Bravo to Philip Stephens for telling it like it is on HM Treasury in yesterday’s FT:
The inflationary bust of the early 1990s shredded the Treasury’s credibility in setting interest rates. Tony Blair’s incoming government promptly handed control to the Bank of England. The global financial crisis exposed the dire failures of the Treasury’s fiscal framework. David Cameron’s response has been to hand fiscal oversight to a new Office for Budget Responsibility.
These were scarcely votes of confidence. Most institutions would have asked themselves where they had gone wrong. Yet by the accounts of ministers and senior officials across Whitehall, the Treasury’s swagger is ever more pronounced. It does not do contrition.
Exactly. HMT is undeniably full of very smart people, but as anyone who has worked in government knows all too well, the sheer arrogance of the institution’s culture is breathaking – as its tendency to bully, hector and throw its weight around.
This isn’t just whingeing from someone who used to work in another part of Whitehall. This culture is a serious problem because it creates such ripe conditions for failure. Look at how the Treasury bullied the IMF into toning down warnings before the financial crisis about the UK’s vulnerability to financial risks – in effect, taking the batteries out of the smoke alarm.
To be sure, much of the blame here rests with ministers – especially, in the run-up to the financial crisis, Gordon Brown. But as Philip Stephens notes, “I struggle to recall the slightest hint of any official dissent from Sir Nicholas [Macpherson, Permanent Secretary at the Treasury] or his colleagues”.
Not so long ago there was a long public debate about how the Home Office was not “fit for purpose”, which eventually led to the department being broken up. It’s time we had a similar debate about the Treasury – a department whose dysfunctional culture has done all of us a great deal more damage than the Home Office ever did.
