By Ben Kerrigan-
Kwasi Kwarteng ignored warnings that his disastrous mini-budget could trigger a backlash on the financial markets, Treasury officials have told MPs.
Permanent secretary James Bowler confirmed on Monday that the then-chancellor was told about the potential impact of his £45 billion package of unfunded tax cuts.
However, Mr Kwarteng, who recently admitted he got carried away with Liz Truss’s government and blew it, went ahead with the spending spree in September, triggering plummeting the pound to historical lows and increasing the cost of government borrowing and chaos in the mortgage market.
Mr Bowler took over as the top civil servant in the Treasury in October after predecessor Sir Tom Scholar was abruptly sacked by Mr Kwarteng.
On Monday, Ms Russell told the Commons Treasury Committee: “Cat and I are confident that we gave all the advice to ministers on the economic and fiscal backdrop, the impacts and the market position and particularly around the financing requirement, which was a big issue because of the cost of the measures.”
Mr Bowler said he is “absolutely confident Treasury officials set out the right advice to the chancellor”.
He conceded that they could not persuade Mr Kwarteng to take another route, saying “officials advise but ministers decide”.
Labour’s Dame Angela Eagle told him the mini-budget was a “self-inflicted catastrophe”.
“Your words,” Mr Bowler responded.
He said the financial chaos, as well as the coronavirus pandemic and the response to the war in Ukraine, has dented morale in the Treasury.
“It’s been a tough year for Treasury civil servants,” he said.
“There’s been a lot of crisis upon crisis, so Covid, Ukraine energy, so the mini-budget came on top of that.
“Political change, so four chancellors since the summer, and in some quarters negative commentary on Treasury civil servants, none of that has been helpful.
“In terms of morale I think that has had an impact but staff understand they’re working on really, really important areas.”
Mr Bowler started as permanent secretary on October 10 after Sir Tom was sacked on September 8, with his ousting being partly blamed for the financial crisis.
“I think Tom’s departure wasn’t normal,” Mr Bowler said.
Kwarteng started as one of the stars of Liz Truss’s government before the whole celebration came tumbling down and blew up in his face as the former prime minister fired him before being forced out herself.