By Matt Foster

31 Mar 2016

As the Treasury's permanent Nick Macpherson this week departs the civil service after more than a decade as the department's most senior official, here's our full conversation with his former boss as chancellor, Alistair Darling – who worked with Macpherson as the Treasury grappled with the 2007-8 global economic crisis

There are obviously many roles for a perm sec – there's providing advice to ministers and then there's role of organisational leader for the officials in the department. How did you rate Nick on both of those fronts?

Highly in both respects. All good civil servants will give you their best advice. But if you really want to do something, they will say "You can do it, but you need to watch out for this or for that". And equally, Nick wouldn't be afraid to say "Well, I wouldn't do that if I were you". 

That's how it should be – ultimately the ministers make the decision. Most advice as you know, comes from officials further down the line. So you need to be confident that the permanent secretary has got a handle on everything that's going on. And Nick, as I said, would come and see you and say "Well, you've been told that, but maybe you should think about this".

When we won in 1997 he had been Ken Clarke's principal private secretary (PPS) – and then obviously he became Gordon's PPS. And so I knew him within the first year I was in the Treasury. So I would see him every now and again. But then I really got to know him an awful lot better when I was chancellor, for obvious reasons.

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I think in relation to the wider leadership of the Treasury – obviously when I was there he was leading the Treasury through a time of acute crisis. The Treasury was very much on the frontline, whereas traditionally the Treasury isn't. I know that he was very highly thought of by his staff and because of that he could motivate them and get people to work all hours of the day and night – which doesn't always happen in a department. 

"It doesn't do any harm to be familiar with the basic tenets of impartiality and objectivity, which he certainly had in abundance"

I think the other thing that's important is maintaining the integrity of the civil service, and I think that has been under pressure in the last few years. It's very easy for ministers to blame civil servants for their own shortcomings. The fact that Nick was, if you like, a traditional civil servant in the sense that he believed in the integrity of the civil service regardless of what ministers may come and go, I think that was hugely valuable. And that's something that I hope the civil service manages to maintain because without it, it would be a major blow to the way in which our democracy is supposed to work.

There are some outstanding permanent secretaries in most government departments. If you look at the number of permanent secretaries there's been in the last five years, you could be done under the trade descriptions act for use of the the word permanent. But the idea of the permanent secretary – you don't have to be quite of C.P. Snow's Corridors of Power – but it doesn't do any harm to be familiar with the basic tenets of impartiality and objectivity, which he certainly had in abundance.

You've written previously about what you saw as a kind of lack of experience of recession at the Treasury ahead of the financial crisis – and a lack of foresight, common to a lot of economic institutions at the time, on the interconnectedness of banks and the reliance on tax revenues from the financial services industry. How do you think the Treasury addressed that under Macpherson?

I said at the time the Treasury was not the only institution in the world to be in this position. Nobody thought financial stability was a problem. But you know, if the Treasury was short-staffed in 2007 on financial stability, one of the things that it demonstrated is that is has within its ranks civil servants – a lot of them were quite young as well, 20 and 30-somethings – who could be taken off existing work and in this case, told to work on Northern Rock morning, noon and night, and come up with a good solution to it. 

And again, that takes leadership from the top, to say "Look, perhaps we should have seen this coming – but who's to say. because nobody else saw it coming?" Of course, there was huge pressure to cut back on Treasury staff like every other civil service department. But as we headed towards the brink they rose to occasion. 

One of things that worries me now is that there comes a point where you simply don't have the know-how within a department. In every department, whether in my case in the Treasury, or when I was at the Department for Transport, dealing with train crashes, you need an institutional knowledge. The trouble is, if you keep losing older people, you lose all of that. With the best will in the world, someone who is 25 doesn't remember what happened ten years ago.

"There was huge pressure to cut back on Treasury staff like every other civil service department. But as we headed towards the brink they rose to occasion"

It's that sort of knowledge that I think is terribly important in the civil service, and in policymaking. It's not all "Yes, Minister" – it's not all about how officials can stymie your best cunning plans and all that. It is a sensible brake – and one of the things that's striking with Nick is that in 1997 he'd been serving Ken Clarke for perhaps three or four years. And the next morning he was serving Gordon Brown –  and you'd never know. It's seamless. And that's one of the strengths of the system and it's certainly one of Nick's great strengths. The civil service will miss him.

So do you think that's one of the reasons he's been in post so long? That need for institutional knowledge and the ability to take the long view?

No doubt. But it's also a tribute to him that all the chancellors that he's served have decided that he's a good thing and he should stay. If you look at the numbers of permanent secretaries that were chopped in between 2010 and 2015 – that certainly didn't happen at the Treasury. You know, Gordon though highly of him, I thought highly of him, George Osborne thought highly of him. And in other quarters people say, "well, isn't that terrible?" No, it's not. Because I think what all of us are looking for is the same thing – somebody who's a check and a balance on what we might want to do.

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