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The Treasury is one of Britain’s oldest, most powerful and secretive institutions. But all too frequently it has escaped public scrutiny when it comes to investigating the ups and downs of the UK economy. More often, it is depicted as a saviour, repeatedly rescuing the nation’s finances from the hands of posturing Prime Ministers, powerful special interests, and the combustions of world financial markets. It is a bedrock of government stability in times of crisis.
However, there is another side to the story. The Exchequer, more than any other institution, has shaped modern Britain’s economic system. In between the highs there have been many lows, from botched privatizations to dubious private finance initiatives, from failing to spot the great financial crisis to contributing to ever-growing regional imbalances and economic inequalities.
Davis’s book goes behind the scenes to offer an inside history of the Treasury, in the words of the chancellors, officials and civil servants themselves. It shows the failings as well as the successes, the personalities and the thinking which have shaped Britain’s economy since the 1970s. Based on interviews with over fifty key figures from the last five decades of Treasury life, it offers a fascinating, alternative insight on how and why the UK economy came to function as it does today, and why a paradigm shift and institutional rethink is long overdue.
through income from their own estates and through new taxes. The royal estates had shrunk since William the Conqueror held half of England, but they were still substantial enough to produce some £10,000–15,000 a year. Relatively little of this income came directly to the exchequer, but it provided the queen’s dower, households for the royal children and grants of patronage. Royal estates worth at least 20
Originally Brexit was going to be this book's punchline. It neatly marked the end of forty years of Treasury history, starting with one existential crisis for the institution and ending in another. It also seemed to mark forty years of the rise and fall of Britain's particular neoliberal experiment. The Exchequer had played a vital role in shaping that system, positioned as it had been at the centre of an intellectual and institutional nexus, connecting British elites from Whitehall to the City. But since the referendum, there have been
taxes in Ireland to a consortium of merchants headed by John Forth, an alderman and sheriff of London. 71 William and John Dashwood, both of London, were recruited with five others to raise finance in London to loan against these future taxes, and two further men were recruited in Dublin to organise the collections. Forth and the Dashwoods were prominent among the first investors into a new Royal Africa Company stock that opened in November 1671. 72 Ford arranged a bridging loan for the Irish exchequer
was not a practical idea, for, quite apart from policy differences, it depended on Grenville’s willingness to serve as a mere Chancellor of the Exchequer: he had refused to do so earlier under Bute, and would never now accept such a demotion.5 Chap 7 19/8/02 11:47 am Page 149 The Chatham ministry I (1766–1767) 149 Far from being a successful attack on the ‘factions’, the new ministry was soon opposed by all three of them, and ironically the only political group that dissolved was the one to which George III would not have affixed such a stigma, that hitherto
acquired financial expertise. The contrast between the dazzling and unpredictable Townshend and the sound, reliable North could hardly have been greater. Yet Townshend himself was among those who had discerned the talents of the man now to be his successor.2 George III at once instructed Grafton to offer the Exchequer to Lord North. The Duke later noted that this decision was ‘particularly satisfactory to me, as I knew him to be a man of strict honour: and he was besides the person whom Lord Chatham desired’, recalling the abortive attempt to replace Townshend by North
The story of today's Treasury starts back in 1976. That was the year when the department suffered the humiliation of a forced IMF bailout. An institutional identity crisis followed. Shock treatment was doled out and changes begun. The arrival of the Thatcher government in 1979 then traumatized the department again and a system overhaul was pursued at several levels. A radically reconfigured Exchequer then played a big part in implementing the new ideas of the 1980s. As this chapter argues, behind the big personalities