Treasury’s key lessons from financial crisis: raise salaries, keep staff

A Treasury review into the financial crisis and its response has found that it must lower its staff turnover rate and incentivise people to stay, to fit in the new regulatory regime.

Sharon White, director-general of public spending at the Treasury, says: “Looking ahead, the Treasury will need deeper expertise – ‘generalists’ with greater experience and some financial sector specialists – if it is to play an effective role in the new regulatory arrangements.

“This may necessitate a different career path for such professionals that takes them between the Treasury and outside financial institutions and regulators.”

She adds: “It may also require stronger incentives for staff with experience to remain at the Treasury for longer. This in turn will mean tackling organisation-wide issues, most notably high turnover and low pay relative to the rest of the public sector.”

White says: “The financial crisis of 2007 to 2009 was arguably the most difficult set of economic circumstances that the Treasury has faced in its history.

“The crisis has had huge ramifications for the economy, the public finances and people’s living standards. Its impacts are still being felt.

“The Treasury, like many other institutions, did not see the crisis coming and was consequently under-resourced when it began.”

However, White says the Treasury had reacted to the crisis nimbly and with a “strong ‘esprit de corps’”.

She says: “Resources could have been brought in more quickly and greater investment should have been made in staff and project management.

“The Treasury has made significant progress on financial sector contingency planning to deal with any fall-out from the eurozone.”