Updated: Sep 14
Has the Truss government started as it intends to go on? By any measure the sacking of the Permanent Secretary to the Treasury is a bold move. But was it the right thing to do?
Emphatically, argues Matthew Lynn in Monday’s Telegraph (12.09.22).
“Yes, it was a harsh decision and Sir Tom may well have been a safe pair of hands whose experience will be missed in the difficult months ahead. But the reality is we need a far more political Treasury. It has a bias against growth; it does not believe in the power of free enterprise; and it has become far too fiscally conservative.”
To what extent Treasury thinking is indicative of the wider institutional ‘Blob’ is an open question, but Matthew Lynn believes this should be the start of a much wider, radical project:
“The UK needs to reform, or sometimes even remove, the institutions blocking an economic revival. Liz Truss could do worse than start by abolishing quangos, such as the Office For Budget Responsibility, and taking on the Bank of England.
For the Prime Minister’s new government to stand any chance it needs bold reforms, and it needs them fast. That won’t happen with the same old people in charge.”
The reaction from Inside has been predictable:
“I think they are behaving improperly towards the civil service,” said Lord Butler, the cabinet secretary to Margaret Thatcher, Sir John Major and Sir Tony Blair. “Sacking someone with no notice for no apparent reason – someone held in high regard by chancellors of all political parties – is no way to earn the respect of the Treasury and the civil service,” said Lord O’Donnell, himself cabinet secretary to Sir Tony, Gordon Brown and David Cameron.”
That said, the former Permanent Secretary’s track record hardly inspires confidence:
“He was Cameron’s chief negotiator with the EU, coming back with precisely nothing, and oversaw the Treasury’s absurd and hysterical Project Fear, which damaged Britain’s reputation as a place to invest.
Over the years since 2016, the Treasury has blocked attempts to take the opportunities presented by our departure from the EU, while the flaws in its management of the pandemic are becoming glaringly obvious. Fraud is running into billions on support schemes that were, in retrospect, far too generous, and poorly designed.”
There is also a wider institutional problem in its thinking which is expressed in three ways:
“First, the Treasury has a bias against growth and is too committed to the view that the UK’s aging demographics, its declining share of world trade, and its weakened commercial base means it is hopeless to ever expect it to grow faster than one or two percent a year, and the best it can hope for is to cling onto a declining EU for comfort.
Next, it does not believe in enterprise or the power of free, open and deregulated markets. To the Treasury, tax cuts never stimulate faster growth, they simply cost money. Enterprise zones never become hubs of innovation and entrepreneurship, merely centers of money laundering and tax dodging.
And, perhaps worst of all, the Treasury is far too fiscally cautious. Over the decade of record low interest rates, it failed to borrow to invest, and potentially lift the country’s long term growth rate. It is too late to start now.”
Sacking the senior Permanent Official is a start, according to the author. But only a start.
The full article can be read below with a link to the original here: