Lord O’Donnell warned that too many Treasury officials were leaving and that staff are underpaid reports The Telegraph.
His comments come amid criticism that the Treasury has failed to develop radical policies to help boost economic growth. George Osborne, the Chancellor, has also faced accusations that some measures in the budget were poorly considered. Treasury officials are currently grappling with multi-billion pound new schemes to help encourage more private investment in infrastructure.
In his first speech in the House of Lords since stepping down as Cabinet Secretary last year, Lord O’Donnell warned that the Treasury may be struggling to address the problems caused by the ongoing global financial turmoil. He said that the rate of staff turnover was “far too high and their pay levels too low”.
He added that it was in everyone’s interest that the Treasury should continue to attract “the best” recruits. “Otherwise the Treasury is in danger of cutting off its arms, as well as its nose, to make its hair shirt fit,” he said.
Lord O’Donnell, the former permanent secretary at the Treasury, suggested that part of the department dealing with financial services and stability could be funded by the financial industry to save taxpayers’ money. The Financial Services Authority (FSA), the City regulator, is already funded by a levy on the financial services industry.
However, he said that solutions could be found to the eurozone crisis. He said that strong leadership can “transform situations that look almost impossible”.
Lord O’Donnell’s criticism came as it emerged he has been appointed an adviser to one of North America’s largest banks, providing “advice and counsel” to Canada’s TD Bank Group on economic, government, regulatory and strategic issues.