The Treasury needs to rebuild public trust
Lord Kerslake popped up on Sunday morning to discuss the findings of his review into the current state of the Treasury.
Kerslake, a former head of the civil service, was commissioned by shadow chancellor John McDonnell to assess the capabilities and remit of HMT and his findings look set to make interesting reading.
Kerslake’s report is likely to be as close to the Treasury as McDonnell will get, given the current state of Labour’s poll rating, but that doesn’t mean we can’t extract some value from the endeavour. Kerslake notes that the Treasury is seen as “arrogant, overbearing and negative towards other departments”.
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The department has likely been viewed this way for centuries, but an arrogant chancellor brings the charge alive and they don’t come much more arrogant than George Osborne. Kerslake is clear that what became known as Project Fear and the accompanying proposal of an emergency Brexit budget “took their toll on the credibility of the Treasury”.
Indeed, in the weeks before the referendum Osborne asserted with total confidence that a vote to leave the EU would cause “a year-long recession with at least 500,000 jobs lost”.
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His Treasury report, now utterly discredited, went on to predict that a Leave vote would see growth in the third quarter of 2016 plummet to between -0.1 and -1 per cent. In fact, it was +0.6 per cent.
Economic reality has since seen UK growth forecasts upgraded by everyone from the Bank of England to the IMF and OECD. The Treasury, of course, was not alone in getting its predictions wrong. Yet time and again Osborne presented such predictions as fact, insisting that they were concrete and independent forecasts when in fact they were nothing more than soundbites.
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As the writer and anthropologist Andrew Lang once observed: “An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts – for support rather than for illumination.”
Osborne’s dodgy claims were designed to support a political position and they illuminated nothing more than the extent to which he was prepared to peddle falsehoods. As Kerslake concludes, “we need a strong and trusted Treasury”.
Let us hope that Philip Hammond, whose first Budget will be presented next month, oversees a restoration of faith in this most important department.