Sir Donald MacDougall

Economist who worked for prime ministers from Churchill in the Second World War to Heath in the 1970s

George Donald Alastair MacDougall, economist and civil servant: born Glasgow 26 October 1912; Lecturer, Leeds University 1936-39; staff, First Lord of the Admiralty's Statistical Branch 1939-40; staff, Prime Minister's Statistical Branch 1940-45, Chief Assistant 1942-45, Chief Adviser 1951-53; OBE 1942, CBE 1945; Fellow, Wadham College, Oxford 1945-50, Domestic Bursar 1946-48, Honorary Fellow 1964-2004; Economic Director, OEEC 1948-49; Fellow, Nuffield College, Oxford 1947-64, First Bursar 1958-64, Honorary Fellow 1967-2004; Nuffield Reader in International Economics, Oxford University 1950-52; Kt 1953; Honorary Secretary, Royal Economic Society 1958-70, Vice-President 1970-72, 1974-2004, President 1972-74; Economic Director, NEDO 1962-64; Director-General, Department of Economic Affairs 1964-68; FBA 1966; Head of Government Economic Service and Chief Economic Adviser to the Treasury 1969-73; Chief Economic Adviser, CBI 1973-84; President, Society for Strategic and Long Range Planning 1977-85; married 1937 Christabel Bartrum (one son, one daughter; marriage dissolved 1977), 1977 Margaret Hall (née Linfoot, died 1995); died London 22 March 2004.

Donald MacDougall first came to prominence as Winston Churchill's Chief Assistant in the Prime Minister's Statistical Branch during the Second World War; for 45 years he was to hold an influential place in British public life.

After two decades in Oxford, first at Wadham and then at Nuffield, MacDougall returned to Whitehall in the 1960s, as Chief Economic Adviser successively to two fledgling dirigiste institutions, the National Economic Development Council and the ill-fated Department of Economic Affairs. His Whitehall career culminated with a four-year spell from 1959 as Head of the Government Economic Service and Chief Economic Adviser to the Treasury. He then became Chief Economic Adviser to the CBI, at a fraught time in that body's relationship with Government. He was also prominent internationally as Director of the Organisation for European Economic Co-operation in Paris. In Britain, he moved effortlessly between Oxford and Whitehall and his memoirs Don and Mandarin (1987) reveal the intellectual stimulus he received from this double harness.

His personal involvement in the corridors of power, with figures as diverse as J.M. Keynes and George Brown, as well as in dramatic events such as Churchill's first meeting with Franklin Roosevelt in May 1943, and R.A. Butler's attempt to float the pound in 1952 ("Robot"), was reminiscent of a C.P. Snow novel, though for MacDougall "the Abominable Snowman" was one of his bêtes noires, after Snow's disparaging assessment of Professor Frederick Lindemann, one of MacDougall's mentors, in Science and Government (1961). MacDougall was not in the traditional civil-service mould, but he became one of the indispensable public servants of his generation as a trusted and objective outsider who could always see problems in a new and unprejudiced light.

Donald MacDougall was born in Glasgow in 1912, younger son of Daniel MacDougall, who worked in the family's china business. The young Donald went first to Kelvinside Academy, where, in the traditional Scots manner of hard-working probity, he received a sound educational grounding, before moving on to Shrewsbury School, which he did not particularly enjoy. MacDougall's father died when he was 17 and with the Great Depression gathering pace only his grandfather's trust enabled him to go on to Balliol.

Oxford was for him a sight of previously unglimpsed horizons. He took a second in Maths Mods, and was disappointed not to get a First in PPE, which one of the examiners, Roy Harrod, believed he deserved. With the George Webb Medley Scholarship in Political Economy, he continued at Oxford as a graduate student, now under Harrod's supervision, producing original work on the definition of prime and supplementary costs. In July 1936 Harrod submitted MacDougall's paper to J.M. Keynes for inclusion in the Economic Journal. Keynes, who was about to publish the General Theory, not only accepted the article, but engaged in a lengthy correspondence with MacDougall on his definitions of price structure.

On the back of this success, and recommended by Harrod, MacDougall secured his first academic post at Leeds University as a lecturer in economics. In 1937, whilst at Leeds, MacDougall married Christabel Bartrum, whom he had met two years earlier on holiday in Austria. His travels to Europe had left MacDougall in no doubt as to what lay ahead on the international scene, and with the outbreak of war he was drafted by Lindemann ("the Prof") and Harrod into the First Lord of the Admiralty's Statistical Branch.

