The Debt Management Office was set up in 1998 as part of the wide-ranging reforms of the Bank of England by Gordon Brown, the then Chancellor. He gave the Bank control over interest rates, but took away its role as the government agent for debt management and handed it to the newly established DMO.
The intention of the new Labour Government was to ensure that debt management decisions could not be perceived to be influenced by inside information on interest rate decisions, and to increase transparency in debt and cash management operations.
“If you bundled up debt management and monetary policy, there is the potential for the most extraordinary conflict of interest,” Robert Stheeman has pointed out.
The office, which is staffed by civil servants, has actually benefited from the financial crisis, he claims. “From a motivational perspective, there is nothing better for the people working in any organisation than to think, ‘Now you are really needed’.”
Mr Stheeman concedes, though, that the morale of staff remains a concern. “All staff here are civil servants and we’re in the middle of a pay freeze which we’ve had for two years — it seems like ten.
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“Motivation and staff retention are very real issues, especially when we work in and have to recruit from an external environment, which is not at all typical for Whitehall.
“Our staff turnover has increased as our pay falls further behind that of the financial sector. These are real management challenges for the organisation and they’re the ones that constantly concern me.”