Civil service reform is back on the agenda; and there’s plenty to be done

National Audit Office Director Kate Caulkin places the independent public spending watchdog’s latest report on the civil service in the context of wider reforms
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By Kate Caulkin

29 Nov 2023

With public finances straining at the seams amid growing domestic and overseas challenges, the civil service remains incredibly busy. EU exit, Covid-19 and the cost-of-living crisis have all resulted in increased workload pressures on departments, met by rising staffing numbers and costs.

The NAO’s latest report on the civil service looks at how departments hire and manage staff below senior civil service level. It focusses on pay, performance management and recruitment in the 16 main civil service departments that were in place at the start of 2023.

Our report follows hot on the heels of the Autumn Statement, which confirmed 66,000 civil service roles to be cut by the end of the next spending review. And it provides further reading for John Glen, the newly-minted minister for the cabinet office, following Lord Maude’s independent review of governance and accountability in the civil service.

The NAO’s main takeaway is that the government has significant opportunities to improve the efficient management of its workforce. The independent public spending watchdog’s report provides numerous, practical recommendations for senior decision-makers.

Let’s look more closely at some of key findings. Civil service salary costs have risen since 2013, when headcount was 443,390 with total salary costs of £11.4bn. By 2022, civil service numbers increased to 510,080 with total salary costs of £16.6bn. But across all civil service grades, real-term median salaries have fallen over this time.

Recruitment times vary, with the slowest department taking on average more than a month longer to recruit than the fastest department. Fourteen of the 16 main departments did not know how much it costs them to recruit staff.

Departments reported annual spending on recruitment costs of up to £26 million in 2021-22. In July 2023, the Cabinet Office committed to setting out more consistent standards on recruitment times and costs, to enable future benchmarking.

Questions remain regarding the performance and viability of the Government Recruitment Service, which is part of the Cabinet Office and provides recruitment services to most departments. Its staffing was cut by 40% in 2022 and only increased a year later in response to warnings over service failure.

Different departmental pay structures mean some departments pay significantly more than others for staff at the same grade. For the higher executive officer grade at the Department for Environment, Food and Rural Affairs, the national pay band is £30,317 to £32,803; for the same grade at HMRC it is £34,404 to £36,985. Differentials also exist between departments for some specialist staff.  For digital professionals, the departmental median Grade 6 salary across departments differed by as much as £13,100.

The Cabinet Office monitors departmental pay variations but does not coordinate departments to avoid the potential undesirable effects of departmental competition on pay for local or specialist staff. To remedy this, the Cabinet Office should report on civil service pay differentials across departments, starting from 2024-25, and work with departments to address pay differentials where this would be beneficial.

Finally, and perhaps most importantly, are our findings on performance management. Nearly two thirds of departments do not know what happens to staff after they are classified as underperforming. 

Departments vary in their approaches to performance-related pay. In 2021-22, per-head departmental spending on performance-related pay for staff below SCS level ranged from £13 (HMRC) to £1,366 (DfT) per employee. Departments also vary in the number of employees that each line manager is responsible for, with line manager to employee ratios ranging from 1:1.4 (formerly BEIS) to 1:6 (DWP), with a median ratio of 1:2.5.

The Cabinet Office should work with departments to help them assess the effectiveness of their own performance management systems. And departments’ executive committees should receive regular reports on the number and grades of staff identified as underperforming and what happens after they’ve been identified as underperforming. 

What it all boils down to is this: the Cabinet Office and departments need to work together more effectively to drive efficiency and help the civil service meet the challenges and pressures it faces. After all, we all have a vested interest in a better performing civil service.

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