For a 26-year-old economist, this was a heady first taste of official life at a crucial turning point of British history. As the first Lord was Winston Churchill, MacDougall now found himself swept onwards and upwards, next serving for five years in the Prime Minister's Statistical Branch, the last three as Chief Assistant.

MacDougall's charts analysing the circumstances of successful U-boat attacks on Allied merchant shipping was one of his most significant contributions to operational research. He also worked on assessments of German oil consumption, but by 1944 was given important responsibilities on problems of post-war reconstruction, including how the commitment to full employment could be achieved without accompanying inflation, one of the central economic and social concerns of his later period as Chief Economic Adviser.

In 1945, shortly after the end of the war, MacDougall was in a British delegation to Moscow, headed by Walter Monckton, to discuss reparations and German industry with the Russians and the Americans. It was almost entirely staffed by Balliol men. From Moscow, MacDougall flew to the Potsdam Conference, where he was part of the Prof's civil-service team, advising on German economic questions. He was appointed CBE in Churchill's Resignation Honours.

With the disbandment of the Statistical Branch, and after a temporary placement in the Economic Section of the Cabinet Office, MacDougall resumed his academic career. He was beaten to a post at Balliol by Tommy Balogh, a later sparring partner during the first Wilson government but through Lindemann's advocacy secured a Fellowship at Wadham. His lectures, mainly to mature ex-servicemen, who were concerned with real issues, such as Britain's foreign-trade problem, on which MacDougall became an expert, rather than economic theory, were immensely popular and, when he lectured in Wadham Hall, even the gallery was filled to overflowing. Although he was only at Wadham for five years, he was immensely happy there and formed fruitful professional links with A.J. ("Freddie") Ayer and William Deakin, later first Warden of St Antony's College, not to mention Wadham's legendary Warden, Maurice Bowra, who became a close associate. During his Wadham years, MacDougall maintained his Whitehall links by joining Sir Stafford Cripps's industrial "Working Parties" at the Board of Trade, a forerunner of the "Little Neddies" MacDougall was later involved with in the NEDC.

In 1950 MacDougall was appointed Reader in International Economics, which necessitated a move to Nuffield College as a Professorial Fellow. In October 1951, the Prof, now Lord Cherwell, was appointed Paymaster General in Churchill's new administration and he asked MacDougall to join him. Reluctant to leave Nuffield so soon after his appointment, MacDougall compromised by taking unpaid leave. It proved one of the most fascinating periods of his life.

As Rab Butler, Chancellor of the Exchequer, continued to live in his own house in Smith Square, the Prof and MacDougall were accommodated during the week in flats at 11 Downing Street. One of MacDougall's first missions was to provide Churchill's brief for the economic part of his talks with President Harry Truman in January 1952, to which he travelled with the Prime Minister, the Foreign Secretary, Anthony Eden, and the Prof, on the Queen Mary, glad that, unlike in 1943, there was no danger of U-boats.

On their return to Britain, the Prof and MacDougall were shocked to receive Butler's assessment of the critical level of Britain's reserves; they were even more shocked by Butler's plan ("Robot") for the floating of the pound, a limited form of convertibility, and the blocking of overseas sterling balances in London.

The next eight days were in MacDougall's own words "the most exciting I spent with the Prof", as he was a first-hand witness of the realpolitik that overturned Butler's plans for what MacDougall thought would "have had appalling economic and political consequences for the country". A vital part of the strategy was getting Anthony Eden, previously neutral, on the Prof's side. When the dust had settled, MacDougall published a paper on "The Risks of Convertibility", which led a devout Scots lady to ask his mother in shocked tones of her recently knighted son, "Is it true that Sir Donald is against conversion?"

When MacDougall returned to Nuffield it was as a University Lecturer and Fellow. In a strange twist of fate, Roy Harrod succeeded to MacDougall's former post as Reader in International Economics, and the two, mentor and protégé, gave graduate seminars in international economics for the next eight years. MacDougall travelled widely on behalf of the college and was successful in establishing Nuffield's investment income.

The lure of Whitehall, however, remained strong and MacDougall was desperately disappointed when his friend Alec Cairncross beat him to the post of Chief Economic Adviser in 1961. In retrospect, however, he saw this as a blessing, the post eventually coming his way in 1969, as it enabled him to be in "on the ground floor" in two fascinating posts. Selwyn Lloyd, Chancellor the Exchequer, asked him to be first Economic Director of the NEDC in 1962, where he proved a great advocate of the expansion of demand, and was successful at recruiting bright young economists to government service.

