From Centre to Regions: The Civil Service Shake-Up

From Centre to Regions:

The Civil Service Shake-Up

In a move intended by the government to yield significant annual savings, the roles are being relocated from London to 13 key locations across the UK: Birmingham, Leeds, Cardiff, Glasgow, Darlington, Newcastle and Tyneside, Sheffield, Bristol, Edinburgh, Belfast, and York, as well as the already announced digital and AI hub in Manchester and energy campus in Aberdeen. Here, we explore the potential impact of decentralising the civil service on both the London office market and regional markets, drawing on the story so far to understand the extent of the proposals.

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The story so far

Progress in decentralisation to the regions

Shifting senior roles

The potential regional impact on placemaking

The story so far

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Shifting senior roles

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Michael Pain Partner, Head of Tenant Advisory Team

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Sophie Davidson Associate, Research

"Places for Growth' undeniably made significant progress towards its target, evidenced by the substantial increase in civil servant numbers outside London and the subsequent expansion of its office footprint since 2020"

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Impact on London’s office market

Is this the right strategic objective?

This announcement can be seen as an extension of earlier efforts. As far back as the 1968 Fulton Report, civil service reformers warned the service was too London-centric. In 2004, the Lyons Review proposed and ultimately exceeded its target of relocating 20,000 roles from London and the South East, with over 25,000 positions moved. Building on this, the ‘Places for Growth’ programme, announced in the March 2020 Budget, set a significant headline target of relocating 22,000 civil service roles out of London and the South East by 2030 (later accelerated to 2027). This ambitious proposal aimed to move a quarter of all civil servants within a timeframe extending beyond the parliamentary term. 'Places for Growth' undeniably made significant progress towards its target, evidenced by the substantial increase in civil servant numbers outside London and the subsequent expansion of its office footprint since 2020. In March 2024, an update from the government stated that over 18,200 roles had been relocated out of London, with Leeds, Manchester, Glasgow, Birmingham and Sheffield the top recipients of roles. All five of these cities have been highlighted in the recent announcement as focus areas.

The latest announcement is a smaller (yet still significant) undertaking. According to figures quoted by the government, the proposed 12,000 relocations represents 12.6% of the current 95,000 full-time equivalent (FTE) civil service employees based in London. However, there is a discrepancy in reported figures: while the government now cites 95,000 London FTEs, the Cabinet Office reported 102,525 in March 2024. This difference could indicate a genuine reduction in employees or inconsistencies in data. For subsequent comparisons, we will use the March 2024 data as it represents the latest full dataset available.

It is important to note the distinction between roles and people. While positions may be transferred out of London, history suggests that staff are unlikely to be willing to make long-distance moves. As an example, the ONS relocated to Newport in 2005/6 as part of the Lyons initiative, but only about 10% of the staff chose to relocate, resulting in a loss of expertise. Therefore, the primary effect is likely to be the creation of new employment outside London rather than the transfer of existing London-based employees. A key challenge lies in relocating specialist skills, as these may not be readily available in target locations.

Progress in decentralisation to the regions

While not disputing the positive impact on regional employment and office markets, data from the Cabinet Office does show that employment in the civil service has increased in all regions, including London, calling into question the overall impact of the ‘Places for Growth’ programme against its intended purpose. In March 2019, 20.6% of all civil service FTE roles were in London but, after a 17,095 increase (or 17.8% of the increase in roles nationally), that proportion of all FTE roles in London had only fallen marginally to 20.1%. However, when comparing the civil service to overall office-based employment, the civil service already has a lower-than-average concentration in the capital (see figure 1), with London accounting for the largest share of all UK office-based jobs at 26.4% (ONS). That said, there is wide variation between industries (for example, London accounts for 38.3% of financial services and insurance roles, but only 21.6% for real estate services).

Despite a significant increase in civil servants in London, some regions outside the capital have seen even greater growth, leading to a moderate shift in their share of the national workforce. Given the across-the-board increases, it's challenging to determine the extent to which these are driven by job relocations versus new job creation.

Key insights:

Northern Ireland saw the second largest increase of 32.0% (or +1,090), albeit from a smaller initial base.

