Fury as civil servants scoop record bonuses

TREASURY officials who oversaw the Northern Rock debacle and the onset of the credit crunch have been rewarded with record bonuses, Scotland on Sunday can reveal.

New figures show that civil servants at the UK Exchequer pocketed £1.2m on top of their basic pay last year, with one senior figure getting a bonus of £18,000.

The sum is nearly double that given to Treasury officials three years ago, when bonuses amounted to £700,000.

The bonuses were earned during the 2007-08 financial year, when the Treasury was accused of failing to move quickly enough to prevent the disaster of the Northern Rock crash.

One in four members of the Treasury's in-house staff was given a "performance bonus" – a lump sum on top of civil servants' salaries which rewards high achievement.

The average sum given to each member of staff who qualified for the reward amounted to £2,349.

On top of that, a third of the Treasury's staff got a "special bonus", in recognition of their response to "particularly demanding tasks or situations". Average payments were £463.

The revelation of the payments will be embarrassing for ministers as they have urged bank chiefs to suspend their own bonus culture during the credit crunch. RBS and Lloyds TSB have issued a bar on bonuses this year after they were forced to go to the Government for emergency funding.

Far from bonuses in the Treasury being scrapped, they have now grown for four successive years.

For senior staff, the rewards are particularly high, with top bonuses last year £4,000 higher than in 2006-07.

Ministers insist that bonuses are an important way of rewarding civil servants who perform well under often difficult circumstances.

Whitehall sources also pointed out that the overall pay bill at the Treasury was falling by 5% as part of a wider bid to cut administration costs across government.

Nevertheless, critics say that for officials to be accepting hefty bonuses at a time when households are having to tighten their belts is unacceptable.

Matthew Elliott, chief executive of the TaxPayers' Alliance, said: "Giving Treasury officials record bonuses for a year in which the economy has gone into serious decline is totally unreasonable.

"With ordinary families struggling to make ends meet in the recession it's an insult to dish out prizes for all in the department which has overseen such serious economic problems. Bonuses are meant to reward success, not failure."

The bonuses were awarded in a year in which the Treasury, along with the Financial Services Authority and the Bank of England, were sharply criticised for their response to the Northern Rock affair – the first run on a British bank in more than 100 years.

A report by the Treasury Select Committee found that the three bodies had ended up "with the worst of both worlds" by failing to react quickly enough.

The figures refer to the 2007-8 financial year so do not take into account the Treasury's performance in handling the recent economic turmoil.

Meanwhile, the Cabinet Office has pointed out that the Government is on course to have the lowest number of civil service staff since the Second World War.

A spokesman for HM Treasury said: "Over the current spending review period, covering the years to 2010-11, the Treasury has committed to a 5% year-on-year real terms reduction in its administration budgets, which includes all pay costs."

The Treasury figures are just the tip of the iceberg across government, which is thought to pay bonuses in excess of £100m a year across all departments.

Staff at the Ministry of Defence and the Department for Work and Pensions take the lion's share of the extra payments.

But there were also large payments to staff at HM Revenue and Customs, which last year lost disks containing the personal data of more than 25 million people.