Public Accounts Committee 

Oral evidence: Civil service workforce: Recruitment, pay and performance management, HC 452

Monday 5 February 2024

Ordered by the House of Commons to be published on 5 February 2024.

Watch the meeting 

Members present: Dame Meg Hillier (Chair); Paula Barker; Sir Geoffrey Clifton-Brown; Mr Jonathan Djanogly; Mrs Flick Drummond; Peter Grant; Ms Marie Rimmer.

Gareth Davies, Comptroller & Auditor General, National Audit Office, Abdool Kara, Executive Director, National Audit Office, Adrian Jenner, Director of Parliamentary Relations, Linda Mills, Deputy Director of Parliamentary Relations, and David Fairbrother, Treasury Officer of Accounts, were in attendance.

Questions 1 - 111

Witnesses

I: Sir Alex Chisholm, Permanent Secretary, Cabinet Office; Fiona Ryland, Government Chief People Officer, Cabinet Office; Mark Adam, Chief People Officer, Ministry of Justice; Esther Wallington, Chief People Officer, HM Revenue and Customs.

Report by the Comptroller and Auditor General

Civil service workforce: recruitment, pay and performance management (192)

Examination of witnesses

Witnesses: Sir Alex Chisholm, Fiona Ryland, Mark Adam and Esther Wallington.

Chair: Welcome to the Public Accounts Committee on Monday 5 February 2024. Today we are looking at the civil service workforce, particularly recruitment, pay and performance management. This is not for the senior civil service; this is for the vast majority of civil servants. After hiring large numbers of staff to cope with EU exit, the civil service is now aiming to reduce headcount to pre-pandemic levels but, at the same time, is struggling to recruit staff at the right rate and speed.

There is also a risk of losing candidates, as we have previously covered, because of slowness in security vetting, meaning that people, sometimes understandably, opt for another job that does not require security vetting. We want to touch on that as well, picking up on a previous report we have done in that area. In the 12 years that I have been a member of this Committee, we have repeatedly looked at how the civil service keeps and recruits staff with specialist skills. There is a lot to cover in what will, I hope, be an interesting session.

Before I ask Mrs Flick Drummond MP to kick off, I want to welcome our witnesses. In the room, we have Sir Alex Chisholm, the permanent secretary at the Cabinet Office, Fiona Ryland, the Government chief people officer at the Cabinet Office, and Mark Adam, the chief people officer at the Ministry of Justice. We are joined online by Esther Wallington, chief people officer at HMRC. MOJ and HMRC are here because they are very large recruiters of lots of staff, so good examples of some of the challenges being faced across Whitehall.

Q1                Mrs Drummond: Starting with reducing the size of the civil service, which went up from 443,000 in 2013 to 510,000, the Chancellor said there was going to be an immediate cap on civil service headcount. How are the Departments going to reduce the size of their civil service?

Sir Alex Chisholm: It is correct that the civil service has grown by those numbers, as you described. The NAO Report recognised that that has come from additional functions that have come from the EU exit process, extra work that has come from dealing with the pandemic, and also some underlying pressures in terms of demand.

However, as you rightly say, the Chancellor, on behalf of the Government, has said that we should not continue to grow and that, in the interests of overall economy and efficiency, we should try to have a cap on civil service numbers. It is not a freeze on civil service recruitment—we can still recruit people, because we are losing them at the other end as well—but an overall cap on numbers has been set.

The composition of that and how it varies between Departments is still being elaborated, because the Government do not want to affect frontline services. As you know, in a number of areas there has been an effort to catch up on backlogs and improve on turnaround in services, so we do not want to interrupt that process. We also do not want to artificially drive an increase in external spend on consulting or contracting labour, which tends to be more expensive. With those things in mind, as I say, that is still being elaborated.

To answer your question, the key to reducing overall numbers and improving labour force productivity is going to come from continuing investment in better technology and higher skill levels across the civil service.

Q2                Mrs Drummond: I am going to come on to the people plan in a minute, but just to look into this a little bit more, paragraph 8 on page 7 of the Report said, “The grade mix of the civil service has shifted since 2013, with falling numbers in junior administrative grades and increased numbers in more highly-paid senior policy and management grades.” How is that affecting Departments? Is it making it more effective, or is it just making it very expensive?

Sir Alex Chisholm: It probably reflects two factors. First of all, some of the work that would have been done at the most junior levels of administrative activity is now done by machines—by computers—which reflects a healthy development and is wider across the economy, so we do not need as many people doing the most basic kind of admin work.

However, there is probably also a trend there towards a higher level of seniority. Some of that reflects, possibly, the complexity of our work; some of it may reflect a pressure that comes from being able to pay a higher rate. You will have seen that the same report refers to the fact that, in nominal terms, all but the very bottom grade of people’s pay has gone down in real terms. That may have been contributing towards the push towards a higher distribution of senior grades.

Q3                Mrs Drummond: Ms Ryland, to what extent have Departments stopped hiring staff to meet the current headcount cap and possible further reductions?

Fiona Ryland: Each Department is looking at its own workforce planning in terms of what it needs to do to meet the new requirements. For some Departments, that means that they are still recruiting—for example, DWP with job coaches in jobcentres. For others, it may mean that they are not recruiting the same type of workforce that they were before.

Q4                Mrs Drummond: When will it get down to pre-pandemic levels?

Fiona Ryland: The aim for that is at the end of the next spending review.

Q5                Mrs Drummond: We are talking about three or four years’ time.

Fiona Ryland: Yes.

Sir Alex Chisholm: That was stated as an ambition by the Chancellor. There is not yet a detailed plan for that, but the hard cap is at the end of this spending review period, which is the end of March 2025.

Q6                Mrs Drummond: Going on to the people plan, one of our reports in 2020 stated that there was no data across Departments to assess what skills the civil service has and where they should be best deployed. Has that changed?

Fiona Ryland: One of the things in the people plan that is work in progress is procuring and implementing a new civil service-wide learning management system. This will be a way of bringing together all our online learning offer, but also, more importantly, to answer your question, will have a training record for every civil servant. That training record will be portable across Departments. This allows us, for the first time, to look across the whole civil service and understand what skills and capabilities we have.

Q7                Mrs Drummond: In terms of the International Civil Service Effectiveness Index—InCiSE—we did generally quite well, except in digital services, where we came well below the average. Our report in February 2023 talked about the defence digital strategy. How is it affecting the effectiveness of the civil service and impacting on the collection of data of the workforce?

Sir Alex Chisholm: I will make a couple of comments there. First of all, we have much better data on the overall level of skills among civil servants. It shows that, in the annual civil service employment survey, the number of people who have a function has more or less doubled since the time that we started measuring that five or so years ago. That is certainly true for people in digital.

I mentioned in a previous evidence session that roughly 2.6% of the workforce work in the digital, data and technology function, and that has now doubled to 5.5% most recently. This is very purposive. We set out to do that. We set out to try to get to 6%, and we are almost there. That is because we recognise that, with the overall mix of work that we have, we need to have a higher proportion of people with specialist digital skills.

The InCiSE comparison is a little different, because the reason that we score less well there compared to the top-scoring countries is that they all have a citizen identity scheme. You can interlink a lot of data from that, which we are not able to do, because we do not have such a scheme at the moment in the UK. Among countries that do not have such a scheme, we score very highly.

Q8                Mrs Drummond: You are setting up the civil service people data analytics strategy. Is that the main way that you are going to be starting to monitor data on the civil service?

Fiona Ryland: This will improve our data and reporting in two ways. One is collecting more standardised, consistent and frequent data about our people, and the second is around performance in some of the areas that we are going to cover today—metrics such as recruitment and time to hire.

Q9                Mrs Drummond: Going back to the people plan in other ways, the Government People Group is responsible for setting overall civil service recruitment strategy and policy alongside standards for HR teams across the Government. In the past, we have highlighted the lack of strategic workforce planning in the Government, and it does not feature much in the people plan. Why is that?

Fiona Ryland: The Government People Group works with Departments around their strategic workforce plans. For example, you have mentioned the headcount cap. Departments are working through what that means for them. We provide guidance for Departments to use around that and we collect common trends and patterns to help inform our strategies, so we do work with the Departments around their workforce planning.

Q10            Mrs Drummond: What sorts of metrics are you using to maximise the effectiveness of the people plan?

Fiona Ryland: We have a number of metrics that we are either already collecting or working towards collecting. If I use recruitment as an example of that, we have agreed a number of different metrics, the first of which is time to hire. We have agreed a standard definition of that with Departments: from when an advert goes live until when a job offer is made. We have chosen that particular time to hire, because that is easier to benchmark externally. We are now collecting that from Departments every quarter, so the first tranche of that data will be available from April this year.

We are also agreeing time to fill, which is the time from when a vacancy gets approved all the way through to the person starting on the first day; that is what hiring managers really care about. That is harder to benchmark externally, because of some unique parts of our process, such as vetting. That is why we are measuring both of them. We are also measuring diversity metrics in terms of recruitment. We are building a suite of people metrics to measure the activities in the people plan.

Sir Alex Chisholm: Cost to hire will also be part of that.

Fiona Ryland: Cost to hire is part of that as well.

Q11            Mrs Drummond: There is a lot that you are going to be doing this year, 2024, so by the end of the year we will certainly see some movement and some good-quality data on that.

Fiona Ryland: Yes.

Q12            Paula Barker: It is safe to say that there are lots of variations across Departments. On average, it takes just over three months for recruitment. Sir Alex, how concerned are you with the current state of recruitment in the civil service?