By number, the greatest growth has been in the North West. FTE roles increased by 31.4% (+15,830) to grow their share of civil servants from 12.2% to 13.0%. Manchester hosts the second headquarters of DSIT (at the civil service’s Trinity Bridge House location, announced in 2023) and DCMS (c. 12,000 sq ft signed at Bloc in 2022), as well as a base for HMRC (c. 157,000 sq ft at Three New Bailey) and GCHQ (c. 13,000 sq ft at Heron House). In 2023, the Department for Levelling Up, Housing, and Communities also took 25,000 sq ft at Soapworks in Salford, and the ONS expanded into 13,600 sq ft at Heron House this year. Looking forward, the new c.893,000 sq ft Digital and AI Innovation Campus has the potential to accommodate 7,000 civil servants.

In Yorkshire and the Humber, a 30.5% increase (+9,555) in FTE roles has helped shift their share of civil servants from 7.6% to 8.0%. Although it predates the ‘Places for Growth’ programme, the government opened a 378,000 sq ft civil service hub in Leeds (Wellington Place) in what was the largest ever office letting in the region. There is also a significant presence in Sheffield, cited as ‘a leading location for policy making outside of London’ by the government.

The expansion of the civil service’s footprint outside of London has had a demonstrable impact on local economies. In Darlington, for instance, 'public administration and defence' has been a significant driver of its gross value added (GVA) over the past five years. This boost is largely down to the Darlington Economic Campus, which has brought a substantial number of civil service jobs to the town. Darlington's 'public administration and defence' sector saw an impressive 10.2% annual GVA growth rate in the five years up to 2023 (ONS).

With echoes of the previous administration, the latest announcement seeks to boost the number of senior roles in regional locations. The 'Places for Growth' programme's objective of locating 50% of senior civil servants to regional office locations by 2030 saw positive movement, with the proportion growing from 35.7% to 41.7% between 2019 and 2024 (albeit less than halfway to their target in half the timeframe). While the overall proportion remains relatively low, the North West saw the largest shift, with its share of senior civil servants increasing from 3.2% to 4.8%. After London's dominant 58.3% share of senior civil servants, Scotland ranks a distant second with only 5.9%. While London's substantial share is to be expected due to its proximity to ministers and Parliament, this underlines the extent of the regional divide. The latest announcement has reaffirmed this goal, keeping the same target date of 2030.

"The expansion of the civil service’s footprint outside of London has had a demonstrable impact on local economies."

This makes it one of the biggest contributors to the local economy, particularly when you consider London's comparatively modest 1.1% 5-year annual growth rate over the same period. In Leeds and Manchester, this figure is 6.0% and 5.9%, respectively, illustrating the relative impact on regional cities. This rapid expansion of the civil service's office footprint outside London goes far beyond simply creating immediate jobs. It is laying a robust foundation for future expansion, as well as fostering increased business confidence in these towns and cities, with positive implications for regional economic growth.

"A significant and ongoing challenge will be in the willingness for senior employees to relocate, as well as the ability to recruit for these positions in cities outside of London."

A significant and ongoing challenge will be in the willingness for senior employees to relocate, as well as the ability to recruit for these positions in cities outside of London. A recent study by ESRC Centre for Population Change and Connecting Generations highlights that while relocating high-skilled workers could theoretically reduce regional imbalances in talent and economic output, large cities need to offer premium amenities and services and an attractive public realm, while employers need to offer competitive working conditions. This approach is also likely to be important to mid-level civil servants with prospects of progression, helping to develop a robust talent pipeline, and to ensure the civil service remains a competitive employer for local, high-skilled workers. A Cabinet Office evaluation of the 'Places for Growth' programme revealed that inconsistencies in relocation support caused ‘satisfaction concerns’. Some civil servants reported difficulties with the process and timelines, particularly when securing new housing, schools and ‘other lifestyle factors’. These difficulties are likely exacerbated by London’s appeal, with the same report highlighting that the perceived opportunities for career advancement in the capital are a key factor in staff retention. Furthermore, the Public and Commercial Services Union has raised concerns that such initiatives are generating uncertainty, indicating that these moves are not always popular. A well-planned strategy to enhance the ‘pull’ of regional opportunities is therefore essential for the long-term success of decentralisation.

