This case study on the use and application of history by civil servants in the Treasury aims to help academic historians and political scientists gain a greater understanding of how history is used in the policy making process, and how historical evidence and methods can assist civil servants in their daily work devising, evaluating and implementing policy and providing advice to ministers.
It is based on seven interviews with former and current officials, conducted by Dr Christopher Knowles in 2018 and 2019. Those interviewed include the former Permanent Secretary, Nicholas Macpherson, a senior Treasury official involved in the public spending review following the 2008 financial crisis, and officials at Deputy Director and Team Leader levels working, at different times in their careers, in the areas of Debt and Reserves Management, National Insurance Contributions Policy, Economic Productivity, Migration Policy, the role of professional economists in the Treasury, and Digital Infrastructure.
After outlining the ‘view from the top’ and describing current programmes and activities designed to give staff a greater understanding of economic history and the role of the Treasury in the British economy, the case study provides specific examples of how a historical perspective has assisted five civil servants, at different levels in the organisation, in their work. The examples illustrate some of the ways that history has been applied to the policy making process: identifying historical precedents in cases where similar issues had arisen previously; understanding how we got here, how issues that civil servants are dealing with arose and developed over time and how this limits and constrains possible courses of action in the present; applying historical methods to help determine if evidence submitted to support a particular course of action is sufficiently robust; and more generally exploring what happened last time as a routine part of their day-to-day work clarifying and refining policy options.
In an article in the magazine, Civil Service World in 2016, Sir Nicholas (now Lord) Macpherson, recently retired as Permanent Secretary of the Treasury, was quoted as saying:
The Treasury's own files contain a lot of relevant information, but it's extraordinary how often officials tend to develop policy from first principles rather than going back and getting a deeper understanding of why we are where we are now.[1]
He added that his predecessor, Sir Douglas Wass, deeply regretted the decision taken in 1976, as part of a programme of far larger reductions in public spending, to close the Treasury’s internal historical section. During his tenure as Permanent Secretary from 2005 to 2016, Macpherson tried to encourage and promote alternative ways that staff at the Treasury could gain a historical perspective on the issues they were dealing with, and so help restore the department’s ability to ‘scrutinise and learn from its past’.[2]
That doesn't mean that history is the answer to everything. It's a contributing factor: it's always important to understand why you are where you are, and if you want to improve things you need to take that historical perspective into account.[3]
In 2008 after a long period of continuous economic growth, the British economy entered a period of recession following the financial crisis. Staff at the Treasury are relatively young and there is a high level of turnover as they move on to other positions, often in other government departments. Macpherson was concerned that apart from himself and one or two other senior officials, no one at the Treasury had been in post during the previous recession in the early 1990s, so he supported a programme of historical seminars, including a series on previous periods of economic austerity and public spending control, to try to address the lack of institutional memory.
Macpherson regrets what he perceives as a decline in the teaching of economic history at British universities. Shortly before he retired from the Civil Service in 2016, he was instrumental in establishing a partnership with King’s College London and he continues to contribute to a postgraduate course on ‘The Treasury and Economic History since 1945’.[4] The teaching panel includes former ministers and serving Treasury officials, one of whom is Mario Pisani, a former Speechwriter and Private Secretary to the Chancellor of the Exchequer and currently Deputy Director, responsible for Debt and Reserves Management.
Pisani acts as the Treasury coordinator for the course, which covers the economic history of Britain since the Second World War. Six Treasury officials are selected to attend each year, from around 30 applicants. They each have to write an essay on a subject of their choosing and some give a talk to their colleagues. The essays are Treasury property and are published on the Treasury intranet. They are not open to the public, so participants have complete freedom to express their views. According to Pisani:
It is going to be an incredible resource. The hope is that over time we can produce a new series, a bit like the one that the Treasury Historical Service was producing in the 1970s.
Pisani is also the joint Chair of the Treasury History Network, which arranges internal events for its members. He helps to organise other history-related activities, including regular series of lectures and workshops. On the academic side, the programme is coordinated by Duncan Needham, Deputy Director of History & Policy. Previous lectures and workshops have included a series on ‘important budgets of the past’, a series on historical negotiations with Europe, and one on previous economic recessions and subsequent periods of fiscal consolidation. In Pisani’s view:
Our aim should be to internalise history so it becomes automatic when considering any issue.