Sir Alex Chisholm: Overall, we continue to be a very attractive employer and we are able to get very talented people to join and also to stay with us, so I am not concerned at that level. However, I recognise that it is a competitive market going forward, but also that we should not rest on our laurels and that some of the aspects of our recruitment system could be a lot better.

In particular, as the Chair was mentioning and as the chief people officer was saying, the time to recruit is too long. We are not satisfied with that. The median is 99 days. Looking at best practice across the wider economy, it is about half of that. We would not necessarily get to that, because there are some more complexities in the civil service-type approach, and even the commitment to being fair and open comes with a certain time cost, but I am really confident that we can get that down. One of the reasons why we are gathering all this benchmarking data is to see what is working in which Departments, so that more of us can learn in that way.

Q13            Paula Barker: Are you concerned that the data was not being collected prior to this? I am surprised that that data collection was not already in place.

Sir Alex Chisholm: Departments and public bodies did collect data for themselves, but we did not have a standardised way of measuring and comparing it, which is what we have moved to in the people plan.

Q14            Paula Barker: To follow on from that, there was no standardised data. Ms Ryland, do you think people are put off joining the civil service? If the data was not already collected, how can we have a measure and a barometer of how many people are being put off?

Fiona Ryland: How many people do not apply is a really difficult thing to measure. One of the things that we are looking to measure, through better deployment of technology, is how people behave during the process. For example, we do not have consistent data around how many people drop off during the recruitment process. That is another thing that we are hoping to collect. It is very difficult to measure the people who do not apply.

The people plan is aiming to open up recruitment to a wider range of people than we have before, through the use of the attraction materials that we use, making job adverts simpler, using clearer language and having a recruitment process that more people would recognise from different sectors.

Sir Alex Chisholm: To add two points to that, one is that the most common reason for people not accepting a job that they have been offered by a part of the civil service is because they are taking a job elsewhere in the civil service. On average, people apply for three different roles.

The second thing is that compared to where we were a number of years ago, the ability to work where you come from has really improved a great deal. When I go around the civil service and talk to people in offices such as those in Salford or Glasgow, they say, “If you had not set up here, I would not be working for the civil service now,” so we have really addressed that. That was probably a hidden recruitment issue that we had in the past. Through the places for growth programme and having hubs across the whole of the UK, we are now able to attract and enable people to work in the communities that they come from.

Q15            Paula Barker: What period of time would it be acceptable to get the recruitment process down to? What would you be aiming for?

Fiona Ryland: Once we get our current performance across the civil service, that will enable us to set clearer targets.

Sir Alex Chisholm: In the summer, the Government Recruitment Service was in the 80s, in terms of days. I think that we were down to 71 days by the end of December. We have still further to go, into the 60s.

Fiona Ryland: I agree. We recently started piloting a different approach to recruitment in the Government Digital Service. It is a small pilot at the moment but, through streamlining our process and implementing more digital tools, we have reduced the time to hire in that pilot to four weeks.

Q16            Paula Barker: Mr Adam, the Ministry of Justice recently won the Civil Service Commissioners’ 2023 award for excellence in recruitment. Perhaps you could tell us a little about what you are doing differently and what good practice could be shared across the piece.

Mark Adam: I am happy to. We work in partnership with the Government People Group on a number of these initiatives. There have been two things. We were delighted to be a recipient of that award, partly because it is about working with the commissioners on getting it right and making sure that fair and open competition works, as well as how we expand our reach.

One of the challenges in our Department is getting our attraction right, as you can imagine, from court jobs right the way through to prison officer jobs. How do we look at leavers from the MoD in terms of conversion? Can we speed that process up, with people leaving and joining the system and going forward into employment? What can we do around ex-offenders, not necessarily working straight back in prisons but in other parts of Government and the system in terms of how they could operate? We also have catapult mentoring schemes that accelerate people through.

We are working at the moment on around 60 days for the core MOJ. A prison officer takes slightly longer, at 77 days. As has been described, different jobs have different parameters in which they can achieve, and what we are looking at is how we compare some of that best practice and work together.

Q17            Chair: Is it 60 days from the minute someone answers the advert to recruitment?

Mark Adam: Yes. In terms of the criteria that Fiona set out, 60 days are what we work to, and 77 days within HMPPS.

Q18            Paula Barker: So that good practice is now being shared across the Department.

Mark Adam: Yes, we work very closely with the Government resourcing service to say, “We have learned this from that.” We use a slightly different system. We have been doing that in a contract since 2014, but it does not stop us working closely on how we can improve.

Q19            Paula Barker: Ms Wallington, is there anything that you would like to add from an HMRC perspective in terms of your recruitment?

Esther Wallington: In common with other Departments, we have managed to get recruitment numbers down over the last year. The Report said that we were at 105 days. We are already down to 92 for having people from advert into post. We run a lot of bulk recruitment campaigns, as well as a very effective system of reserve lists. We have a high hit rate for recruitment, and our goal is for great candidate feedback and a simple service for vacancy holders.

We also run a specialist recruitment service, particularly for technology and tax roles and some finance positions. That is a much more hands-on service, where we are proactively in the market, looking for specialist skills and tailoring our marketing to very particular roles. We have a very high hit rate. In fact, this year we filled all the specialist vacancies that we have held, so we are pleased with the approaches we are taking, and the time to hire is decreasing.

Q20            Paula Barker: Sir Alex, what is the proportion of agency staff as opposed to permanent staff across Departments?

Sir Alex Chisholm: I do not have a figure for the proportion. I do have some figures on the amount that we spend in total on contingent labour, which in 2022-23 was £7,385 million across the whole civil service. That is broadly comparable to the previous year. I do not have it as a percentage of staff.

Q21            Paula Barker: Could you write to us and let us know what the proportion is?

Sir Alex Chisholm: I do not know whether we would even have that figure.

Fiona Ryland: We will check, but we track spend rather than headcount.

Q22            Chair: There is sometimes a discussion about what a consultant is, what contingent labour is and what a temp is. Are all Departments now measuring consultancy and contingent labour on the same basis, so that you are comparing apples and apples?

Fiona Ryland: We would need to check that.

Sir Alex Chisholm: It is an important point.

Chair: We have discussed it before in this room, and there was talk about moving to doing that better, but it has been a long time. Well over a decade ago, there was a lot of discussion about this, so it would be helpful to know if that has moved on.

Q23            Paula Barker: I am interested to understand and drill down a little bit more in respect of that, and the length of stay for agency workers and how that is complying with the agency worker regs, and so on.

Sir Alex Chisholm: That would not be gathered by us across the whole civil service. It would be individual employers who monitor their compliance with that. There are a lot of employers in the civil service, so is there any particular area on which you would like us to try to ask that Department to give their information?

Paula Barker: The Home Office would be very interesting to understand.

Chair: Perhaps we could think about which Departments. I am thinking of big-volume employers, which is why the two Departments are in the room today.

Q24            Paula Barker: We know that there have been changes in Whitehall policy in respect of people being vetted, with some targets set for next year. Is there anything on top of the new procedures that is being done across the piece to speed up vetting processes?

Sir Alex Chisholm: Yes. I am very pleased to have the chance to tell the Committee that, compared to when we were before you in the spring, we have really turned around the whole service. All of our targets were hit in December for all types of vetting levels, so that is great.

Q25            Chair: Is that renewed vetting as well or just recruitment?

Sir Alex Chisholm: That is all for initial vetting and, because we are on top of that, we are now eating into the renewals, which have been just rolled forward for a period of time. That will be completed as well over the next few months. That is really good and reflects very well, I have to say, on the team working in UK Security Vetting, who have really focused on the quality of that service. The efficiency and productivity of that team have gone up, so that is great. Departments have really noticed a difference.

That said, particularly for the more sophisticated vetting—the so-called developed vetting—the target that we have there is still quite long, at 95 days. Although we can make an exception for priority cases, which we get quite a lot of, we still think that is quite a long time to wait. As part of the wider transformation programme that we have for vetting, we plan to get that down quite considerably.

Q26            Paula Barker: What constitutes a priority case?

Sir Alex Chisholm: It would be, for example, anything to do with Ukraine. They all have priority, and there were a lot. They include counter-terrorism work and these types of cases. All of those were dealt with within a month, where people needed to onboard quickly.

Q27            Mr Djanogly: I would like to move on to recruitment costs. I am going to start with the NAO Report at paragraph 12, where it says: “Fourteen out of the 16 main departments could not provide full recruitment cost data, which means most departments do not know how much it costs them to recruit staff…only two departments—HMRC and the former Department for Digital, Culture, Media & Sport (DCMS)—could provide data on total recruitment costs”. Mr Adam, as the sole representative of the 14 Departments that could not provide the information, why not?

Mark Adam: It is certainly a focus and a challenge for us. It comes back to the previous thing about having a consistent way of counting. Recruitment within the MOJ is devolved, so we allow line managers to lead on that. We understand the costs that I spend from an HR point of view. They are £702 per hire for offers made, and £1,200 for specialist recruitment for prison officers. What that does not take into account, though, is the line manager time that could go into that, any advertising costs, or any specialist addition. We can definitely get better at that. Working with the Cabinet Office on an agreed set of metrics will allow us to improve that. It is tracked, but not in a consistent way.[1]

Q28            Mr Djanogly: When you say that you can definitely get better at it, does that mean you are going to get better at it? Is there a plan to get better at it?

