Treasury economy efforts criticised
Published 15/02/2013 | 00:46
Desperate Government attempts to stimulate the economy have been criticised as "expensive experiments" by an influential group of MPs.
The Public Accounts Committee (PAC) said the Treasury did not seem to understand the risks and benefits of £375 billion of quantitative easing (QE), while its flagship lending guarantee scheme had failed.
The department was also rebuked for not getting a grip on spending across Whitehall, and "impenetrable" book-keeping. The verdict was delivered in the cross-party committee's report into the Treasury's performance in the last financial year.
The MPs noted that it had managed to cut the public purse's exposure to bank guarantee schemes in the wake of the credit crunch, and was doing better at holding on to key staff.
However, the Government was still facing a £34 billion loss on shares in RBS and Lloyds, and there were doubts as to whether the department had "sufficient capacity and skills" to respond to any future banking crisis.
Plans for more job cuts and high turnover of personnel threatened its "ability to effectively control the risks it is managing on behalf of the taxpayer".
The committee expressed concern that the Treasury had a "limited understanding" of its role in QE, and pointed out that the National Loan Guarantee Scheme - intended to help firms access cheaper lending - had only achieved 15% of planned take-up. The initiative had now been superseded by the Bank of England's more generous Funding for Lending scheme.
"The Treasury has limited understanding of its role in these measures. It has not set out its goals and intended outcomes, and it has limited management information to help it monitor progress, giving the impression of a series of expensive experiments indemnified with taxpayers' money," the MPs warned.
PAC chairwoman Margaret Hodge said: "The Treasury acts as both the finance ministry and economic ministry. But it appears to neglect its role as finance ministry. Its own accounts are impenetrable and this committee keeps seeing instances of poor decision making by departments, which the Treasury could and should have prevented.
"High staff turnover threatens the Treasury's ability to respond to crises and manage public spending effectively. While staff turnover fell in 2011-12, it is still very high. Furthermore, the Treasury remains committed to cutting its headcount by a third and there are still very few women at senior levels."