The potential regional impact on placemaking

The civil service’s investment in new, high-quality offices, as highlighted in the examples above, is a strong first step in relocating civil servants and attracting new talent. However, there is even greater potential for placemaking. Leeds offers a prime example, where Leeds City Council's regeneration plans were amplified by the arrival of a major government hub. Similarly, Manchester's new digital and AI campus is driving broader urban regeneration, including new residential communities, investment in 'active travel' initiatives, and the creation of green spaces. The anticipated influx of highly skilled jobs, both directly in the civil service and through employment created through partnerships with local government and universities, is intended to stimulate demand for local services, housing, and leisure.

The long-term commitment of the civil service as an employer in a location has the potential to act as a powerful catalyst. It provides the crucial certainty that incentivises substantial private investment in new office developments, a wider array of local amenities, and improved infrastructure. Such investment, in turn, enhances the area's attractiveness, creates jobs, and boosts economic activity. However, it is worth noting that the widespread adoption of hybrid working could mean that the regions do not see the full benefit of relocating senior roles. For example, it is now straightforward to remain living in London or the South East whilst commuting to a regional office for only part of the week. While they would use travel networks, this arrangement would not generate demand from high earners for housing and local services.

"It provides the crucial certainty that incentivises substantial private investment in new office developments, a wider array of local amenities, and improved infrastructure"

Impact on London’s office market

The civil service’s London office footprint is largely concentrated in Westminster district, accounting for approximately 75% of its total floorspace in London. Other key locations include Canary Wharf and Southbank. The estate is a mix of government-owned and leased stock, and it is the leasehold estate that is likely to bear the brunt of the downsizing, based around those buildings with upcoming breaks and expiries. That said, the government’s 2025 Spending Review outlined an intention to ‘dispose of surplus estate’ to reinvest in the retained estate, indicating a plan to also sell owned assets. The civil service’s announcement of the closure of 102 Petty France, 39 Victoria Street and Caxton House, as well as their planned departure from 70 Petty France, reduces the civil service’s office footprint in London by over 950,000 sq ft across only four offices, with more announcements to come. These properties, all situated in Westminster, represent 8.7% of the submarket's total stock of around 10.9 million square feet, underlining the potential for substantial voids. These properties fall short of their prime counterparts in the submarket and wider central London office market, being older with more basic amenities with lower energy efficiency ratings (they all currently have ratings of EPC D). Although larger spaces are in short supply in the area, occupier demand for secondary stock is bearish.

Aerial view of London and the Tower Bridge, England, United Kingdom

"With little new available space in the pipeline in the area and a trend of office stock being removed for other uses, we expect strong demand if similar spaces come to the market."

However, recent lettings in the Westminster and neighbouring Victoria submarkets of grade A and B office buildings (notably Evercore signing for 135,000 sq ft at 105 Victoria Street and American Express taking c.78,000 sq ft at Belgrave House) indicate that demand is there for higher-quality space. With little new available space in the pipeline in the area and a trend of office stock being removed for other uses, we expect strong demand if similar spaces come to the market. The Victoria/Westminster district is benefitting as an overspill location from core parts of the West End submarket such as Mayfair and St James’s, where the vacancy of quality office accommodation is acutely low. Victoria/Westminster’s success has been underlined by recent strong rental performance. Indeed, our market monitoring shows that prime net effective rents in this district rose by 8.6% in the year to Q1 2025, and have increased by 22.6% over the last three years (figures assume a 5-year lease).

See here for our Q1 2025 Central London Net Effective Rents Monitor

It is anticipated that all commercial rented properties will need a minimum EPC C rating by 2027 and an EPC B by 2030. Should these changes be implemented, the landlords of these properties (if they remain in office use) will be required to make necessary upgrades to meet these standards. As the vacated properties are unlikely to appeal to tenants in their current state, landlords now face crucial decisions about how to best redevelop these buildings for future use. Redevelopment opportunities could include:

The UK Government has announced its intention to close 11 central London offices and reduce the number of civil servants in the city by 12,000 by 2030. As part of the ‘Plan for Change’ programme, thousands of civil service jobs will be relocated to towns and cities across the UK, with a particular focus on decentralising more senior roles.

