Tuesday, September 14, 2010

When Sir Humphrey Was Frit

Joshua Chambers has ha fascinating interview with former Cabinet Secretary Andrew Turnbull. It doesn't make happy reading. In it he basically says that civil servants were too scared to tell ministers (for ministers, read Gordon Brown) that spending and borrowing were expanding too quickly. It may sound pathetic, but there you go.

Speaking last month, the retired civil service chief said it was too difficult for civil servants to call for public spending to be reigned in until after the financial crisis hit.

The former cabinet secretary said that the Treasury was prone to “wishful thinking” and that “the politics” of the time had prevented civil servants from speaking more openly about the increasing level of debt.

He suggested that spending was too high because of “optimism bias” in the growth forecasts: “It was a forecast error, but also by a process of optimism bias, not enough people were saying: ‘Come on, do you really think we are able to expect 2.75 per cent growth indefinitely?’”

Questioned on whether he thinks civil servants should have come forward, Turnbull – who was permanent secretary at the Treasury from 1998 to 2002 – suggested that they were scared to. “Yes, maybe Whitehall should have,” he said. “But it’s quite difficult when your minister is proclaiming that we have transformed the propects of the UK economy.”

When asked directly what prevented civil servants from telling politicians that borrowing was too high, he said: “The politics was that we had put an end to boom and bust.”

Turnbull added: “We had a sense of overconfidence; it happened all around the world, but it was a rather extreme form of it in the UK.”

The problem, he argued, demonstrates a need for an organisation such as the Office of Budget Responsibility, which has been set up by the coalition government. “Having someone outside the process is helpful,” he said. “I think the OBR is something which is necessary, providing some degree of external constraint less prone to wishful thinking.”

Turnbull said that that excessive borrowing started to be a problem from 2005. “It kind of crept up on us in 2005, 2006, 2007, and we were still expanding public spending at 4.5 percent a year,” he said, arguing that the Treasury should have been putting more money aside. “You might have thought that we should have been giving priority to getting borrowing under better control, putting money aside in the good years – and it didn’t happen,” he commented.

Turnbull said that “there were some other places that had begun to accumulate surpluses for a rainy day; places like Australia.”

While Turnbull argued that the primary reason Britain is “in the mess that we’re in” is because “public spending got too big relative to the productive resources of the economy, by error” he added that a loss of output caused by the financial crisis has also contributed to the budget deficit.

Nice to know that Turnbull's analysis coincides with George Osborne's. But he does make his civil service colleagues sound rather pathetic and cowardly.

The full interview can be read HERE.


simon said...

It doesn't cast the civil servants of the time in a great light, I agree. On the other hand, if civil servants stand up against government policy, they face accusations of being politicised and frustrating the will of a democratically elected government.

Public servants who raise legitimate concerns about the current government's proposed cuts are already facing these sorts of allegations and I suspect there will be more of it.

It's easy to judge public servants (I'm not one, by the way) harshly after the event. But striking the balance between offering objective advice and not being seen to obstruct government policy may not be quite so straightforward when you're in the middle of events.

Simon Lewis said...

Are the civil servants now afraid to tell the Chancellor what everyone else says, that his 2.5m job creation in the private sector is widely optimistic?

The Purpleline said...

I am sorry Iain but there should be a massive clear out in Whitehall, all those who were responsible for this debacle should at least be stripped of their pensions and sacked with immediate effect.

Re-introduction of Treason should be brought back to ensure these people can never do such harm again. Brown should be put in prison for his crimes.

Thenn after we clear out Whitehall a proper procedure should be put in place to ensure the civil service never ever becomes a political wing of the Labour party.

Iai- if you read comments beforee publishing can you start a debate on the minimum wage.

I am a strong believer it should be scrapped.
I think it keeps working people down as the employer can always say we pay the minimum wage, therefore it is not aspirational. If we dropped it then I am sure younger people 1.5 million would get a job if it was linked to their benefits.
So work out the hourly rate for unemployment and use that as the basis for employing these people if they come off the register and work then they could get a bonus from the government. Now that would be money well spent. #minimumwage on twitter tdy thks

Nick P said...

If the civil servants had had the balls to speak truth unto power and to minute said advice, then it would forever rest on the record and history would be able to judge properly where blame/credit should rest. They are public servants, not political servants. Yes, they must do as they are told but they have the power to hold their masters to future account, without fear or favour.

