Tom Scholar sacking cost Treasury almost £500k, annual accounts reveal

Document contains tributes to perm sec axed by Liz Truss and Kwasi Kwarteng
Tom Scholar

By Jim Dunton

21 Jul 2023

Liz Truss and Kwasi Kwarteng’s decision to sack HM Treasury permanent secretary Sir Tom Scholar cost the department almost £500,000 in severance pay and compensation, its annual accounts reveal.

The document also includes messages of thanks from Treasury non-execs after Scholar was forced from his job on September 8 last year, two days after Truss became PM and appointed Kwarteng as her chancellor.

It says Scholar received a “severance payment” of £335,000 for “loss of office” and a further payment of £122,000 that included “annual leave adjustments and compensation in lieu of notice” before he formally left the Treasury on 2 November.

Scholar’s baseline salary for 2022-23 was bracketed at £195,000-£200,000. However, the annual report and accounts record that his compensation package bumped the total up to £540,000-£545,000. He also received additional pension benefits of £11,000.

Announcing his departure in September last year, Scholar made it clear that leaving was not his choice.

“The chancellor decided it was time for new leadership at the Treasury, and so I will be leaving with immediate effect,” he said, referring to Kwarteng.

“It has been the privilege of my career to lead this great institution since 2016. I wish the Treasury all the best for the times ahead, and I will be cheering on from the sidelines.”

Scholar’s sacking sparked intense criticism, even before Kwarteng delivered the disastrous “mini-budget” that destabilised the UK economy, laying the ground for his expulsion from 11 Downing Street and Truss’ October resignation.

Previous Treasury perm sec Lord Nick Macpherson told members of the House of Lords Constitution Committee in April that Scholar’s removal from office appeared to have been “a pre-emptive strike” to demonstrate the importance of telling the Kwarteng regime what it wanted to hear.

Macpherson said Kwarteng seemed particularly interested in hearing that unfunded tax cuts would have no consequences in the market.

“As it happened, unfunded tax cuts did have a massive impact on the market. And Tom Scholar as the leading official who had experience of financial crises would have been very valuable to them,” he said. “It was a pity.”

Pointedly, the Treasury’s just-published annual report and accounts contain messages of appreciation for Scholar’s work from lead non-executive Lord Jonathan Hill of Oareford and Zarin Patel, who chairs the Treasury Group Audit and Risk Committee.

Hill said: “On behalf of the non-executive directors of HMT, I want to record formally our gratitude to him not just for leading the department with such integrity and professionalism from 2016-22, but for his long and distinguished career as a public servant. He was held in high regard not just in the Treasury but across Whitehall.”

Patel said she also wanted to record her gratitude to Scholar and welcome James Bowler, who was appointed as new Treasury perm sec in October last year.

HM Treasury’s annual report and accounts record that Kwarteng, who served as chancellor for exactly 38 days, received a severance payment of £16,876 following his loss of office.

Current prime minister Rishi Sunak, whose resignation as chancellor in July last year was a significant move in starting the ministerial backlash that forced Boris Johnson to stand down as PM, also received a severance payment of £16,876. The Treasury ARA records that it was repaid in full to the department.

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