MPs criticise Treasury over 'expensive experiments'
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.
FREE Organic Lip Gloss. Treat your lips to some organic goodness...View details
Please go to www.uk.nyrorganic.com/shop/katewilson and browse my online shop for some fantastic award winning products. If you need any advise please email email@example.com or call 07717838577
Terms: Available whilst stocks last so get in quick! a randomly chosen colour will be sent with your order
Contact: 01579 550453
Valid until: Friday, May 31 2013
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The initiative had now been superseded by the Bank of England's more generous Funding for Lending scheme.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 chair 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."
The Labour MP said the support provided to banks during the credit crunch had helped prevent the banking system from collapsing.
"We are pleased that the Treasury has successfully withdrawn nearly all of the taxpayer guarantees to banks. But the taxpayer still owns some £66 billion of shares in RBS and Lloyds, a sum which is yet to be recovered," she said.
"The Treasury has not convinced us it understands either the risks it has taken on by indemnifying the Bank of England against losses on QE or the expected economic benefits.
"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.
"The Treasury's attempts to stimulate economic growth through new lending have, so far, not been successful."