Mark Adam: There is a plan to track what we are doing with line manager time and to be able to understand their costs that go into that recruitment, so that I can expand on my £702 and understand what exists in addition to that. We also recognise that, in a devolved model, there are choices. For example, in a prison officer scenario, we allow them to add in fitness testing, which has a different cost that we put into that process, so there is not a single figure that we are operating to. It will depend on a number of recruitment scenarios, but we will get there with a number.

Q29            Mr Djanogly: Sir Alex, is this going to be replicated in other Departments?

Sir Alex Chisholm: Yes. As well as standardising the assessment of recruitment time to hire, we are benchmarking all the costs involved in that. That same first data exercise in April, which Fiona mentioned, will show that cost-to-hire data. That will enable organisations to compare for each of the elements within that. You could be advertising, which has a cost. You could be using people to do the initial assessment and employment checks. You could use people to conduct the interviews, and so on. All of that adds to the cost. There is also the core cost of the system you are using.

At the moment, within the Government Recruitment Service, which is part of the Cabinet Office, 217 organisations use Civil Service Jobs, about 87 use the application tracking service and about 30 use the expert services for that, including nearly all Departments. We have some very rich data there, which will enable people to see what the comparable costs are and, hopefully, drive those down.

Q30            Mr Djanogly: When it comes to cost per hire, only one out of 16 provides enough data, and that is HMRC. Ms Wallington, could you advise us what you are doing that makes that possible, so that everyone else can follow your great example?

Esther Wallington: We run quite a lot of centralised recruitment processes, which allow us to be able to look at data right across the Department. Probably the key difference is that we are running those processes either centrally from within HR in the Department or in a very small part of the organisation where we can manage the time and, therefore, capture the data on it.

Sir Alex Chisholm: Just to be clear on that, the missing data tends to be where you have taken a very delegated or devolved approach to recruitment, where the individual business unit, who are not specialists in recruitment and not part of HR, have some of their management or staff time taken up in that process. Getting them to fill out a timesheet with the amount of their time is the missing element. It comes with a cost to do that.

Q31            Mr Djanogly: Your bit of the process is to standardise it between Departments, so that we can then look at it.

Sir Alex Chisholm: We can improve that data picture. Although it comes with a cost to the business units to complete that data, if we do not have it, we cannot make the comparisons. If we had it, it would tend to support a more centralised approach, because you tend to get better at something over and over. Having a more devolved approach tends to be higher cost, but the data will support that.

Q32            Mr Djanogly: Is this something that will happen within the next year?

Sir Alex Chisholm: It will happen sooner, because we will have the first set of that data in April.

Q33            Mr Djanogly: Once you have done the standardisation, how will you then ensure that Departments comply with it?

Sir Alex Chisholm: Departments have very strong incentives to speed up their time to hire and to lower the cost. This is an overhead cost. The people plan is not conceived only in the fertile imagination of Fiona Ryland here, but is a common request from across the whole civil service and HR departments within that. People say, “The No. 1 priority is to improve the recruitment process in terms of its efficiency and timeframes.”

Q34            Mr Djanogly: As we saw from Ms Barker’s questions, overall time to hire is very slow. That is from the information that we have from Departments that have that information, so one would imagine that it is something worse than the 99 days reported. How are you going to help Departments to learn from other organisations that recruit more quickly? Is this a process that is going on at the moment?

Sir Alex Chisholm: Yes. Maybe you would like to comment on that, Fiona.

Fiona Ryland: We look externally. For example, I mentioned the pilot that we were doing with the Government Digital Service, which came about from looking at some of the best practice in larger organisations when specifically recruiting digital. We are working really hard on sharing best practice across Departments. What are Departments doing that reduces time to hire, and then how can we share that with Departments and scale it across the civil service? We do both external and internal benchmarking.

Q35            Mr Djanogly: Do you get large outside organisations offering to help you with this sort of thing, or do you ask for that sort of help?

Fiona Ryland: We go and understand how other large organisations are recruiting at the moment and what their time to hire—as opposed to cost to hire—looks like, and try to bring some of that best practice back in.

Q36            Mr Djanogly: You would then disseminate that through your own organisations, so that people realise how different they are from what the private sector is like.

Fiona Ryland: Yes. We have communities of practice in terms of recruitment specialists that we can share best practice information with.

Sir Alex Chisholm: I would not make a perfect comparison with the private sector, because we have a particular obligation in the public sector equality duty, for example, that does not apply to private sector employers, as well as our commitment to fair and open competition. In some cases, disputes arise as to why a certain person was not chosen, and you need to look at the quality of the record keeping and so on. Our process should not expect to be as quick, because it is more thorough and more oriented towards fairness than the wider economy, but it needs to be quicker and more efficient than it is now. We are driving in that direction, but I do not think that success is equivalence.

Q37            Peter Grant: Sir Alex, if I caught you right, you said earlier that a lot of the time, when somebody turns down a job offer from within the civil service, it is because they are going to take up a different job offer with a different Department. First of all, how do you know?

Sir Alex Chisholm: That is data from Civil Service Jobs, which is able to track that there might be three posts advertised in different Departments. They see that a common person has accessed that, because you would have a particular identity that they can detect, so they have been able to work that back from the data.

Q38            Peter Grant: Essentially, a recruitment website is tracking that person’s activity.

Sir Alex Chisholm: It is our website, Civil Service Jobs.

Q39            Chair: Is it efficient to have people applying for several jobs, maybe even in one Department? Is there any way of reducing that?

Sir Alex Chisholm: It is probably efficient for the individual. People are hungry for work and apply for two or three jobs at the same time in the civil service. They are probably applying externally as well. It is very common for people, when looking for work, to apply in different directions.

Mark Adam: It would be very common for someone to apply to be a prison officer, to apply for Border Force and to apply for the police at the same time. These are similar jobs with similar skillsets that are cross-deployable, so they are working out which opportunity is going to come to fruition first.

Q40            Peter Grant: One of the questions that arises from that, Sir Alex, is why, if the website can tell that the same person has had offers or interviews from several Departments and has taken only one of them, it cannot tell you, for example, how many people spend an hour looking at the job description or at the salary and then do not apply? Surely, that kind of information would be very helpful to you in assessing what makes particular jobs attractive and less attractive.

Sir Alex Chisholm: Yes. It would certainly show if there were particular parts of the process that were causing failure to arise in the sense of people getting stuck, hitting the “back” button or giving up after a certain period of time. It is probably a bit harder to have really hard data to be sure what motivation people have if they start an application process and then discontinue it. I know that Departments have been working on trying to simplify and speed up the process, because people are deterred by long forms and the sheer amount of time it takes to apply. As Fiona mentioned, the experiment that we have been doing on digital is partly around cutting everything to its bare minimum. The more time it takes, the more likely people are to be put off.[2]

Q41            Peter Grant: What information are you able to collect as to the reasons why somebody picks one job rather than the other two or three they have been offered?

Fiona Ryland: I am not sure that we collect that level of information about why people choose one job over the other.

Q42            Peter Grant: If you know that you have a bank of people who want to work in the civil service and choose to go and work for the Treasury rather than for HMRC, or whatever it might be, is there not then a great learning chance for the Departments whose jobs that person has chosen not to take up? Is it about pay? Is it about location? Given that these people are now civil servants, you would expect that they would be quite happy to tell you what attracted them to one civil service job rather than another.

Sir Alex Chisholm: There might be an opportunity. I am just trying to think of the scale of the activity. Government Recruitment Service looks at 50,000 to 60,000 posts a year, so I do not think that it would be realistic to expect all of those successful candidates to then be interviewed about why they chose this job relative to other jobs. It might be possible for individual employers to look at the patterns in their recruitment and, if they are finding that they are not very competitive, to try to understand what they might not be competitive about. The Government Recruitment Service might be able to say, “People are choosing other Departments because they are offering more pay,” for example—that might be possible—but if there are other factors, it is a bit harder to judge. I get the general drift of what you are saying, in that we have a nice source of data there and we want to try to mine it as much as possible.

Q43            Peter Grant: We are going to come later to pay differentials between Departments, and sometimes even within the same Department. Ms Ryland, the permanent secretary mentioned, for example, the off-putting impact of a big, long, complicated application form, or even just a long, drawn-out recruitment process. What are you doing to compare the efficiency of the way that the Government Recruitment Service does things compared with either Departments who do it themselves or other external providers?

Fiona Ryland: There are a number of ways in which we measure ourselves. You are right in terms of looking at what process we ask people to go through, and then how off-putting that is. In terms of how we measure ourselves, we have already spoken about time to hire and cost to hire. We are also measuring the productivity of people working in the Government Recruitment Service. Over the summer, we engaged in a process where we have recruited permanent civil servants to replace agency workers we were using. The way in which we measure productivity is the number of roles that a person completes, and that has moved from just under 350 to just over 450 in that time, because having permanent civil servants who are well trained and stay with you for a while increases that productivity.

Q44            Peter Grant: Are those figures per year and per person?

Fiona Ryland: Yes.

Q45            Peter Grant: How do you measure the effectiveness of the process? The Department wants the job filled reasonably quickly, but they want the best person in the job.

Fiona Ryland: Yes, exactly. We currently measure time to hire. We are implementing cost to hire with Departments, as we mentioned before. We are starting to measure candidate feedback on the process, as well as hiring managers’ satisfaction with the process. We measure the diversity of hires. Where we can also do some work is on the quality of people who start, in terms of how long people stay with us and what their performance is in role. That is more challenging than some of the other metrics such as time to hire and cost to hire, but that is where we need to get to, because it is not just about speed and cost: it is how productive people are when they start in role.