As an example of how he has used history in his own work, he refers to the Bank of England’s capital base, which is lower than most other central banks. There are historical reasons for this, which he needs to be aware of and understand in his role as the Treasury official responsible for Debt and Reserves Management.
The global financial crisis and economic recession, following the collapse of Lehman Brothers in 2008, opened up a massive hole in the UK public finances. The Conservative and Liberal Democrat coalition government, when it came to power following the 2010 general election, decided that public spending had to be reduced.
Fiscal consolidation was the policy of the coalition government, but the outgoing Labour government had also committed to consolidation; although it had not yet run a spending review, it had set out a path for public spending reductions. The coalition government changed that path, increasing the proposed pace of consolidation, so although the policy shift between governments made a difference, senior Treasury officials understood that some degree of consolidation had to be implemented by any government, regardless of the outcome of the election. Spending plans, set before the financial crisis, were based on assumptions about the size of the economy which were no longer true. Officials were concerned that the very large gap between what the government was spending and what it received in tax could not be financed indefinitely by borrowing. The tax base had shrunk. Expenditure, on the other hand, does not adjust automatically with the economy; if anything it tends to rise in a recession rather than fall and there is no automatic process by which spending and revenues line up with each other, so Government action is required to ensure they remain in balance.
Fiscal consolidations have happened before, several times in the UK over the previous hundred years, for example at the time of the IMF crisis in the 1970s, and again in the early 1980s and in the 1990s recession. Although there is always a need to control public spending, and a well-established framework in the UK is generally fairly effective in ensuring that government departments keep within the controls that are set, when the financial crisis arrived in 2008 very few of the staff at the Treasury had previous experience of a major fiscal consolidation involving significant public spending cuts. According to one senior official who worked on the spending review:
We were very aware that most people at the Treasury had not had any experience of cutting public spending. The last fiscal consolidation had been in the early 1990s. It had finished by about 1995, and here we were in 2008, 13 years later. The Treasury has quite a young staff and high turnover. Very few of the two hundred or so people involved with the spending machinery of the Treasury had been there during that earlier period, and those who had, such as the Permanent Secretary, Nicholas Macpherson, were now very senior. We didn’t have the institutional knowledge of how to do it.
I was also worried about what would people feel like, culturally, when they got up in the morning, about what they had to do that day. It is much easier to hand money out than to take it back.
The Permanent Secretary, together with senior officials responsible for public spending, made a conscious and deliberate decision to explore the history of previous fiscal consolidations, and encourage staff involved with the spending review to learn from how their predecessors had handled similar issues in the past. A senior official commented that:
So essentially you have this community of people who run the spending processes, who make it happen, and none of them had done it before, so it seemed sensible to try to learn from history. It’s a repeat event, a fiscal consolidation. There is plenty of experience in the UK of doing that. There wasn’t some great history plan, we didn’t go about it in any particularly structured way, but we did set about trying to learn some lessons.
They obtained copies of academic books and articles, such as The Treasury and Whitehall: The Planning and Control of Public Expenditure, 1976-1993, by Colin Thain and Maurice Wright. To learn about earlier fiscal consolidations, outside the scope of living memory, they invited academic historians to talk about what had happened in the 1920s, and they read original historical material such as the 1921 and 1922 Geddes Committee Reports, which they borrowed from the British Library. They also invited people to talk about their personal experience of previous fiscal consolidations.
We organised a series of seminars from people who had been involved in spending control at the Treasury in the 1980s and in the 1990s, who would talk about their experiences; what they had done and how they felt; what had gone wrong and what had gone right; and how they got through it all.
What did Treasury staff learn from these activities? They looked for patterns in the historical precedents, rather than focussing on the specifics in any particular case. They wanted to gain a better understanding of the broad shape of the programme, how to achieve the right balance between proportional, across the board cuts and axing major items, how the process could be managed most effectively, and how it had worked out in practice.
