George Kerevan: Nick Macpherson's quiet but calculated sabotage of the democratic process

Sir Nicholas is infamous for publishing – of his own volition, he claims – the letter of advice he sent to Chancellor Osborne at the height of the Scottish independence referendum campaign. In this letter, Macpherson rubbished the idea that a UK Government would accept sharing a common currency with an independent Scotland. He implied that Alex Salmond was misleading the Scottish electorate by saying David Cameron was bluffing in this regard. (Sir Nick seems to have forgotten that Alex Salmond wasn’t bluffing either, when he said an independent Scotland would refuse to take any of the Treasury’s debt liabilities if a common currency was rejected.)

It is unheard of for a senior civil service mandarin to enter the political arena so brazenly. Asked if civil servants were not meant to be independent of party politics, Sir Nick gave the game away in a recent interview. No, he said, civil servants were not independent. Rather, they served the government of the day. He might have added: and if the government hasn’t the balls to put in the political boot, then the Treasury will do the job.

This is where any democrat, north or south of the Border, should start to get worried. At a lecture last year, held at Kings College in London, Macpherson elaborated on his doctrine of civil service political intervention. He said that in such an “extreme” case as the independence referendum, in which Sir Nick believed “people are seeking to destroy the fabric of the state” and to “impugn its territorial integrity”, the normal rules of civil service impartiality simply do not apply.

Macpherson has a vision of the British imperial state and sees himself and the unelected civil service as its guardian. Politicians may come and go, but the state – and the Establishment and City interests it guards – is another matter altogether. Anyone seeking to “impugn the territorial integrity” of the state or “destroy the fabric of the state” (it’s the same thing as far as Sir Nick is concerned) is the enemy within. And if the elected government of the day can’t protect the state from those seeking to “undermine” it (as judged by Sir Nick) well then the state (Treasury mandarins, MI5 and SIS, the BBC, retired colonels, etc., etc.) have a duty of care to step in.

Who is Sir Nicholas Macpherson? With his mop of unruly hair and soft accent, he comes across as a more human figure than, say, the caricature Whitehall mandarin of Sir Humphrey Appleton, in Yes Minister. Delve down, though, and you will discover that Sir Nick went to Eton and Balliol College, Oxford. He lists his clubs in Debrett’s as the MCC and the Athenaeum.

The Athenaeum, in Pall Mall, is the quintessential Establishment club – it allowed lady members only in 2002. If you’ve read Chris Mullin’s wonderful 1982 political satire, A Very British Coup, you’ll know the Athenaeum is where the Establishment (led by “fictional” MI5 chief Sir Peregrine Craddock) plots to undermine a left-wing, unilateralist Labour government – amazingly like the sort Jeremy Corbyn might lead.

OK, Sir Nick is so Establishment he could have been invented by central casting. But does that make him dangerous? Perhaps he’s just an old-fashioned guy with old-fashioned values? That would seem to be the consensus in government as neither David Cameron nor Nick Clegg had the chief secretary fired for publishing his letter denouncing the common currency. Nor did Labour object. In fact, while I was questioning Sir Nick at the Treasury Select, one of the Labour members kept interrupting in his support. That was Rachel Reeves, Oxford University and ex-Bank of England, whose husband is ex-Treasury. When I say Establishment, I mean Establishment.

However, mandarins such as Sir Nicholas Macpherson are very far from harmless. As Chris Mullin (a former Labour minister) puts it, the British elite are: “still mainly educated at the same handful of schools and universities and belong to the same gentlemen’s clubs and freemasons lodges...many of these people are, of course, professionals who would indignantly deny that their political affiliation would in any way affect their duty as public servants and I am sure, in many cases, that is true. I am equally certain that in many other cases it is untrue.” I have bigger beef with Sir Nick: his time at HM Treasury has been a disaster for the British economy. He was so fixated with the Scottish referendum that other things went by the board. He has waxed lyrical about the effort put in by the Treasury to thwart Scottish independence: “The project was run by a standing Treasury team of six officials, though during the course of two years’ work some 50 officials contributed to the analytic work”.

Yet during Sir Nick’s decade as head of the Treasury, UK government borrowing has doubled from 42 per cent of GDP to 87 per cent, productivity has flat-lined and last week the trade minister, Lord Maude, had to resign in disgrace after less than a year in the job, with the publication of yet another set of disastrous export figures. Under Sir Nicholas Macpherson’s reign at HM Treasury we have seen the biggest fall in potential output since the 1930s and the weakest recovery in modern times. Macpherson has been in post far longer than heads of the Treasury usually are.

But far from having a strategic or reforming focus, Sir Nick has hunkered down, defending the political status quo and preparing austerity budgets.

His final few months have been centred on the internal negotiations with the Scottish Government over the post-Smith fiscal framework. True to form, he has used these negotiations to squeeze Scotland financially.

By letting Sir Nick Macpherson get away with intervening openly in a major political situation, the main Unionist parties have created a dangerous precedent. Sir Nick may be gone – in as much as Establishment figures ever actually go. But in some other referendum, or General Election, or political crisis, we will see the head of HM Treasury, or even the Cabinet Secretary, make a dramatic intervention to “save” Britain from the elected politicians.

At the end of Chris Mullin’s prophetic novel, civil servants, BBC chiefs and newspaper proprietors meet at the Athenaeum to celebrate the ousting of Jeremy Corby…sorry, Prime Minister Harry Perkins. The anchor of the BBC Radio Four breakfast programme says: “Been nothing quite like it since the night Allende was overthrown in Chile”. A top newspaper boss disagrees because the political defenestration has been carried out “without tanks on the street”. In fact, he says, “It was a very British coup”. Just like Sir Nick’s quiet but calculated sabotage of the independence referendum.