Sir Alex Chisholm: It is also the competitive intensity, measured not only by the number of applicants but the number of applicants who, at the end of the process, you consider appointable.

Q46            Peter Grant: I can certainly identify with the difference between a lot of people who want to take the job compared with the number of people who would be capable. Most MPs who have recruited at any time in the past will identify with that.

Can I now look specifically, Ms Ryland, at the intention to increase the percentage of staff time spent in the office from 40% to 60%? Why 60%? What is the basis for that figure?

Fiona Ryland: When we looked at this, we wanted to achieve a balance between offering people the chance and the flexibility to work from home, as well as the benefits of coming into the office. We all believe that mentoring more junior and younger people, training and collaboration are better done face to face and when together. Departments had slightly different standards across that. The piece of work that we did was to say, “Can Departments agree on a common standard of 60%?” We benchmarked this against a lot of large external organisations, and that appeared to be where many of them were.

Q47            Peter Grant: While I appreciate that you cannot comment on the actions of Ministers or former Ministers, certainly one former Minister seriously riled the civil service workforce by suggesting that when they were at home they were not doing the job properly. There is no doubt that that poisoned the discussion to some extent.

The PCS union has done a survey that suggests that 39% of civil servants would think about leaving if they were forced to spend 60% of the time in the office in jobs that they feel they can do effectively with more time working from home. Does it concern you that if you force this through without proper consultation, you could find yourselves losing staff who could have stayed and done a perfectly good job for you?

Fiona Ryland: A lot of our civil servants work in their workplace for all or most of their time anyway. Departments are working with their workforce when they are implementing this standard to really understand what works for people and how we can make sure that people get the benefits of coming in to work in the office. We also need to evaluate what happens as we work through this in terms of attrition and attraction. We also get feedback about people wanting to be in the office more with their colleagues and benefiting from mentorship, development and collaboration.

Q48            Peter Grant: My understanding is that if someone wants to spend a lot more time in the office, they can do that. There is not going to be anybody working at home thinking, “I wish I could go into the office. I am feeling lonely here.”

Sir Alex Chisholm: There is a bit of a critical mass argument there. If the standard is 60% and people understand that that is what is expected, think about which days of the week they come in and have a high expectation of finding a thriving office environment with a lot of colleagues there and activities that are attuned to being present in the office, that is different to someone saying, “I come in and find that my team or my manager is not there,” or, “I am in an empty office on a particular day of the week.” That is not what we want to have. We want to have offices being properly utilised and people being confident that they can come in and find colleagues.

Q49            Peter Grant: Alternatively, offices that we no longer need can be disposed of rather than having money spent on them. Finally on this, is 60% an indicative target or guidance? Is it mandatory? Is it the same 60% for every Department, or do Departments have the option of setting a different figure?

Sir Alex Chisholm: It is the standard that we adopted. As Fiona was saying, we did a lot of benchmarking and consultation. It is going to vary naturally between Departments. Thinking about Mark’s Department, there is no point saying 60% to a prison officer, who, hopefully, is in every day. That would be true for Border Force, Home Office and many other areas, so it is not going to be identical everywhere. We are talking here about a standard among office workers of 60%. In a small number of cases, there will be people whose current office set-up does not allow them to attain that number. I emphasise that that is a small number and is not the norm at the moment. There will be variations according to the work type that people have. In some cases, people have special needs.

We try not to say that it is an absolute in every case, because that does not work, given the high level of heterogeneity that we have, but it is a standard that is useful for managers and teams when they are having their conversations with people, because you will find that people have different preferences. Some people like to come in more; some people like to come in less. Having a standard helps with that, because we can see that it is beneficial to teams, as Fiona was saying, to collaboration and creativity, and to opportunities for people who are trying to develop their careers to learn from others, to improve their knowledge and to make connections, and so on.

One other factor is that, as the Report notes, people from different Departments often share the same building. In our civil service culture, we value fairness very highly, and people were saying, “Hang on. These people in this Department seem to be doing that. In my Department, we do that.” Those differences were causing a little bit of tension, so 60%, which has been agreed by all Departments and all permanent secretaries, gives us a nice common reference point.

Q50            Sir Geoffrey Clifton-Brown: Good afternoon, Ms Ryland. Are you aware that the world of recruitment agencies is changing quite quickly at the moment? They are all competing with each other, they are using AI to find out what works best on these repetitive tasks, and they will know, if you use them, precisely what the cost per hire is and what the average length of hiring in a certain sector in the private sector compared with the public sector would be. Given the quite large disparity between Departments in terms of their hiring costs, and some not even being able to give hiring costs at all, would it not pay you to encourage every Department to at least benchmark their hiring with the Government Recruitment Service against a private recruitment hirer?

Fiona Ryland: Yes. The reason for developing the metrics that we have is so that we can compare ourselves internally and externally, and understand our performance. Yes, there is a place for benchmarking ourselves around what other organisations do. Some Departments use external recruitment companies as part of specific campaigns or for some of their recruitment.

When we are benchmarking, it is important to look at the type of roles. My colleague from MOJ has already given the example that, for some roles, the process looks a bit different, or you might have to invest more in terms of attraction, but the point of having the metrics is so that we can compare ourselves to external organisations, some of which do some work for us in the civil service.

Q51            Sir Geoffrey Clifton-Brown: Ms Wallington, I want to take you to paragraph 2.14, which looks at departmental costs per hire, with HMT at just over £6,000, compared with yours at £1,538. That might not be directly comparable, but that is a huge difference. What is it that you are doing right and that the Treasury is doing wrong, particularly as you are, presumably, fishing in much the same pool as they are?

Esther Wallington: I do not know enough about Treasury recruitment. We have some of the same pool, although our policy team is significantly smaller by comparison. Most of our recruitment is in customer services and customer compliance levels. If you are familiar with civil service grades, AO administrative grade and officer-level grade are the vast majority of our recruitment. We run those as quite large campaigns, bringing in large numbers of candidates. We can do that much more efficiently than individual campaigns for single posts, which will, I imagine, be largely the profile of HMT recruitment.

Q52            Sir Geoffrey Clifton-Brown: On almost every metric running through the Report, you are at or near the top, so it seems to me that you are the exemplar in Government. Perhaps this is a question for you, Mr Chisholm: why not let other Departments loose and find out what HMRC is doing right?

Sir Alex Chisholm: It is partly a question of scale. Esther employs 85,000 to 90,000 people. The Treasury employs about 3,000 people, so you are not quite comparing like with like. As I say, the exercise that we are doing to compare all of the costs across Departments will reveal the different opportunities for cost saving in Departments, especially when you have more comparable jobs. We should follow the example of HMRC.

The bigger point for me is that HMRC has quite a centralised system and does not say to each team, “You manage the recruitment process.” The individual teams say, “This is how many people we want,” and they have a centralised bulk recruitment-type system. That is a lower-cost approach, and that is probably what we should be doing more of across the piece, which is why I mentioned trying to look at the hidden costs in time taken up in teams at the moment in this employment. When you compare that with having a more centralised approach, where you have people who just do recruitment, the centralised recruitment approach would be lower cost. HMRC is a demonstration of that and, with this cost benchmarking, we will have more people moving in that direction.

Q53            Sir Geoffrey Clifton-Brown: Can we get an assurance from you proactively that you will look at not only benchmarking to the outside recruiters but using the best exemplars within Government and trying to encourage the worst to come up to nearer the better?

Sir Alex Chisholm: We absolutely will. We will also try to understand what is driving the cost, because there are different elements. There is the advertising, the use of the system and the amount of assessment time. In some cases, there is a long time before the employment contract is edged into, so these are all distinct elements. Having comparable cost data across each of those phases is what we will need to drive the costs down. We have to make allowances for scale and for different types of jobs, but I do not want those to be used as excuses to stop us getting the cost-saving opportunities that we need to.

Q54            Mr Djanogly: Sir Alex and Ms Ryland, do we have any evidence to show how important pay is to Government’s ability to recruit and retain civil servants?

Sir Alex Chisholm: Yes, we do, but it is not comprehensive. When we have what we call failed campaigns—for obvious reasons, because, at the end of it, there are no appointable candidates—we absolutely look at what the factors there are. The most typical factor tends to be pay, especially when you are looking for very competitive types of roles—for example, digital or cyber roles. At the other end of the process, when people leave us, we say, “Why are you going?” If they say, “To take a well-earned retirement,” we are happy with that, but if they say, “Because I am doubling my pay by going somewhere else,” we take a note of that and say that is a pay-related exit. Those are the two main sources that we get of pay as a factor.

Q55            Mr Djanogly: Taking the second one, are you seeing an increase in people saying that that is the reason why they are leaving?

Sir Alex Chisholm: No. That is not the case.

Fiona Ryland: No.

Q56            Mr Djanogly: Paragraph 9 in the NAO Report says that, with the exception of the most junior grade of administrative assistant, which saw the only real-terms increase: “Every other grade, from administrative officer to permanent secretary, has seen a real-terms drop in median salary over this time.” Is that a concern in terms of retention?

Sir Alex Chisholm: It is a concern but, to use pseudo-medical language, it is a chronic rather than an acute problem. We cannot see that there are a lot of people suddenly leaving us, saying, “I am not prepared to work here, for pay reasons.” If you remember, we saw in the people survey results last year that people’s satisfaction with the overall pay and benefits—we should always remember that benefits are an important part of the civil service package—fell a lot last year, which was reflected in the improvements made in the pay paid last year. If you remember, the pay remit was a bit bigger and then there was an additional top-up payment.

