new Secretary of State for BEIS. 
  • Agreement of headline ‘financial principles.’ This includes the allocation of spending budgets and the detailed budgets required for the administration of the new department. 

Further reading 

Making and breaking Whitehall departmentsIfG, 2010. 

Machinery of Government guidance, Cabinet Office, 2015. 

Creating and dismantling government departments IFG, 2019. 

About the author: Chris Rhodes is head of the Parliament and Constitution Centre in the House of Commons Library.

Photo: “UK aid logo” by DFID – UK Department for International Development is licensed under CC BY 2.0.