Better late than never

All organisations should evaluate their policy successes and failures—the theme of a fascinating series of policy reunion seminars and events at the Institute for Government organised by Jill Rutter, who also hosted workshops for Treasury staff for this review. Understanding what works and what doesn’t is central to improving later performance. With the Financial Services Authority already having undertaken a review, the publication of the Treasury’s assessment leaves the Bank of England alone among the tripartite regulators in not having held a comprehensive public appraisal - despite calls by Andrew Tyrie, chair of the Treasury select committee. The challenge for Sir Mervyn King is to appreciate that the more power the Bank accumulates, notably with the dismantling of the FSA, the more he has to be accountable and open up to outside scrutiny and review. Most comment on the White review has been about the admissions over the Treasury’s handling of the events of 2007-08: the lack of preparation and initially slow response. Yet, while a rapidly expanded Treasury did handle the crisis of autumn 2008 well,  the most interesting sections cover the department now. As in all such reports, the Treasury claims to have learnt the lessons in contingency planning (for example by creating a Treasury equivalent of military Reserve Forces in ‘rapidly deployable crisis reservists’ in other parts of government and the City), in improved monitoring of financial risks, and in better procurement processes for external advisers. However, the Treasury emerges as still a vulnerable organisation, and, paradoxically, that may be one reason for its keenness to publish the report, in order to highlight current pressures. As the summary says: pay is much less competitive than at the Bank or FSA ( where salaries can be 50 or 100 per cent higher) and 10 per cent lower than in other Whitehall departments; a flat organisational structure restricts promotion opportunities; and a very strong corporate culture can make it hard for outsiders to succeed at senior levels. Annual staff turnover is around 25 per cent: a level ‘more commonly found in semi-skilled parts of the service sector, such as call centres and in hospitality.’ Around half the present Treasury workforce joined after 2008. Two-thirds are aged between 20 and 39. The squeeze on pay and the grade structure creates strong incentives for staff to seek promotion, often outside the Treasury, to increase their salaries, rather than move up a pay-scale within a grade. This means that many officials do not stay in the same posts for long, which is as serious a problem as the more highly publicised rapid turnover of ministers. That also creates a series danger of an increasing lack of institutional memory. The Treasury hopes to reduce its annual turnover target to between 15 and 20 per cent. Pay flexibility is part of the answer, but the Treasury also needs to improve its management of people. Many of the proposals for strengthening appraisal and management development are along the lines which the Institute for Government discussed in its open letter to the new civil service leadership on March 5^th . The Treasury’s problems may be more acute than in much of Whitehall because of the rapid turnover of staff. However, the White review vividly underlines the need for action now if management problems like those of 2007-08 are to be avoided again.