Retrofitting for continued office use

Residential redevelopment

Hotel redevelopment

For the reasons listed above, stock would likely be welcomed by the private sector and positioned competitively. Acting on that opportunity, 1 Victoria Street, vacated by the civil service in 2024, is already undergoing significant construction. Landlords Mitsubishi Estate London are retrofitting and extending the building to create premium office space.

Given the inherent character and desirable location of these buildings, they typically lend themselves to residential development. There is a history of previous civil service offices undergoing conversion to residential use, including Millbank and Ergon House which were vacated in 2018 and since redeveloped by housebuilders Berkeley Group.

For similar reasons, they could be well-suited for hotel use. Nobel House, acquired by Criterion Capital for £50 million in 2024 when Defra moved out, has been offered for rent in its current form. However, it is now in the early design phases for conversion into a hotel with ancillary uses, as it ‘no longer meets the requirements of the modern office market’.

Is this the right strategic objective?

It is easy to see the ‘push’ benefits of relocating civil servants out of London. Occupancy and labour costs will be lower (although this will be partly offset by the costs of implementing the proposals). While the 'pull' benefits of boosting regional economic growth outside London likely remain a key objective, particularly amidst plans to further devolve power from Westminster (outlined in the 2024 English Devolution White Paper), the government's quoted £94 million in annual savings is likely also a strong driver. This is especially pertinent given the severe cost pressures within the public sector. The strategy also provides an opportunity to offer higher quality accommodation that meets a wide variety of objectives, including improved energy efficiency, lower running costs, layouts better suited to collaborative working, and ‘wellness’ features that improve the health and wellbeing of staff. The recent decentralisation of the civil service provides compelling evidence for optimism. The expansion of the civil service footprint outside London, significant increase in roles, and the resulting economic benefits all demonstrate the highly positive impact this strategy can have across the country. Crucially, this growth does not detract from London, which stands to gain from office upgrades or the redevelopment of previously occupied buildings, despite both requiring considerable capital investment.

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The West Midlands experienced the most significant growth, with a 33.5% increase in FTE roles (+8,705), raising its workforce share from 6.3% to 6.8% (see figure 2). In Birmingham specifically, the government opened a new hub at 23 Stephenson Street (c.110,780 sq ft) in 2022, accommodating 1,700 civil servants. This followed the opening of the Ministry of Housing, Communities and Local Government’s second HQ at i9 in Wolverhampton in 2021 (c.14,000 sq ft).

In reality, there is likely to be a natural limit to how much relocation can occur. London remains the nation’s capital, and it is perhaps inevitable that the most important policy decisions will be taken there. Many of the senior roles will still need to be in London for much of the time, and there will probably be some resistance to the proposals. The risk, therefore, is that it will be predominantly the lower-level jobs that will move, potentially undermining this aim. Despite the ‘new normal’ of hybrid working, the office remains a crucial location, a point especially true for the civil service. Most civil servants are expected to be in the office 60% of the time and, on average, occupancy levels have been exceeding this. The latest data from the Cabinet Office shows that the average occupancy across all departments in the six months to December 2024 was 70%. This figure significantly outpaces national averages, as Remit Consulting estimates overall national office occupancy at just 30.8% for the same period, rising to 32.7% by April 2025. Despite potential variations in data collection methods, which the Cabinet Office acknowledges even between departments, this comparison still presents a compelling insight into the importance of the office to the civil service. However, this mandatory attendance policy has been met with significant opposition from unions, sparking ongoing debate on the impact on civil servant well-being and productivity. The office’s evolving purpose and ability to attract and retain talent will need be reflected in how this strategy is implemented. The new campus locations, for instance, are likely to offer flexible and collaborative spaces, marking a clear pivot from the more traditional, rigid office layouts prevalent in Westminster. In a competitive talent landscape, particularly for skilled roles, an attractive work environment will be a critical success factor in the long-term success of this strategy.

Beautiful London city panoramic view from above. Skyscrapers in London city district.

"Crucially, this growth does not detract from London, which stands to gain from office upgrades or the redevelopment of previously occupied buildings, despite both requiring considerable capital investment."

West Midlands

Northern Ireland

North West

Yorkshire and the Humber