Treasury grants pay flexibility to UK Export Finance in return for cutting contractor spend

UKEF chief Louis Taylor tells CSW he has struck deal with Treasury to end "very inefficient use of money" through contractors

By Civil Service World

26 Oct 2016

The Treasury has given UK Export Finance permission to pay its permanent staff more in exchange for cutting its spending on contractors, UKEF chief Louis Taylor has told CSW.

After two years of being frozen, average pay rises for civil servants have been capped at 1% since 2013. 

Although government bodies are granted some freedom to address recruitment and retention problems by re-allocating funds within their overall paybill, civil service unions have warned that ongoing pay restraint is hitting the ability of government organisations to recruit and retain specialist staff, and is increasing its reliance on temporary contractors. 

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The latest annual report from UKEF — the UK’s official export credit agency — ackowledges that the organisation faces a battle to “attract and retain the right people where salary levels may lag behind financial services and other public sector comparators”.

In an interview with CSW to be published next week, Taylor, UKEF's chief executive, said the organisation had recently struck a deal with the Treasury on pay flexibility, with greater freedom granted in return for cutting contractor spend. 

“We were struggling with the salaries we were able to offer to get permanent staff and so we ended up with a lot of contractors and actually that’s a very inefficient use of money; the salary equivalent of a contractor is higher than permanent employees,” he said.

“So we came to an agreement with the Treasury that they would give us some allowances for some key roles to allow us to hire permanent people and allow us to move out a lot of the contractors to save money. So what we’re doing is lowering our wage costs and our salary costs by being able to offer allowances to permanent employees and removing contractors.”
He added:  “We pay a permanent employee a little bit more than we otherwise would but we get rid of contractors to whom we would pay disproportionally more, who are not loyal to the organisation or are less engaged, and who when they walk away take knowledge with them; there’s so many benefits to doing it this way.”

Taylor said he hoped the “economically rational” move, implemented in April, would ultimately save UKEF millions of pounds over the current Spending Review period

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