Senior civil servants have admitted that real-terms pay cuts over the past decade have affected recruitment and retention, and have recognised the need for a new reward strategy.
Sir Alex Chisholm, permanent secretary at the Cabinet Office told MPs on the public accounts committee (PAC) that an exodus of people from the civil service because of pay was a “chronic problem”, and that pay was often identified as an issue when a recruitment campaign had failed to appoint a candidate.
He said: “The most typical factor [in a failed recruitment exercise] does tend to be pay, especially when you’re looking for very competitive roles, so digital or cyber roles for example.
“At the other end of the process we [ask] ‘why are you going?’… and they say ‘because I’m doubling my pay going somewhere else’, then we take a note of that.”
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A National Audit Office report in November found that from 2013 to 2022, the median salary in almost every civil service grade declined in real terms. The sole exception was the most junior grade, administrative assistant, which saw the only real-terms increase.
Chisholm recognised that real-terms pay decreases “must be storing up problems with competitiveness with the wider economy”.
However, he added that additional benefits were still seen as an attractive part of the civil service reward package. It offers competitive pension contributions, for example.
Responding to a question about civil servants on similar grades and in similar roles receiving different rates of pay, Fiona Ryland, government chief people officer, said departments were seen as individual employers and had the flexibility to set their own pay rates.
She said there was a need to look at where it makes sense for departments to have flexibility over what they pay their employees, and where there needs to be greater coherence in the pay rates between departments.
Chisholm, however, noted that differences in pay rates between individuals on the same grade in the same location “add tensions”, but this only existed because each grade has a pay range that takes experience into account.
The NAO report found that highest salary available to a higher executive officer (HEO) at the Department of Food and Rural Affairs was £1,601 less than the lowest HEO salary at HMRC.
Chisholm rejected a call made by the Public and Commercial Services (PCS) union for national pay bargaining in the civil service.
PCS general secretary, Fran Heathcote said: “We welcome questions from MPs addressing the absurdity of civil servants in the same grade getting wildly different rates of pay depending on which department they work in. PCS believes that the government must take steps to eradicate the current system which, in its current form, only promotes discriminatory practices and vast pay inequality across the civil service.
“Alex Chisholm admitted pay is a common factor in failed recruitment campaigns and described low pay as being a chronic problem. However, discredited policies such as performance-related pay which has been proven to be discriminatory are not the cure. The only remedy for the problems stored up by years of real-term pay cuts, is to reward our hardworking members with the pay rises they deserve.”
Prospect union general secretary Mike Clancy said: “It is good to see Cabinet Office officials admitting that pay is a problem for recruitment in the civil service, especially where a recruitment campaign has failed to appoint.
“Prospect members tell us this is a particular problem in specialist agency roles where there are direct private sector comparators. This means that more and more, jobs are being done by less experienced people putting increasing pressure on workloads and reducing the ability of agencies to adequately fulfil their functions.
“The officials at the PAC were also right to admit that a decade of poor pay could be storing up an acute retention problem. All of our interactions with members in the civil service suggest that that acute problem is imminent and if the government doesn’t sort the pay problem, they will very soon see a mass exodus of skilled staff.”
Chisholm told MPs that he aspired towards developing a “smaller, more highly skilled, more agile and better paid civil service”.
“Overall we continue to be a very attractive employer and we are able to get very talented people to join us and also to stay with us… however I recognise it is a competitive market going forward and we shouldn’t rest on our laurels,” he said.
Chisholm and Ryland recognised that some aspects of the civil service’s recruitment process needed improvement, particularly time to hire which sits at around 99 days.
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