Out of the shadows and into the Treasury

A sure sign of a successful civil servant is near-anonymity while maintaining
a shadowy presence behind a political master. The new permanent secretary to the
Treasury, Nick Macpherson, has worked in the lee of Gordon Brown for eight
years, playing a key role in the chancellor’s major reforms. But outside the
tight-knit world of Whitehall, Macpherson remains an unknown quantity.

The 49-year-old Etonian, who was announced as permanent secretary last
Tuesday, is very much the archetypal civil servant, only recently abandoning his
trademark bow ties.

He worked closely as cabinet secretary with his predecessor Gus O’Donnell,
who this month became the country’s most senior civil service mandarin, and is a
key part of Gordon Brown’s dream team.

Few know what qualities Macpherson will bring to the job, but his 20-year
career at the department, paired with his reputation as a man with a tight grip
of finance, could prove crucial as public spending tightens and the economy
starts to slow.

With a hand in several of the chancellor’s policy reforms over the past eight
years, Macpherson will enjoy an advantage that most mandarins don’t have – a
broad and established knowledge of the Treasury’s work.

He joined the civil service in 1985 and eight years later became principal
private secretary to chancellor Kenneth Clarke. In 1997 he managed the
transition from the Conservative government to Labour, and remained as Brown’s
private secretary until he was appointed as director of welfare reform a year
later.

Macpherson then became an established part of Brown’s inner circle and was
behind the chancellor’s early changes to the benefits system, including the
introduction of welfare-to-work and the integration of the tax and benefits
systems.

In 2001, he was moved to head up the department’s public services directorate
– an area that became a key election battleground.

He is understood to have played a central role in introducing Labour’s
performance and targets culture for public services, and as the accounting
officer for the government’s contingency fund, he kept a tight grip on
departmental overspends.

Macpherson was also on the advisory board of the seminal 2002 Wanless Review
into health spending, which led the chancellor to increase national insurance
contributions in a one-off hike.

The former accountant with Peat Marwick also played a central role in the
government’s current efficiency drive, which aims to save £21.5bn by 2008, and
coincided with his promotion to managing director of the budget and public
finance directorate last year.

With economic growth predicted to slow to 2%, rather than the 3% to 3.5%
predicted by the Treasury this year, and concerns over a £10bn black hole in the
public finances, Macpherson will not have an easy ride as permanent secretary.

Brown has already postponed the spending review until 2007 and is likely to
draw on Macpherson’s past experience to tighten government spending further. The
permanent secretary has also pledged to make the Treasury a more outward facing
and professional institution, amid accusations that the department is a tight
cabal that rules Whitehall.

Macpherson’s days in the shadows may already be over.