Tuesday, 12 April 2011

Sir Gus O’Donnell’s role in our economic crisis: David Moss points the finger

 How Whitehall helped the economy: Sir Gus demonstrates

My friend David Moss , who harried Whiehall for years over its ridiculously costly plans to introduce Identity Cards (and won, by the way)  and is now giving them grief over Biometric Testing, yesterday published an article highlighting the role of Britain’s Civil Service - and, in particular, Head Honcho Sir Gus O’Donnell  - in turning Britain into an economic basket case. I have his kind permission to republish it here :

 How Whitehall helped the economy: Sir Gus demonstrates

The Trustafarians of the Whitehall legacy
The Telegraph has an article today, 'Gordon Brown: I made a big mistake on banks' [1] by Richard Blackden, in New Hampshire and Andrew Porter, about a speech Brown has delivered in Bretton Woods
in which our former PM acknowledges some responsibility for the credit crunch: “We set up the FSA [no you didn't, but let that pass for the moment] believing the problem would come from the failure of an individual institution. That was the big mistake. We didn’t understand just how entangled things were.”

This doesn't ring true.

Anyone who reads the business pages knows how "entangled" things are. Brown should have known. Even if Brown didn't, Balls should have known and could have told Brown. Even if Balls didn't, Sir Gus O'Donnell [2], Cabinet Secretary (2005), formerly Permanent Secretary at the Treasury (2002), Managing Director of Macroeconomic Policy and International Finance (1999), Head of the Government Economics Service, the UK's Executive Director at the IMF and the World Bank (1997-98) should have known and could have told Brown and Balls.

Those may be the words Brown is using. But they can't possibly be what he means. Brown has kept quiet about this matter for a year or so.
Why has he now broken his silence? And why has he now broken his silence by saying something unbelievably stupid -- "We didn’t understand just how entangled things were"?

Balls went to Oxford and Harvard, did a stint at the Financial Times and then in 1994, at the age of only 27, became economic advisor to Brown [3]. Three years later, Labour were in power. They set up the malfunctioning Tripartite System but otherwise stuck to Ken Clarke's economic policy for their first term. 

By 2001 and their second term, Sir Gus had been back in the country for three years and his appointments as MD Macroeconomic Policy and International Finance and Permanent Secretary at the Treasury
were at least not blocked by Brown and Balls.

When Brown and Balls abandoned the Clarke policy and set out on their own debt-financed expansion of the public sector, did Sir Gus resign?


Officials advise, ministers decide, as we are sometimes asked to believe - 
did Sir Gus advise against this expansion and then reluctantly button his lip? Far from it, he co-edited two books with Ed Balls: Reforming Britain's Economic and Financial Policy: Towards Greater Economic Stability [4]
and Microeconomic Reform in Britain: Delivering Opportunities for All [5].

Both books have a Foreword by Brown. Both books are self-congratulatory -- boom and bust have been abolished, and opportunity for all has now been gifted to the UK by certain even more gifted people's wise economic policy.

A lot of facts above, and maybe a bit of surmise, but it seems to me worth investigating whether the catastrophic economic policies we normally associate with Brown and Balls only should actually have Sir Gus's name associated with them as well, possibly even as the prime instigator (older, more experienced, insider, ...).

Why? What's my beef? The home civil service has wasted astonishing amounts of money in the past, continues to do so and promises to waste more [6]. Sir Gus is head of the home civil service. He and his permanent secretaries -- the "trustafarians of the Whitehall legacy" (© David Moss) -- remain unaccountable [7]. They are the forces of reaction Tony Blair complained about ... and whom Cameron has now started to complain about. Unaccountable incompetence is not good for the country.
It's in our interests for Whitehall to be reformed.

Reformed in what way? Introduce more private sector practices?
That's been tried for decades and it's failed comprehensively.
Introduce democracy? Vote mandarins in and out? Outsource the job to effective civil services? Germany? Finland?

I don't know. What I do know is that Whitehall, which should be a bulwark of the Constitution, is instead one of the last bastions of the Spanish practices we all came to know in the 1970s. And I hope the above, in the right hands, yours?, might be a lever to help to bring about the reform that is needed.


1 comment:

  1. Thank you very much, Scott, for giving the article some extra, high quality circulation.

    I suspect that GOD probably hasn't drafted his letter of resignation yet.

    He appears in episodes 4 and 5 of The Adventures of Marsham Towers*. And in a series of emails exchanged with Peter Mandelson**.

    I'm not sure what to do with him next, while awaiting the letter. Maybe a reprise of the sinister Dirk Bogarde in The Servant? Or, more likely, an uppity version of Jeeves, to David Cameron's hopelessly biddable Wooster.

    Anyway, thanks again.


    * http://dematerialisedid.com/BCSL/Adventure.html

    ** Stick "secstatedti site:idealgovernment.com" into Google ...
    Tuesday, April 12, 2011 - 05:40 PM