It’s not like some Eureka moment. It was partly about where do you find the money? Where do you find the savings? What is the balance between very specific things – we are going to cancel this programme – versus more general things – we are just going to squeeze the balloon – and understanding how that balance had played out in the past; where people found the money and which things were successful.
The historical examples helped them understand what was possible, and what level and type of public spending cuts could actually be delivered.
It is not just a set of plans. You have to be confident that the plans are going to be implementable. You have to deliver them, so it was helpful to know which cuts stuck and which ones didn’t.
They had to make a judgement on what would be acceptable to politicians.
Are politicians willing to accept these reductions? You don’t know what’s going to be acceptable if you haven’t thought about it and done it. Specific examples are all different, but the conceptual stage, thinking about the broad principles, has been done before and we can learn from that.
The historical precedents helped them show their colleagues in the spending departments that the scale of spending cuts the Treasury believed were necessary were actually possible, because it had been done before.
Even within the Treasury, staff had been through a long period of good times, which was all they had experienced. You had to change expectations, so they understood that it was not just about shaving a bit off here and there, you are going to have to make more substantial cuts.
Being able to say that in the past the government did this, or this, or these things, in terms of a proportional reduction in public expenditure, or the specific things that previous governments actually did, gives you a sense of what is doable.
As well as worrying about whether the politicians were prepared to see it through, they were concerned about the possible effects if they pushed too hard.
The Treasury is not there just to make the numbers add up. You have to try and judge whether taking the money out is really going to affect services to an unacceptable degree, or be so politically unpopular that the government is going to struggle to maintain the spending reduction, or even reverse it; or are people just crying wolf and if you think they are, you’ve got to see through that.
Spending control is an evolutionary process and the Treasury has learnt by delivering the numbers. We worried about whether the political will would hold up but also about the impact on public services, if you squeezed the wrong thing too hard. Maybe you can save the money, but if the services fall over, that is not what you are trying to achieve.
They were also concerned about how to manage the process, and how to secure Cabinet approval.
What do you actually do? How do you manage a spending review? How do you secure Cabinet buy-in? The Treasury had been running spending reviews for years, so a framework was already in place, but handing cash out and taking it back in have a very different feel. We looked at those micro-processes and in particular, how do you secure agreement from the government as a whole? We looked at how this was done in the 1980s and 1990s. In the 1970s it was discussed for days and days and days in Cabinet. There wasn’t any way the coalition government was going to do that again.
The processes that the Treasury has developed, and the ways in which spending is described and controlled, have changed over time.
Recent history helps you understand that, and also why we have the spending framework we have today. The spending framework that we had in 2008 was put in place in 1998, after the Labour government took office. Most people in the Treasury had not operated under any other set of rules and did not really understand their strengths and weaknesses, or why we had them and which bits were really important.
Although the spending framework that was applied in 2010 had essentially been developed in 1998, the underlying rules went back much further. They had often been first created or amended following previous financial crises.
Spending rules were changed very substantially in the 1970s after the IMF crisis, and again in the 1980s and again in the 1990s with fiscal consolidations. Understanding that history was important for staff at the Treasury who had to manage the process. And it was even more important for a new government that hadn’t created the rules and didn’t have any particular ownership of the framework. We had to be able to say to the Chancellor, George Osborne, these are the things that you really need to do, because this is how you run a spending review. You should make this decision first, then this decision and then this one; because this is what worked in the past and this is our experience of what works and why it works.
The government was not going to fundamentally change the spending framework in 2008. It had been invented by Gordon Brown and Alastair Darling who was Chief Secretary to the Treasury at the time. They owned it. They weren’t going to start again. But in 2010, a new government could have changed the rules. We had to explain to them what the rules were and which bits really mattered, and whether they should change them or not. We had to help them understand what really mattered, how we had got there, and why it had been set up this way or that way.
The historical precedents complemented other types of evidence.
