Chisholm: Pay is a ‘chronic’ issue for the civil service

Chief operating officer warns MPs real-terms cuts are storing up ‘increasing problems of competitiveness’ for departments
Alex Chisholm appears before MPs yesterday Photo: Parliament TV

By Jim Dunton

06 Feb 2024

The long-term failure of officials’ pay to keep pace with inflation and the wider economy has put departments on a course that will require radical change, civil service chief operating officer Sir Alex Chisholm has acknowledged.

Chisholm – who is due to leave his joint role of COO and Cabinet Office permanent secretary this spring – made his comments at a Public Accounts Committee hearing yesterday afternoon.

A recent National Audit Office report confirmed all civil service grades apart from the most junior one, administrative assistant, had seen real-terms salaries reduce between 2013 and 2023. Chisholm was asked if he was concerned about the effects on civil service recruitment and retention.

“It is a concern, but to use pseudo-medical language, it’s a chronic problem rather than an acute problem,” he replied. “We can’t see that there’s a lot of people suddenly leaving us saying – you know – ‘I’m not prepared to work here for pay reasons’.”

Chisholm accepted that pay was the most common reason for so-called “failed” recruitment campaigns, where departments were not able to find suitable candidates for specific roles – particularly “competitive” digital, data and technology, jobs.

He said last year’s pay settlement for civil servants, and the one-off £1,500 cost-of-living payment that was eventually bolted on, had “stabilised” dropping satisfaction levels with the overall pay and benefits offered to rank-and-file officials. But he also said the trend identified by the NAO was a significant challenge for departments.

“If you look at it on a 10-year view, paying less and less in real terms, year on year, at every grade bar the bottom one, must be storing up increasing problems of competitiveness in the wider economy,” he said.

“Effectively, the discount required to work in the civil service has been growing for all of that period. So that is why, as a key part of the Civil Service People Plan, it’s not only trying to fix the recruitment time to market and other immediate issues like that. But there is a much bigger reward strategy that needs to be produced as part of that. Because I think that is a really big strategic issue for the civil service.”

Chisholm said that the solution would be a smaller, “more agile”, and more highly paid civil service – along lines set out by Cabinet Office minister John Glen last month.

Fran Heathcote, newly-elected general secretary of the PCS union, welcomed Chisholm’s admission of the problem posed to civil service recruitment by low pay. But she questioned the solutions departments were using to deal with it.

“Discredited policies such as performance-related pay, which has been proven to be discriminatory are not the cure,” she said. “The only remedy for the problems stored up by years of real-term pay cuts, is to reward our hard-working members with the pay rises they deserve.”

Mike Clancy, general secretary of the Prospect union, said the organisation’s civil service members reported that the “acute” problem referenced by Chisholm was imminent.

“If the government doesn’t sort the pay problem, they will very soon see a mass exodus of skilled staff,” he said.

Clancy added that Prospect members reported that the issue of “failed” recruitment was  a particular problem in specialist agency roles where there were direct private-sector wage 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,” he said.

Latest back-to-the-office drive ‘about fairness’

Elsewhere in Monday’s session, Chisholm said that at least part of the motivation for the government’s latest back-to-the-office drive for civil servants was creating a level playing field between departments, with one rule requiring office attendance for 60% of the time.

“Oftentimes you’ve got people from different departments sharing the same building,” he said. “In our civil service culture, we do value fairness very highly and people were [saying] ‘hang on, people in this department seem to be doing that and my department we do that’ and those differences were causing a little bit of tension.

“So 60%, which has been agreed by all departments and all permanent secretaries, does give us a nice common reference point.”

PAC chair pays tribute

At the end of the session, PAC chair Dame Meg Hillier said the committee was keen to put on record its thanks to government officials for their work in difficult circumstances over the past decade.

“I want to pay tribute on behalf of the committee to all those hard-working civil servants who kept us going through Covid, and who have delivered on some very big and challenging projects in recent years,” she said.

“Whether they are smaller in number or larger in number over the years, we want them to be well managed, well paid and happy in their jobs – and get value for money from them for the taxpayer.”

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