Special report: SCS recruitment

Who exactly are you? To try to find out, Civil Service World has set about researching the backgrounds of all those appointed to senior civil service (SCS) positions over the past six years, using requests made under the Freedom of Information (FoI) Act.

Three years ago, a previous CSW Special Report divided all those appointed to SCS posts over the years 2005-’07 into three groups: recruits from within that department; those brought in from other parts of the civil service; and those entering central government from the wider public, private or voluntary sectors. This study updates those findings with another three years of data, covering the years 2008-’10. Eleven departments of state responded to our FoI requests in time for us to include their responses (see methodology below), and the full six-year data set shows that a gradual evolution in the shape of SCS recruitment gave way in 2010 to a sudden and dramatic change.

External recruitment

After climbing steadily until 2006, the number of SCS appointments declined gently from 307 in 2007 to 284 in 2008 and 280 in 2009 – then collapsed: there were just 135 SCS appointments in 2010 (see figure 1). This fits the picture of a civil service that is rapidly diminishing: ONS figures reveal that 25,820 ‘full-time equivalent’ jobs have been cut since the spending review last year. Sir David Normington, the first civil service commissioner – who oversees all open competitions for the roles of permanent secretary, director general and director – explains that “departments are reducing their senior numbers quite sharply. Before the election, all government departments had to draw up plans for making a 20 per cent reduction in their senior civil service.” Those plans have, of course, since been superceded by cuts in administration budgets of around a third over the spending review period.

The picture is not uniform across the civil service, however, with departments cutting jobs at different rates – and the relationship between job cuts and the number of appointments is a complex one. So the Department for Transport (DfT), the Department for Work and Pensions (DWP) and the Department for Communities and Local Government (DCLG) have all shed many senior jobs, but while SCS appointments fell to almost zero in DfT and DWP during 2010, in DCLG the number of appointments held up – perhaps reflecting a recruitment exercise as existing SCS staff competed for a declining number of jobs(see figure 2).

While cutting administration budgets, the coalition has also announced a freeze on external recruitment – so you might expect the proportion of SCS appointees coming in from outside the civil service to have fallen dramatically last year. During 2008-’10, 26 per cent of SCS appointees came from external sources; during 2005-’07, the figure was 24 per cent (Fig1). So the figure for 2010, 21 per cent, looks relatively high, opening up several possibilities. Either the vast majority of all SCS appointments in 2010 were made before May; or there was an unusually high number of external appointments in first few months of 2010; or Cabinet Office minister Francis Maude has been quietly signing off a lot of exemptions for specific appointments; or departments have found ways around the freeze.

Our research can’t answer this question; but what is clear is that this kind of external influx, continued over at least six years, will have significantly affected the composition of the SCS – and, with that, its skills, cultures and working methods. Normington explains that “the external perception is that the civil service is still largely home-grown, but it hasn’t been for some time. Your figures are reflecting what has been a long-term trend.”

Normington explains that the drive for external recruitment began in the 1990s, when the government opened up senior jobs to external candidates. “What’s been happening ever since that time is that there has been quite a chunk of senior civil servants who were recruited externally,” he says.

Deviations from a general decline

While there was a general decline in SCS appointments during 2010, some departments have deviated from this pattern (Fig2). Over the past three years, the Department for Culture, Media and Sport has increased its appointments of senior civil servants. DCMS is, of course, building up towards the Olympics in 2012; but these recruits, most of whom arrived at the department from other parts of central government, are probably largely media policy specialists. When business secretary Vince Cable was caught by a Daily Telegraph sting operation late last year and lost control of media policy, senior civil servants were transferred from the Department for Business, Innovation and Skills into the DCMS – and this would be reflected in the figures obtained by CSW.

The Department for Environment, Food and Rural Affairs has also appointed more SCS over the past three years. In 2005-’07, the department made 50 appointments, but in the past three years it made 79 – a 59 per cent increase. It even recruited more people in 2010 (27) than in 2009 (18) – a 50 per cent increase.

A final variation is that two departments (the Department of Health and the Cabinet Office) experienced a big spike in appointments in 2006, and three others (the Ministry of Defence, Treasury and DCLG) saw appointments peak in 2007 – just before public money became tight during the credit crunch. This appears to reflect the general growth in civil service numbers until that point, with the Department of Health and DCLG taking the opportunity of expanding workforces to bring in fresh skills from outside the civil service.

