Civil service morale hit by chronic pay issues as recruitment and retention of staff at risk, say MPs

Most Depts do not know how much recruitment costs or how to make it more efficient

Not enough data on staff underperformance to know if it is being managed effectively

Morale in the civil service is being lowered by chronic pay issues, risking an inability to recruit and retain skilled staff. In a report published today, the Public Accounts Committee (PAC) identifies longstanding pay issues within the civil service, reducing levels of staff satisfaction. The report raises concerns that this damages departments’ ability to attract and keep staff, including specialists who could expect competitive private sector salaries.

Civil service pay at almost all levels has seen a long-term decline, with median pay decreasing in real terms for most staff since 2013. In evidence to the PAC’s inquiry, the Government recognised that this stores up increasing problems of competitiveness with the wider economy for the civil service, and affects departments’ ability to recruit. Unattractive pay is the typical reason for failed recruitment campaigns at the civil service resulting in no appointable candidates.

Other civil service pay issues highlighted in the report include pay disparities between departments for staff at the same grade level, which can lead to unhealthy and unproductive competition among departments for staff, and a lack of coherence in how departments use pay to reward civil servants for good performance.

The report also finds that civil service recruitment is too slow, particularly compared with the private sector. On average it takes 99 days to hire new staff, with candidates requiring the highest level of security clearance taking an additional 171 days on average. Departmental data on recruitment and security vetting times are also patchy and inconsistent, which holds back work on how to speed up the process.

The PAC’s inquiry found that not enough data is collected by departments on how many of their staff are underperforming in their organisations. Most do not monitor what happens to staff who are identified as underperforming. The report warns that, without tracking this information, departments cannot tell whether performance in their staff is being effectively managed, or issues identified and addressed.

The Government’s Civil Service People Plan, which envisions a smaller, more efficient and more productive service in which civil servants are rewarded for delivery, has ambitious aims, but is vague on what specific actions will be taken and how success will be judged. The PAC’s report is calling for more detailed explanations of the commitments in the Plan.

Dame Meg Hillier MP, Chair of the Committee, said: “Without the dedicated efforts and specialist skills of our nation’s civil servants, the machinery of any government grinds to a halt. It is welcome to see Government pointing in an ambitious direction with a plan for a smaller, better paid and more highly skilled civil service, but these outcomes will not materialise without more specific aims.

“For too long Whitehall has found itself in a losing recruitment battle with the private sector, without the right data, curiosity, or willingness to act to tackle the problem. The challenges this country faces are immense – an ageing population, climate change and a more volatile and hostile world, to name a few. Whitehall needs to plan to ensure it has the right skills and rewards to deliver.”

PAC report conclusions and recommendations  

1. The Civil Service People Plan has ambitious aims, but it is vague on what specific actions will be taken and how success will be judged. The Cabinet Office has set out a vision for a smaller civil service which is more highly skilled and better paid. But the Civil Service People Plan does not provide enough clarity over how it will achieve these aims. The metrics outlined in the People Plan do not specify targets or expected levels of performance against which success can be measured and assessed. For example, the metric on the amount of time taken to recruit does not say how many days it should take departments to hire staff. The People Plan also does not say how it will improve the poor state of much departmental workforce data, which will be essential to demonstrating progress on commitments such as reducing recruitment costs.

Recommendation 1: Before the first of its annual progress reports on the Civil Service People Plan, the Cabinet Office should publish more detailed explanations of the commitments in the Plan, including how they will be delivered in practice, target or expected levels of performance, and criteria against which success will be judged.

2. The time taken to recruit staff across the civil service is too slow. It takes an average of 99 days to hire new staff in the civil service, from the job being advertised to completing basic pre-employment checks. Completing security checks for new recruits can take on average an additional 171 days for candidates requiring the highest level of security clearance. The Cabinet Office acknowledges that civil service recruitment times are slow, particularly compared with private sector firms, and asserts that it is confident these can be reduced. Recruitment times vary across departments, but departmental data on recruitment and security vetting times are patchy and inconsistent, hindering efforts to understand how departments could speed up recruitment. As a first step, the Cabinet Office has set out how departments should measure recruitment times for civil service roles. But the challenge will be to make sure departments record and report recruitment times accurately, so that performance can be benchmarked with the aim of making recruitment faster.

Recommendation 2: By the time of its Treasury Minute response, the Cabinet Office should require all departments to report data on recruitment times to it on a consistent and regular basis. It should use this information, along with data from external comparators, to establish benchmarks for recruitment times within the civil service.

3. Most departments do not know how much it costs to recruit staff, or how they could be more efficient. 14 of the 16 main departments cannot provide full recruitment cost data. Only one department, HM Revenue & Customs, understands its recruitment costs well enough to be able to calculate its cost per hire, which is a standard metric for assessing the efficiency of an organisation’s recruitment processes. The Cabinet Office says it is developing a way of measuring and benchmarking recruitment costs consistently across departments. As part of this, it needs to specify how departments can estimate the cost of all staff time spent on recruitment activities, including that of line managers involved in hiring staff, given most departments struggle to report this cost. In addition, most departments have not sought to learn from others how to make their recruitment processes more efficient. This is despite there being identified examples of good recruitment practice within the civil service, such as HM Revenue & Customs on recruitment costs and the Ministry of Justice on increasing the diversity of those it hires.

Recommendation 3a) By the end of 2024, the Cabinet Office should define a common cost per hire measure that includes the cost of all staff time spent on recruitment, and require all departments to report to it regularly on their full cost per hire.

1. b) The Cabinet Office should, within six months, share examples of efficient recruitment from within the civil service and external organisations, to encourage departments to identify improvements to their own recruitment processes.

4. Chronic pay issues within the civil service have lowered morale and risk departments not being able to recruit and retain skilled staff. The Cabinet Office acknowledges that there are longstanding issues within the civil service relating to pay and reward. These include a long-term decline in real-terms pay, which has reduced levels of staff satisfaction within the civil service. As departments can set their own pay scales, there are also persistent disparities in how much people at the same grade are paid in different departments. There is also a lack of coherence in how departments use pay to reward civil servants for good performance. We are concerned that these issues damage departments’ ability to attract and retain staff, including specialist staff where salaries in the private sector can be particularly competitive. The Cabinet Office has promised to introduce a new pay and reward strategy for staff below senior civil service level in 2024. So far, however, there is little specific detail in the Civil Service People Plan on what the new strategy will involve and how it will address long-term pay issues.

Recommendation 4: In its forthcoming civil service pay and reward strategy, the Cabinet Office should clearly set out the specific actions it will take to address longstanding issues such as declining real-terms pay; variation between roles paid at the same grade; and disparities in pay between departments, including disparities in the use of performance-related pay and the risk of indirect discrimination.

5. Departments do not collect enough data on staff underperformance to know if it is being managed effectively. Some departments do not routinely collect data on the number of staff who are underperforming in their organisations, and most do not monitor what happens to staff who are identified as underperforming. Without these metrics, departments cannot accurately tell whether performance is being effectively managed, and underperformance identified and addressed. If government is to achieve its ambition of a smaller, more highly skilled civil service, it will become increasingly important for departments to understand and manage underperformance.  The Cabinet Office is focusing on improving the capacity of line managers within departments to deal with issues locally, which it sees as fundamental to raising performance levels. But it accepts that it could improve performance reporting, particularly as better departmental data will be needed to understand how effectively line managers are tackling underperformance.

Recommendation 5: By the time of its Treasury Minute response, the Cabinet Office should mandate all departments to collect data on the number of underperforming staff, how underperformance is being managed, and the outcomes for underperforming individuals.