Fallout from Scholar and Lovegrove sackings should be a lesson for ministers, Sedwill says

Truss and Kwarteng's errors are a cautionary tale for future leaders, former cabinet secretary tells peers
Lord Mark Sedwill appears before the Constitution Committee yesterday

By Jim Dunton

27 Apr 2023

Former cabinet secretary Mark Sedwill has told a parliamentary committee that last year’s sackings of HM Treasury permanent secretary Sir Tom Scholar and national security adviser Sir Stephen Lovegrove should be a cautionary tale for future prime ministers and secretaries of state. 

At a session of the House of Lords’ Constitution Committee yesterday, Lord Sedwill told peers that while there always had to be scope for senior officials to be removed from post, the summary sackings of Scholar and Lovegrove were “equally damaging” and made “without merit”.

He told peers investigating the appointment and dismissal of senior departmental officials that it was a “tribute to the system” that Scholar’s successor James Bowler and Lovegrove’s successor Sir Tim Barrow were “very capable and strong public servants”.  But he stressed: “Those dismissals were damaging.”

Sedwill told peers his main concern was that neither Scholar nor Lovegrove had been given the opportunity to demonstrate to then-prime minister Liz Truss that they would serve her cabinet with the same loyalty and capability that they served previous administrations.

“I have no doubt that they would have done precisely that,” Sedwill said. He acknowledged that both would have given the PM and her ministers advice they were not keen to hear. But he said that once decisions had been taken, they would have “done their level best” to loyally implement decisions and deal with the consequences.

“That’s the issue with this particular pair of dismissals,” Sedwill said. “They were never given the opportunity to demonstrate that they would work for the incoming government.

“One can only assume it was a deliberate signal to Whitehall that political alignment with the new government’s views was the key criterion and capability, loyalty, performance were not.”

Sedwill told peers he was sure his successor as cab sec, Simon Case, would have made many of the same points when Truss and her chancellor Kwasi Kwarteng took office last September – for what turned out to be just weeks in post.

Sedwill said he believed Scholar’s untimely sacking contributed to the market turmoil that followed Kwarteng’s disastrous mini-budget in late September, in partnership with the chancellor’s seeming rejection of Office for Budget Responsibility guidance.

“Hopefully the political cultural lesson is ‘do that at your peril’ because the consequences for good governance and thus your own political authority will be damaging if you pursue it,” Sedwill said.  

“There has to be a political culture here which really prizes having the best people able to give the best advice in these jobs.”

Truss sacked Kwarteng as chancellor in mid-October, installing Jeremy Hunt as his successor. She resigned as PM a week later.

Former Treasury perm sec Nick Macpherson told yesterday's House of Lords session that Scholar’s sacking appeared to have been “a pre-emptive strike” to demonstrate the importance of telling the Kwareng regime what it wanted wanted to hear.

Lord 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.”

The former perm sec, who worked with Scholar for 25 years, told peers he was concerned that Truss and Kwarteng had deciced to change the Treasury’s top leadership based on an “almost certainly misplaced” understanding of Scholar’s views on economic policy.

“If you’re going to have an impartial civil service, taking decisions on the basis of alleged or perceived views is quite a dangerous path to go down,” Macpherson said.

‘We need to raise the standard of the civil service’

Elsewhere in the session, Macpherson – who served as perm sec at the Treasury from 2008 to 2016 – told peers he was in favour of boosting the flow of talent between the public sector and the private sector as a way to drive improvement.

But he conceded that pay in the civil service, particularly at higher grades, was an obstacle and that Treasury restraint on his watch had been a contributory factor.

“I don’t think that any of us are under any illusion that if this country is going to progress, we need to raise the standard of the civil service – the public sector more generally – and be ambitious,” Macpherson told Constitution Committee members.

“The civil service does not have a monopoly of expertise or wisdom. I recognise there are practical obstacles to opening up every single job. It might be that you don’t want the head of MI5 to be some random person off the street. But given technological development, it is very easy to put job descriptions on the internet and turn these things around quickly.

“Given the public-sector pay, it’s often difficult to attract people at senior levels. Which is a pity because you don’t want only the wealthy to be able to be able to afford to come into the civil service.

“I must take my share of the blame for successive pay policies, not least in the Treasury.”

Macpherson said recent data from the Civil Service Commission indicated that more civil service jobs were being opened up to outside applicants than had been the case 20 years ago.

“I see that as a very positive development,” he said.

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