Appearing before the committee last week, Bernard Gray, chief of defence materiel, expressed his frustration at public sector pay rules that mean that Treasury sign-off is required in order to pay officials more than the prime minister.
Gray said that he was pushing the Treasury to relax the rules for procurement body Defence Equipment and Support (DE&S), to allow them to compete effectively against private sector employers.
Gray said: “We have pulled together a set of proposals that we have put into the Cabinet Office and the Treasury that say we would like to have…freedoms…to be a more effective and agile employer of our workforce within the public sector.”
He expressed frustration that current rules stop him from offering more money to his employees, who are lured by higher wages in the private sector.
During a session this week, MoD permanent secretary Jon Thompson said that in extreme situations, some employees could double their wages by moving to a private firm.
“That is not normal for us, but there are some trades where that is the case,” he said.
Thompson added that the department was looking to draw on the example of the private sector, which he said “have fewer people and pay more to incentivise them”.
Gray said he was also asking the Treasury and Cabinet Office to consider how greater freedoms to pay more to staff in D&ES could be formalised.
He asked: “What could you do that gives some kind of a boundary within the public sector to D&ES, plus that would allow people to have confidence that they could invest their careers in it and they wouldn’t be subject to whim?”