MPs need to manage billions of pounds, so should we be worried they predominantly have degrees in the arts and humanities?
MPs need to manage billions of pounds, so should we be worried they predominantly have degrees in the arts and humanities?

The head of Britain’s spending watchdog has accused Whitehall of failing to grasp the impact of deep public spending cuts. Sir Amyas Morse, who leads the National Audit Office, suggested that civil servants were carrying out “radical surgery” without knowing “where the heart is”.

In a rare interview, Sir Amyas indicated that, as Whitehall embarked on another round of austerity, officials lacked the information or overview to assess when judicious cuts leading to improvements in productivity veered into the rationing of services.

“If you’re going to do radical surgery it would be nice if you knew where the heart was,” he said. “You’re slightly more likely not to stick a knife in it by mistake.”

Sir Amyas went on to suggest that, under David Cameron, an “optimism bias” had led ministers to press ahead with projects in which they believed, such as NHS reforms, with little debate about the potential risks of implementing them.

His warning comes two days before a Budget where George Osborne will modify the depth of cuts to government departments, alleviating some of the concerns of civil servants about the impact of a Conservative government after May’s general election.

An Office for Budget Responsibility statement on Wednesday will not give the chancellor as much new wiggle room as the Treasury had hoped but the OBR’s forecast of lower inflation will significantly reduce the cost of index-linked government bonds.

Along with proposed new cuts in welfare payments, cheaper debt interest enables Mr Osborne to remove some of the heat from day to day spending in government departments, which had faced steeper cuts over the next five years than they have experienced since 2010.

While there will still be great pressure on departments, the chancellor also plans to tweak the total spending assumption. This will further limit the likely scale of cuts, so he can counter Labour’s charge that he is slashing the state to levels not seen since the 1930s.

Mr Osborne will also devote much of his Budget speech to outlining the measures a future Tory government would introduce were it not in coalition with the Liberal Democrats, including more welfare cuts, raising the point where people pay 40 per cent income tax and giving greater relief against inheritance tax.

Sir Amyas, who reports directly to parliament, rather thana minister, cited local government cuts, that had led to a big reduction in the funding going to social care, and correspondingly greater pressure on the NHS.

“Now if you’re going to go through much deeper, more profound organisational cuts . . . you need to understand what you’re doing better than that,” he said.

Instead of saying they were not responsible for what happened in local government — “so I will just kind of chuck it over the wall and let that turn out how it may, I’m sure they’ll make a good job of it’” — civil servants had “a responsibility to be much better informed at the centre than that”.

The watchdog head added that “old-style policies” had been “a little bit more about outcomes and you’d find a means”. Now ministers were being “more executive in style. I’m not saying that’s wrong but it’s a feature, and that means that as a civil servant, you’re faced with someone who’s saying ‘this is what I strongly believe we should do here’.”

Sir Amyas added that, when he and his team had spotted problems or deficiencies, civil servants had sometimes been reluctant to address them. “What I observed is something that I will collectively describe as the feather game. Because if you keep blowing the feather hopefully it will land on someone else,” he said.

Departments’ reluctance to add to their responsibilities “may be understandable at one level but you’d like to feel that they’d be steering towards the sound of gunfire, rather than steering away from it”, he said.

Sir Amyas noted an initial reluctance by the Treasury to take on the role of scrutinising whether some institutions were offering severance payments and “compromise agreements” for departing public sector staff in disproportionate numbers.

He added: “They were very much not wanting to agree to do that. And although they have now agreed to do it, they didn’t want to have the responsibility for picking up patterns and being a bit of a detector of things that might be going wrong.”

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