Lord Jim O'Neill rules out a formal role in Andy Burnham's government, citing blind trust rules not policy

Lord Jim O'Neill, the former Goldman Sachs chief economist who had been tipped to become Andy Burnham's chief economic adviser, has said he will not take a job in the prime minister's government.

He told the Financial Times that the decision was not a political one. It is not because of any policy disagreements, he said, adding that he was a massive fan of the focus on devolution and hoped Andy and his team would be bold on this and everything else.

The obstacle was the machinery of public appointment rather than its direction. O'Neill said he was enjoying his current roles too much, and did not want to surrender control of his own investments by placing them in a blind trust for the duration of an official post.

At a glance

• Lord Jim O'Neill has ruled out a formal role in Andy Burnham's government.
• He had been widely tipped to become the prime minister's chief economic adviser.
• O'Neill said the decision was not driven by any policy disagreement.
• He cited a reluctance to place his assets in a blind trust and give up control of his investments.
• He described himself as a massive fan of the focus on devolution and urged the government to be bold.
• He is a former Goldman Sachs chief economist and a former Conservative Treasury minister.

The blind trust problem

The requirement at issue is not obscure. Anyone taking a formal government role with influence over economic policy is expected to remove any scope for personal benefit from decisions they help shape, and for someone with a spread of active investments and directorships that usually means a blind trust: assets handed to an independent manager, with the owner losing sight of what is held and any say over it.

For a career civil servant that is a formality. For someone who has spent a career running money and sitting on boards, it means surrendering the thing the job was built on, for a post that lasts only as long as the government does.

A recurring problem for governments

This is a familiar friction. Governments want people with genuine market experience, and the people with genuine market experience are precisely the ones for whom the conflict-of-interest rules bite hardest. The rules exist for good reason, and the cost of them is that the pool of willing candidates narrows sharply at the senior end.

The alternative O'Neill has chosen, advising informally, keeps the expertise available while avoiding the disclosure regime. It also removes the accountability that comes with a formal post, which is the trade-off running in the other direction.

Who he is

O'Neill spent his career at Goldman Sachs, where he was chief economist and is best known for coining the BRIC acronym for Brazil, Russia, India and China. He later served as a Treasury minister under a Conservative government, and has chaired reviews on antimicrobial resistance and on urban growth outside London.

That last strand is the relevant one here. He has argued for shifting economic decision-making away from Whitehall for well over a decade, and had been advising Burnham informally before Burnham became Labour leader.

What it means for the devolution agenda

O'Neill's endorsement of the government's devolution focus is arguably worth more than the job he declined. His long-standing argument is that the UK's productivity gap is substantially a problem of concentration, and that cities outside London underperform comparable European cities because they lack the powers and the revenue to invest on any useful horizon.

His instruction to be bold reads as a warning as much as encouragement. Devolution packages have a habit of arriving with new responsibilities attached and old funding formulas intact, which produces the appearance of decentralisation without the substance.

What happens next

The chief economic adviser post remains to be filled, and the government has not indicated a timetable. O'Neill has made clear he will continue to offer advice on an informal basis, which is how the relationship worked before the election.

The wider test arrives with the government's devolution plans, where the question O'Neill has posed is straightforward: whether mayors and combined authorities get real powers over revenue and long-term capital, or another round of ring-fenced pots administered from the centre.