That said, it must have been hell to endure the ghastly fallout from the TB-GB'ies .

Libertarian said...

@simon lewis

I hope not as 2.5 million private sector jobs is a very easy to achieve target.

There are 4.6 million SME's in the UK if only half of them created ONE new job, then target met. How do we encourage that, again easy, all the business support organisations have been reporting the answer for the last 3 years, cut employers national insurance

Anonymous said...

Civil servants are there to give brave and unbiased advice. In my long experience of dealing with them, they play back either (a) what the civil service unions want to hear or (b) what the minister wants.

I continue to find it amazing that, while most MPs I've met are just dull (and grab any beads on offer from any source) Sir Humphreys are bright and conniving. They connived to diddle the Nation out of £1.3 trillion of pension pot, but very few hacks seem remotely interested. Their thing is expenses: very Street of Shame, that.

Brian said...

@simon: In its misguided quest (fool's errand) for "diversity", the Civil Service assumed that different people would have a range of opinions that would enable better policy development and decision making. Unfortunately, the PC recruitment and promotion systems encouraged groupthink of a narrow set of values and ideas. If one didn't conform to the groupthink, one's career stalled.
@Simon Lewis: will the Cuban Civil Service tell Castro that the private sector won't be able to absorb the 500,000 redundant public sector workers? As an aside, I bet high-ups in the Cuban CP will find their skillsets transfer easily to new oligarchic private sector companies there.

William said...

The Honours system in this country has a lot to answer for.
Just as we saw at the Chilcott inquiry, senior Civil Servants said nothing because their "K's" would not have been forthcoming. Once granted and they're retired the truth comes out.

Not a sheep said...

So a Labour government bullies (even if just implicitly) the Civil Service and now the Civil Service union is threatening what amounts to a campaign of civil disobedience because the new government is having to take action to address the problems left by the bullies.

Unsworth said...

So Turnbull clearly doesn't think it started in America.

Who are they obliged to serve? Governments come and go.

What he and his colleagues have done is serve the Government of the day, rather than Queen and Country. They have lost all moral credibility - that is assuming they had any in the first place.

We must therefore understand that, until otherwise proven, all Civil Servants are simply an extension of party political machinery.

Anonymous said...

A savage indictment of Brown and the system he created ...

'the Treasury was prone to “wishful thinking”'
'a process of optimism bias'
'excessive borrowing "kind of crept up on us in 2005, 2006, 2007, and we were still expanding public spending at 4.5 percent a year,”'

...and of course of Balls the monster he created.

Cynic said...

He also didn't mention its spirit of vindictiveness. Ideas thought up by the acolytes had money poured over them no matter how barmy they were.

Good ideas / policies put forward by Blairites were strangled financially to stop them and him getting credit. From about 2002 onwards, the malice oozing out of No 11 was palpable

Lord Blagger said...

It's even worse.

The real problem is the long term liabilities.

1.2 trillion - not billion for civil servants

1.6 trillion for state pension

State second pension? Who knows

PFI 350 billion

Nuclear decommissioning 100 billion.

The rest, pocket change.

At the bottom, the banking mess at about 40 billion.

ie. It's all the off balance sheet accounting that is to blame. All without assets.

It's not surprising the National Audit Office is going. The real question, will proper accounting replace the current fraud.

And it is a fraud.

Anonymous said...

Two words in the very last sentence got me "by error" ****!!!!!. WTF did he think Gordo was doing???

Frank said...

Before we blame the civil servants for not spotting that the economic conditions had not been transformed, let us remember that they were joined by:
- most international economists,
- the Bank of England (as well as the IMF, etc),
- the Tory Party (which were going to adopt Labour Spending plans until the recession happened).

Steve H said...

What do you expect, Iain? The more you give politicians direct control over the recruitment of the senior civil service, the more those civil servants won't dare to speak out of turn.

Also, is there a problem with The Purpleline's spellchecker as he/she has capitalised only the first letter of "treason" instead of the whole word as usual.

Mirtha Tidville said...

The only good thing is that finally, many of the greedy bozos of this country, who used to vote for people like the one eyed idiot, might just begin to realise how stupid and incomptent he really was.

As for the uncivil service, they should think themselves fortunate. You used to get shot for cowardice

Unknown said...

If Balls ever gets into the Treasury will it be any different? Who are these spineless individuals they can't speak out for the nation they work for against incompetent, useless politicians? A massive cull is required.