The Old Bordenian Association

We are sorry to report the death on 14 October of one of our highest flying old boys ever, Frank Cassell, who attended the school between 1942-48.

A graduate of the L.S.E., Frank Cassell spent some time as a journalist on The New Statesman and The Banker. He then joined the Civil Service in the Treasury, where his career went from Economics Adviser, Senior Economics Adviser, Under Secretary to Deputy Secretary. He served as Economics Minister in Washington and became the UK Executive Director of the I.M.F. and the World Bank. He was appointed Companion of the Order of the Bath (CB). Frank maintained strong links with the school and was the guest speaker at a recent annual prizegiving. The Association extends its deepest sympathy to his family.

The following obituary was published in The Times on 1 December and it is reproduced here, with their kind permission.

Obituary – Frank Cassell

Economist who, as a senior figure at the Treasury for more than 20 years, helped to steer British fiscal policy during turbulent times.

Frank Cassell was close to the centre of macroeconomic policy making at the Treasury for more than 20 years. He had an excellent knowledge of the financial and monetary systems and used this to good effect as economic management in the Treasury evolved, fitfully and at times painfully, from the Keynesian approach dominant in the mid-1960s to one that put emphasis on the control of inflation and financial stability.

While generally in sympathy with this evolution, which coincided in its later stage with liberalisation of the financial system, his natural caution meant that at times he favoured slower and more careful change and he was never ideological. His background in financial journalism gave him a different perspective to that of most macro-economic experts in the Treasury and made him one of the best drafters of internal papers and published policy statements.

An avid cricket fan, he could give the impression of being more concerned about a collapse in the England or Kent batting than of adverse financial developments, but this concealed a deep seriousness about economic policy. His genial manner helped to reduce the temperature both in internal Treasury disputes and those with the Bank of England and other government departments. He had an ability to advise ministers frankly and in ways that they did not find threatening. These qualities made him an outstanding Treasury adviser and then director at the International Monetary Fund (IMF) and World Bank and later the Crown Agents.

Frank Cassell was born in 1930. He was educated at Borden Grammar School in Kent and after National Service in the REME studied economics at the LSE. His early career was in financial journalism, first at the News Chronicle and from 1958 as deputy editor of The Banker. His book: Gold or Credit – The Economics and Politics of International Money, was published in 1965. He joined the Treasury in that same year after an interview with the head of the Government Economic Service, Sir Alec Cairncross, who had liked an anonymous article he had published about controlling credit.

In his first decade in the Treasury came Harold Wilson’s devaluation, the subsequent fiscal squeeze and IMF programme, and later the rise in inflation and oil price hike on 1973. Through this period, Cassell progressed steadily up the Treasury economists’ hierarchy, specialising in monetary policy, the finance of industry, and balance of payments and exchange rate issues. By the mid-1970s, he was the under-secretary in charge of the Finance Economic Unit at the time when another IMF programme looked likely. He played a role in the opening discussions with the IMF in 1976, often recalling a secret meeting between Treasury officials and IMF staff in a Paris hotel before official negotiations began. He accompanied the Cabinet minister Harold Lever on a trip to the US in the hope of persuading the Administration to support less severe terms, a mission that Cassell privately considered to have had, if anything, the opposite effect.

During 1976, and before the agreement with the IMF, he was transferred from his specialism on monetary and financial policy to be head of the medium-term and policy analysis group of economists. If it was less to Cassell’s taste than his previous role, he concealed this with his usual good humour. Until that point the medium-term assessment of the economy, for which he was now responsible, was the formal background to the Treasury’s proposals for future public expenditure growth. The analysis was in volume terms, with inflation assumed to be kept in check by incomes policy. After assessing the potential growth of the economy towards full employment and the demands of private consumption and net exports, to keep the balance of payments secure, what was left could be allocated to public spending.

But, as the Treasury Permanent Secretary Sir Douglas Wass’s meticulous account of the 1976 crsis shows, the external financial pressures on the UK had made such an approach impossible. Nevertheless, the medium term assessments continued until 1979 with Treasury ministers increasingly reluctant to share the results with spending departments. As well as organising this assessment, Cassell drafted the economic policy introduction to the annual public expenditure White Papers that set out the Government’s view of the probable growth of the economy and public expenditure. This text was fought over, with some officials regarding the growth assumptions as too optimistic and ministers invariably regarding them as disappointingly low.

