The UK constitution and Nick Macpherson’s letter on a Scottish Currency Union

Yesterday [13 Feb 2014] was a big moment in the  life of the UK constitution.  As part of an all party media campaign to communicate that no possible future UK government would agree to a currency union with a putative independent Scotland, contrary to the decidedly fishy assertions of Salmond and Sturgeon, the Coalition government released a letter of advice from the top Treasury civil servant, Nick Macpherson, reflecting on a Treasury paper on the issue, and himself advising that no such currency union should be entered into.

The letter is a tour de force.  There are many difficult issues bound up in whether this is a good idea or not, as all the ink spilled examining the euro area crisis proves, but this letter nails them in a few elegant and devastating paragraphs, making my own blogs on this look like Heath Robinson contraptions.

But the letter does raise some important constitutional issues, and I pounded away at that in a series of tweets last night.  The point has been made by others, so there is no special insight here.   But, to summarise.  It’s unusual for the civil service itself to disclose its advice in public.  What criteria should the Government use to decide?  How do the Government devise a framework to decide such a matter, to avoid making it look like what decided things on this occasion was simple political expediency (ie Nick agreed with George)?

If the criterion was that it was a very important issue (it certainly was an important issue) then on what other important issues can we expect public advice from Nick Macpherson, or his successors, or peers in other spheres of policy?  For example, as Alex Salmond himself quipped, what did Nick Macpherson think about the pros and cons of the UK exiting the EU?  Or what might he think of the prospects of arriving at a renegotiated settlement?  What does he think about the Bank of England’s new forward guidance framework, as a response to the Treasury request to consider it?  What did he think caused the financial crisis, and has enough been done to stop another?  Are we to expect senior civil servants to disclose their views about important military ventures?  For example, what did they think about UK involvement in Iraq or Afghanistan?  What does Nick Macpherson think about Help to Buy?  [The subject of a Faisal Islam tweet].  What did he think about the allocation of spending cuts in the Coalition austerity plan, for example, in the light of the controversy over the resources devoted to flood defence?  Does Nick Macpherson think enough is being done to tackle youth or long term unemployment?  Does he think, for example, that the automatic stabilisers are doing enough stabilising?  What did he advise on the creation of the Office for Budget Responsibility and what does he think of its performance subsequently?  Did Nick Macpherson agree with the Tory perspective that Labour’s fiscal policy was imprudently loose under Gordon Brown?  How does Nick Macpherson view the strategy the Treasury have used to deploy their shareholder influence over the Banks they control after the equity injections in the crisis?  What is his view on the trade-off between the need to cure senior financiers of greed and avarice, and the need to staff those banks with the best and brightest?  What did Nick Macpherson’s deputy think about the Scottish currency union?  Dave Ramsden is the Treasury’s senior point man on macroeconomics.  What does he think about it?  Can we see what he wrote too?  How was Nick Macpherson appointed?  Can we see something to allay worries that he might have been appointed because of a shared vision with the Coalition, (in which case his apparently independent advice on Scottish matters might be seen to be less independent)?

I am all for a new era for the civil service, in which their talents are exposed and exploited in this way [Nick’s letter, and the HMT paper, are of the highest quality].  It will help hold Governments to account;  help even out the inequality in analytical resources between an incumbent government and the opposition;  and, I think, focus policy decisions on technocratic rather than populist grounds.  But the framework itself within which what advice is exposed in this way needs to be made explicit.  And different areas of government policy treated even-handedly.  Otherwise, the civil service will fall into disrepute, and there will be larger pressure for those in the most senior or sensitive jobs to rotate, Washington-style, when a new Government comes into office.

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One Response to The UK constitution and Nick Macpherson’s letter on a Scottish Currency Union

  1. stone100 says:

    To my mind the political bias comes in the form of the UK treasury only pointing out how a currency union would be bad rather than the treasury giving constructive suggestions for how Scotland could adopt its own currency and the outstanding UK treasury debt be dealt with in that event. I don’t think the debt issue need be a show stopper. I had a go at a post about how the debt could be dealt with:
    http://directeconomicdemocracy.wordpress.com/2014/02/17/lets-be-constructive-about-currency-and-debt-arrangements-for-an-independent-scotland/

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