4 Attracting and retaining the right
skills
48. In its civil service pay guidance for 2014-15
the Treasury states that "public sector pay awards will be
limited to an average of up to 1 per cent in 2015-16".[80]
As part of this inquiry we have sought to understand more about
the effect of this on the capabilities of the Civil Service.
49. In its June 2013 report Building capability
in the Senior Civil Service to meet today's challenges the
National Audit Office reported that "owing to the pay freeze,
and changes to pensions and benefits, the total reward for senior
civil servants has been reduced by around 17 per cent in real
terms over four years."[81]
The CBI tells us that due to such reward gaps "there
is a frequent flow of civil servants taking their expertise out
into the private sector, meaning these skills are lost from the
civil service."[82]
Rob O'Neill, Assistant General Secretary, First Division Association
(FDA) told us that such retention problems are only set to get
worse as the economy recovers. Reporting on the results of a survey
the FDA had carried out of Civil Service HR managers, Mr O'Neill
told us that "they are quite clear that, as the economy picks
up, their problems are going to rise and that we are going to
start to see people leaving the Civil Service more".[83]
This warning was based in part on the fact that the Civil Service
now "increasingly prioritises skills that are very prized
in the private sector", such as "digital and commercial
skills". [84]
50. We have also heard how the current pay policy
is affecting the career choices made by those who choose to stay
in the Civil Service. In a private seminar with members of the
CBI we were warned that the unavailability of pay rises in post
is acting as an incentive for Civil Servants with valuable specialist
knowledge to move out of post in search of promotion, harming
corporate memory. This is a problem that is acknowledged by John
Manzoni at all levels in the Civil Service. He told us that:
If you are a young person of 25 years old and
you have just had a child and you want a new mortgage, and the
only way you can get more money is to do another job in government,
you are going to go and do another job in government. The unintended
consequence of that particular policy is that it encourages people
to move around […] I do not need evidence to tell me, frankly,
that that is wrong, because I can just see it. We have to solve
that problem. [85]
51. When asked what steps the Civil Service might
take to address such problems, Mr Manzoni told us "we are
already in a conversation", but warned that this is taking
place in the "context of a real and understood set of constraints".[86]
We suggested that Mr Manzoni time these conversations so that
any findings are ready to put in front of a new Minister after
the general election. He told us that "that is the intent."[87]
52. The Cabinet Sectary and Head of the Civil Service
told us that in his opinion: "overall, pay levels are okay."
He added that "if you look at our surveys of staff opinion,
people are increasingly concerned about pay and benefits, but
I do not think it has reached critical levels". Here Sir
Jeremy's focus appeared slightly narrower than that of his Chief
Executive:
I look particularly at the highest-performing
civil servants in the highest Civil Service job levels: directors-general,
directors and deputy directors. I look at the most talented in
that group, and our turnover rate—our resignation rate—amongst
that group of people whom I am very keen to keep is down below
3% per annum, which is a very low attrition rate for your stars.
It is something I look at on a monthly basis, as you would imagine.
It is on my dashboard.[88]
53. A focus on the most talented is understandable.
However, Professor Colin Talbot warned us that most of the damage
being caused by the current lack of competitiveness with the private
sector is occurring in lower ranks. Reporting on the results of
interviews he had conducted with members of the Senior Civil Service,
Professor Talbot told us that the "evidence we are getting
from them is that, particularly in policy areas, experienced policy-maker
civil servants have been leaving in droves".[89]
He warned that this is currently resulting in the creation of
"huge gaps" in the middle of the Civil Service "around
grade 6 or 7".
54. The Cabinet Office states that "from April
2013, a Pivotal Role Allowance has also been available to departments
to retain niche skills and those responsible for delivering the
most important and complex projects across government".[90]
Information requested from the Cabinet Office shows that thus
far, this facility has been used 25 times, suggesting its ability
to reduce the possible hollowing out of skills at lower levels
is limited.[91]
55. The need
for pay constraints is a reality that the Civil Service will continue
to face. At present the Civil Service appears able to retain its
most talented leaders, which is essential and encouraging. However,
the impact of these leaders will be limited if the right skills
do not remain at their disposal. Warnings that skills at mid-management
levels are being significantly hollowed out are worrying. It was
clear to us that the introduction of the Pivotal Role Allowance,
intended to retain key people, was a token gesture, not a sufficient
response to this challenge.
56. The modern
Civil Service is increasingly charged with finding more intelligent
ways of solving problems and making efficient use of funding.
The Government should ensure that this approach is continually
applied to its policy on Civil Service pay. If this is not done
the Civil Service will needlessly lose expensively gained skills
and knowledge, which it will struggle to replace.
57. We welcome John Manzoni's suggestion that
the Civil Service is continuing to explore ways in which constrained
resources can be best used to ensure that vital skills are retained
at all levels. The Civil Service need a pay and reward system
that will retain people in the jobs in which they are most needed
and will extend job tenure to make the most effective use of experience.
We recommend that this work is prioritised so that a range of
effective proposals are ready for Ministers to consider at the
beginning of the next Government.
80 HM Treasury, Civil service pay guidance 2014-15,
March 2014 Back
81
National Audit Office, Building capability in the Senior Civil Service to meet today's challenges,
HC 129, June 2013 Back
82
Confederation of British Industry [CSS30] Back
83
Q 127 Back
84
As above Back
85
Oral evidence taken on 14 January 2015, (2014-15), HC 922, Q 45 Back
86
Oral evidence taken on 14 January 2015, (2014-15), HC 922, Q 67 Back
87
Oral evidence taken on 14 January 2015, (2014-15), HC 922, Q 70 Back
88
Oral evidence taken on 27 January 2015 (2014-15), HC 669, Q 386 Back
89
Q 36 Back
90
Minister for the Cabinet Office [CSS26] Back
91
Cabinet Office [CSS35] Back
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