A law to ban tax rises. Do you think that’s wise, prime minister?

http://www.theguardian.com/politics/2015/may/03/law-ban-tax-rises-wise-prime-minister

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In a review of my book Mr Osborne’s Economic Experiment in last weekend’s Financial Times, the former editor of the Economist, Bill Emmott, re-quoted the following remark once made to me by a Whitehall official: “Governments do foolish things. My job is to make sure they do foolish things properly.”

Emmott speculated that this quote was “possibly apocryphal”, but I can assure him it was not. What it was, however, was a typical example of the sense of humour never far from the surface in the civil service, and immortalised in Yes, Minister, the celebrated BBC comedy series, which was based on serious research. Some of my best Whitehall friends helped the writers, although I could not possibly comment on who they were.

The not-so-apocryphal quote came to mind last week when, amid a series of truly ludicrous pronouncements by the Tories about their fiscal plans, I attended an interesting lecture by Sir David Ramsden to celebrate the 50th birthday of the Government Economic Service.

Ramsden is the present head of the service, as well as being chief economic adviser to the Treasury. His lecture attracted a vintage collection of present and former civil servants, although one notable absentee was the man whose arrival at the Treasury in 1964 prompted the setting-up of the GES. He is Robert Neild, now a robust 90-year-old, who recently told me the story of its beginnings.

Neild was brought into the Treasury by the incoming Wilson government of 1964-70 as chief economic adviser, only to find that his supposed predecessor, Sir Alec Cairncross, had changed his plans and did not wish to be moved out of the job.

This was potentially embarrassing all round, but the classic Whitehall solution was to make Cairncross head of the newly formed GES, although there had of course been economists working in Whitehall and No 10 Downing Street since Churchill’s wartime cabinet.

Neild remained as the chief economic adviser until his resignation in 1967 over the government’s refusal to take his advice about the need for a sterling devaluation – which was eventually forced upon them later that year.

People are going to look back on this period and conclude that this country has been afflicted by a kind of madness

One of Neild’s successors, Sir Kenneth Berrill, used to tell the story about how, when the quadrupling of the oil price in 1974 had added to the woes of the British government, he popped across the road to the Red Lion for a pint and heard some bar-room bores opining on the state of the economy. Berrill could not resist intervening, and when asked who the hell he was, replied that he was the chief economic adviser to the Treasury. To which the reply was “and I’m the Queen of Sheba”.

When, many years later, Ramsden was introduced to Berrill, we were in the midst of the banking crisis. On hearing that Ramsden was one of his successors, Berrill replied to the effect that it was bad enough in his day, but he would not relish having to cope with what Ramsden was facing.

Now, the relationship between officials and ministers has always been interesting. After Ramsden’s lecture last week, a former permanent secretary recalled the time that the Heath government in the early 1970s wanted to make a somewhat eccentric change to the system of corporate taxation. Officials saw two Treasury ministers, who said: “Are you telling us we should not make this change ? After all, it was a key point in our manifesto.”

“No, minister. It is your policy. We are just telling you what the consequences will be.”

And here we are again, with the unbelievably foolish Tory commitment to enshrine in law that there will be no increases in income tax, VAT or national insurance during the lifetime of a Conservative government if one is elected this week.

This is at the same time as my old friend Lord Lawson, chancellor from 1983 to 1989, is criticising the prime minister in the Spectator for “making a flurry of promises, many of them either expensive or unwise, or both”.

The criticism from many sides has been that such promises are “uncosted”. But the chief secretary to the Treasury, the Liberal Democrat Danny Alexander, has blown the gaff by revealing the gory details about how the egregious George Osborne intends to crack down on welfare and child benefit – something which must make a decent “wet” Tory such as the late Lord Gilmour (whom David Cameron professes to have admired) turn in his grave.

Now, as it happens, I strongly believe that people are going to look back on this period when the entire “debate” has been founded on the premise that cuts and austerity are needed at all, and conclude that this country has been afflicted by a kind of collective, and profoundly masochistic, madness.

Nevertheless, it is ludicrous to rule out the scope for fiscal policy in the way proposed by Cameron and Osborne.

Indeed, if I were in the shoes of Ramsden and the Treasury’s permanent secretary, Sir Nicholas Macpherson, I should be wondering whether, if we finally experience a sustainable recovery, one would be in danger of breaking the law by advising that taxes needed to be raised.