Low salaries force Treasury staff to quit for HMRC

The Treasury is considering an overhaul of its pay structure amid concerns that low salaries are seeing increasing numbers of staff leaving to work for the Bank of England and HMRC, both of which have more attractive pay and promotion scales

In evidence to the Treasury select committee, Sir Nicholas Macpherson, permanent secretary to the Treasury, said that that his department lost 12 staff to the Bank of England last year which, like the Financial Conduct Authority (FCA), has a more generous salary scale.

In addition, former Treasury graduate trainees were also moving to HMRC, which has kept a more complex salary grading structure than the Treasury, in order to boost their pay.

Macpherson said: ‘It is frustrating to lose staff to other public sector bodies, and to be a feeder for other departments – rather like being a second division Belgian football team providing really good people for the Premier League teams like Chelsea and Manchester United.’

The select committee heard that the most recent Treasury staff satisfaction survey showed scores in all areas were above Civil Service benchmarks, with the exception of those for pay and conditions. Staff turnover in 2011 reached 28% and remains significantly higher than at the Bank of England (8% in 2013).

Macpherson said the Treasury had introduced ‘targeted interventions’ to address the issue of skilled staff defecting to better-paying employers, having also identified problems with highly qualified graduate trainees leaving after three or four years to go into the City. He said the aim was to ‘demonstrate there is more money available in these critical areas’, and also to ensure the Treasury offered the sort of flexible working conditions which would attract staff back at a later stage in their career.

Macpherson said he had held ‘helpful’ discussion with the Bank of England governor Mark Carney on the issue, with the Bank agreeing to fund the shortfall between its salary and the one offered by the Treasury to a recent recruit from the Bank who joined the department at a senior level.

‘The challenge we face is how to retain people without throwing the pay policy out the window.  We are in a situation where we pay less well than other departments and have higher turnover, so we have to do something about it. If the upturn really gets going the Treasury will be at much more risk,’ Macpherson said.

Macpherson told the select committee that part of the problem was the Treasury’s decision in the 1990s to ‘de-layer’ its grading structure, which now limits its ability to offer pay increases via promotion to a higher grade.  Committee chairman Andrew Tyrie asked Macpherson to produce a  note outlining the Treasury’s ‘s pay issues and providing a trend line going back over as many years as possible to illustrate the problems.

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