A former minister who quit the government over failures to recover fraudulent Covid loan payments has blamed the civil service for rising national debt.
Theodore Agnew, who left his role overseeing efficiency and transformation across government in 2022, said he attributes “at least half of the increase of the national debt to the incompetence of the civil service over the last 20 years”.
In an interview with the Telegraph, Lord Agnew said an increase in government spending in response to both the financial crisis and the Covid pandemic accounts for around £550bn in borrowing – leaving £1.5tn unaccounted for.
“And what have we got to show for that in the country today? If you look at where the money has been spent, it has just been spent so badly,” he said, citing HS2 as an example. The high-speed rail project has been the subject of significant criticism. Last year, HS2 Ltd executive chair Sir Jon Thompson said the project could cost £67bn – up from the original estimate of £37.5bn in 2009 prices – despite the cancellation of its northern leg in 2023.
Agnew has been a vocal critic of the civil service. In 2020, when he was in charge of civil service reform, he called the service“broken” and accused it of being obsessed with policy at the same time as lacking core skills – though he added that "good people" were "trapped inside the system".
When he quit his ministerial post, he hit out at “a combination of arrogance, indolence and ignorance” that he said was to blame for the failure cut down fraud in pandemic aid schemes.
Speaking to the Telegraph, Agnew said he believed little had changed since he quit his joint Cabinet Office-Treasury job three years ago.
“The failure of the British state is blocking economic growth, exacerbating the decline of the nation’s health, sabotaging the building of housing and infrastructure and systematically eroding our status as a first-world economy,” he said.
He claimed that job protections for civil servants are contributing to these problems, saying it “would have been easier for me to win the lottery” as a minister than to sack underperformers.
But while Keir Starmer caused consternation by criticising the civil service last month – saying “too many people in Whitehall are comfortable in the tepid bath of managed decline” – Agnew said the prime minister’s comments were “entirely rhetoric”.
“This is a man who has existed virtually his whole life in the public sector. He is a creature of the public sector, and so is Rachel Reeves,” he said.
The Conservative peer also criticised the chancellor’s attempts to use regulators to boost growth.
Last week, ministers ousted the head of the Competition and Markets Authority following a meeting at which regulators were urged to “tear down the barriers hindering business and refocus their efforts on promoting growth”.
At the same meeting, Reeves said every watchdog “has a part to play by tearing down the regulatory barriers that hold back growth” – a mission she said should be “woven into the very fabric of our regulators through a cultural shift from excessively focusing on risk to helping drive growth”.
Recalling the comments, Agnew said: “Someone who makes a career as a regulator is someone who is risk-averse, lacks imagination and doesn’t understand wealth creation.
“It is bizarre, frankly, that she should go to these people. It’s a bit like going to a fox and saying ‘How can you kill a few fewer chickens?’”
But despite his criticism of the chancellor, Agnew said Reeves was right to water down her tax raid on ultra-wealthy non-domiciled residents – saying it must be “hard… for a socialist government to relax rules on non-doms”.
Last week, the chancellor said she would table an amendment to the finance bill to make rules allowing non-doms to bring overseas income into the UK and pay a reduced tax rate more generous. The plans were announced amid reports that Reeves’s plans to abolish the non-dom regime, confirmed in the October Budget, had led to an exodus of millionaires.
Agnew also said Reeves should follow newly sworn-in US president Donald Trump’s lead by rowing back on net-zero targets for electric cars.