🤖 Yes, the Treasury blocks stuff... bad stuff

The political waiting game

My time in government was energising because the Treasury is the centre of everything. Other departments recognise that when they're dealing with the Treasury, it's just a little different. The Treasury has a big influence on policy to a degree that no other department has. But it was also frustrating, because our political weakness made it difficult to get policies implemented. It was the 2023-24 period and if people didn't want to engage with you, they would simply wait you out. I definitely saw that with the Financial Conduct Authority. They would just refuse to do things because they perceived, rightly, we weren't going to be there very long. It was the same with the private sector.

Who is really in control here?

Regulators can be a massive problem and a block. The Treasury has allowed some regulators to become the tail wagging the dog on huge areas of policy, because the regulator is where the real expertise will often arise.

Death by consultation

A fundamental difficulty is the system of how primary and secondary legislation is drafted and put through. It was far, far too slow. There is too much time for objections and consultations. I used to joke in meetings that it's death by consultation. At the same time, anything big that gets done comes after a significant amount of over-analysis and paralysis. So when it gets through, you don't have the fear that someone hasn't thought about X or Y.

The civil service needs fewer people, more money

We've got to a position where we're employing too many people and paying them too badly, and getting frustrated that they aren't motivated. We should have fewer people taking more responsibility and paying them better.

Yes, the Treasury blocks stuff… bad stuff

I agree that the Treasury blocks policy–it's the ultimate blocker of bad policy. But here is where I think departments are correct: we've allowed the Treasury to effectively become the department that runs the government. The Treasury hasn't allowed other departments to develop their own independent capacity to really understand the financial and other permutations of certain decisions. The Treasury has hoarded that capacity and as a result it tends to know things other departments don't know.

And… sometimes good stuff

The Treasury has an over-reliance on static models. It is very, very bad at rejecting good arguments from outside organisations about how there can be a dynamic effect if you change a policy. The Treasury just rejects them without consideration. For example, it was strongly against the M25 [the motorway that encircles Greater London] because it couldn't imagine how it would develop and become critical to London's economy. So yes, the Treasury is very good at public spending decision-making, but when it comes to the economy, you have to make decisions understanding there is an element of judgement there. Politicians have failed in not imposing this on Treasury officials.

Declining capital markets are a big challenge

Our capital markets are really drying up. Unless we're willing to act really big and get more capital from our big pension funds and investment plans into domestic capital markets, however we do that, and to do it quickly, we are going to have a significant problem for the City of London. What starts in capital markets affects private markets.

Yes, data matters, but politics trumps

External organisations have to persuade the key official that they are intellectually and statistically capable of genuinely helping their decision-making. If you can't persuade officials of that, it will go straight in the bin. Your analysis must be better than theirs. Officials know that the Resolution Foundation and the Institute for Fiscal Studies know what they are talking about. At the political level, things are different. First, is your ability to intellectually persuade the Chancellor. Second, is whether your policy is likely to bring in more money or less money and, third, does it align with the Government's broad strategic objective in a certain area.

Your proposals should be short term

Policy proposals need to be concrete and relatively short term, i.e. 1-3 years. Anything longer than 3 years, just forget about it because nobody's ever going to believe you. If you can show previous examples where you got it right, that's very persuasive.

If only I’d put a tenner down…

The policy I would have been proudest of–and this will sound tragic–was a plan to offer shares in NatWest* that we were planning to announce, but then Rishi Sunak unexpectedly called the election and things went in a different direction. Had that not happened, it would have been transformative for many people including underprivileged groups. So yes you need to convince the prime minister why a specific policy is great, but you also need to know when they are going to call an election!

*The UK Government became a shareholder in NatWest bank after the financial crisis of 2008. They recently sold off their stake in NatWest, after nearly 17 years of public ownership.

A message from Tom

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