That has stabilised the situation, but what you are pointing to, absolutely rightly, is that, if you look at it on a 10-year view, paying less and less in real terms year on year at every grade, bar the bottom one, must be storing up increasing problems of competitiveness with the wider economy. Effectively, the discount required to work in the civil service has been growing for all of that period, which is why a key part of the civil service people plan is not only about trying to fix the recruitment time to market and quite immediate issues like that, but there is a much bigger reward strategy that needs to be produced as part of that, because that is a really big strategic issue for the civil service.

Q57            Mr Djanogly: In that line, let me suggest that what we are seeing here is this huge increase in civil service headcount going into steadily more poorly paid jobs. What I would put to you is whether, with technology and training, we should not now have the ability to have a much smaller but higher-paid and more motivated civil service.

Sir Alex Chisholm: Yes, and that is exactly the aspiration that we have and that, indeed, the Minister for the Cabinet Office spoke to just last month, almost word perfect—a smaller, more highly skilled, more agile and better-paid civil service.

Q58            Mr Djanogly: You are suggesting that, with the new plan that Ms Drummond was discussing, and the other things that we have been talking about, this is going to happen. Are we are on course for a transformative change?

Sir Alex Chisholm: That is the ambition, but we do not yet have that reward strategy that the people plan commits to producing. It is a big issue for the civil service. Clearly, lots of elements come into that, such as the overall benefits and the composition and structure of the workforce. It is necessarily a very big piece of work, but that has been committed to.

Q59            Mr Djanogly: Ms Ryland, did you want to that?

Fiona Ryland: I would agree that that is what we have committed to doing. I agree that we are potentially storing up challenges for the future, although the effects we see are not consistent across the civil service, so we probably experience it more in digital and data, for example, than in other areas.

Q60            Peter Grant: Sir Alex, the NAO Report found that, even within the same pay grade in the civil service, some Departments are paying more than 10% less than others for a job that has been graded the same. How can that be allowed?

Sir Alex Chisholm: The grade might be the same, but the job might be and very likely is different. That is reflected already, for example, within Departments, where you have a range of pay at a particular grade, reflecting experience and the marketability of those skills, but also big differences when you compare Departments.

For example, an EO, or an executive officer, in the Cabinet Office might be working in a relatively administrative support-type role—for example, putting together a brief for a Minister to do a visit or to attend an important parliamentary Committee. An EO in Mark’s Department would, most typically, be a prison officer. That is the most typical grade that they have. They are both EOs, but I would not over-emphasise the comparability.

To take another example, a higher executive officer in my Department, which is quite policy oriented, would be working on briefing papers, taking minutes of meetings and that type of thing. In the Department for Work and Pensions, that is the entry level for team management. They are assessed as a manager and will have a number of people working for them.

The grade is indicative but, because we have had a delegated grade structure for pay since 1996, differences have developed over time, and there is not a perfect comparability.

Q61            Peter Grant: Why do we have the concept of, for example, a higher executive officer, when it means two completely different things in two Departments, while it is supposed to be the same civil service?

Sir Alex Chisholm: It should indicate a broad comparability and weight, but it does not mean that it is identical.

Q62            Chair: Skills aside, that means you are not having people able to move from one job to another.

Sir Alex Chisholm: There are limits on that. For example, in our case before of an executive officer working in my place and transferring to Mark’s, possibly one of the people from security vetting might have a suitable background, but not that many people would, even though they would have the same grade, and that would be found out in the assessment process.

Q63            Peter Grant: How much of a problem is it that, when you look at salaries for people on the same grade in different Departments at the same location, you are again finding differences of 10% and 15%?

Sir Alex Chisholm: That adds tensions. We have a relatively small number of cases of that, but that is the type of thing where we see so-called flex cases that come in from Departments. They say, “We need to address our pay at this particular level in this way.” If they cannot do it within their own pay remit—and there is usually some flexibility in the pay remit to do that—they sometimes make particular cases to Treasury and Cabinet Office to see whether they can address these anomalies that have developed over time. We take steps to try to keep a broad alignment and to stop arbitrage opportunities between Departments for comparable jobs.

Q64            Peter Grant: I know that we are going to look later at the question of potential unintended discrimination in relation to other matters. Ms Ryland, are you concerned that, in some of the locations that are now having significantly greater numbers of civil servants employed there, you could have two people in two Departments of the same Government with a significant difference in the salaries that they are both being paid?

How confident are you that the civil service is not walking into the same problem that a lot of local councils did a few years ago, where they had a huge liability for backdated pay claims because the law was not just about equal pay for equal work but equal pay for work of equal value? Are you not concerned that if two people have a badge that says “higher executive officer”, that is likely to be taken as an indication that the jobs have been assessed as being comparable, yet there is sometimes a difference of £3,000 or £4,000 in their salaries?

Fiona Ryland: Different Departments are different employers, so they have that flexibility to set the pay rates. I agree that when you look at any grading structure, it generally is a band in which those jobs fit, not necessarily exactly like-for-like work. In terms of the new reward strategy, we need to look at where it makes sense for Departments to have flexibility to meet their specific workforces and, where there are jobs that are more similar, we could have greater pay coherence.

Q65            Peter Grant: I know there is a very common view—it is particularly supported among the current Government—that it is good if employers are having to compete with one another, because it makes sure that they are all having to give better conditions for their employees and so on. Is it actually a healthy thing if you have two or three Government Departments all moving into an area at the same time and they are effectively competing with one another for the same pool of talent, rather than working co-operatively to get all that talent into the civil service?

Sir Alex Chisholm: There is a balance, isn’t there? You almost answered your own question in the way that you put it, if I may say that. We do want an element of pressure on individual employers to make sure that their own offer as an employer is competitive and a competitive tension does cause people to improve their offer. You are also right in saying that in some particular areas, that competition can become a bit unhealthy.

We have tried to address that, for example, in Glasgow. As you know, Glasgow is our second headquarters. We have over 400 staff there in the Cabinet Office. When we were looking to recruit there, we made common cause with the three other main Departments recruiting in Glasgow and said, “Would you like to work in the civil service?” and tried to channel applicants towards the most suitable Department within that, rather than us all advertising, promoting and trying to compete against each other.

Q66            Peter Grant: Do you take similar steps to make sure you are not competing with the Scottish Government or the Welsh Government for civil servants?

Sir Alex Chisholm: They have a slightly different approach. It has become a noticeable issue, as you are probably aware. I am sure you have good information on the Scottish Government, because the rest of the civil service does not have annual increments based just on the amount of time that you have been working, but that system has persisted in the Scottish Government. That has created some genuine differences between pay, which does cause some tension, you are right, in local employment markets.

Q67            Paula Barker: We know that from 2018 the Civil Service Board agreed pay coherence principles that aimed to co-ordinate Departments. The Cabinet Office has responsibility for overseeing the civil service workforce, which would suggest that it has a role to identify and mitigate pay variation across Departments. I do not want to labour the point, but I just wanted to touch on Mr Grant’s point about potentially discriminatory practices and how we mitigate those. The PCS union believes that a return to national pay bargaining would remove the necessity of having hundreds of pay negotiations every year, replacing those with one central negotiation. That would make the process much more cost-effective for the taxpayer and much more efficient. Would you agree with that?

Sir Alex Chisholm: Government policy is not to have national pay negotiations but to continue with the current system of having individual Departments and public bodies as the employers. That has not always been the case and, indeed, I mentioned before that the move from a single civil service to delegated employers was in 1996. There is always scope for reviewing the relative benefits of that.

At the time, it was seen both as an empowering move for the people running those Departments or public bodies to be able to make their own choices around how much pay to give to their workforces and what they needed to pay, but also as reflecting the huge differences between different types of skills and jobs across the very heterogeneous civil service. Therefore, by having a delegated structure, you could pay what you needed to to secure the workforce that you needed to do the job that is your responsibility.

It does come, as you rightly say, with a degree of cost to it, because it means that individual Departments have to do their own negotiations. It also sometimes creates some anomalies, which then have to be addressed over time. The Government People Group and HR departments across Government try to mitigate those costs and variations, but there is a balance between the benefits of the delegated structure and the relative cost.

Q68            Paula Barker: We know that there is an issue in terms of persistent specialist skills gaps and pay differentials. What do you think needs to be done at the civil service level to address those issues?

Sir Alex Chisholm: We have done some really good work on that, starting with people working in commercial roles across Government. That was an area where, before the establishment of the Government Commercial Organisation, the churn rates were in the 20s—25% or 26%. We were losing an unacceptable number of people from those roles, and also the quality of people working in procurement sometimes left something to be desired at that time.

The establishment of the Government Commercial Organisation, with its own particular approach to recruitment in specialist terms, has greatly improved that and we have been able to get more good-quality people to stay with us for longer. It has also enabled people to move across different roles across Government. That has worked well. We have then been able to replicate some of the success of that in some other areas or professions where we have particularly had a lot of competitive pressure.

In terms of digital, data and technology, we developed a specialist pay framework where, for all these different, defined digital roles—we carefully defined what they do—we said, “This is what the pay would need to be.” We were able to make a strong case to the Treasury to say that if we can improve the pay rates right across Government for these roles, we would be able to save money overall, because we would spend less on consultants and contractors. That was indeed the case.

Every Department now has moved over to the DDaT pay framework, as it is called, as a result of this, and, indeed, you can see that our recruitment and retention has greatly improved as a result. That has been a successful example of working right across Government in a specialist area.

