Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Accepted
Treasury faces challenges maintaining debt management expertise due to staff turnover levels.
Conclusion
Government borrowing is a complex process, requiring substantial experience and judgement.38 The DMO explained that it was set up as a “specialist organisation” with staff that have very specific skills which are “not normally found in the Treasury”. It added that the DMO is a “repository of specialist skills” available for the Treasury to use.39 The Treasury told us that its Debt and Reserves Management team (DRM) acted as the “gatekeeper” for both the DMO and NS&I. It explained that the DRM worked with the DMO and NS&I to discuss and agree their remits at the start of the year, particularly the DMO in terms of how best to structure what gilts it needs to sell, when, and over what length of time. It also explained that the DRM was responsible for stress-testing and challenging any analysis the DMO and NS&I provided when developing their remits, as well as monitoring their performance both during and at the end of the year.40 The NAO report identified that the Treasury faced challenges around maintaining expertise in its debt management functions, which can be affected by staff turnover levels.41
Government Response Summary
The government states it agrees with and has implemented the 'recommendation', despite the original item being a conclusion. It details plans for NS&I to upskill staff and grow expertise, the DMO's resourcing strategy, and several HM Treasury initiatives to improve staff retention and address skill shortages, including a recent pay uplift and grade restructuring.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 It is important for HMT, DMO, and NS&I, to have the right skills and resources to execute their duties effectively, given the critical role played in delivering value for money for the taxpayer. 2.3 To support delivery of the transformation programme (formally known as Rainbow), NS&I has plans in place to upskill the organisation by insourcing functional skills in IT and service integration, alongside growth in its commercial and contract management expertise. In the context of a wider Civil Service Headcount cap, NS&I has retained the ability to grow their headcount to support core transformation activity whilst using external contractors and consultants where needed to provide additional short-term support. 2.4 The DMO has a developed resourcing strategy to maintain skills and capacity, and enhance resilience for its operations, including to identify where there is greater potential for the loss of critical skills. It has examined the key person risk for all direct reports of its Executive Committee, considering mitigation measures for each person or skill set, the route to hire suitable skills, and to capture and retain knowledge within the team. The DMO has developed an action plan for both short and longer term by role, and is now expanding knowledge and providing further training across the organisation to help develop specialist skills. 2.5 In December 2023, HMT launched a campaign to recruit a new DMO Chief Executive. HMT announced the successful candidate on 16 April 2024, after undertaking a full and open recruitment. The DMO Chief Executive is a vitally important and high-profile leadership role, which is further reflected in the recent upgrade to Director General, with an increase in the salary. The role has been offered on a permanent basis. HMT launched the campaign with plenty of notice to find the right candidate to take on this critical public role, and to allow for a handover period before the incumbent retires. This approach will ensure a smooth transition in leadership at the DMO, which is now underway. 2.6 The Treasury also places great weight on knowledge management within the department, ensuring policy decisions and key stakeholder engagements are adequately captured and shared over time. The department invests in its people to develop the skills and capabilities required to undertake varied and complex work and to respond flexibly to the evolving needs of the department. Throughout 2023-24 a range of corporate learning and development initiatives were delivered, including for example: People Management workshops and a Policy Leadership Programme, as well as offering a range of external qualifications in policy, economics, tax, and analytics. 2.7 In recognition of some of the key challenges around retention and skills shortage, HM Treasury has recently undertaken a programme of work to de-merge one of its grades, which provides a pay uplift to approximately a third of its largest cohort of staff. This brings the department’s grading structure in line with the rest of the Civil Service, which will help to respond to issues it has experienced attracting and retaining staff at this grade.