In the late 1970s the practice of interrogating Treasury macroeconomists before parliamentary committees began, and following the publication of the expenditure White Papers, Cassell appeared before the House of Commons Expenditure Sub-Committee. He was not an enthusiastic proponent of the Treasury publishing more information or of officials being interrogated about it, but fulfilled the role with some skill. He was regularly asked by MPs of all parties about the prospects for growth and unemployment and with difficulty managed to get by without going beyond the little that ministers had authorised him to say.

The arrival of Conservative ministers in 1979 greatly intensified the changes that the 1976 crisis had set in motion. Cassell’s main task was, under the direction of Geoffrey Howe and Nigel Lawson, to take the lead in drafting the Medium Term Financial Strategy (MTFS) which was unveiled for the first time in the 1980 Budget and restated annually. The emphasis was on reducing inflation through monetary and fiscal discipline as a means of producing the conditions for stable growth. Drafting the annual MTFS in the early 1980s involved a number of difficult debates: the unfamiliar strength of sterling had devastating effects on certain industries, the targets for monetary growth were regularly exceeded (partly as a result of financial liberalisation) and the previously assumed relationships between monetary growth and inflation broke down. The fiscal plans were not achieved in the early years as public expenditure proved more difficult to constrain than expected. Cassell was at the centre of all these debates and organised drafts of the MTFS each year. While he was a strong proponent of anti-inflationary policies, he looked back on these years with a certain ruefulness.

In 1983 he was promoted to deputy secretary public finance, supervising the Treasury’s monetary and tax policy teams. This role drew on all his previous experience, and for five years he was to be a key figure in the Treasury hierarchy. He had a central role in the preparation of annual Budgets and was closely involved in discussions on a number of possible policy changes such as the amalgamation of national insurance contributions and income tax, which was rejected, and independent taxation for women, which went ahead after his departure for Washington, in the 1988 Budget. His responsibilities involved daily contact on monetary, exchange rate and banking issues with Bank of England officials, mainly Eddie George, with whom he had a remarkably friendly relationship given the institutional tensions. He and other senior Treasury and Bank of England officials knew the City and many of its senior figures in a way that contrasted with the position in 2007 and 2008 with the onset of the current financial crisis, a change that baffled him. His dealings with the Bank of England and the problems of the City ended in his final weeks in the job with his pivotal role in confronting the wish of the BP share sale underwriters to be released from their obligations following the 1987 stock market crash. During this time he began to have more pronounced concerns about the effects of financial deregulation on the growth of private sector credit and spending.

The most controversial monetary policy problem with which he was involved was whether the UK should join the European Exchange Rate Mechanism (ERM). Experience with the UK’s financial crises since the 1960s made him extremely cautious about such a commitment, and he retained this sceptical attitude towards the ERM and subsequently EMU for the rest of his life. He had co-authored a paper for Nigel Lawson in the 1980s warning about the difficulties of defending the sterling exchange rate if it came under pressure in the ERM. However, having had his say and the political decision having been made in the Treasury to propose ERM membership, he became an integral part of the team that engaged with No 10 on the issue.

In Washington from 1988 he had the triple role of economic minister at the British Embassy and executive director at both the IMF and World Bank. He had long wanted this move and it occurred at an historic moment. The Soviet hegemony in Eastern Europe was disintegrating and countries were turning to the IMF as they began the transition to market economies. Cassell’s personality was ideally suited to influence the Washington debate and keep London in touch with developments at the IMF. His telegram to London on the agreement at the IMF board of the first Polish programme was a masterpiece. While in Washington he was assisted by a starry team of future Civil Service leaders including Gus O’Donnell, Suma Chakrabarti, and Jeremy Heywood.

His spell in Washington ended with retirement in 1990. He was on the board of the Crown Agents from 1991 to 1997 and chair of the Crown Agents pension trustees from 1997 to 2006. He maintained a keen interest in macroeconomic and financial affairs until his death. Recently he watched the evolving crises in the banking sector and the eurozone with incredulity but his customary realism.

He married Jean Seabrook in 1957, and she survives him, with their two sons and daughter.

Frank Cassell, CB, economist at the Treasury, was born on August 21, 1930. He died on October 14, 2011, aged 81