The Treasury’s unwillingness to share key analysis across Whitehall departments led to “problematic” Government decision-making in response to Covid-19, a report has found.
The assessment by the Institute for Government (IfG) think tank said the Treasury had “excelled” in delivering “broadly successful” economic support schemes during the pandemic, but added its “secretive” approach at times hindered effective action.
This approach was said to be due to the Treasury being “scarred” by previous experiences of publishing analysis, particularly during the 2016 referendum campaign, leading to information being withheld from other Government departments.
The report cites analysis published by the Treasury when George Osborne was chancellor in April 2016, which set out a grim economic outlook if the UK left the European Union and was condemned by Brexiteers as part of “project fear”.
The IfG said this lasting sensitivity to criticism led the Treasury to limit engagement with external experts and veto proposals to establish a structure similar to the Scientific Advisory Group for gathering social and economic evidence.
The crisis also highlighted existing areas of weakness, particularly in the Treasury’s approach to conducting and sharing technical analysis— Gemma Tetlow, Institute for Government chief economist
This meant the more transparent scientific evidence was channelled into decision-making without a clear picture of other analysis of complex trade-offs.
The report – The Treasury during Covid: What lessons can be learned from the pandemic? – was based on more than 50 interviews and private discussions with current and former government officials and experts.
It said there was a lack of Cabinet Office structures in 2020 to co-ordinate analysis-sharing across Whitehall departments.
This resulted in departments sharing evidence “strategically”, with the Treasury focused on supporting then-chancellor Rishi Sunak to make the economic case for measures and interventions.
The IfG found this helped to perpetuate a “tug-of-war” between the Treasury and health policy-makers in autumn 2020 which fuelled questionable decisions.
For example, the report found an “optimism bias” informed the Treasury’s Eat Out to Help Out scheme, which was out of step with the scientific advisers’ assessment of the risk of a second Covid wave in the summer of 2020.
The creation of a Cabinet Office team to share analysis across government towards the end of 2020 was found to have had a “major positive impact” on decision-making as ministers had access to a common evidence base.
The IfG said the Treasury, like many other departments without a health focus, was not prepared for the pandemic even though they were supposed to have plans in place – albeit based on the risks of a major flu outbreak.
However, the IfG praised the Treasury’s performance in the early phase of the crisis.
“The need for quick, novel thinking played to the Treasury’s strengths. It has a bright, capable, enthusiastic, flexible and generally young workforce that responded well to the need for new thinking and rapid action,” it added.
The IfG said many of the subsequent problems identified on analysis-sharing stemmed from “long-standing features” of how the Treasury operates.
Gemma Tetlow, IfG chief economist, said: “The pandemic brought out both the best and the worst in the Treasury.
“Officials and ministers rose to the enormous challenge of dealing with a crisis of previously unimaginable proportions, preventing a huge rise in unemployment and widespread business failure.
“But the crisis also highlighted existing areas of weakness, particularly in the Treasury’s approach to conducting and sharing technical analysis.”
Olly Bartrum, IfG senior economist, said an effective pandemic response required the Government to consider a wide range of evidence to inform policy that balanced “complex interdependencies” between the spread of Covid and economic behaviour”.
He added: “The Cabinet Office lacked the structures to synthesise evidence effectively until late 2020.
“In that environment, the Treasury’s secrecy and inclination towards tactical sharing of information contributed to decision-making becoming a tug of war.”
By shining a light on the Treasury, we do not wish to imply that similar praise and criticism could not also be levelled at other parts of government— The Institute for Government
The IfG acknowledged that the Covid inquiry will examine the questions it raised, but warned it could take many years to conclude.
This means “memories would have faded and many of the officials and ministers involved will have moved on”.
The IfG said it focused on the Treasury because of the important role it played in the Government’s response, although it acknowledged other departments did too.
It added: “By shining a light on the Treasury, we do not wish to imply that similar praise and criticism could not also be levelled at other parts of government.”
In a series of recommendations, IfG called for the appointment of a “distinguished” external economist as a chief scientific adviser to the Treasury and the creation of greater incentives for staff to develop stronger technical expertise.
The Government should also ensure the Treasury is more “open and collaborative” with other Government departments and the Cabinet Office is strengthened to break down departmental silos, it added.
A Treasury spokesperson said: “During the pandemic the Treasury acted quickly to prevent catastrophic increases in unemployment.
“Without furlough and the other Covid support schemes, millions of people would have lost their jobs and their businesses.
“We take note of this report and will set out the Treasury’s position to the official Covid inquiry.”
