Gus O'Donnell: The Lord GOD

Posted On: 
3rd May 2012

After leaving behind the careful impartiality required of the country’s top civil servant, Gus O’Donnell is finding his voice in the House of Lords and is ready to speak out.

Gus O’Donnell is suffering from his very own mid-term Blues. Normally the most cheery soul you could meet in Whitehall or Westminster, the former Cabinet Secretary is dealing with the pain of loss: not of office, but of the defeat of his beloved Manchester United by their City rivals.

“[Monday night] wasn’t my finest experience... It’s a black day. It was very painful,” he grimaces. Freed from the cares of Government, Lord O’Donnell has more time for watching and playing sport these days. To be strictly accurate, his are an end-of season rather than mid-term blues. But after serving four different administrations, the man known to some as GOD (thanks to his initials) more than most knows what the Coalition is going through right now. From Major to Blair, from Brown to Cameron, he’s been at the heart of Government for more than 20 years. To paraphrase the hymn: all political creatures great and small, the Lord GOD played with them all.

Sitting in his cramped office opposite Parliament, the crossbench peer is passionate about the merits of independence: of independent candidates for Mayor, of an independent Bank of England, of an independent civil service.Does he think it’s fair, the way the civil service has recently been blamed by some MPs for the ‘Omnishambles’ of recent weeks: from the Budget to Qatada to Heathrow?  

“You need to be really clear about   accountability and what you want,”  he says. “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,” O’Donnell makes  clear. As for the Budget decisions on pasty taxes,  granny taxes and  charity taxes: “I’ve never heard the Chancellor say anything other  than ‘I’m responsible for tax decisions’, and I know he’s the sort of  person that would never attempt to say anything else.” 

Lord O’Donnell admits that he’s more a fan of Sir Humphrey than Malcolm  Tucker. “I’m more ‘Yes Minister’ than ‘The Thick of It’, I  have to say,” he explains, though he has watched Armando Iannucci’s coruscating depiction of life in Whitehall. O’Donnell says the “added dimension” of working in coalition “makes an  issue – if you bring more special advisers into it”. But he speaks effusively about the role that special advisers can play, before  questioning the qualifications of some in the current crop.

“My criticism would be [that] it’s not so much about numbers, it’s about backgrounds. Too many come from a media, sort of PR background. What I’d like are some special advisers who are real experts in the subject. When you see the good ones, you know them. They’ve got to be  in that ground between policy and politics and get both sides of it.”

Whoever is ultimately responsible for the final sign-off of the Budget, O’Donnell is encouraged that the open processes of coalition government has allowed greater opportunities for civil servants to “look at things and challenge” decisions. It was not always thus. “In the past, there have been budgets where  the sharing internally hasn’t been as good as it might be, let’s put it that way” O’Donnell smiles, with a subtle reference to the Blair-Brown years.

As for one of the Budget’s biggest decisions – the decision to drop  the top rate of income tax from 50p to 45p – Lord O’Donnell gives his  own economist’s verdict.  

“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.” Which would suggest that 45p is, for revenue-raising purposes, as low as any sensible government would go? “It would suggest that under that model a move to 45 to 40 would have a very large cost, that’s right” he replies.

Of course, it was the Quad – David Cameron, George Osborne, Nick Clegg, and Danny Alexander – who signed off the Budget. Some critics argue that too many decisions are taken by the foursome. O’Donnell admits that this was not the original plan.

“We started off with this presumption there’d be something called the Coalition Committee. And we really thought that it would be in the mode of meeting possibly two, three times a week, to do… resolving differences of view, that sort of thing. And in the end, the Coalition Committee ended up meeting very rarely and it devolved to the Quad having a bigger role. And, it’s a role that has proved effective, I would say, but it is quite a small group. And it’s quite important you  ensure that the Quad is used in the right way and it doesn’t pre-empt Cabinet.”

O’Donnell gently refuses to discuss the current Jeremy Hunt affair, pointing out that he will be giving evidence to Lord Leveson. But in general, he disagrees with predecessors like Lord Butler who believe communications officers now have too much seniority in the civil service.

“I think in a world where you have got 24/7 media and actually in a vibrant democracy it’s incumbent on governments to explain their policies. And presentation matters a lot. Suddenly there are a massive number of channels through which you have to present. I think the old days, the civil servants would sort out the policy and then they’d hand it on to someone very junior to sort out presentation, I think that can lead to some massive policy mistakes. Because actually what you need as you’re thinking about policy is ‘how are we going to present this?’ If there isn’t a sensible presentation of the policy, I  would suggest there is something wrong with the policy. So I think the  interaction is really important.”

As for the role of Sir Alex Allan, the under-employed independent  adviser on ministerial interests, he simply says: “I think people  haven’t realised there is a lot more to the role than those reviews. He looks at ministerial interests. There are a lot more things that that post has to do.”

