Coffee House

GOD isn’t good enough for Threadneedle Street

3 May 2012

When Gus O’Donnell was running the civil service, he was known by
his initials — GOD. It seems to have gone to his head. He says in this week’s House magazine
that he’s considering applying to be Governor of the Bank of England, and in the same interview exposes his failure to grasp modern economics by saying it would be dangerous to put income tax
back to 40p (which was the plan even under Gordon Brown).

It is striking that the technocrats like O’Donnell now want to run the show explicitly (as his endorsement of a civil service candidate for Mayor, Siobhan Benita, demonstrates). That Sir Gus
is even in the frame for the Bank of England job sends a dangerous message about the quality of candidates to succeed Sir Mervyn King, himself in denial about his failure to control inflation and
the asset bubble which was blown by his easy-money policies. What’s needed for the Bank of England is someone who actually saw the crisis coming, or can at least offer an explanation for it
better than that Sir Mervyn volunteered last night (‘A big Scot did it, then ran away’).

In the current issue of The Spectator, Martin Vander Weyer mentions Dr Allan Bollard, who has
just stood down as head of New Zealand’s central bank. He’d be a far better bet that Sir Gus, in that he appears in possession of a clue. Which is more than can be said for many of the
candidates being touted for Threadneedle St so far.

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Show comments
  • Downtown

    Dr Bollard has left New Zealand’s finances in sound shape, which is more than can be said for the central bank heads of many far richer and more powerful nations with reserve currencies. He actually knows that you can’t go on spending more than you earn for ever.

    As an aside, I wish we would stop talking about the “40%” tax rate. It is misleading. National insurance is a tax, and it adds 12% to that total, meaning the real rate is 52%.

  • canonalberic

    Surely the worst senior civil servant since the guy stretchered out of Chequers in 1973. Guaranteed however a small career as an anti-tory bogus “expert” on the BBC.

  • idle

    Deffo not the Barclays man. I have met Varley and he a very nice fellow. But he was the marginal underbidder for ABN AMRO and is lucky as buggery that Goodwin outbid him. He must go to sleep every night thanking his lucky stars for The Shred.

  • David Ossitt

    The Barclays man should get it.

    This chap; if melted down might make a half decent pot of glue.

  • The Engineer

    Sir Everard Digby
    May 3rd, 2012 2:51pm

    “The infinite monkey theorem states that a monkey hitting keys at random on a typewriter keyboard for an infinite amount of time will almost surely type a given text, such as the complete works of William Shakespeare.”

    The real problem wit this theorem is, that although probably true, it would require an infinite amount of time to scan through all the random text and discard an infinite amount of junk.

    Of course, this junk will contain an infinite number of texts which differ from the ‘target’ text (eg. Shakespeare’s works) by a single keystroke.

  • Boyders

    If we need someone who foresaw the crash, then there is only one candidate…

    Arise the one and only, the inimitable, the smug, the ghastly self styled business hater, the Vince Cable.

  • ButcombeMan

    GOD is remembered in the Civil Service as the man who wrote the over hasty, evidence free report, that joined together the Inland Revenue and HM Customs. Both worked reasonably well before GOD interfered (with the support of that economic madman G Brown). The consequent mess that is HMRC is widely seen as failing. It is losing top brass and compromised. It is in fact too large to manage.

    GOD at the Bank of England is a sick joke.

  • AR

    Typical weasel words on accountability below in which he deliberately misses the point. Yes, we want politicians to take decisions and yes we want them to be accountable for them (although we want them to have considerably more external help in arriving at those decisions), but then the civil service are responsible for implementation and want them to be accountable for their success or failure in delivery….

    “you can decide that you are going to give responsibility to civil servants or an independent body and let them get on with it or you can keep the accountabilities as they are and you basically make the decisions – in which case you’re accountable,”

  • Hayek was right

    His comment on the 40p was based on the OBR report

    ‘“What struck [me] was the – it’s buried away in a footnote – solution to one of the all times biggest problems that economist have faced, which is what’s the income tax rate which maximises revenue? And there it is, nobody’s mentioned it really, it’s there in a footnote: 48 per cent. That’s what’s there in the OBR report.”’

    I dont know if the OBR use a static or dynamic model for their Laffer curves (probably static) , but certain as hell our boy Gus doesn’t know if they do or the difference.

    His depth of economic knowledge is clearly of the easy airport reading variety, as this is worryingly lightweight

    “Lord O’Donnell is a big believer that economics should bounce back from the criticism over the 2008 crash and adapt. He says thinking about behavioural economics is a bit like thinking on climate change 20 years ago.
    “I think we risk throwing out the baby with the bathwater,” he says. “We need a new kind of economics or new public policy which brings in the things that Danny Kahneman is writing on psychology about how people actually make choices. “

    Yup, knows as little about economics as there is lack of rigour in the so called data of anthropomorphic climate change.

