The decision of Liz Truss and Kwasi Kwarteng to instantly sack two top civil servants damaged the running of government and seemed intended to give the message that they valued political alignment above competence, former senior officials have said. Giving evidence to a parliamentary committee, three leading ex-civil servants said that the dismissal of Tom Scholar as the Treasury’s permanent secretary, in particular, made it harder for others to deliver unwelcome news and potentially worsened the crisis triggered by Kwarteng’s mini-budget. “It was almost as if it was a pre-emptive strike designed to demonstrate to the rest of the Treasury that if you wanted to thrive and prosper under the Kwarteng regime, you had to tell them what they wanted to hear, namely that unfunded tax cuts would have no consequences in the market,” said Nick Macpherson, who preceded Scholar in the Treasury role and is now a crossbench peer.
“As it happened, unfunded tax cuts did have a massive impact on the market,” he told the Lords constitution committee. “Tom Scholar, as the leading official, who had experience of financial crises, would have been very valuable to them. So I think it was a pity.” Mark Sedwill, formerly head of the civil service, who is also a crossbench peer, highlighted the decision of the incoming Truss administration to remove Stephen Lovegrove as national security adviser, as well as the dismissal of Scholar. “I think those dismissals were without merit,” Sedwill said. “Their successors were very capable and strong public servants, but the dismissals were damaging.” The officials were “pre-emptively dismissed” and never given the opportunity to show they would have adapted to the new government, Sedwill said. He added: “One can only assume that it was a deliberate signal to Whitehall that political alignment with the new government’s views was the key criterion, and capability, loyalty and performance were not.” Before she took over from Boris Johnson as prime minister for her 48 days in No 10, Truss railed against what she termed an anti-growth “Treasury orthodoxy”, which she said would push against her plan for unfunded tax cuts. Scholar, who had been the Treasury’s lead civil servant since 2016, was removed as soon as Truss appointed Kwarteng to be her chancellor. Five weeks later, Truss dismissed Kwarteng after the pair’s tax-cutting mini-budget spooked financial markets and sent government borrowing costs soaring, with a knock-on impact for mortgages. Scholar and other officials, Sedwill said, should have “had the opportunity to demonstrate to the new administration that they would serve them with the same loyalty and capability they had served previous administrations. I have no doubt they would have done precisely that”. Usha Prashar, formerly head of the Civil Service Commission, which regulates appointments in the service, and is also a crossbench peer, said sacking top officials without “good due process” set a bad example. She told the committee: “I just think the optics were very poor, particularly for a government department. What sort of message does it send to the country in terms of how do you run a decent organisation?”
Sedwill rejected an argument by Benjamin Mancroft, a Conservative hereditary peer, that such rapid sackings were common in the private sector. “Very few chairs come into a plc board and sack the chief executive on the first day,” he said. “It may be after a period they conclude the chief exec isn’t right for the future of the business, and then will make a change. “But I can’t think of an example where a chair has been appointed to a plc on the basis they will sack the chief executive on the first day, or have done so without giving that chief executive the opportunity to perform.”