Developing

Chaos at the heart of government: Is the Treasury fit for purpose?

By Ian Dunt

A damning new report on the performance of the Treasury has found its own accounts are "impenetrable" and it cannot explain the results of £375 billion spent in quantitative easing.

The public accounts committee report raises serious issues about whether the Treasury is fit for purpose, amid a bruising austerity programme and a flat-lining economy.

"Measures are characterised by a lack of goals and intended outcomes, with no means of monitoring progress," chair Margaret Hodge said.

"Throughout, the Treasury seems to be embarking on a series of expensive experiments, indemnified with taxpayers' money."

"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."

Staff turnover at the Treasury remains very high and threatens its ability to respond to a future banking crisis, but the government still plans to scrap another third of its workforce, MPs found.

Furthermore, they raised concerns over the missing £66 billion of shares in RBS and Lloyds owed to taxpayers and the failed attempt to stimulate economic growth through new lending.

"The Treasury has not convinced us it understands either the risks it has taken on by indemnifying the Bank of England against losses on quantitative easing or the expected economic benefits," Hodge said.

"Some £375 billion has so far been injected into the economy as an 'experiment' but the Department could not explain to us what the effect has been on the whole economy or on different parts of society."

George Osborne is under pressure to unveil a new plan to bolster the flagging economy in next month's Budget, although Ed Miliband's announcement of a new 10p rate of income tax may have stolen one of his more tempting proposals.