Top jobs variation

Every year, the civil service commissioners release an annual report which shows the result of all competitions for posts at permanent secretary, director general and director levels, revealing the backgrounds of appointees. The most obvious change over the years has been the dramatic fall in the number of such top appointments, which declined by two thirds between 2006-’07 and 2009-’10 (Fig1). And there has been a squeeze almost as tight on the numbers of successful top-flight applicants recruited from outside the civil service: external recruits comprised 53 per cent of all appointees in 2006-’07, but 25 per cent in 2009-’10. Though sample sizes are very small in 2009 and ‘10, by last year the proportion of top jobs won by external applicants lay at 14 per cent – a collapse that probably reflects the external recruitment freeze – while 69 per cent went to applicants from within the department.

“We’ve seen departments be much more selective about running open competitions in the last year,” Normington says. Though sensible in terms of bolstering staff morale and keeping down wage inflation – external recruits typically attract higher salaries – the external recruitment freeze has had its opponents. When the Northern Ireland Civil Service recruited its new chief Malcolm McKibbin (see news) through a closed competition, the civil service commissioners of Northern Ireland expressed “grave concern”.

The rush to appoint people from within the department to top jobs in 2010 is easy to explain, Normington thinks: “It’s very, very hard when you are reducing your numbers to recruit from outside during that period,” he says. “It sends a very difficult signal into the organisation if, for some reason, you start recruiting from outside. It’s a very turbulent time in the civil service.”

Internal recruitment

Looking at the differences between departments’ recruiting patterns (Fig2), it is immediately obvious that some departments – most obviously the Ministry of Defence and Treasury – prefer to recruit internally (though the Treasury increased the proportion of its appointees coming from outside the civil service from 10 per cent in 2008 to 47 per cent in 2009, perhaps reflecting its takeover of the banks and a consequent need for new skills). Others source most SCS appointees from outside the department: the Cabinet Office, DCLG and DfT all follow this pattern.

The MoD is particularly unusual here in that while it has always taken some SCS recruits from outside government – even retaining those numbers when overall appointments collapsed in 2010 – it appoints very few people from other parts of government.

“It’s a longstanding issue with the Ministry of Defence,” Normington comments. “There’s a sense that it’s a specialist area and that you grow up in the department. It is also true to say there’s always been a slight sense that even though the Ministry of Defence is a home department, it isn’t the sort of department that most of the rest of the civil service thinks of working in – it’s a different world.”

Unusually, the MoD’s new permanent secretary, Ursula Brennan, arrived from another department in 2008. However, it remains to be seen whether her appointment will set a trend: the ministry is set to lose 25,000 civil service jobs by 2014, and there may be few opportunities for outsiders during that period.

Although recent years have seen a big influx of senior staff into the civil service, most commentators contacted by CSW argued that external recruitment should be balanced by strong internal progression for talented staff. Professor John Benington, an emeritus professor at Warwick University’s International Centre for Governance and Public Management, points out that internal recruits have real advantages. “You do have to have people with knowledge of the civil service and of how to get things done in difficult times,” he says.

“That knowledge is built up over time, so you certainly don’t want to entirely replace knowledgeable, experienced people who have come up through the department.” He also cautions against assuming that “somehow people from the private sector or consultancies know everything that needs to be known.”

Recruitment from other departments

In the parts of government where many recruits are sourced from outside the department, there are normally hard-nosed operational reasons behind that pattern. The DfT, DCLG and Defra, for example, have large numbers of arm’s length bodies and strong links with delivery agencies in the wider public sector, leading to high levels of interchange with these key stakeholders. The Cabinet Office is slightly different. During the years since 2005 it has had by far the highest proportion of recruits from other parts of government, allied to strong recruitment from outside the civil service. Indeed, it claims it has not recruited a single SCS internally over the last two years: 76 per cent came from other parts of the civil service, and 24 per cent from external sources. This reflects the Cabinet Office’s role as an important stopping point for ambitious civil servants being groomed for great things – plus, in 2010, the arrival of a set of policy and communications professionals ushered into the civil service by the coalition leaders.

Sir John Elvidge, the former permanent secretary of the Scottish Government, presided over a system where civil servants frequently transferred from one policy area to another – and argues that such interdepartmental interchange is an important way to develop rounded leaders. “People knowing that they might move between subject areas affects the way that they think about their role in an organisation,” he says. “It fits with the idea that people’s loyalty and commitment needs to be broader than to a particular function. It has an effect on the networks they build up; it has an effect on the way in which they relate to colleagues who are working in a different area of the organisation. After all, that could be them in six months’ time.”

From a department’s perspective, he adds: “It also enables us to make the best use of different sets of skills, so if someone’s strengths are all around getting a new major policy thrust started off, then you can move them between subject areas where that’s the requirement. If people are natural consolidators, then you can move them to areas of work in that phase.”

