Friday, September 30

Truss Risks Harming UK Government Machinery, Ex-Officials Warn


Prime Minister Liz Truss damaged Britain’s system of government by sacking a top civil servant and removing another in her first days in office, according to two former heads of the Civil Service.

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(Bloomberg) — Prime Minister Liz Truss damaged Britain’s system of government by sacking a top civil servant and removing another in her first days in office, according to two former heads of the Civil Service.

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Robin Butler, who served under three prime ministers, and Gus O’Donnell, the Cabinet Secretary from 2005 to 2011, warned that her decision to fire Tom Scholar, the respected permanent secretary to the Treasury, could undermine the country at a time of monumental change. Firing the top official at the body that controls the nation’s finances, in the first days of a premiership has never happened before.

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Her “improper” actions could “corrupt” the institutions of state, Butler said. She also replaced Stephen Lovegrove, the national security adviser, with an ally from the Foreign Office.

Just two days after becoming prime minister on Tuesday, Truss unveiled a package to protect households from spiraling energy bills that is likely to cost over £100 billion ($116 billion), more than the furlough income support program.

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Extra Holiday

Queen Elizabeth II died the same day, ushering in a period of national mourning and constitutional upheaval. A public holiday has been declared for the state funeral on Sept. 19, which economists said is likely to tip the UK into a technical recession as workplaces close for an extra day.

Parliament is in recess until the funeral out of respect for the UK’s longest-serving monarch, meaning the business of government will be delayed at a time of economic crisis. A lack of detail about the energy bailout has unnerved markets.

“We have a new sovereign, we have a new prime minister and we really need the cement that can hold this system together,” Butler told BBC Radio’s “The World This Weekend” on Sunday.

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“If there was ever a time we needed experience and continuity, which is what the Civil Service provides, it is now. The politicians are beginning to forget the constitution. They are behaving improperly,” Butler said. “It will corrupt our system because one of those great advantages of having an independent, loyal civil service will be compromised.”

Power Grab

The Civil Service is an apolitical group of officials whose job is to deliver the objectives of their political masters. Scholar was sacked in an apparent power grab after Truss vowed to change “Treasury orthodoxy” during her leadership campaign. Lovegrove was replaced by Tim Barrow, who worked with Truss in the Foreign Office.

O’Donnell said: “She needs to understand that sacking someone with no notice for no apparent reason, someone held in high regard by chancellors of all political parties, is no way to earn the respect of the Treasury and the Civil Service.”

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Government officials pointed out that Chancellor of the Exchequer Kwasi Kwarteng only removed Scholar, leaving all other senior Treasury officials in place, and that he had praised the former permanent secretary for his “dedicated and exceptional” service.

Busy Schedule

Truss is expected to accompany the new monarch, King Charles III, on a tour of the four nations — England, Scotland, Wales and Northern Ireland — in the build-up to the Queen’s funeral.

The runup to the funeral is set to be a huge security headache for the capital. More than three quarters of a million people are expected to pay their respects when her body is lying in state in Westminster Abbey, according to the Times.

On Monday, the King and his wife Camilla, the Queen Consort:

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  • Will visit Westminster to hear condolences from the speakers of both Houses of Parliament, the House of Commons and the House of Lords.
  • Will then fly to Edinburgh and visit the king’s official residence, the Palace of Holyroodhouse, before joining Elizabeth’s coffin in a procession to St. Giles’ Cathedral where it will lay in rest for 24 hours.
  • The King will have an audience with Scotland’s First Minister Nicola Sturgeon before attending the Scottish parliament to hear a motion of condolence.

Sept. 19, the funeral date, had been scheduled for Kwarteng’s mini-budget. He was set to announce payroll and corporation tax cuts as well as an initial costing of the energy bailout.

That will now be held a few days later. The Bank of England has similarly delayed this week’s interest rate decision by a week to Sept. 22.

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Data Coming

Monthly GDP figures on Monday are expected to show the economy bouncing back in July, after the 0.6% fall in June. That month was affected by the holiday for the Queen’s Jubilee, celebrating 70 years in the throne. Growth in July is expected to be 0.3%.

In the second quarter as a whole, the economy shrank 0.1%. Economists at Deutsche Bank and Nomura expect the state funeral holiday will leave third-quarter growth slightly negative, technically dropping the UK into recession earlier than expected.

The Bank of England had forecast a recession from the final quarter of this year, though Bloomberg Economics believes the energy bailout will be big enough to prevent a contraction.

As well as GDP data for July on Monday, there will be key jobs figures on Tuesday and inflation on Wednesday.

Marc Ostwald, chief economist at ADM Investor Services international, said: “The period of national mourning may well serve to mute market reaction to the busy run of data, as well as the lack of details on last week’s measures to combat the energy crisis, which will be material to the UK’s growth and inflation outlook.”

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