There has been enormous outrage about the £1bn loss to the taxpayer caused by the sale of the first tranche of Royal Bank of Scotland shares. An article in The Guardian on August 4 reported not only expected criticism from Labour but concern from a banking analyst that the share price of RBS was too low to justify the sale.
What was only briefly mentioned was that the second most powerful mandarin in the Treasury had also given the go ahead. You might expect him to bow and scrape to the Chancellor but actually he has more powers than you might think and he needn’t have followed his instructions. If an accounting officer believes that a government minister is about to make a decision that will lead to a big loss to the taxpayer he can refuse to approve the action.
These actions are not taken lightly – one of the most recent examples being the refusal by Richard Heaton (soon to become Permanent Secretary at MoJ) who requested one, on value for money grounds, on 26 June over extra funding for the Kids company charity. He was overruled by ministers who have now seen to have made a big mistake as recent coverage reveals.
John Kingman could have done the same thing. He would face being overruled by George Osborne but it would have caused a furore and triggered an eventual Whitehall investigation.
Instead as this letter above shows he has positively embraced the sale.
“ I am satisfied that a sale at this time would offer good value for money for the taxpayer and meets all other requirements in accordance with the principles of Managing Public Money,” he wrote to George Osborne.
Really? Now John Kingman is one of the cleverest mandarins in Whitehall. He hates holidays, lives in Leicester Square and one former colleague describes him in these words: “His arrogance is only marginally ahead of his considerable intelligence, whereas with most ambitious men of his ilk the gap is rather larger.” A profile in 2009 by political editor George Parker in the Financial Times says it all.
He writes “If he can achieve the goal of unwinding the taxpayer’s stake ( in RBS) at a profit, his route to the top of the civil service is clear, even if some question whether he has the patience to manage such a huge, traditional organisation. “
Well at the moment he hasn’t – he has acquiesced in a £1 billion tax loss. And I am not the only one who has noticed this. The National Audit Office, Parliament’s financial watchdog, which reports on state asset sales, confirmed to me “We are watching the situation”.
They will have to make a report on this. This will lead him to have to appear before the House of Commons public accounts committee to justify why he approved what was done. No doubt the government would like Parliament to take its time – perhaps not report until the entire sale is over – but that won’t be until 2020.
I say the huge loss to the taxpayer should not go unchallenged for years. Bring it on now!