In at the top

Of the three types of recruitment, it is external recruitment that has had the most noticeable effect on the composition of the senior ranks over the past decade. Many departmental permanent secretaries were recruited from external organisations – particularly from local authorities – into the senior civil service. For example, Benington lists Sir Peter Housden in Scotland, Dame Gill Morgan in Wales, Lin Homer in the Department for Transport, Rob Whiteman – the new permanent secretary for the UK Borders Agency – and Sir Bob Kerslake, the DCLG’s permanent secretary. Sir David Bell, permanent secretary of the Department for Education, is also a recruit from outside government.

However, Normington points out that many of them didn’t go straight into the role of permanent secretary but joined a tier down – being shaped by civil service culture in the process. “The most successful people who have gone into those roles as external candidates have come in at a level or two below that and progressed to permanent secretary, because there’s something about the culture and nature of the civil service that you have to learn,” he says. “It’s quite hard to learn it in the exposed position of permanent secretary.”

External recruitment may also have helped to improve the diversity of the SCS by bringing in people with different social backgrounds and career paths. Andrea Sutcliffe, chief executive of the Appointments Commission (see interview), warns that as this trend declines, it may become harder to broaden the civil service’s make-up: “If you’re fishing in the same pool, you’re going to have the same profile,” she says.

It may also become more difficult to bring in some of the skills most needed in these localist times. Recruits from local authorities, says Benington, have not only a wider perspective of government but also a “capacity to link policy-making and strategy to operational delivery”. For this reason, he argues that the external recruitment freeze should not be permanent: “I can understand it as a temporary measure, but if it resulted in a reversion to the previous position of very largely internal recruitment then it would be a weakness.”

External recruits do come with a hefty price tag, however. David Normington’s review of senior salaries in 2008 noted that “a substantial market premium” averaging 12 per cent of salaries (or more than £20,000) was paid to external recruits in top jobs. More recently, CSW research into the list of highest-paid civil servants published by the Cabinet Office last year showed that 58 per cent of people on the list came from private, voluntary or wider public sector backgrounds, while those with private sector backgrounds made up 38 per cent of the total.

External recruitment is often used to bring specialist skills into departments – hence the high cost. “If you’re very, very short of people and you have to go out in the market, you will find that you’re having to pay over the odds,” Normington says. “Finance was the prime example around 2005-’06, where the government decided to go out into the market and recruit almost all its qualified finance directors from outside. That was quite expensive, and where are those people now? Almost all of them aren’t in the civil service.”

Vicky Pryce used to be head of the Government Economic Service, and is now senior managing director of FTI Consulting. She explains that public sector finance is very different from private sector finance, and this can cause external recruits to depart quite quickly: “People cannot always adapt to the complexities of public sector finance systems – accounts are done differently, there’s the whole scenario of what you count and don’t count.”

Ultimately, Normington believes that more specialist skills should be developed internally in future – particularly in project management, IT and finance. “If you do have some people of your own to compete for those posts, you don’t end up having to bid up the salaries,” he says.

Retention

In each of our two rounds of FoI requests, we also asked departments how many of the SCS recruited within the last three years are still working within the department – and the findings show marked differences between departments (see Figure 3). The DCLG, for example, has a notably low retention rate of 48 per cent in 2008-’10. In part, this may reflect the cut in its numbers of senior staff; the cohort of senior directors has fallen from 21 to 15. The DfT, however, has retained 94 per cent of its 2008-’10 recruits while imposing similar rapid cuts in the numbers of senior officials – figures that suggest the department has managed to keep hold of its newer recruits while shedding staff who’ve been in the department for a longer period.

Retention can be affected by other factors, of course. There’s little clear evidence of a direct link between staff morale and retention rates: though the low-retention DCLG scored just 48 per cent for ‘overall engagement’ in the 2010 staff survey, the DfT’s score of 53 per cent is little better. However, organisational and political shocks can lead to in- or outflows: Normington was permanent secretary at the Home Office when home secretary John Reid condemned it as “not fit for purpose” in 2006, and remembers managing a wholesale change in the composition of the senior management. “Sometimes there is some great problem in a department which causes the management, the permanent secretary, to want to recruit lots of new people,” he notes. And sometimes, he adds, you get natural flows when, for example, a large cohort recruited at a similar time moves on to new things.

What will the numbers show next year?

In future, Normington expects all departments to have lower retention rates because of the number of job cuts that will be implemented, and he predicts that the figures for 2011 will show even greater reductions in senior staff appointments. There will be still less recruitment from outside the civil service, he says, but the proportion of SCS sourced from other parts of government is likely to rise: the policy remains that departments should open up recruitment to other areas of the civil service. Indeed, last year a civil service vacancy-filling scheme was introduced to help civil servants to apply for jobs in other parts of the civil servcie within their geographical region.

