MPs warn Whitehall mandarins have not learned crash lessons

The MPs said the Government and the City needed to do more to prepare for a “worst case scenario” in the financial system.

A cross-party report found there was a “surprising and urgent gap” in the Treasury and the MPs said they had “not seen sufficient evidence” to show that officials had learnt a key lesson from the 2007-8 crash about the need to be prepared.

Bernard Jenkin, chairman of the Public Administration Select Committee, said: “The Treasury has done a lot, but there is more to be done to be ready for another financial crisis.

“We still have institutions which are ‘too big to fail’ but with so much national borrowing capacity used up, they may prove ‘too big to save’ if it happens again.

“We did not find evidence that Government and the City are actively practising and exercising for this worst case scenario. We found this lacking in other areas too.”

“The failure to act quickly on the developing Ebola epidemic in West Africa cost thousands of lives and billions in aid,” he added.

“This failure was by no means unique to the UK but the Chief Medical Officer and the Joint Intelligence Committee combined their understanding too late for timely action.”

A Treasury spokeswoman said: “It is unfortunate that the Public Administration Select Committee’s report takes no account of the relevant facts.

“By focusing on Whitehall procedures they have entirely missed the point: the lessons of the financial crisis have been learned and acted upon by putting in place a reformed regulatory system, ring-fencing the banks, ending the ‘too big to fail’ problem, and dealing with the risks posed to the economy by an unsustainable deficit.”