We also had international evidence. For all of these things, we were looking internationally as well. We looked at quantitative measures, how fast can you go? How fast can you reduce the deficit? This is partly political, but it is also an economic question; what is a sensible way to go about it to minimise damage to the economy. So it was helpful to have some sense of the pace of consolidation in earlier periods of fiscal consolidation in the UK, and also in other countries that had been through a similar process. We looked at how they had done this in Canada, for example, where they had an independent process, and how they had done it in other countries.
In the official’s view, probably the most valuable aspect of learning from the history of previous periods of fiscal consolidation, at home and abroad, was that it helped staff at the Treasury responsible for implementing the review prepare for a task he knew would be difficult, on a personal level as well as technically and professionally.
We had a bunch of people who we knew had to go through a process that was going to be quite hard; that involved advising ministers to make difficult decisions about taking money away from people and services, and doing things that were going to be unpopular. You’ve got to be ready for that. The experience of listening to people talking through how they had done it before, what had gone well and what had gone badly, and how they persuaded ministers to do things they might not have wanted to do. That helped people. You can’t easily show any of that. But I think it did help people think their way into the role, and think about how they were going to get through the day.
And as in all of life, no evidence is entirely neutral. Most people have a point of view. In social sciences evidence is never clean cut. At the end of the day politicians are making choices. Spending is a negotiation. It’s harder to negotiate people down than up, so you want your negotiation team to be ready for that.
In conclusion, he commented that:
The UK has had these kinds of public spending problems before, but we are generally quite good at getting out of them. And that is why the history is useful, because it is a repeat event. We had done fiscal consolidations in this country before. They had been reasonably successful, and we knew we could learn from that. Because of this very long but unusual period of economic and financial stability since the early 1990s, we didn’t have people who had experienced the history. We therefore deliberately went out to access the historical evidence, and bring the history back in to the building.
In Treasury jargon, each source of tax revenue is called a ‘tax head’. National Insurance Contributions (NICs), Income Tax and VAT are the three ‘tax heads’ which make by far the largest contribution to government revenues. Together they provide 58% of total UK government income.[5] NICs account for around 17% of tax receipts collected by the Government.
National Insurance was first introduced following Lloyd George’s ‘people’s budget’ and associated welfare reforms of 1908-1911, as a method of paying for new contributory state pension, unemployment and health insurance schemes. A further wave of reforms by the Labour Government after the Second World War changed the basis on which the tax was assessed and how it was used to pay for benefits and services. Further amendments in successive budgets added to the complexity over the following years.
The Office of Tax Simplification published a series of reports in 2016 recommending closer alignment between NICs and Income Tax, but the reports also identified around 80 differences between the two taxes, three of the most significant of which are: first, while Income Tax is assessed annually over the tax year on total income from all sources of employment, NICs are levied weekly or monthly, depending on the employee’s pay period; second, NICs are assessed separately for each job, so unlike Income Tax, the threshold below which no tax is payable applies for each additional job an individual takes on; and third, links between the total number of contributions paid and entitlement to benefits – such as the state pension – derive from the origin of NICs as an insurance scheme, rather than a tax paid by all. The complexity of NICs makes it difficult to introduce any changes, let alone fundamental reforms.
Understanding the origins and history of the tax is essential when considering options each year for budgets. Over 200 people work on tax policy at the Treasury and most of them will contribute to policymaking in the run-up to a budget. The official explains that the starting point of any tax decision is often the Government’s overall fiscal stance, as set out in its fiscal rules. For example, that the government deficit for the year should be no more than so much, which may require raising so much in revenue. The tax policy teams then formulate various options to achieve this in the manner that best supports the Government’s wider fiscal and economic objectives, and consider each option in detail.
The history that’s needed to help assess the options and inform a decision is quite precise, and concerns specific targeted policy options.
Ministers find it useful when considering these kinds of issues to understand how it was done in the past, for example what balance was struck between Income Tax, VAT and NICs.
The factors the policy teams need to consider include the impact of any tax changes on public finances, the wider economy and the labour market. Historical evidence is of greatest value when reviewing big strategic decisions: for example considering the impact on the overall distribution of income if a significant amount of money is raised from one particular tax head, such as Income Tax, VAT or NICs. To analyse the various options in more detail, the official and his colleagues use economic models developed by HMRC, alongside the Treasury’s own in-house economic model, which is based on historical data compiled by the OBR, the Office of Budget Responsibility, (which is in itself another example of the use and application of history to political decision making). Historical precedents can help expose the significance of particular options, and highlight choices and trade offs for the different options under consideration.