Q69            Chair: Can I ask how you determine what extras there are? Perhaps I will ask Mr Adam and Ms Wallington in particular to answer this. There is evidence that there are some jobs where there are little extra things that can be added on, in terms of weighting particular skills, pushing at the edges of the pay policy. How much are you having to do it in a roundabout way and how much is actually set in stone?

We know you have to have permission to be paid more than the Prime Minister. That is the higher level, rather than the lower level, but there are an awful lot of civil servants at living wage level now. I know that is a big issue for people who did not think they were going into jobs at the living wage level. Do you find yourself providing performance pay or security payments, when that is just a way of boosting basic salary? Security payments would apply, potentially, for prison officers—they might get extra pay for the danger of their job.

Mark Adam: We do not pay anything in relation to danger of the job, but we do pay in terms of the antisocial element of that job, in terms of shift working and things like that. As Sir Alex just said, DDaT would have been a particular challenge where we would have looked at recruitment and retention allowances. Being able to use that pay framework consistently has been really helpful to get better comparability and make that more competitive.

We tended to find, around some of those specialist jobs where we were thinking about the need for what we would describe as recruitment and retention allowances for specialists, that this helps. It is not a blanket approach at all, but it certainly helps in some of the specialist positions.[3]

Q70            Chair: Do you find that you get any perverse impact of those recruitment and retention elements? You are then putting some jobs out of kilter with others on a similar grade, although I recognise the point about not all grades being quite the same.

Mark Adam: Yes. That is an inevitable element of a system where you are prioritising different skillsets at different times to be competitive. It is about really being driven by the evidence. Where we see that we cannot fill jobs or we do not get the hires through, we start to look at saying, “Actually, this is a job we are going to have to attach a different pay element to, to make that competitive.”

As you can imagine, everyone will always say that their job is the thing that you need to add a different pay element to. That is why being transparent in terms of the way we present our pay and having open conversations with our unions about it before we settle on particular rates is really important.

Esther Wallington: We did a pay deal in 2021 and we removed quite a lot of the allowance structures around that, but we still have some flexibility to pay differently for different sorts of roles. We make use of higher starting pay, for example, in some of our roles, particularly in digital roles. We have a small allowance for people, particularly in areas of criminal justice within the Department, who might be doing on-call shifts, for example, and might be called on at short notice to work particularly antisocial hours.

We are starting to explore critical role allowances, which we agreed as part of our pay package this year. We are just looking at where we might apply those, but generally we have a pretty standard pay approach, which we negotiated in 2021.

Q71            Chair: In terms of perverse outcomes, you talk about shift work, Mr Adam, and I have come across examples where people have been, for example, moved from frontline into a policy or private office role, but losing their antisocial hours or other allowances means it is just not worth their while. As Ms Barker said, people can be on the same grade but paid differently. Are grades now just a bit out of date? How do you manage those challenges at the edge? Maybe you just want separate pathways for people but, if you do not, you are going to hit that problem, are you not?

Mark Adam: There is a really difficult balance to strike, in terms of having the flexibility that we do to be able to target some of our individual workforce needs that exist in all Departments. I welcome the work from the Cabinet Office on a cohesive reward strategy, because it is something that will really help us in terms of planning consistently.

It is not dissimilar to the conversations we have had around recruitment, time to hire and standardisation. It is about understanding where those differences exist so that we can be more consistent. For example, where we do pay allowances for people in private office, are we all doing that in the same kind of way? Understanding that will build more transparency into that system.

Q72            Chair: I was quite an unpopular Minister because I did not want staff to stay late. Apparently, that threw out their pay expectations, which was me perhaps not understanding some of their motivations. What about you, Ms Wallington? Are there other issues where sometimes the perverse outcome of paying a specialist or a particular role more means that you just cannot get them to move across to another role?

Esther Wallington: We do not really find that too much, because we are tending to pay for very specialist, niche skills, so we do not see quite so much movement across those sorts of roles. As I say, we did take out quite a lot of the non-standard terms as part of our pay deal, so we do not see an issue of people being able to move into different types of roles.

Q73            Chair: Can I touch on AI, which Ms Barker also raised? We have raised this before, particularly with DWP and looking at job payments, but if you have algorithms or AI being used, how are you monitoring whether there are any unfair outcomes? For example, some recruitment now is relatively blind. In the private sector and the public sector, it is very often automated questions and then the AI system spits out “yes” or “no” if someone has answered the questions. Do you test who is coming through those processes, who has applied and whether you are spitting out people from particular backgrounds more than others, Ms Ryland?

Fiona Ryland: In terms of the Government Recruitment Service, we are not currently using generative AI in that way. What we are doing in terms of automation is coding—just using it to say, “Take this piece of data and check it against that database in terms of that.”

We are looking at implementing generative AI. We are going to start in terms of helping hiring managers to write job descriptions and those kind of things, to improve the outcomes there. When you start to use that in terms of shortlisting, that is where you have to really evaluate what outcomes are coming from that and whether you are introducing any kind of bias in that way.

Q74            Chair: How are you doing that?

Fiona Ryland: We are not currently at the point of implementing that kind of generative AI, but we will have a framework in place to help us to evaluate where we do use it. The other thing is that you can still use human judgment to check the outcomes of using generative AI in that way.

Sir Alex Chisholm: AI can help us in this way, because it can be very useful in spotting patterns of data that we are unable to see ourselves. In terms of reporting back on trends, we can get a report back from a new AI-enhanced Government Recruitment Service saying, “You do realise that we suddenly have a different mix of people coming in because of the way you asked that question,” and if we did not know that, we might be able to take corrective action more quickly.

Q75            Chair: Mr Adam, Ms Wallington and Ms Ryland, are you comparing and contrasting, as this move comes forward, with recruitment practices in sectors that were already using AI?

Mark Adam: Yes, we are learning every single day on this. We use an element of gamification on the selection of prison officers to test people’s desire for risk, for example. It is not an absolute decision-maker for the panel, but it gives you an area in which to probe and follow up as part of that selection process. There are so many tools developing. This is something we can work with right the way across the system.

Q76            Chair: Is there anyone else in a similar field? You mentioned before police and Border Force, which are both in the public sector. Is there anyone in a similar field—private sector security companies, for example—using systems that you are looking at using?

Mark Adam: Yes. We have worked quite closely with the Met police in terms of how they do some of their selection, comparing it with how we do some of our selection as well. We are learning across. We also talk to private prison providers around their processes as well, to see what we can learn from that.

Q77            Chair: I gather that one of the challenges is that sometimes the questions in these systems are exactly the same. If you have applied to 10 jobs, you have done that question several times before.

Mark Adam: We run the risk of people having formulas that can work out how to answer these things, yes.

Q78            Chair: These are all big questions. Ms Wallington, are you learning from other sectors that are equivalent to HMRC or whoever you consider your competitors to be?

Esther Wallington: Yes. We are exploring some use of AI, but much more in the outreach way—helping us to write good job descriptions and good job adverts, helping us to access the right sort of candidates—rather than focusing on the assessment side. We are working with quite a lot of companies, such as the jobs boards that we advertise with—LinkedIn, for example—to make sure that we are making full use of new technologies in that.

Chair: There is obviously lots still to do there.

Q79            Peter Grant: I want to look now at performance management in the civil service. Ms Wallington, can I turn to you first? The NAO has reported that HMRC was not able to provide it with data on the number of staff who the Department regards as underperforming. Can you explain why you were not able to provide that?

Esther Wallington: We introduced a new performance management system in 2018. In introducing that, we wanted to focus on high-quality conversations with managers and individual goals that were set rather more short term, because we felt that fitted our business better than an annual performance cycle of ratings. In doing so, we removed those annual ratings. In doing that, it means that we did not then hold lots of central information on how people were doing.

Instead, we focused on investing in line management capability and support through employee advice services to help managers to manage really well, rather than focusing on the administrative process side of collecting the central data. It has served us well. We have been able to move people around when we have needed to for different peaks of work, and that has been aided by these short-term goals. We see good staff survey results on people’s experience of using the performance management system, both managers and individuals who are subject to it.

We feel the system is working. We can always review it, but we tend to focus more on the business performance and outcomes, particularly with teams, rather than centrally collecting information on underperformance. We do hold information on people where it gets to the far end of managing poor performance processes, where managers do need to contact our expert advice service and HR. We then hold that information.

Q80            Peter Grant: I certainly do not have an issue with the first part of your answer, because there are lots of different ways that you can identify who is struggling and who is doing well. There will be some jobs where a standard checklist approach is not appropriate, but, as somebody who has an overall responsibility for performance management across HMRC, how are you able to manage that in full if you do not actually know which employees are currently needing to be supported because, for whatever reason, they are just not performing the way they want to?

Esther Wallington: Our focus there is on the managers and being able to provide them with the right level of support, because it is the managers who, in the end, are accountable for making sure that people can perform as well as possible. All our emphasis is on how we help managers to have good conversations, through training and expert guidance. Over 10% of our managers contacted our expert advice service for advice on how to manage individuals.

At a central level, we are looking at business performance and outcomes in teams, whether that is customer contact or compliance performance. That is what, corporately, as an organisation, we are looking at in terms of data, and then we are supporting managers to manage their people.

Q81            Peter Grant: Ms Ryland, you will have heard that answer. Are you going to be encouraging other Departments to adopt the same approach? If not, why not?

