Ex-Treasury chief Sir Nick Macpherson takes swipe at Iain Duncan Smith over resignation

Macpherson says IDS's resignation over Personal Independence Payments was an "interesting, postmodern" decision

By Civil Service World

14 Apr 2016

Former Treasury permanent secretary Sir Nicholas Macpherson has questioned Iain Duncan Smith's decision to resign as work and pensions secretary over welfare cuts.

Duncan Smith quit the Cabinet last month, saying cuts to personal independence payments (PIP) for disabled people were "a compromise too far" and accusing the Treasury of implementing policies that were "more and more perceived as distinctly political rather than in the national economic interest".

But Macpherson, who left the finance ministry at the end of March after more than a decade as its perm sec, took a swipe at Duncan Smith's decision in a valedictory interview with the Financial Times.

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"We have had a secretary of state announcing cuts in disability benefit and within a week resigning over a policy he announced," Macpherson told the paper. "That is an interesting, postmodern approach to political resignation."

In the wake of Duncan Smith's resignation, his successor Stephen Crabb announced that the planned cuts would not go ahead, with ministers subsequently saying that the £4.4bn cost of the change of tack would not be met by further reductions in welfare spending.

The resignation led some to question the Treasury's dealings with departments, with Public Administration and Constitutional Affairs Committee chair Bernard Jenkin accusing the ministry of taking a "high-handed" and "short-termist" approach to budget-setting as it seeks to run a surplus by 2020.

"We didn't spot it"

Elsewhere in the interview, Macpherson acknowledged that the Treasury had failed to anticipate the global financial crisis of 2007-8, saying that the department had only had a "very small" team of 20 dealing with financial stability when problems with Northern Rock emerged. 

"The fact is we didn't spot it, we didn't ask the right questions and that was a failure." But he said the department had averted an "utterly disastrous" outcome and was now full of "battle-hardened" staff, many of whom were "still relatively young". 

And he cautioned against drastic intervention to save Britain's steel industry, as the government continues to look for a buyer for the plants set to be closed by Indian firm Tata Steel.

Business secretary Sajid Javid announced this week that the government was mulling "co-investment" with a private buyer, including taking on some of the debts of Port Talbot, the UK's largest steelworks. 

But Macpherson, whose interview was carried out before Javid's remarks, said it was vital for the market to "allocate economic resources" and warned that "far too much debate in Britain is seen through the lens of the producer".

He told the FT that nationalising steel was "not a policy I would be recommending if I still worked at the Treasury."

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