Our role as Civil Servants is to understand the implications of any proposed policy changes, assess possible options, and be prepared beforehand for questions from ministers, and for issues before they arise and become critical.
It can help politicians understand the implications of a particular decision if they are told, for example, ‘a previous politician from the same party did something similar’. History helps to bring out the context – especially what was the state of the economy at the time earlier decisions were taken. Also what was the parliamentary position at the time and the size of the governing party’s majority. How a decision is communicated in Parliament and justified to the public are important issues for politicians.
For example, no Conservative Chancellor has raised the basic rate of Income Tax since the end of the Second World War.
What they have done is change the thresholds, and raise VAT and NICs. Ministers are interested in what the rationale was for earlier tax increases, or occasionally, decreases. They also want to know whether any proposed measures are consistent with their party’s broader aims and philosophy.
These types of issues illustrate the type of thinking within the department as the strategy for the next budget is considered. They are rarely cited in papers that go to ministers, although they could be if appropriate; for example we might say ‘No-one has done this before’ or ‘This would be historically significant.’
As an example of a relevant and useful historical precedent for his own work, the official refers to the decision in Gordon Brown’s 2002 budget to raise NICs, following a review of NHS funding and performance by Derek Wanless, a former banker. The official comments that:
Exploring the history of the 2002 decision to raise NICs was useful as it showed the length of time that was required to build support for significant policy change. It also demonstrated which issues were of greatest relevance, and how the government gained acceptance for a particular principle or strategy, and squared the need to raise revenue with the public and in Parliament.
In his view, the use and application of history as a tool for policy making is still probably the exception in the Treasury rather than the rule. However, in his own work, he is trying to bring a historical perspective to his team and generally support the idea that history can be used as a policy tool, especially in the current context of a difficult parliament. The series of seminars on ‘Important Budgets of the Past’, for example, was one way of achieving this. The two seminars he personally found of greatest benefit were firstly, one on the 1970s budgets following the IMF crisis, and secondly, a talk by Professor Martin Daunton on Gladstone’s 1853 free trade budget:
In Gladstone’s view, tax policy was not a scientific exercise, or just a way of raising money for the government; it should help create a unified society and balance different interests. He delivered his 1853 budget as if he was making a moral judgement on society, almost like a sermon. The seminar made me realise that budget making is as much an art as a science and Gladstone’s take on the issue was not very different from how most politicians look at it today.
In this section of the case study, three civil servants who attended the course at King’s College London on ‘The Treasury and Economic History since 1945’ discuss what they learned from the course and how they have made practical use of historical methods and a historical approach in their daily work.
One of the officials joined the Treasury straight from university, after studying history for her degree. She attended the course in 2016, towards the end of her first role at the Treasury, and since then has moved roles twice.
As well as furthering my economic knowledge and skills, and my understanding of the history of the post-war period and the Treasury’s role in the British economy, the course equipped me further with two things: history as knowledge, but also history as practice. I can see parallels between what a historian might bring to the table and what I do in my day-to-day policy work. So for instance, in a policy issue it is important to look at perspectives. What did we do last time in this policy area? Was it effective? Should we do it again? What have others done, internationally for instance? Secondly, considering the evidence. Is the evidence in front of me robust enough to justify the conclusions? Thirdly communications. Making sure that what I’m doing is clear and can be understood by others.
I found it really valuable to look at the root causes of things, and to see things from different perspectives. Historical practices like that influence me in my day-to-day work, helping to provide some organising thoughts for how I approach policy problems.
In her role at the Treasury, she and her colleagues are often asked to review a business case or spending proposal from another government department.
Part of our job at the Treasury is to provide fair and effective challenge, and it is helpful to look at the case and think, what assumptions are underlying that analysis? The strategic piece presents it this way, but what have other countries done? Could it be done a different way?
