A contract worth the paper it wasn't printed on

LONDON REPORT:Alan Budd's explanation of his fast exit is so far- fetched, it's probably true, writes FIONA WALSH

REMEMBER THE fuss over the rapid departure of Sir Alan Budd from the Office for Budget Responsibility? Well, it seems the desire of our new political masters to save paper was responsible for the confusion over just how long the noted economist had intended to serve the coalition in the first place. Or at least that’s what Sir Alan would have us believe now.

One of George Osborne’s first acts on becoming chancellor was to create a new body, the Office for Budget Responsibility, to provide the government with independent economic forecasts. It was intended that this office would restore credibility to the somewhat dodgy treasury figures of the past and provide the government with solid statistics to help it battle the deficit.

The new body’s reputation for impartiality took a knock early on, when it became embroiled in a row over unemployment forecasts. Figures were leaked from the treasury showing an alarming 1.3 million jobs would be lost over the next five years because of Osborne’s austerity budget. The leak created political uproar but, just hours later, the government was furnished with a far more benign set of forecasts from the body – just in time for the prime minister’s weekly grilling in the House of Commons.

In the wake of the row over the office’s apparent willingness to whip up favourable forecasts for the government, it emerged that Budd was to step down after just three months. His unexpected departure – before the body was even enshrined in law – further damaged the reputation of the organisation and the belief in the City was that he was quitting early in protest at the political pressure he had been put under.

Budd, a former member of the Bank of England’s monetary policy committee, insists he was on a three-month contract at the office from the outset and that he had always intended to depart in mid-August. Earlier this week, in his first interview since leaving the body last Friday, Budd said his short-term contract would have been made public earlier but for the sake of saving a few trees; in other words, it was decided that his contract would not be published in order “to save paper”. It’s an explanation that’s so far-fetched, it’s probably true.

As Budd ends his brief tenure at the Office for Budget Responsibility, so another man steps up to what will be an equally short, but potentially explosive, period of public service. Sir Philip Green, the retail billionaire behind the Topshop and Bhs chains, has accepted the government’s invitation to lead a wide-ranging review of efficiency across Whitehall departments.

The new cost-cutting tsar is a controversial choice. Although Green lives in the UK and pays tax here, his wife Tina, who actually owns much of his retail empire, is a resident of Monaco. Green, friend of supermodel Kate Moss and celebrities such as Simon Cowell, certainly knows how to spend money – he celebrated his 50th birthday some years ago in the company of 200 or so of his closest friends at a lavish toga party estimated to have cost £5 million. He knows how to save it too, in business at least. He is renowned for his minute attention to detail, down to the cost of the clothes hangers and plastic bags used at his stores.

For the next nine weeks, Whitehall will be getting the Phillip Green treatment as he compiles his report on where savings can be made in time for the government’s spending review on October 20th. The tycoon’s combative reputation has already sent a frisson of fear through the massed ranks of civil servants.

Green has already made it clear that he and his team will be taking a close look at procurement and will be examining all contracts signed over the past three years. It could make for some uncomfortable encounters if he doesn’t like what he sees.

Civil service unions were already bracing themselves for huge cutbacks throughout every government department – and that was before Green was let loose on the books. Critics have portrayed the billionaire’s new role as that of “handing out P45s” to poorly paid public sector workers, comments about which Green says he is “sad and disappointed”.

But Green is used to dealing with critics. After what he regarded as a particularly negative interview on Radio 4's Todayprogramme, he suggested that, after he's finished this job, he might move on to review the strategy and costs of the BBC.

Fiona Walsh writes for the Guardian newspaper in London