Fiona Ryland: I agree with Esther in terms of where our focus needs to be: on the quality of line managers and their confidence and capability to be able to manage the performance of their team. Part of the people plan is the line management capability work that we are doing which, across the civil service, will set the standards that line managers need to work towards and provide training in order to support those managers.

I agree that line management capability and their confidence to be able to manage performance is key. It is not just about poor performance, but being able to support all of their team in terms of performance and give them high-quality feedback and coaching, setting great objectives. That is the most important thing here.

Q82            Peter Grant: I know that you had significant experience in various parts of the private sector before you came into the civil service. Were you surprised that three quite major Government Departments were not able to provide the NAO with the information that it was looking for about underperforming staff?

Fiona Ryland: In some of the large private sector organisations that I worked in, you would not necessarily be able to supply that data. I go back to what Esther said, which is that it is about focusing on what managers are doing locally, in order to drive, support and improve performance.

Q83            Peter Grant: The NAO found that 10 of the Departments it approached, after having identified that a member of staff is struggling for whatever reason—it will not always be down to any fault on their part, I have to say—were not able to provide information on what they did next, how they monitored individual members of staff, how they managed them, how they supported them or sometimes even what happened next. If you are not able to provide information as to what you are doing, does that give the impression that it is not being given sufficient importance across the service? Identifying and supporting underperforming staff maybe is not being given the importance that it should be.

Fiona Ryland: Departments do give this the importance that it requires. What we can do in the Cabinet Office is work with Departments to understand the barriers in terms of collecting and reporting on that data. As with all these things, there is a balance between how much time we want to spend on collecting and reporting the data and how much we want to spend on supporting managers and teams in improving performance.

Q84            Chair: If you do not measure, how can you tell? You can tell intuitively, but I am just looking again at the organisations you have worked in before. There are some quite wide-ranging organisations. For example, with Compass Group—a big, wide catering company, up and down the country—you could not possibly see it for yourself. You would be relying on managers to report in. Without any metrics, how could you keep a tab of whether performance was being measured well, and similarly across the civil service?

Fiona Ryland: In the organisations that I worked in, there was a focus on the business performance and the outcomes, rather than the granular in terms of every team member’s individual performance and appraisal. That is why I also agree with Esther in terms of focusing on the overall business performance and team performance, and then supporting managers to deal with those individual performance issues locally. That is not to say that we cannot improve reporting, and we will be working with the Departments to understand the best way to do that.

Q85            Chair: You said at the beginning there would be a log of everybody’s training, for example, so that can be centrally available. Although that is not quite a proxy for performance, it may be a proxy for where certain interventions might be necessary, which could be a vague proxy for performance. Is there any way you are going to look at codifying that a bit more? If people needed a retraining on health and safety that was outside the normal rota, for example, that might suggest a sloppiness.

Fiona Ryland: Yes, exactly. Where we can learn from the private sector organisations that I have experience of is that, generally, when we understand people’s job roles, there is a set of standardised training for that particular role. Then you measure whether people have completed that training and where the gaps are. When we have that kind of data, we can look across and see where the gaps are in terms of people’s skills, capabilities and training.

Q86            Mrs Drummond: The line management capability programme commits to improving the productivity and capability of line managers across the civil service, but presumably you will need some metrics to find out how productive they are and their capabilities.

Fiona Ryland: Yes. We are also looking to introduce a way of accrediting line managers, so we actually understand people’s standards.

Mrs Drummond: Externally accredited standards.

Fiona Ryland: Yes, exactly, and then we can deploy the training interventions and accredit managers, so that we know they have met their standards and we know where the gaps are.

Q87            Mrs Drummond: This is going to be across the civil service. They are all going to be doing this one system.

Fiona Ryland: Yes.

Q88            Peter Grant: Ms Ryland, the Committee, over the four years or so that I have been a member, has looked at a number of instances where the overall public-facing performance of a Government Department has simply been unacceptable. It has been woefully inadequate. In terms of the kind of explanations that we have been given, some permanent secretaries have been quite open that they just do not have the staff to meet peaks in demand, for example. Sometimes it has been antiquated IT systems. There are a number of themes running through.

I am struggling to remember any instance where the performance of the Department was explicitly linked to the fact that individual people were not performing. Is that a fair reflection? Is it fair to say that no matter how many times we see levels of service performance that are just not good enough, it is never because individual members of staff are underperforming and it is because of other things, such as workload, too much work for the number of people or IT systems that are not working?

Fiona Ryland: I do not think you can say that it is never an individual performance. What I am saying is that at the Department level they should be concerned about the business outcomes and the delivery of the overall objectives, and line managers locally need to be concerned with the individual performance, supporting, coaching and dealing with challenges locally.

Q89            Peter Grant: Is it fair to say that there is a direct link between what we are talking about now and what we were talking about earlier on? Sometimes, the root cause of somebody who is just not performing in their job is that you have appointed the wrong person. The recruitment process somehow has come up with the wrong answer. Alternatively, the best candidates walk away and you have to make a suboptimal appointment, rather than leave the posts vacant.

Do you think it is adequately recognised throughout civil service departments that, if you do not invest properly in the recruitment process at the beginning, you are more likely to have problems in having to manage the performance of your staff later on? Is that something that needs to be better understood?

Fiona Ryland: That is well recognised, particularly by hiring managers, because they are the people who are going to have to deal with any performance issues from people they have hired through the process. People are really aware of that. However robust your recruitment processes are, they are not perfect at predicting performance in roles, so you make your recruitment processes as good as you can, and you do that through evaluation around the processes, but then you will always, in a number of cases, have to deal with people who were not right for the role.

Q90            Peter Grant: Do you monitor how many people leave the civil service, either choosing to leave or being asked to leave, where difficulty in achieving the necessary performance standard is a significant issue? Do you monitor whether that is an issue across the service?

Fiona Ryland: I think Departments monitor that data.

Q91            Peter Grant: Is it centrally monitored by the Cabinet Office?

Sir Alex Chisholm: We do have data on the overall number of people we know who have been dismissed for attendance issues, misconduct or formal poor performance. In 2022-23 it was 2,365.

Q92            Chair: Do you have any idea about that in terms of a pattern? Do some Departments have more of an issue than others?

Sir Alex Chisholm: I do not have that year-on-year picture.

Q93            Chair: Would that not be useful information, Ms Ryland, in your position, to see whether there is a Department that is struggling?

Fiona Ryland: Yes.

Q94            Peter Grant: To bring that into context, 2,365 is out of about 500,000 civil servants.

Sir Alex Chisholm: Roughly, yes.

Q95            Mrs Drummond: You were setting out the central employee identifier, which is going to follow that particular civil servant all the way through. Is that so that you can get the data we have just been talking about? Will it enable you to do that?

Fiona Ryland: Yes. That would allow us to understand the data attached to that person as they go through various roles.

Q96            Chair: If they changed Departments, you could see an issue with the individual. Somebody might underperform in one Department but not another.

Fiona Ryland: Yes, if the Departments have systems that allow performance data to be entered.

Q97            Chair: There are still gaps in the data. Do you have any powers, Ms Ryland, to require Departments to collect certain data? You keep telling us that it is down to Departments, and Departments might collect it. Can you enforce anything?

Fiona Ryland: We have data standards that Departments comply with. Different Departments are in different stages in terms of the quality of their HR systems and the quality of data in those systems.

Q98            Chair: When will they all be up to scratch?

Fiona Ryland: Different Departments are going through different programmes of updating and implementing those systems.

Q99            Mrs Drummond: You say that you are going to save £9.8 million in efficiency by this CEI—by enabling better processes, removing manual work and so on—but does that mean you are going to keep a really big eye on every single civil servant as they move through their career? It is almost like Big Brother.

Fiona Ryland: It is more about the manual processes associated with people moving between Departments. At the moment, you have to re-set up a civil servant on a different HR system in a different Department. It is more around the time saved. A lot of those processes will be able to be automated.

Sir Alex Chisholm: It also links to your record in training. At the moment, you could go for a course and have a great evaluation on that course, but that record does not sit with you when you move to another role. I think that would be very good. In future Committees, when you are saying, “How many people have been qualified to this standard?”, we would have that data across the wider civil service.

Q100       Chair: It also might help with underperformance, as a proxy. If you have been trained in something and you failed to deliver on that, then—

Sir Alex Chisholm: Yes, exactly. If you are trying to schedule work, you can say, “How many people have this particular qualification?” That will be good.

Can I just make two other points that have come up? One is that if you are trying to make the recruitment process a bit easier and a bit quicker, a correcting mechanism we have open to us is to be more stringent in the application of the probation assessment period. That is something we need to look at as part of this range of changes: how many people are going through probation?

The other point was to Mr Grant’s point about the percentages and the number of people who exit as a result of poor performance. That should be a very small number because really, when people are underperforming, that should be tackled and improvement achieved in their work. Sometimes, as you recognised very rightly, it does not really reflect on the individual. It means that they have been given a task for which they are not suitable. A different type of work is the solution to that, rather than an exit. I do not want a measure of the health or strength of the civil service to be the number of exits that we have as a result of poor performance.

Chair: Yes, absolutely. If you recruit well and manage well, it should be fine.

Sir Alex Chisholm: Yes, exactly.

Q101       Peter Grant: In case my comments were misunderstood, I always take the view that nobody ever takes a job wanting to do badly. Whether it is in the civil service or anywhere else, on day one everybody thinks they are going to be good at the job and wants to be. It is only if something has gone wrong with recruitment or if something goes wrong further down the line that you have a difficulty with performance.