I find it helpful to think about what assumptions have been made, or if the same piece of evidence could be used to make two opposing arguments.
In the official’s current role, working on digital infrastructure policy, exploring the best and most effective way to achieve the government’s aim of delivering full fibre broadband, across the UK, she found it helpful to refer back to earlier initiatives.
About ten per cent of premises in the UK are unlikely to be commercial for the market alone to deliver full fibre broadband. To meet our commitment to a nationwide network, additional support of some kind is required. A key question for the Treasury, working together with the Department for Digital, Culture, Media and Sport, is, what is the best way to provide such support? Looking at previous programmes and policies, such as the UK superfast broadband programme (announced in 2010-11), is really instructive in thinking about how you might want to do it.
She also looked at what other countries had done.
Soon after I started my current role on digital infrastructure, the government published its review on future telecommunications infrastructure, led by the Department of Digital, Culture, Media and Sport, with whom we worked closely. Part of the analysis was looking at what other countries had done to deliver full fibre broadband.
In her view history is valuable because it helps provide perspectives, which allow her to test arguments, consider possible solutions for policy issues and provide an insight into how policies are perceived by others, especially by politicians and the general public.
Perception is something I am really interested in, because I am a historian. Economics is incredibly important, but so is an understanding of how people will actually think about the policy issues we are considering and working on every day.
A second official who attended the course works in the GDP (Gross Domestic Product) and Inflation Branch in the Economics Group at the Treasury. The role of the group is to analyse and try to explain the reasons for key trends in the UK economy and so inform policy making across the Department.
One of the particular concerns of the group is the relatively low level of productivity in the UK, which is around 20-30% below that of other major developed countries. Productivity is important as it enables businesses to pay higher wages and make greater profits. This increases tax revenues, but also leads more generally to improved living standards and economic well-being, which is one of the Treasury’s objectives.
The UK was the global productivity leader in the nineteenth century, before it was overtaken by the US around the start of the twentieth century. Since then, productivity has been higher in the US than in the UK and most other developed countries. In the 1970s and 1980s the UK and other countries were generally catching up with the US. However from the mid 1990s this was no longer the case and while UK productivity continued to grow in absolute terms, it declined relative to the US. To make matters worse, while US productivity grew strongly throughout the 1990s, possibly due to high levels of technical innovation, from 2007 onwards US productivity grew more slowly, and UK productivity growth slowed considerably in absolute as well as in relative terms. Wages and tax receipts in the UK, which generally follow productivity, showed a similar pattern.
The reasons for the relatively low levels of productivity in the UK since the 1990s, both in absolute terms and compared to the US, are not fully understood, although many theories have been advanced to account for this. Following best available advice and trying to help where it can, UK governments have promoted various policies designed to achieve greater productivity growth, including investment in economic infrastructure, research and development, and technical innovation. The focus on technical innovation led the official and his colleagues to ask when was the last time that the UK government had an explicit and high profile objective to promote technical development. As a result they decided to explore the ‘White Heat of Technology’ initiative of Harold Wilson’s Labour government in the 1960s and invited two academic experts, David Edgerton and Jon Davis, to give a seminar on the subject to staff at the Treasury.
We were interested in the internal mechanics of government, as much as what particular technology was promoted or what was the impact of the government initiatives on the wider economy, which given the passage of time is impossible to measure with any degree of accuracy. We learned that the reasons for promoting technology in the 1960s were as much to do with the political imperatives of the Labour Government, as for any inherent economic benefits.
In this particular case, the historical precedent was almost a cautionary tale, highlighting the importance of political as well as economic issues. But learning about what had happened in the 1960s, and why, still helped the team clarify and refine their thoughts on possible options open to the government today, to intervene in the economy, promote technical innovation, and take positive steps to improve productivity.
The historical input provided context, rather than any specific lessons. We understood a little more about the challenges which make promoting technology through government initiatives very difficult. It helped to explain how we got where we are now, and clarified some of the limitations and constraints under which we work.
