Senior civil servants should be incentivised to remain in the public sector with performance related pay, the cabinet secretary told the Public Accounts Committee yesterday.

Sir Gus O’Donnell told the committee that some departments have high turnover rates and project managers will leave before a project is completed because of better pay in the private sector. “We have some people who are extremely marketable and they move elsewhere for higher pay,” he said, adding that “I would like to find ways of rewarding them for longer [service].”

“We reach cultural issues: can we tie in big bonuses with keeping project managers in place?,” he said, adding “these are the right things to do and we should incentivise people to stay in place and deliver whole projects”

The cabinet secretary also said civil service pay made it difficult to attract in new talent from the private sector: “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.”

O’Donnell believes that senior civil servants, particularly permanent secretaries, should stay in place for longer than they have done in previous years. Five new permanent secretaries were appointed last year.

“One of the things I can do which I have definitely tried to do is try to ensure that permanent secretaries stay in place for longer,” he said. “I would dearly love permanent secretaries and ministers to stay in place for longer.”

The cabinet secretary appeared in front of the public accounts committee with Treasury permanent secretary Sir Nicholas MacPhearson, government's lead non-executive director Lord Browne, and Cabinet Office minister Francis Maude.

Lord Browne is in charge of appointing new non-executive members to the government’s departmental boards and told the committee that “we’ve appointed over half of the board members and I would expect the next to be appointed within a month or so.”

He said that reforms to the boards provided a “chance of creating better governance” in departments, in particular helping ministers and officials learn from previous mistakes. “In my experience, the best commercial organisations are the ones that learn from their successes and their failures, principally their failures.”

The committee was told that the new boards would not change overall accountability within the department: the accounting officer will still be responsible for departmental administration.

“Accountability is best served by a single person and not a committee taking responsibility for the administration, “ Sir Nicholas MacPhearson said.

Francis Maude also spoke of accountability and said that ministers are reponsible for policy and officials are responsible for policy implementation.

However, Maude said that boards should provide more assistance in helping departments to choose suppliers and ensure that decisions are not made solely on cost.

“Accounting officers have to show that the supplier that has been chosen is manifestly the cheapest,” Maude said, adding that actually another supplier may bring more expertise or a willingness to innovate.

“Boards will give accounting officers more [ability] to make ... rounded judgements rather than just falling back on qualitative judgements,” Maude said. “The board should take a big spending decision rather than it just being down to a minister.”

Written by CSW