Leaders: Sir Humphrey must be neutral

It was said a currency union would be 'fraught with difficulty'. Picture: John Devlin
It was said a currency union would be 'fraught with difficulty'. Picture: John Devlin
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Civil service neutrality is a cornerstone of public trust in government. Voters need to be able to trust the impartiality of official statements and documents and that the public administration is not compromised for partisan political motives.

In its report on the Scottish independence referendum campaign, the Commons Public administration select committee can at least be said to have been balanced in its strictures. It has found both the UK and Scottish governments at fault. It says that the advice of Sir Nicholas Macpherson, Permanent Secretary to the Treasury and one of the UK’s most senior civil servants, to Chancellor George Osborne saying that a currency union between independent Scotland and the rest of the UK would be “fraught with difficulty” ought not to have been published.

It was only made public, the committee found, “because it suited ministers’ political objectives in respect of the Scottish referendum”.

It also finds that the Scottish Government’s independence White Paper had “raised questions about the use of public money for partisan purposes”, as part of the 670-page blueprint set out SNP pledges ahead of the 2016 Holyrood election. This, it concluded, “did not uphold the factual standards expected of a UK government White Paper”.

These concerns were well aired at the time. What purpose is served by returning to them now? The likely outcome of a gridlocked parliament in the aftermath of a heated general election and the subsequent battle over “more powers” for the Scottish parliament takes the UK into deeply disputatious constitutional waters. The temptation to present partisan political points as if flowing from the mouths of senior civil servants will be particularly strong.

And the need for vigilance is all the more acute given the possibility of a referendum on the UK’s relationship with the European Union as referendums currently get no mention at all in the Civil Service Code. The committee calls for the code to be “revised to specifically refer to referendums and provide civil servants across the UK with clear and definitive guidance on their role in respect of referendum campaigns”.

Committee chair Bernard Jenkin MP said this must occur before any future referendums.

As well he might, for as matters stand there is a real risk that questionable statements on the consequences of an EU exit may be presented as “dire warnings” from neutral civil servants.

The problem is that it is in the nature of government to present partisan documents as having all the authority and imprimatur of a neutral, above-it-all Sir Humphrey. Such assertions are all the more questionable when they relate to future spending, tax and borrowing projections.

Guidance here is long overdue – the public needs to know it can rely on trusted sources.

Normality is difficult to define

Chancellor George Osborne sought to convey the impression last week that the financial world is finally returning to normal. But in truth very little is “normal”.

This is particularly the case with inflation, already down to a historical low of 0.3 per cent and expected to fall further and remain close to zero for the rest of the year.

This extended period of low inflation, coupled with the possible onset of deflation later this year, has confounded the experts. For years they have warned that inflation would rise and with it interest rates. Instead, what was to be a short-term “emergency” regime of ultra-low rates of 0.5 per cent has persisted into its sixth year.

Now Andrew Haldane, chief economist at the Bank of England, has said interest rates are as likely to fall as to rise, in contrast to the majority view of the Bank’s monetary policy committee that the next move would be a rise.

The recent forays of central banks and markets into negative interest rates have raised the issue of how low interest rates can go.

The risk is of mortgage debt becoming more expensive and that consumers and businesses delay spending in the expectation of lower prices ahead. But that does not seem a present danger.

On the plus side, borrowing costs for business and households have remained low for far longer than expected and the stock market is at a record high on hopes of stronger economic growth.

However, savers and fixed-interest investors may now have to accept even lower returns. “Tax breaks” for savers mean little when returns have fallen to derisory levels. The Bank has a tricky course to steer – and this amid global geo-political shocks that may lie ahead

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