    Clearly Gus is someone persuaded by the best media operatives, not the best data and analysis.

  • Sir Everard Digby

    The infinite monkey theorem states that a monkey hitting keys at random on a typewriter keyboard for an infinite amount of time will almost surely type a given text, such as the complete works of William Shakespeare.

    To prove this,give him the job and see how long it takes him to come up with a workable economic policy. Or use a real monkey. If the theorem is correct,there would be no difference between the two.

  • The Crunge

    Ill prepared and without the experience to run anything so financially complicated as a coconut shy the breathtaking arrogance of such men leave mere mortals like me both astonished and terrified. His talent is for holding meetings, appropriating blame and collecting pensions paid for by productive people. Can I suggest that Cameron responds as follows: “We do not have time to consider the candidature of self-serving left wing people in search of further financial sinecures and kudos. We will be appointing a professional, well-qualified individual who can actually do the job”. The arrogance of the man!!!!!

  • Swiss Bob

    I heartily endorse all the above comments.

    Cameron should have fired his arse the moment he entered Downing St.

  • AR

    We’ve been here before we tried appointing a civil servant to the Bank of England before and it was a complete disaster. In 2006 John Gieve was appointed Deputy Governor for Financial Stability, apparently on the strength of his experience at the Treasury. He announced his resignation in 2008 after presiding over the collapse of Northern Rock etc…..

    The fact that O’Donnell is utterly unqualified for this role is clearly enough to disqualify, but the best reason is that he’d continue the process he helped start in No. 10 of focusing power in the hands of the civil servants.

    Perhaps a better question is: why would Osborne even consider such an appointment? Although he was right about the euro, he’s not well respected by financers, central bankers or regulators. Sadly, the answer is that such an appointment would gain him kudos with the civil servants.

  • Keith

    These people appear to think that being nominally in charge of things is a kind of competency in itself. This reflects the assumptions of the public sector generally, in which promotion has little to do with ability. What has O’Donnell ever actually done?

  • A Wyndham

    I believe he is now The Lord O’Donnell of Clapham, btw, not ‘Sir Gus’.

  • Andrew Taylor

    Exactly the sort of tosser we should be running a mile from at the first opportunity. If they have any sense, they’ll just slip his application into that filing system which stores everything in tiny pieces – a shredder. The bloke shouldn’t be let out unsupervised with a spoon, let alone a central bank.

    He has NEVER done a proper job outside the cossetted and unreal Lalaland of ‘public service’ so far as I can see.

    He is probably unsuitable through deafness anyway – he must still be clearing the kaak out of his ears after spending several years with his head stuck up Tony Blair’s tail pipe!

  • TwentyTwoYards


    With respect, I don’t think it is right and proper in a civilised polity to make people criminally liable for genuine business or administrative mistakes.

    No one has perfect knowledge of the future, and hindsight is always correct. It is not a criminal offence to have poor judgement, or to lack foresight. Yes, it makes one completely unsuited for many senior roles, but it doesn’t make one a criminal – not on its own.

    There are enough laws and regulations as it is – if anyone is proven to have broken them, yes, by all means make them criminally liable and throw the book at them. However, it is not healthy to create new laws, especially if these are retrospectively applied!

    Anyway – apologies if I misunderstood your comment and you did not mean the above! :)

  • Dimoto

    Glad this issue was raised.
    O’Donnell and that other “damaged goods” establishment sinecure junkie Adair Turner should not be allowed anywhere near the Bank.

    We need a low-profile, proven-expert governor. Not a celebrity “connected” relic of the Brown debacle.

    Same goes for the increasingly noisy MPC.
    (who nominated that Blanchflower show-off ?)
    We need silent wise-men of impeccable integrity.

  • Austin Barry

    Sir Gus apparently has important economic credentials, latterly as Managing Director of Macroeconomic Policy and International Finance, with responsibility for Fiscal Policy, International Development, and EU and Monetary Union.

    So, I agree, it would be absolute, trouser-soiling madness to let him anywhere near the Bank of England, or the Bank of Toytown for that matter.

    GOD seems to be in the tertiary stage of egomania.

  • Publius

    I don’t trust men who dye their hair, the vain bitches.

    Nor do we want yet another New Labour stooge anywhere near power.

  • Tiberius

    I think your spotless CV entitles you to a shot at the Governor’s job, Fraser, and then we wouldn’t have to suffer at the hands of all these inadequates. I’m sure you would have the “punchbowl” emptied down the drain long before Northern Rock imploded.

  • michael

    Just how much avoided tax have he and his loopholing subordinates banked?

  • Nick

    Make them criminally liable for their mistakes.

  • Mirtha Tidville

    He`s still deluded I see.No matter what, I cant see either Cameron and/or Clegg letting this New Labour cheerleader anywhere near Threadneedle Street

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