Senior civil service pay remains “seriously uncompetitive”, the man tasked with regulating top Whitehall appointments has warned.
Sir David Normington heads the Civil Service Commission (CSC), the independent body which ensures that senior civil service appointments are made on merit. In his foreword to the CSC’s annual report – published on Monday – the first civil service commissioner says a "long-term pay and reward strategy" should now been seen as a "central part of the future development of the senior civil service".
"I am well aware of how difficult this is at a time of austerity and most senior civil servants have accepted that in straitened times they cannot expect to receive any significant pay increases," Normington says.
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"However, most have had no or almost no pay increase for at least five or six years; and all the evidence is that pay levels are seriously uncompetitive against external comparators.
"It cannot be long before this impacts on morale, on the loss of some of the most talented, and on the ability to recruit. In some areas it is already doing so."
Civil service pay was frozen in 2010, and chancellor George Osborne confirmed earlier this month that pay rises – which have been capped at 1% since 2012 – would continue to be held down until at least 2019.
'Pay was a factor'
Normington is set to leave post in March next year, meaning today’s publication marks his final annual report as first civil service commissioner.
The report offers a detailed breakdown of appointments to the senior civil service in 2014-15, and sets out a number of personal "wishes" from Normington about the future of Whitehall.
Among its findings, the CSC's report shows that there were a total of 73 appointments made at the two highest senior civil service pay bands over the last year, down from 98 in 2013-14.
Over half of the appointments overseen by the CSC in 2014-15 came from outside the civil service, the report says, with a quarter of those appointed at director general level and 21.2% of those appointed at director level drawn from the private sector.
The number of posts filled via “exceptions” – where departments sidestep open competition and loosen their adherence to appointing on merit to try and plug urgent skills gaps – dipped slightly on last year. The commission said 9% of total civil service recruitment was done through exceptions in 2014-15, down from 15% in 2013-14.
“The majority of appointments (65%) made using an exception were for temporary appointments to provide managers with the flexibility to meet the short term and specialist needs of the civil service,” the commission said.
There was also a fall in the proportion of posts for which no suitable candidate could be found. In 2013-14, 16% of all roles open to competition failed to result in an appointment; but in 2014-15 that figure stood at 8%.
While the CSC says there does not appear to have been a "decline in the ability of departments to attract candidates" over the last year, it does raise some concern over the potential impact of pay restraint in hiring for more specialised roles.
"In last year’s report we noted that in some competitions the level of remuneration on offer did appear to be a barrier to attracting suitable external applicants, especially in areas of skill shortage," the report says.
"This year commissioners have reported that in at least twelve competitions, pay was a factor in restricting the field. Very often this was because the external talent pool was paid at a much higher rate than is normally paid for equivalent civil service roles.
"This was often true when the external candidate pool was in the private sector – oil and gas and legal being two examples. But it is also sometimes the case with other parts of the wider public sector, for instance where local authority or health service pay rates are higher than central government pay rates. However, as the figures above indicate, this has not translated into a significant number of competitions that made no appointment."
'Urgent need'
As well as his comments on pay, Normington makes two other personal recommendations on the future of Whitehall. The first civil service commissioner says there is still more to be done to improve diversity in the civil service, in spite of some “encouraging” progress.
He adds: "There has been excellent progress led by the Cabinet Office on talent management in recent years but I am not confident that it is yet producing the diversity in the feeder grades to director general and permanent secretary to ensure fast enough progress."
Diversity data on those applying for senior posts remains patchy, the commission says, with only 60% of applicants for the jobs it regulates volunteering to provide diversity information. In a bid to address the data problem, the commission says diversity returns will now become a compulsory part of the application process.
But on the basis of the limited data for 2014-15, the CSC says 8% of the senior civil service competitions it oversaw failed to attract any female applicants, while 33% failed to attract a single candidate identifying as black or minority ethnic (BME). Just 6% of competitions attracted a candidate with a declared disability.
Commissioners also raised concerns about the gender diversity of applicants in 17 of the competitions chaired by the CSC this year, according to the report, but it says there "does not appear to be a significant difference between the likelihood of female and male applicants reaching the interview stage once they have applied for a competition".
Elswhere in his report, Normington – a former home office permanent secretary – highlights what he calls an "urgent need" to improve the quality of human resources across the civil service.
The commissioner says the gains promised from Whitehall's move to a centralised HR function are "yet to be fully realised" and, in some cases, are causing “confusion between the centre and departments about where responsibility lies".