The Treasury has rejected calls for its work on financial services to be funded through an industry levy, following warnings from a former top civil servant it is at risk of being “swamped” by its workload.
During his maiden speech in the House of Lords on Monday, former Cabinet Secretary Lord O’Donnell suggested civil servants working on financial services regulation for the department should be funded in the same way as the FSA. This would exclude the minister responsible for that brief, Treasury financial secretary Mark Hoban.
A Treasury spokesman describes the proposal as “interesting”, but adds: “You fund Government departments through public spending”.
O’Donnell made the comments during the first debate in Parliament’s upper chamber on the Financial Services Bill on Monday. He cited a Treasury internal report published in March which said a lack of staff in the department left it unprepared to deal with the financial crisis. It also said the Treasury has problems attracting and retaining staff, suggesting it should create a target of reducing staff turnover to between 15 and 20 per cent a year.
O’Donnell said: “The Treasury is a brilliant department and I was proud to be its permanent secretary, but it is in danger of being swamped by the pressures placed upon it.
“It is in the interests of all of us that the Treasury is able to continue attracting the best staff and retaining their skills and experience. To avoid this being at the expense of the taxpayer, perhaps the part of the Treasury dealing with financial services and stability should be funded in the same way as the Bank and the FSA, namely by the financial industry which benefits from their work.”