Login 

Share

Obituary: Sir Alan Budd

Alan Budd had a stellar career as an economic policymaker: Chief Economic Adviser to Her Majesty’s Treasury, Head of the Government Economic Service, Member of the Monetary Policy Committee of the Bank of England, and founding Chair of the Office for Budget Responsibility.

But anybody who worked with him, as I had the privilege to do, will always remember Alan the man. His gentleness. His patience. His tolerance. His interest in other people and their views. Never interested in rank or status, he would pay as much attention to the views of a junior economist as to those of a chancellor of the exchequer. He was interested in evidence and the truth. He had an uncanny ability to develop policy through discussion, distinguishing the ideas which were coherent from those which weren’t. Above all, he could improve any policy proposal by bringing to bear his intellect and power of communication, so that when he reflected it back to you it sounded so much more coherent and persuasive. Anybody who worked for Alan remembers him with affection.

Alan was born in Kent in 1937. Some obituaries have presented Alan as an establishment figure. He wasn’t. He tired of Oundle, the public school to which he had won a scholarship, and left at the earliest opportunity having taken A levels early. He worked for several years, including doing national service, before he went to the London School of Economics, initially as a part-time student. He subsequently did a PhD at Cambridge before becoming an academic at Southampton University. He joined the Treasury in 1969 as a Senior Economic Adviser – those were better days when there was far more interchange between academia and the civil service – but became steadily disillusioned with the path of economic policy, understandably since those were the days of the Barber boom, oil crisis and the descent to the IMF. Alan subsequently published a 1978 critique of those times: The politics of economic planning.

He then moved to the London Business School where fortuitously he joined forces with Jim Ball and Terry Burns, who had turned the Centre for Economic Forecasting into one of the country’s most influential forecasters. At a time when the Treasury was only beginning to move away from volume planning, the LBS was placing a much greater emphasis on nominal variables, such as the money supply and the public sector borrowing requirement; Alan was an early advocate of a medium-term financial plan in the late 1970s. Ball, Burns and Budd were seen as monetarists at the time. They certainly rejected the crude Keynesianism that led to the Barber boom; they also tended to favour market solutions, such as floating exchange rates, and were against crude controls like incomes policy which distorted the price mechanism. But they were never ideologues, and advocated a much more pragmatic approach to policy than more doctrinaire monetarists.

Alan took over leadership of the Centre for Economic Forecasting when Terry moved to the Treasury as Chief Economic Adviser in 1980, running a talented team comprising Bill Robinson, Geoffrey Dicks, Andrew Scott and Peter Warburton, among others. Alan subsequently moved to Barclays Bank as Chief Economist. And it was from there that he moved to the Treasury to replace Terry Burns when the latter stepped up to Permanent Secretary in 1991.

By then, Britain was in the Exchange Rate Mechanism, which Alan accepted as a fait accompli. In his seminal 2004 Wincott lecture, Alan concluded: “The period of membership of the ERM was not a very worthy episode. A slightly cruel summary of it would be to say that we went into the ERM in despair and left in disgrace. Nevertheless, we are still enjoying the benefits of it.” He played a big role in picking up the pieces after Black Wednesday, developing the new macroeconomic framework with Terry Burns. Inflation targeting could finally provide the nominal anchor which economists had been searching for since the end of the Bretton Woods system. And Alan’s influence can be seen in the institutional framework which was steadily strengthened through the 1990s, culminating in central bank independence. He was also influential in the stronger fiscal policy framework which returned the public finances to surplus by the end of the decade. Meetings between Alan and Ken Clarke (the Chancellor, 1993-97) were always memorable. Alan would patiently and clearly set out what needed to be done. Ken was never the best listener. But he would listen intently to Alan, only occasionally interjecting some midland common sense. Later that day, you could detect Alan’s words in what Ken was saying whether in a House of Commons debate or a monthly monetary meeting. Ken described Alan as “wise”, which indeed he was.

Gordon Brown too valued Alan’s steadying influence, appointing him to the newly independent Monetary Policy Committee when Alan retired from the Treasury. He went on to be a valued Provost of Queen’s College, Oxford, finding the time to do occasional work for the government: his review into whether David Blunkett had intervened in the visa application of a former lover’s nanny was perhaps the most tricky. He came back into my orbit when he agreed to be interim Chair of the Office for Budget Responsibility in 2010. This was a challenging time. The OBR was not yet on a statutory footing. Its role and independence were still politically contested; Treasury economists were worried that they were out of a job. But Alan went about his new role as he had always done: gently, persuasively and with the highest integrity. In my view, the OBR would not have achieved the status it has now without Alan’s early influence.

Alan was a great man and I shall miss him.

 

Nicholas Macpherson (former permanent secretary to HM Treasury and visiting professor, King’s College London)

 

Sir Alan Budd, economist and policymaker, born 16 November 1937; died 13 January 2023.