Select Committee on Public Service Report



  92.    In 1996, the "Senior Civil Service" was created. It comprises all Civil Servants at the old Grade 5 (or Assistant Secretary) and above. Posts in the Senior Civil Service are evaluated by each department or agency to establish their level of responsibility. Individuals occupying these posts are placed in pay bands (which are set centrally) reflecting their responsibilities, experience and value to the organisation. In recent years the remuneration of some agency chief executives has been higher than that of Permanent Secretaries. Salaries offered to chief executives recruited from the private sector between 1992 and 1994 tended to be 10-18 per cent above the top of the equivalent Civil Service range, with performance bonuses adding a further 10-15 per cent of annual salary. These anomalies are now being rationalised. Salaries for Permanent Secretaries are now determined by a Remuneration Committee, consisting of the Heads of the Home Civil Service and the Treasury, together with three outside members of the Review Body on Senior Salaries.


  93.    Increasingly, staff in the Senior Civil Service are being recruited by open competition. For example, of the 131 chief executives in post in October 1996 (including 6 chief executives elect), 69 per cent were recruited by open competition (37 per cent were outsiders and 63 per cent were insiders). Whereas Senior Civil Servants used generally to be people who had spent their careers building up experience within the Civil Service, and who expected to work in the Civil Service until retirement, it is now the case that all agency chief executives are appointed on personal contracts for limited terms, which may be renewed. Two chief executives have been removed from their positions. Some chief executives have been required to re-apply for their positions through open competition at the end of their period of appointment. Open competition and personal short term contracts may be used not only in relation to the recruitment and retention of agency chief executives, but they are also beginning to be used throughout the rest of the Senior Civil Service.


  94.    In 1991 the old system of uniform pay and grading was in part replaced by a new system, whereby 65 per cent of Civil Servants were paid according to arrangements specific to the organisations in which they worked. In 1996 an even more fundamental reform was introduced for grades below Senior Civil Service grades: the old central pay arrangements (which, through the previous three decades had been made variously by the Treasury, the Civil Service Department and the Cabinet Office) were entirely replaced by a system which delegated to departments and agencies authority to make their own pay arrangements, albeit within the overall Treasury limits on running costs.

  95.    An example of the way in which delegated pay arrangements work in practice is found in the Employment Service Agency. When the Employment Service was launched as a Next Steps agency in 1990 it was bound by the Civil Service terms and conditions. New pay and grading structures were introduced progressively, affecting Senior managers first in 1993, and ending with clerical and support staff in 1995. The new structure had 12 pay bands, replacing 17 grades. Jobs were evaluated according to benchmarking exercises, and allocated to pay bands on the basis of the job evaluation. Staff of the Employment Service Agency now progress through their pay band on the basis of performance pay awards which are consolidated into annual salary until the pay band maximum is reached; beyond this, performance pay awards are awarded as one-off lump sum payments which have to be re-earned each year. Performance objectives are agreed between individuals and their line managers and performance is assessed annually. In 1995-96 performance pay accounted for 3 per cent of the total ESA pay bill. The value of pay bands and performance pay awards is determined annually in negotiations with the relevant trade unions.

  96.    Performance related pay, as described above, has been a feature of Civil Service pay arrangements since 1988. It was introduced as a matter of policy by the Government of the day. A by-product of the system is that regular performance evaluation allows job vacancies to be filled on a competency basis. Posts up to senior management level are now open to all individuals, whatever their jobs might be. In 1995-96, all agency chief executives had bonuses linked to their agency's performance: agencies achieved 83 per cent of their targets, with chief executives being rewarded accordingly.


  97.    As with pay, responsibility for recruitment has been delegated to departments and agencies. Thus departments and agencies now do their own recruitment or employ the services of Recruitment and Assessment Services or another commercial firm. The rules and procedures for recruitment must conform with the Civil Service Commissioners' Code, published in 1995. The procedures of each department or agency are audited by the Civil Service Commissioners, who have, in fact, appointed a private sector company (P-E International plc) to ensure that selection is on merit and on the basis of fair and open competition. Whereas in 1967 the Civil Service Commission was responsible for all permanent appointments, following a 1995 Order in Council the Commissioners' approval is now required only for appointments to the Senior Civil Service. Departments which recruit to the administrative fast stream operate as a consortium under the leadership of the Cabinet Office (OPS), and the OPS now publishes annual reports on the fast stream competitions, comparable to the reports on these competitions published by the Commissioners in earlier times.

  98.    Some vacancies at the old Grades 1-3 are now being opened to external candidates. The proportion of posts open to such competition has levelled off at about 30 per cent. The First Civil Service Commissioner attends meetings of the Senior Appointments Selection Committee, which advises the Head of the Home Civil Service on candidates to be recommended to the Prime Minister. On 1 January 1995 there were 636 staff in Grades 1-3 of the Civil Service. The Commissioners have noted that relatively few women apply for positions in the Senior Civil Service: in 1995-96 only nine per cent of applicants were women. The Commissioners have also been monitoring the ethnic origin of senior recruits and they have noted that ethnic minorities represent 5.4 per cent of Civil Servants nationally, and make up 1.9 per cent of respondents among serving staff in the Senior Civil Service.


  99.    A new Civil Service Code was promulgated in the 1995 White Paper The Civil Service, Taking Forward Continuity and Change. In it, provisions were made for the officials to appeal to Commissioners in relation to matters which they felt were not consistent with the requirements of the Code-that is to say matters causing concern on ethical grounds. Six approaches were made to the Commissioners in the first three months of the Code's operation. By December 1997, four appeals falling within the terms set out by the Civil Service Code had been received. Two had been investigated, one was resolved within the relevant department, and the other was still the subject of internal departmental procedures.


  100.    Civil Service training is today mainly the responsibility of departments and agencies, where most of the training is given. However, the Civil Service College now offers a significant programme of courses on business development and management. These courses are consistent with the new emphasis on making the Civil Service more efficient and business-like. The courses available include total quality management, benchmarking, business process re-engineering, courses with special emphasis on the working methods of the European Union, and courses on policy and current developments in Government.


  101.    Thirty years ago the Treasury was the central department for managing the Civil Service. It did this primarily through its management and training divisions. Most of that work has now passed to the Office of Public Service (OPS) within the Cabinet Office, though the Treasury still has some central responsibilities. The Prime Minister is the First Lord of the Treasury and has responsibilities as Minister for the Civil Service (though another Minister, currently the Chancellor of the Duchy of Lancaster, takes charge of day to day matters). The Treasury has responsibility for ensuring that departments, which now make their own pay and personnel management arrangements, do not exceed their expenditure limits. Thus the Treasury's control of the Civil Service is not now in terms of staff numbers but is rather in terms of running costs. The Treasury also has special responsibilities for ensuring value for money throughout the public services. This entails certain responsibilities in relation to the creation of agencies: the Treasury is always consulted about the details of the agency's framework documents, and about the details required to be included in the agency's annual reports and statements of accounts. In addition, the Treasury has responsibility for privatisation and share ownership policy; and these responsibilities are particularly important when 'prior options' exercises are undertaken (see paragraph 80 above).

  102.    Most of the other activities conventionally associated with the central management of the Civil Service are now located in the Office of Public Service (OPS), within the Cabinet Office. The Office of the Civil Service Commissioners comes within its ambit, as does the Civil Service College. The OPS is responsible for the market testing programme and efficiency scrutinies; the Next Steps initiative; the effective and efficient use of information systems in Government; recruitment training and development; advice on machinery of Government issues; senior public appointments; equal opportunities; duties and standards of conduct; and the promotion of greater openness in Government.

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