Liz Truss’s government has axed the top civil servant at the Treasury as part of sweeping changes in economy policy.
Sir Tom Scholar announced his exit as permanent secretary at No 11 on Thursday, saying Ms Truss’s chancellor Kwasi Kwarteng had decided it was time for “new leadership”.
Ms Truss had repeatedly railed against “Treasury orthodoxy” during the Tory leadership campaign as she promised tax cuts despite warnings from rival Rishi Sunak that they could fuel spiralling inflation.
Sir Tom had worked under Labour PM Gordon Brown as the Treasury’s second permanent secretary in the aftermath of the banking crisis, and was the top civil servant when Mr Sunak rolled out the furlough scheme during the Covid pandemic.
In a pointed reference to the energy crisis, Mr Scholar said he wished his colleagues at the department “all the best for the times ahead”, adding that he would be “cheering on from the side lines”.
Lord Macpherson, who previously held the top role in the department, condemned the move – saying the top mandarin’s experience would have been “invaluable” in the coming months.
“Tom Scholar is the best civil servant of his generation,” he said. “Sacking him makes no sense. As Gordon Brown used to say, ‘They’re not thinking’.”
There has been concern about how radical so-called “Trussonomics” is going to be, with some economists warning that her tax-cutting focus resembled Tory prime minister Edward Heath’s “dash for growth” in the early 1970s.
Ms Truss condemned the “orthodoxy” of the Treasury during the leadership campaign, and said the opinions of many leading economists had failed to deliver growth. “We need to do something different in order to get growth going, in order to put money in people’s pockets.”
Asked to name leading economists who agreed with her, Truss named the right-wing Brexiteer Patrick Minford – who forecast in 2017 that a hard Brexit would boost Britain’s GDP by 6.8 per cent, or around £135bn a year.
Ms Truss said last month that a recession was “not inevitable” and there had been “too much talk” about the prospect. But Bank of England governor Andrew Bailey said on Wednesday that it remains the “most likely outcome” for the UK economy.
Sir Tom’s sucessor will be appointed shortly, the Treasury said. Beth Russell, director general of tax and welfare, and Cat Little, director general of public spending, will lead the department as acting permanent secretaries in the meantime.
Mr Kwarteng said Sir Tom had helped steer the Treasury through “many economic challenges” and leaves the civil service with “the highest distinction”.
It comes as Ms Truss set out her plan to cap annual household energy bills at no more than £2,500 as part of a two-plan to subside energy suppliers extra wholesale costs through extra government borrowing.
No 10 has refused to put a cost on the scheme, which some have estimated to cost up to £150bn. The Institute for Fiscal Studies (IFS) think tank’s deputy director Carl Emmerson said it could amount to more than £100bn in the first year alone.
Ms Truss said she would not “give in” to Labour’s calls for a new windfall tax on the soaring profits of energy and gas giants to pay for a reduction in bills.
Sir Keir Starmer said the PM “wants to leave these vast profits on the table, with one clear and obvious consequence – the bill will be picked up by working people”.
Keith Anderson, who leads ScottishPower, said the announcement had “taken away a huge amount of worry” customers. “Hats off to the government, they have made a big, big intervention,” he said.
The ScottishPower chief said it is not the end of the energy crisis. He said the policy “buys us two years to go and fix a whole load of problems” – urge the government to “go hell for leather” in investing in renewables.
Mr Anderson added: “The next one is going hammer and tongs at energy efficiency. You have a two-year window now to do a massive roll-out programme, properly insulating homes and helping people save energy and save money.”
The cap of £2,500 will not be enough to save as many as 2.2m families from being forced into fuel poverty this winter, the National Energy Action (NEA) campaign group warned.
Among the charities calling for more targeted action for the poorest families, Citizens Advice warned that energy bills will still be “sky high” this winter, and would leave many families were still struggling with terrible choices between heating or eating.