And on the issue of  meetings with premiers and media moguls, he says: “Our democracy requires our politicians and our media to interact a  lot. That’s got to happen. I think the answer is lots and lots of transparency. The Prime Minister has said quite clearly he thinks he got too close and I think he’s right. But my answer is not that in a democracy you can create some wall between these two groups, you can’t  and you shouldn’t, but transparency I think is absolutely crucial.”

One area where there may be too much transparency for O’Donnell is the  use of Freedom of Information. He believes it has removed that “safe space” where ministers can disagree openly. “Risk-averse ministers are going to retreat to somewhere where they feel like they’ve got a safe space. Now, obviously emails and texts are not necessarily that safe space.” Hinting at the Fred Michel  emails, he adds: “And obviously when you’re doing it with someone outside the system, it’s obviously not a safe space”

If the ‘safe space is lost’, he says “you won’t got those criticisms  and you just get a bunch of yes men. And that’s hopeless” he adds, pointing to his telephone to back up his argument. “It will bring back the phone, and you’ll have purely oral conversations.”

As for his own future, is it true he’s a contender to succeed Sir Mervyn King as governor of the Bank of England? “I’m going to think about that and make a decision nearer the time. It’s a fascinating job, it’s a huge job, it’s a much bigger  job than Mervyn’s doing at the minute. You’d need to think about how  you manage that and what support you’d need. I haven’t made up my mind about this yet. The process hasn’t even started yet.” 

Lord O’Donnell’s current passion is for independent candidates, and he’s taken the unusual step of acting as a policy adviser for Siobhan Benita, a former fellow civil servant who is running for Mayor of London. “What me interested in this is how do we bring back more trust to our  politicians? How do we restore faith in our political system? How do we get more people interested in politics and more people voting?  Simple basic things like that. Participation rates amongst the young are so dreadfully low and ‘more of the same’ just doesn’t seem to be  getting there.

“You think of a world where we are moving towards elected police commissioners, a lot more elected mayors, House of Lords reform – will there be anybody standing for election who isn’t backed by a party machine? And so I thought we could get some new blood and interest in politics if we could get some independents involved.”

But thanks to the broadcasters deciding not to give Benita her own election broadcast or much TV debate airtime, he’s disillusioned. “I’m afraid to say my experience of this London mayoral election is that…would I stand as an independent under these rules as interpreted  by the broadcasters? Absolutely not. Basically, there is a massive bias towards the status quo in the system.” 

“The current rules can’t pick up on new candidates who haven’t stood before and new candidates who haven’t gained in strength. They haven’t  worked out how to manage these circumstances. In the absence of  previous electoral support, how do you determine whether someone’s got  support or not?” He suggests that betting odds or polling numbers may be a new way of measuring support, but the BBC at least is not keen.  


To critics who say he shouldn’t be involved in an election at all, Lord O’Donnell replies: “It’s not a paid post so it doesn’t come under  the business appointments rules. And I’m in the Lords, that’s a  legislative body. I’m getting involved in politics every single day. That was passed in January. I can vote on things. Just as I’m an  independent crossbencher, there’s a lot of sense to be thinking about  the role of independents in our democracy.”

Would he be tempted to run for election in an elected Lords? “The one thing that would put me off is the existing rules. Unless the rules are changed you’ve got no chance. You’ve seen the struggle that people have had.”

For now his main focus is on public policy improvement and his particular passions on behaviour change and wellbeing. 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. That people curiously enough make  mistakes, we are not consistent, we probably don’t value the future you as much as we should . Freakonomics stuff…It’s where we need to be  is in all those things people make mistakes or companies make mistakes or in acknowledging the fact that governments make mistakes and none of these things are perfect: that’s the grubby areas we need to be  in.”

Unfortunately, despite his own interest in the economics of happiness, Lord O’Donnell’s own daughter has just made him unhappy with her university choice. “She’s doing combined social studies at Durham and it was politics, history and economics and she’s given up the economics, thereby breaking her dad’s heart,” he jokes. 

Still, as with his pain at the Man Utd defeat, his daughter’s choice seems a temporary blip in the happy progress of Augustine Thomas  O’Donnell. Like his saintly namesake, he’s a Catholic, an innovator and a thinker about the imperfect world we live in. And his own playing days are far from over.  

O’Donnell on… the need for a Coalition Agreement 2.0

“The question is what are the next goals. And, I guess post-Olympics, you get quite an opportunity to look at [that].. Give strategic clarity and be absolutely clear about how you’re going to measure success: [they’re my] two commandments. I very strongly think it’s a very good thing to do.”

O’Donnell on… more women in the City

“Less than five per cent of FTSE 100 executives are women and I don’t think the answer is just more female non-execs; I think that‘s a bit of a con. I think getting women in executive positions is massively important”

O’Donnell on… being known as GOD

“I initialled something G.O.D - it was ages ago, back in the Treasury, a long, long time ago. It’s just one of those things you just get stuck with. There are times when you want to be clear about your authority, so it can help, yes.”

O’Donnell on… Margaret Hodge, the PAC, & that Bible

“The whole Bible incident was terrible. I can’t think of any reasons to defend that. I think there are some elements of theatre you can accept. I think the Bible is going too far.