George Osborne's plans to shrink the Treasury by 25% aren't as new as he'd have us think. He got all the headlines he wanted today, but in reality the Treasury was already planning to scale back.
The Chancellor wants to cut his staff numbers from 1,350 to 1,000 over the next four years. That sounds like a lot, but Treasury numbers peaked sharply in 2008-09 (to deal with the financial crisis), so he's cutting from an unprecendented high and will be cutting back to something much closer to normal.
Osborne is keen to present this as a big, exemplary cut of his own. He's acting tough, taking the lead, and encouraging his Cabinet colleagues to follow suit. Perfect Chancellor behaviour.
But, as Permanent Secretary Nick Macpherson revealed last year, the Treasury mushroomed from 1,100 in May 2008 to 1,400 in December 2009 - after importing hundreds of new staff to deal with the banking crisis.
In a speech at Oxford's All Souls College last December, Macpherson anticipated that staff numbers would start coming down in 2010. Here's the relevant bit from Macpherson's speech:
"We were quick to move staff into those areas under most pressure from late 2007, and deliberately chose to prioritise banking and macroeconomics. The Chancellor and I agreed last year that the Treasury would need to recruit more people. Staff numbers have recently peaked at a little over 1400 compared to 1100 in May last year. In the coming months, I would expect staff numbers to begin to decline, as some of the more intensive work in relation to the asset protection scheme abates."
So, the Treasury will indeed shrink by 25% - as promised by Osborne. But this is more like a return to normal, than a massive precedent-setting cut.
UPDATE, 6 Sep: See this FT story today, quoting Nick Macpherson's speech and picking up on my point that the Treasury was already planning to scale back
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