Can I move on now to the specific question of performance-related pay, which is part of performance management but cannot be the only way that performance is recognised? First of all, Sir Alex, is it appropriate for the civil service to have so many different approaches to performance-related pay? Can that be justified by the fact that there are so many different kinds of jobs being done, or is it simply down to the views of individual line managers?

Sir Alex Chisholm: Honestly, it can be justified, but it is to a bit of a stretch. The Report points to a higher degree of heterogeneity and variation than I would really expect. I can see how, in some Departments where the work is very team based, you might not want to use performance-related pay for individuals as a big part of your reward system. In some other Departments, where that is more expected, it is very clear what someone has to deliver and you are trying to incentivise a particular type of behaviour, you might have a higher level of performance-related pay. I saw that the Department for Transport was at one end of the spectrum compared with HMRC, for example.

I can see some justification, but it is more variation than I would expect, to tell the truth. As part of this overall reward strategy that we need to look at, we should look harder again at the role that we expect performance-related pay to play. You can see that in many parts of the civil service there is a view that it does not play an important role—for example, in HMRC. They have clearly decided, as part of the way they have used the freedoms available to them in implementing the civil service pay remit, that performance-related pay is not a big factor.

When we look across the overall civil service and the wider economy, you can see that how people work does affect their pay. It is based not just on the job they have, but also their output. That is very common in the economy and my invitation to Fiona, as she takes forward the reward strategy, would be to look at wider evidence to see whether there is scope to build the variable element of pay into more of the work that is undertaken in the civil service, to reward people for more output and higher quality.

Q102       Peter Grant: How do you guard against the eventuality that is perhaps too common in the private sector—particularly, admittedly, at more senior levels—where the people at the top are picking up big performance-related bonuses while an organisation is completely failing? How do you make sure that the performance that is being financially rewarded is performance that actually contributes to the success of the Department, rather than to something much more localised and maybe not so important to the end result?

Sir Alex Chisholm: We do not have that problem really in the civil service. It is almost because of an aversion to that—the thought that somebody might be paid a big bonus and then subsequently it is found out that their organisation was not performing very well in every respect—that we do not pay big bonuses. Performance-related pay is a tiny part of total remuneration—it is something like 1%. That is how important it is to people. What is much more important to people, of course, is to get promoted. Our incentives are very heavily dependent on getting promoted, rather than the performance within the grade, and I suggest that that may not be optimal.

Q103       Chair: That could create perverse issues with civil servants who do very well in a job, but have to be promoted to get more money, rather than staying doing what they are good at, hence the specialism functions and the skills. We have looked at this for a long time on this Committee. The balance is still very much on promotion up the line, rather than reward for doing a good job and continuing to do it well.

Sir Alex Chisholm: I agree. That needs a hard reconsideration.

Q104       Chair: In fact, when you think about appointments to permanent secretary positions, it is all people who have gone up the ladder, rather than people who have quite a specialist skill who have gone sideways into that role. There are a very few exceptions. A few outside people have been brought in, but they do not usually last.

Sir Alex Chisholm: Of the current top 220, which is permanent secretaries and directors general, I think 24% came from outside.

Chair: It is going up. It is more than it used to be, although we are looking at lower-level roles in today’s session.

Sir Alex Chisholm: A number of those are also specialists in particular skills.

Q105       Peter Grant: Going back to your comment that, essentially, the reward for good performance is a better chance at getting promoted, is that still sustainable when you are seeing such a massive reduction in headcount? One of the ways you cut headcount is that when an HEO post falls vacant, you do not fill it and end up with a lot of frustrated executive officers who have to wait a lot longer for that promotion. Is the promotion-as-reward strategy you have talked about going to keep on working when the size of the organisation is being significantly reduced?

Fiona Ryland: I think it is, in the sense that there will still be plenty of opportunities for people to apply for. We are still recruiting externally. We are still promoting people. I think those opportunities will continue.

Sir Alex Chisholm: Just to be fair, Mr Grant is right to say that in an expanding civil service, a reward strategy that puts heavy weight on promotion is more manageable than in a contracting civil service.

Fiona Ryland: Yes, absolutely. It was the point that the Chair made around allowing pay progression in role, so that people do not have to seek promotion in order to achieve that.

Q106       Chair: There have been discussions over the years about classroom teachers, senior nurses—people in role receiving enhancements within those roles. We are still quite a long way behind in parts of the civil service, are we not?

Fiona Ryland: Yes, and that is one of the things we will need to address through the reward strategy: how do we allow pay progress in role as people gather those skills, that experience, delivery and performance?

Sir Alex Chisholm: Yes, without adding to the total pay bill.

Chair: And not seeing success just as going up a line.

Sir Alex Chisholm: Yes.

Fiona Ryland: Yes.

Q107       Peter Grant: Clearly one of the issues with performance-related pay is identifying how you define good performance. A lot of that is going to be subjective, especially if you want to reward quality of work rather than just amount of work. Anything that is so subjective has a much greater intrinsic risk of unintentional discrimination. How do you guard against that discrimination being built in, where people with one protected characteristic are more likely to get performance-related pay increases than others just because of the way that the system is set up?

Sir Alex Chisholm: In one way, being much clearer about the definition of what the work is makes the assessment against that much more objective and less subjective. I have seen some encouraging cases across the civil service of that being applied. For example, in case management in migration cases in the Home Office I heard that they were now able to make much stronger comparisons between different caseworking teams about their productivity and the number of cases, with quality checks built in. That is the type of thing where, if you have very good hard data to enable people to see who is the most effective at their work and what they are doing to achieve that, that enables the overall productivity to be improved, not in a way that is subjective, based on irrelevant data such as their ethnic background, gender or anything like that.

Q108       Peter Grant: I was not suggesting that the assessment would explicitly refer to those characteristics, because that would be inarguably unlawful. The cases and examples you have referred to are effectively transactional jobs—almost decision-making jobs. You can count how many decisions somebody has taken. For most, you can wait a few years and see how many of them come back at tribunal and so on, so you have some kind of measure of quality. What about the vast majority of civil servants whose workload, both in terms of the quantity and especially in terms of the quality of their output, is much more difficult to measure?

Sir Alex Chisholm: I feel a little bit impatient about the way in which people describe their jobs as being difficult to measure. We almost revel in that sometimes, and actually we could get better at saying, “What are the measures of that?”

We were talking earlier, for example, about management. It should be easier to see what people’s management history is. What is the improvement they have been able to achieve in people? Who have they appointed? What is the success of the people they have recruited? In a highly data-driven world, all that is going to be more available in future and will give more and more objective data to enable us to make those assessments. Shrink the amount that is considered subjective, make it more objective and that will be fairer.

Fiona Ryland: The other thing that I have seen is that we have a really robust process in terms of moderating performance ratings given at the end of the year. There are some checks and balances in terms of how people moderate performance across individuals.

Q109       Peter Grant: When you saw “we” in that, do you mean the Cabinet Office moderates it across the whole civil service? Or are you leaving it to individual Departments?

Fiona Ryland: No, Departments do that, with support from the professions as well.

Q110       Mrs Drummond: In the people plan, it talks about more efficient teams. Is the average line manager span of 2.5 employees to each line manager an optimal number? I think it is six in the DWP, so it varies.

Fiona Ryland: It does vary. It is right for it to vary: it depends on the nature of the roles that people are managing. If you have people who are doing very similar roles, you can probably manage more people, in the region of eight to 10, whereas if you are managing different specialists, you are probably better off managing a smaller number. It will vary. In some parts of the civil service, our structures are too tall and narrow. We do need to look at the spans and layers, but we need to do that on a Department and team basis.

Q111       Mrs Drummond: How does it compare to private businesses?

Fiona Ryland: In terms of the businesses that I have worked in, it does vary by team. Where you have large operational teams, people are managing larger numbers of people directly. Where you have specialist, head office, technical roles, people have smaller spans of control and smaller teams.

Sir Alex Chisholm: Sometimes more senior roles have been used in order to pay people more, because that is the competitive rate for their skills. With that, in our system, has come an expectation of having more management responsibility. Indeed, sometimes when we evaluate jobs that is explicit in terms of, “What is the span of your control?” Management and pay have become a bit glued together.

If you look at some other professional services organisations—I do regard us as a professional services organisation—they have tried to separate that out more and say that you can pay a particular level for marketable, expert skills, even though you may not be managing very many people.

If you look in the context of where we are today, with a senior civil service of over 6,000 people, a proportion of those are not doing very much management but are highly paid and rightly paid experts. We may need to look harder at that. That is just the senior civil service. If you look down the whole civil service, you probably have over 100,000 people who might have management responsibility. How many of those are trained up to the higher standard in management that you would expect today?

Chair: It is a way of boosting pay and it is still happening—at least you are honest about that. Thank you very much indeed for your time, especially to Ms Wallington for struggling through. It is very helpful to have Departments in the room that are employing lots of people.

This is not something that is going to solve itself overnight. I want to pay tribute, on behalf of the Committee, to all those hardworking civil servants who kept us going through covid and who have delivered on some very big and challenging projects over recent years. Whether they are smaller in number or larger in number over the years, we want them to be well managed, well paid and happy in their jobs, and get value for money for the taxpayer. Can I thank them, from the Committee?

I thank our witnesses. Our transcript of this session will be available on the website uncorrected in the next couple of days and we will be producing a report on this. It is likely to around the Easter recess, but I will get back to you on the timings. Thank you very much indeed.