Bonuses are a highly controversial issue right now but Sir Gus O’Donnell, head of the UK civil service, has no qualms in calling for top civil servants to be paid more – and to get higher one-off payments.
The mandarin told the public accounts committee today that departments were losing some of their best staff because of the competition from the private sector.
“It’s a cultural problem….you get attacked all the time if you put in an element of performance-related pay,” Sir Gus told MPs.
Later he said it was hard to recruit talented people from the private sector into the civil service. “The difference in salary, when you look outside…we’re talking about people in six figures, I’m offering them the wonderful opportunity, I can knock at least £800,000 off on pay to come and work for me.”
And then again: “We are a bit short of people coming in who have been very successful in the private sector because we are not very competitive on pay.”
Later: “Part of the problem is that these skills are quite scarce and very highly paid and we’re in a situation where we’re asking someone to stay, to stay in that one job for a long time, where they are dealing with their contractors and others who are paid materially more than they’re taking and they will get targeted (by private companies) away from there.”
Sir Nick Macpherson, permanent secretary at the Treasury, made the same point about how his ministery had appointed many highly-skilled financial experts to help firefight in the wake of the credit crunch: “The challenge now is to retain sufficient expertise for the future.”
Part of the problem, of course – not that either mandarin mentioned this – is that high pay in the public sector is always compared to the yardstick of the prime minister, despite his salary of £143,500 being rather low by private sector standards given the heavy demands on him. (As I wrote the other day, most PMs can make millions after leaving the post). Who is most guilty of this benchmarking? Politicians, usually.