The Foreign Office and the Department for International Development will look at ways to “align” pay and conditions for staff, following the appointment of a joint ministerial team across the two ministries.
Sir Simon McDonald, permanent secretary at the Foreign Office, told MPs this week that Boris Johnson had instructed the two departments to look at how staff were compensated in light of the new arrangements.
Their findings will feed into the integrated review of foreign, defence and international development policy that began earlier this year. The review has been paused amid the coronavirus crisis but some work on it is continuing.
Seven joint FCO and DfID ministers were appointed in February, meaning the entire junior ministerial team works across the two departments.
McDonald told the Foreign Affairs Committee that looking at how the two departments would work more closely together in future – which he called the “alignment agenda” – would feature heavily in the integrated review.
“We are working through the consequences of closer alignment, so where that takes us is on our mind and I’m sure will be on the committee’s mind,” he said.
Among other things, the two departments will look at staff terms and conditions, he said.
“One of the tasks we have from the prime minister is to align terms and conditions between the two departments. This is in two big chunks: one is in terms and conditions for UK-based members of staff, the other is our local colleagues in the network,” he said.
McDonald admitted that Foreign Office pay levels – a contentious issue in recent years – had made senior-level posts in the department less attractive and increased the likelihood of staff leaving for other jobs.
Asked how pay had affected hiring, he said: “Our recruitment is the best it’s ever been by, I think, any measure. Last year we had more than 23,000 people apply for the Fast Stream of the Foreign Office and the quality of our entrants is superb.
“So in the short term [there is no problem], but when one gets into one’s career, the opportunity cost is ever more on your mind, so later on I think it is more of an issue.”
MPs asked how the two departments planned to address a historical imbalance in pay and perks, which they said were higher for DfID staff than those in the diplomatic service.
But McDonald said it was not necessarily the case that overall pay and benefits packages were higher in DfID, despite that being “widely believed”.
“The traditional characterisation that DfID gets more than the FCO full stop needs to be investigated because it’s a bit more complicated than that,” he said.
“As we accumulate more information, we find that basic pay in DfID tends to be higher than equivalents in the Foreign Office, but the allowance package for the FCO in the field tends to be more generous than DfID – so there’s a certain equalising,” he told the committee.
He did acknowledge that it had been “for a very long time” difficult to convince diplomatic staff to take placements in Whitehall, with pay a contributing factor.
But he said there had been a “very distinct shift” in these attitudes in recent years.
“A lot of that is down to the fact that nearly all households of diplomats are now double income households and so the salary coming in from the FCO is in many cases not even the larger salary,” he said. He added that working in London may now be more attractive for these households, as it may be “more of a challenge” for FCO staff to convince professionally-successful partners to move overseas with them.
A “competitive and sometimes quite frictional relationship"
The question of how to ensure DfID and the Foreign Office work effectively together – and whether the two will or should merge in the coming months – has come under particular scrutiny recently.
Many believe the appointment of the joint ministers in February, which came after months of rumours that the Foreign Office would absorb DfID, was the beginning of a "soft merger" process.
Former FCO perm sec Lord Ricketts told CSW this month that while he does not believe a merger is necessary or desirable, the joint ministerial team could bring "real benefit".
He said that when he led the Foreign Office, from 2006 to 2010, DfID's network of overseas offices operated “pretty much as separate, distinct organisations alongside the embassy or the High Commission”, which he said was "never efficient”.
Differing payscales meant embassy staff were enticed over to work at the better-resourced DfID, and this made for a “competitive and sometimes quite frictional relationship, because one group of staff were on a better package than another group of staff, both working for HMG in the same country”.
Read CSW's feature on the future of DfID and the Foreign Office from this month's magazine issue here.