The Treasury has published an internal review of how it handled the 2007/8 financial crisis, admitting its staff were 'stretched' and that it 'did not see the crisis coming'.
Following recommendations from the Public Accounts Committee and the National Audit Office, the 60 page review found that the Treasury was slow in recruiting an adequate number of people to handle the crisis. It also admitted that its high staff turnover must be addressed if a future crisis is to be handled effectively.
Treasury salaries are also some of the lowest in Whitehall, with employees only averaging 32 years of age and a high proportion of those leaving within three years for promotion or higher pay.
"The Treasury, like many other institutions, did not see the crisis coming and was consequently under-resourced when it began," the review said.
"Overall, the Treasury was stretched and could have been better prepared," it added.
The review has been led by Sharon White, former director general at the Ministry of Justice and now head of spending for the Treasury, who will now face difficulties raising wages at a time when the Treasury itself is imposing wage freezes throughout the rest of Whitehall.
The Treasury is part of a tripartite system of regulation which divides responsibility between itself, the Bank of England, and the Financial Services Authority (FSA).
The FSA had undergone a similar internal review process in December and MP's are now calling for the Bank of England to publish a full account of its handling of the crisis. The Treasury report found that relationships between principal levels of regulator management were 'strained.'
The Treasury now aims to improve the 'retention of people with the necessary skills, expertise, and experience.'
Commenting on the review, Sir Nicholas Macpherson, permanent secretary to the Treasury, said: "This report will help the Treasury learn the lessons of its handling of the financial crisis which started five years ago and ensure the department has the right capability to fulfil its duties in relation to financial services in the future."