Sir Nicholas Macpherson says education and health ministries had serious problems and MoD was put into 'special measures'
The row over Labour's spending record reignited today after the top official at the Treasury said three of the biggest Whitehall departments "lost control" of spending at various points under the last government.
Sir Nicholas Macpherson, the permanent secretary to the Treasury, said the Ministry of Defence was put into "special measures", after it lost control of spending, while both education and the health departments experienced serious problems. In a thinly-veiled reference to the health system reforms announced by the government today, he said of the Department of Health's difficulties that "often, this happens when you are reforming the system".
Macpherson insisted that over any 10-year period in the past century there were financial problems in Whitehall on the same scale and Treasury sources said his comments did not amount to a judgment on the last government's record.
The Liberal Democrats accused Labour of "living in a fantasy land, where Labour never did anything wrong".
Labour said they believed in reducing waste across Whitehall ? starting with the NHS reforms, which they claimed only David Cameron and the health secretary, Andrew Lansley, support.
Macpherson told the Commons public accounts committee: "There was a point in the last decade when the Ministry of Defence lost control of public spending. We put defence on special measures. We said 'You have got to report month by month about what is going on with your spending'. It is a particularly clear example.
"From time to time there would be problems in other departments. I can recall a problem with the Department of Health several years ago where there was a problem with their finances. Often, this happens when you are reforming the system. From time to time, there was a problem in Education. I think they encountered problems with public expenditure control."
But when Jo Johnson, a Conservative member of the committee said this appeared to be a "significant admission", Macpherson replied: "No. If you look at any decade over the last 100 years, there are points when departments get it wrong in their spending control. The point is to learn from it." Macpherson has previously told parliament that Treasury control over spending improved under the last government.
Stephen Williams, co-chair of the Liberal Democrat parliamentary treasury committee, said: "This is evidence from the heart of Whitehall that Labour lost control of public spending and is yet another example that Ed Miliband doesn't know what he is talking about.
"The Labour leader is living in a fantasy-land where Labour never did anything wrong. Yet every day more evidence comes to light which shows that Gordon Brown's spendthrift attitude was out of control and his financial management a shambles."
A Labour source said: "We don't defend every spending decision taken by the last government. We believe in rooting out waste where ever it appears. We hope the Treasury takes this up by putting pressure on departments now to scrap plans to spend �100m of taxpayers' money by creating another tier of politicians in elected police commissioners. They should also think again about a �3bn reorganisation of the NHS, which nobody appears to want apart from David Cameron and Andrew Lansley. That's waste."
Source: http://www.guardian.co.uk/politics/2011/jan/19/treasury-chief-labour-spending
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