With the narrow Labour victory in the 1964 general election, MacDougall made his final break with academe when he was appointed Director-General of the Department of Economic Affairs under George Brown. The birth pangs of the DEA have gone into Whitehall legend. When Brown arrived at his new office on his first day just before 8am, MacDougall was one of three staff, all of whom sat on the floor as there was only one chair, which Brown had appropriated.

Less than 36 hours after the election victory, MacDougall was one of the three senior civil servants summoned by James Callaghan, Chancellor of the Exchequer, and George Brown to 11 Downing Street, to be asked advice on devaluation. MacDougall was the only advocate of immediate action; Wilson's subsequent failure to bite this particular bullet, in MacDougall's view, dominated and distorted economic policy for the next four years. After his experience on the "Robot" crisis in 1952, MacDougall was keen on the idea of an "Opposition" to the Treasury view from within the government, but the much-vaunted "creative tension" Wilson had hoped for proved illusory in an unequal battle in which the big battalions were always on the side of the Chancellor.

MacDougall was reluctantly drawn into preparing George Brown's National Plan of September 1965, based on an over-optimistic predicted average growth of 3.8 per cent, sustained over six years. MacDougall's diplomatic skills were sorely tested by his liaison responsibilities over Brown's pipe dream with the CBI, his next employers, and his former colleagues at the NEDC. George Brown's advocacy of devaluation in the summer of 1966 also fell on deaf ears.

MacDougall's time at the DEA with Michael Stewart at the helm from August 1966 proved calmer and more productive. Nevertheless, MacDougall appreciated Brown's good points and was generous to him in his memoirs, describing him as a formidable minister, whilst admitting that "sadly, on occasion his effectiveness declined as the day progressed".

On 1 January 1969 MacDougall moved to the unprecedented double job of Head of the Government Economic Service, which expanded during his tenure, and Chief Economic Adviser to the Treasury. He served three Chancellors, Roy Jenkins, Iain Macleod (briefly) and Tony Barber, at a crucial transitional stage in the development of the post-war economy. Jenkins had become Chancellor in 1967 after devaluation and MacDougall regarded Jenkins, unlike Wilson, as having been proved right on this issue. Their partnership was ended by the unexpected Conservative victory at the general election of 18 June 1970.

MacDougall had high expectations of Iain Macleod, the new Chancellor, and in the short fortnight that was granted to him before he entered hospital and his premature death, Macleod endorsed MacDougall's recommendation that the abolition of investment grants to industry should be balanced by reduced company taxation, a policy introduced by his successor, Tony Barber. By 1971 MacDougall was predicting in his monthly economic reports to the Prime Minister and Chancellor that the headline total of unemployment could possibly top the sensitive figure of one million by the winter.

In November that year, as part of an expansionary policy, he was instructed, in a return to his concerns of 1944, to produce a plan for reducing unemployment by 400,000 during the following year. By then the Government's difficulties were multiplying in other areas and, although MacDougall's tenure as Chief Economic Adviser was extended until his 61st birthday in October 1973, he was not sorry to miss the period leading up to the February 1974 election.

To some raised eyebrows MacDougall moved almost at once on leaving Whitehall to an equivalent post at the CBI. With the hike in oil prices by the Arab producers in full swing, and then Edward Heath's imposition of "the three-day week" MacDougall's baptism at the CBI was a difficult one. Following the return of a minority Labour government in February 1974, the CBI had many meetings with Denis Healey, the new Chancellor, and his Treasury ministers.

During MacDougall's tenure, the CBI adopted a higher public profile, its annual conferences being covered live on television, but it is arguable about whether this actually increased its direct influence over government, even after the return of a Conservative administration in 1979. In MacDougall's own words "scant attention was paid" to their views and there was "frustration and irritation". He was particularly disenchanted with the Howe Budget of 1981 He finally retired in March 1984.

Donald MacDougall published several economic books, many of which became standard texts, including The Dollar Problem: a reappraisal (1960) and the two-volume Studies in Political Economy (1975).

In 1977 he divorced his wife Christabel; subsequently he married Margaret Hall, Economics Fellow at Somerville College, whom he had known for 30 years, and former wife of Robert Hall, government Chief Economic Adviser in the early 1960s.

Oxford, to the end, remained an important thread. Sir Herbert Samuel, sometime leader of the Liberal Party, once said that life was one Balliol man after another. MacDougall's career in all its myriad patterns showed that he was not an exception to Samuel's sense of collegiate pride.

D. R. Thorpe