Chart of the day: Caught short?
Treasury officials working on financial stability.
From the Treasury's review (pdf) of the handling of the financial crisis comes this fascinating visualisation of crisis management in action. The APS, for clarification, is the asset protection scheme, set up by the government shortly after they became aware that RBS was close to collapse.
Probably the most controversial recommendation to come from the review is that the department should increase its average pay relative to the rest of the public sector, in order to hire and retain more high-skilled employees. On the one hand, salaries in the Treasury are significantly lower than many other parts of the civil service, with the median grade six civil servant earning £47,000, compared to £74,000 in HMRC. On the other, the Treasury is the architect of the fiscal austerity – including the public sector pay freezes – currently causing their colleagues so much pain.
The results of the low pay can be seen throughout the department. The median age at the Treasury is just 32 (compared to 45 across the civil service), and staff turnover was 28 per cent in 2011, three times the average. It had peaked 38 per cent in 2008.
The review is generally damning of the handling of the crisis by the Treasury, highlighting fights with the Bank of England over whether or not to boost the liquidity available to Northern Rock, and the fact that the lack of techincal expertise on the part of the Treasury staff meant that they felt they couldn't challenge the Bank.
The Financial Times reports:
Treasury officials point out that only the Bank of England, which had responsibility for stability in the financial system, has yet to undertake an examination of what went wrong. This week, Sir Mervyn King, BoE governor , admitted everyone had missed the rise in indebtedness of banks, but blamed politicians for the subsequent damage to the BoE’s reputation.
Both the Treasury and the FSA now claim to have learnt the lessons of the crisis. The question now is whether they are only protecting against yesterday's problems; and we can't know that until they are called on again.
Hat tip to Chris Giles for the chart.