Government policies, not a new Treasury permanent secretary, will determine market confidence

Surging interest rates and a disastrous “mini-budget” would not have been the backdrop James Bowler wanted for the announcement of his elevation to Treasury permanent secretary. But it is that very crisis that seems to be the reason Bowler got the job. Despite press reports suggesting that ‘outsider’ Antonia Romeo would be moving from the Ministry of Justice, a boxed in prime minister has taken a move towards orthodoxy – following the Boris Johnson model by dismissing one permanent secretary to shake things up, only to replace them with another conventional figure. But while Bowler’s arrival shows that Liz Truss is shifting her style if not her rhetoric, the markets will respond to the policy course the government now takes. 

The prime minister’s choice, but Bowler’s first loyalty will be to the chancellor 

Bowler, a Treasury lifer, also spent time working in No.10 for Gordon Brown and David Cameron, and is currently permanent secretary at the Department for International Trade. There he briefly – for a month – overlapped with secretary of state Liz Truss. But she will have already known him from her time as chief secretary to the Treasury. Bowler was the director general for public spending, and so the most senior official working directly with Truss from 2017 to 2019. It was his job to focus on the chief secretary; fatefully it was his then boss Tom Scholar’s role to prioritise the chancellor. 

So while Bowler is a conventional Treasury appointment, it seems likely that he also has the job because Truss rates him. It is good that the Treasury permanent secretary is someone the prime minister trusts. Without that there is the obvious potential to generate (even more) tension in the notoriously difficult relationship between No.10 and the Treasury. But given the twists and turns in his appointment process Bowler will need to show that he is loyal to Kwasi Kwarteng, the chancellor. If Truss expects Bowler to be a direct line to No.10 then she will be disappointed – his loyalty and the key relationship will be with her neighbour at No.11. 

The new permanent secretary will stabilise and reassure Treasury staff 

The ”new Treasury team”, as the press notice announcing Bowler’s appointment describes them, does have extensive Treasury experience. Bowler and his two new second permanent secretaries, Beth Russell and Cat Little, have worked at senior levels on public spending, taxation, preparing Budgets (mini or otherwise) and leading the finance function across government. They have less experience working on financial services policy, with financial institutions and in market-facing roles and so will need urgently to plug that gap. 

Russell has moved to the Treasury’s new campus in Darlington and her appointment is a welcome sign that the most senior jobs are open to those outside London. The trio will help stabilise the Treasury and its staff after a turbulent month, with the appointments sending a signal that ministers see Treasury staff as allies and not enemies. 

Truth to power is particularly important in difficult times 

Ministers need all the allies they can get. Their task seems nearly impossible: to produce, in the next three weeks, a credible plan for spending cuts that reassures the markets and Conservative MPs, and that does not reverse tax cuts already announced. At the moment it seems likely that one of those threads will snap. In helping to navigate such perilous political and economic circumstances Treasury officials will need to give their best, most honest advice, with nothing off the table. Even more importantly the chancellor and No.10 must make it absolutely clear that they are willing to listen. 

The spending cuts needed to reassure the markets that the government has a credible plan for the coming years will not be found from tame “efficiency” programmes – ministers will be making choices that mean real pain for citizens. Helping the chancellor and chief secretary to use a scalpel rather than an axe to minimise damage while make credible financial choices must be a priority for the new team.  

These appointments do nothing to change the “Treasury orthodoxy” that Truss says she wants to challenge – that ship has sailed. The critique of the Treasury that it prioritises fiscal discipline and stability over investment and growth will go unaddressed, in part because of the mess that the new government has made of its first month. For generations to come, Treasury officials will tell ministers the salutary tale about what happened when the chancellor sacked his permanent secretary. 

The last month has shown that dismissing the authority of public institutions and ignoring experienced advisers is not the route to radical reform – it is the opposite. Hugging the Treasury close is now Truss and Kwarteng’s only option. But while James Bowler may be a safe pair of hands, his appointment will not be enough to reassure the markets and the Conservative Party. It is the policy choices ministers make in the next few weeks that will determine whether the government survives the pain of the coming months and salvages something from its most inauspicious start.