After the great squeeze, however, Normington expects the number of external recruits to rise again. “There is quite a political drive – and we may see it increasing – to bring in people with a variety of skills,” he says. “Governments often want to do this after they’ve been in for a while: they want to open up the civil service at senior levels, so we might see pressure to have more open competitions within a short time.”

Indeed, the coalition’s service reform agenda may increase this pressure even before the spending review’s cuts have been fully implemented. Pryce believes that external recruits are “needed more than ever, because the private sector will be much more involved in running public services in the future”.

The Institute for Government’s public sector programme director, Tom Gash, recently told CSW that “strong commissioning skills” will be required to implement the ideas set out in the government’s open public services white paper (see article). This view was also set out by the Cabinet Office crown representative for small and medium-sized enterprises, Stephen Allot, at Civil Service Live earlier this year. “Traditionally, [during a commissioning process] you ask for the last few years of accounts – but do the people who look at those accounts actually know how to judge from those what the likely insolvency risk of that supplier is?” he asked, suggesting that the civil service will need to develop these skills quickly. “I’m a trained financial analyst, and I find it pretty hard. Are we qualified to really judge risk?”

Conclusion

After a long period of comfortable and steady growth, towards the end of 2007 the civil service started to wake up to tougher times ahead – and the number of SCS numbers began to gently decline.

External recruitment peaked a little later, in 2009, when 84 new SCS came in from outside government to join our 11 departments – comfortably beating the previous high of 72, set in 2007. Many of the biggest skills gaps in the civil service had already been filled by specialists from industry and other parts of the public sector, and the influx caused a backlash over the issues of pay differentials and cultural ‘fit’ that would probably have slowed external recruitment in any case. But by then these issues had become academic: the financial writing was already on the wall, and even the Labour government had set out plans for a drastic reduction in the size of the SCS.

The result, as our figures reveal, was a huge drop in the number of SCS appointments across our 11 departments – from 280 in 2009, to 135 in 2010 – and an even greater fall in external recruitment. That slide is set to continue through 2011, as the bulk of departments put their exit and redundancy plans
into effect.

Ultimately, though, the government is trying to implement ambitious public service reforms in a world in which globalisation, techology and social change continually demand new skills and capabilities. The civil service will try its best to realise ministers’ ambitions with fewer staff, less money, and a very limited ability to bring in external expertise. But as more of the coalition’s ambitions move from policy work to implementation, any shortages of manpower and skills will become more evident.

The coalition government is determined to cut the budget deficit, both by reducing public expenditure and by reforming public services. For the moment, the emphasis is very much on the former – and many of the government’s reforms are designed to lead ultimately to a narrower role for central government, suggesting that in future the civil service will remain a smaller organisation. However, if ministers are as keen to reform services as they are to cut spending, then the temptation to seek specialist skills outside the civil service is likely to return. After the spending squeeze, the civil service is likely to be a leaner organisation – but the pressures for greater interchange with the wider world, while contained, have certainly not gone away.

Methodology
Civil Service World approached a large number of Whitehall departments last month, submitting a Freedom of Information request that asked each for “the numbers of individuals recruited into the senior civil service pay bands 1, 1A, 2 and 3 from (i) within their current department; (ii) within a different government department or national public agency; or (iii) outside these organisations”. We requested data for the last three full calendar years, and asked how many recruits remain within the department.

The departments listed in the graphics have provided usable data. Some departments, such as the Department for Education, were not able to provide the data. The DfE provided its recruitment survey for the past year, stating whether a job had been open to external applicants or not, but did not state the outcome of the recruitment. (Others are yet to respond but may do so shortly – at which point the data will be added to the online version of this article.)

The Cabinet Office lacked figures for 2008, and said: “The data for 2008 is not available due to the former HR system being decommissioned.” The Scotland Office and the Wales Office were not asked because of their small size. The Northern Ireland Office had devolved its administration of HR following the devolution of policing and justice powers last year, and so was unable to provide the figures by the time CSW went to press.

Once the data was gathered, it was compared with data from Civil Service World’s 2008 Special Report, which asked the same question and gathered data for the period 2005-’07. The 2008 research did not gather information from two departments – the DWP, and HMRC – which responded in 2011, so only data which we hold over the whole six-year period has been used in the combined departmental figures.

The data on top jobs was compiled by looking through the annual reports from the civil service commissioners. In order to make this data comparable, it also only uses the core set of departments listed in the graphs (excluding HMRC and DWP).

The pie charts use actual figures, not percentages, and vary in size each year to show the levels of recruitment into all of the departments polled by Civil Service World.

Note that in 2005, 2006 and 2007 the Department for Transport provided information by financial year.