A third official who attended the course now works on economic aspects of the government’s migration policy. When he took part in the course, he was working on devising a strategy for the Government Economic Service, the cross-departmental grouping of economists in the Civil Service, and the essay he wrote for the course was on the role of the economist in the Treasury from 1945 to the present. He commented that:
As I was relatively new to the Treasury at the time, the course was a way to learn a bit more about the Treasury as an institution and help get a sense of what our role in the UK economy had been over the past few decades. It fitted quite nicely with what I was thinking about in the day job.
It forced me to go out and do some research. Before the war, the government didn’t really actively manage the economy and the Treasury didn’t have economic growth in its remit. That only came later. It was all about managing public finances and that was it.
In 1945 there were no economists in the Treasury … apart from Keynes, who died. It was only in the 1950s that the Treasury started recruiting permanent civil service economists, rather than secondees from academia. The role of the government economist then changed from the person in the corner looking at the stats, totally divorced from policy, to where it is in the Treasury today. People do joint policy and economics type jobs. You are supposed to know a bit of economics to do your policy work properly, and economists are supposed to know what the policy implications are, so they can do their economics work properly.
As one specific example of the value of exploring ‘what happened last time’, he refers to three large-scale economic analyses that were compiled by the Treasury, the first in 2003, on whether Britain should join the Euro, the second in 2014 ahead of the Scottish independence referendum, and the third before the EU referendum in 2016.
Those were basically big set-piece pieces of analysis where the economics was very influential. I wasn’t party to the discussions, but I think we can assume that the first two of those interventions were successful from the Chancellors’ point of view at the time, and that probably informed the approach taken ahead of EU referendum. However, unlike the earlier two, the result did not go the then Chancellor’s way.
More recently, the government published another analysis outlining the impacts of different Brexit scenarios on the UK economy, ahead of the Meaningful Vote. It was arguably drawing on the same playbook as before, even despite an apparent increase in scepticism over the impact of such analyses since 2016. Nevertheless it suggests that this quite a persistent mode of operating. As a professional economist working in the field of public policy, I think it’s important and helpful to understand the way these set-piece economic analyses were used in the past to try to shape the debate.
In his current role looking at migration policy, the official decided to apply a historical perspective and learn more about the government’s decision not to apply transitional controls on migration to the UK from Poland, the Baltic States, and other Eastern European countries, after they joined the EU in 2004. He commented that:
Exploring what happened then was quite informative when thinking about post-Brexit migration policy and the free movement of people.
A former King’s postgraduate student was doing a project looking at that very question: what was the Treasury’s role in 2004 when the decision was made? So I worked with the student, going through papers in the Treasury’s archive material, trying to find things that were important for our current work.
It was incredibly instructive. I could see the economic analysis that was done then and it was reassuring that we had come on in leaps and bounds in terms of the sophistication of our models. But I think it also gave me a bit of humility over our own work, modelling what might happen post-Brexit. That helped with trying to communicate the degree of uncertainty around our analysis.
It was clear that the political environment around migration was very different in 2004, and the policy debate did not factor in a consideration of how increased migration might affect how the EU was perceived in Britain.
We could see how the Whitehall politics played out then. The environment in which the issue was discussed was very pro-migration. It would have been incredibly impressive if someone had been able to look ahead and think about what it could mean for our membership of the European Union. But with the benefit of hindsight it is now very easy to draw the links.
To summarise what he learned from the course and the value of applying a historical approach to his work at the Treasury, he concluded that:
One of the things I’ve found myself doing in my current job is just trying to find out what we did last time instinctively. It sounds obvious, but because turnover here is so high, most people don’t think about it.
[1] ‘Suzannah Brecknell, ‘“History repeats itself” – ex-Treasury boss Nick Macpherson on why institutional memory matters’, Civil Service World, 30 September 2016. https://www.civilserviceworld.com/articles/feature/“history-repeats-itself”-–-ex-treasury-boss-nick-macpherson-why-institutional
[2] Ibid
[3] Ibid
[4] https://thestrandgroup.kcl.ac.uk/teaching/the-treasury-and-an-introduction-to-economic-history-in-partnership-with-hm-treasury/
[5] Office of Budget Responsibility, Economic and Fiscal Outlook – March 2019. Based on 2017-18 tax year outturn data.
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