Deputy dogged by past

At the start of the year, Sir John Gieve walked into one of the most
significant financial roles in the country. As deputy governor of the Bank of
England, and a member of the interest rate-setting monetary policy committee,
his influence over the UK economy should not be understated.

But concerns will no doubt be raised over Sir John’s appointment to such a
lofty position after it emerged that the government department he left in order
to join the Bank was in financial chaos.

Sir John had until recently held the position of permanent secretary at the
Home Office. As such he was responsible for its accounts and £13bn budget, which
were last week hauled over the coals by the National Audit Office.

The body delivered a stinging criticism on the state of the Home Office’s
finances, refusing to sign off the department’s 2004/05 accounts.

The NAO concluded that proper accounts had not been kept, and what had been
presented to them was riddled with inconsistencies and handed in 10 weeks’ late.

The accounts were described by one insider as being in a chaotic state,
although the introduction of a new computing system took a large portion of the
blame.

Managers were unable to balance the books, an investigation was launched
after more than £3m went missing and was eventually written off, while the Home
Office was also forced to make an adjustment of £946m to reconcile its cash
position.

The NAO’s refusal to approve the accounts led Public Accounts Committee
chairman Edward Leigh to criticise the leadership of the Home Office’s senior
management.

With Sir John presiding over such an embarrassing financial mess it is
perhaps not such a surprise that the role of permanent secretary at the
Treasury, which he had at one point been the leading candidate for, was
eventually filled by Nicholas Macpherson.

The Home Office financial crisis may also have been the catalyst for his move
out of government. Sir John had worked within various parts of Whitehall over
the course of 30 years, including stints at the then department of employment
and several roles at the Treasury. These included private secretary to the chief
secretary, press secretary and principal private secretary to the chancellor.

He eventually moved to a position at the directorate responsible for planning
and control of public spending and for improving productivity in the public
services, before transferring to the Home Office.

The Home Office has argued that a lot of work has been done at the department
to tackle the problems that the NAO raised, but it will not be enough to avoid a
good deal of flak coming Sir John’s way.

While his position at the Bank of England may not be under threat from this
stinging rebuke, he will no doubt have a long battle ahead to prove that what
happened at the Home Office was simply an aberration and to restore his once
shining reputation.

For more information on the Home Office accounts, go to
www.nao.gov.uk