Chancellor's problems pile up - FT.com George Osborne wants to be seen as the man "keeping Britain safe in the gathering storm." Instead this week the chancellor and the Treasury have been held up to ridicule, as they embarked on an apparent bid to set a record for u-turns conducted in a 72-hour period. After retreats on pasties, caravans and charities, reports circulated on Friday that Mr Osborne had ordered a fourth about-turn, this time on a so-called "skip tax." This story was dismissed - appropriately - by Mr Osborne's team as "utter rubbish," but the impression has taken hold: the Treasury is for turning. IN UK Politics & Policy "If we can't deal with a pasty tax, does the government have the political will to carry out a spending review?" pondered one government insider. Indeed the £40m concession to pie-eaters pales into insignificance compared to the £10bn of extra welfare cuts Mr Osborne says will be needed to help close the deficit. Mr Osborne insists the Budget u-turns - total cost £150m - are a small price to pay to allow the Treasury to remove festering problems and allow ministers and officials to concentrate on the big issues. But the chancellor's team is still analysing how the problems arose in the first place. Simplifying the tax system is a long-standing Treasury goal, championed by tax experts and think-tanks. The fact Mr Osborne was looking to raise money to fund a £3.5bn increase in the tax threshold and the controversial cut in the 50p top rate of tax pushed old ideas to the top of the agenda. Alistair Darling, former Labour chancellor, rejected the pasty tax as simply not worth the trouble. He told colleagues he would not countenance a new tax on caravans because of the trouble he would get from Margaret Beckett, a cabinet colleague and a famously keen caravanner. But Mr Osborne needed the money. Treasury insiders now concede that not enough time was spent working out how to present and sell the policy, nor in engaging with "stakeholders" such as charities to try to win the argument before the media ripped the policies apart. The chancellor's team admits that "over-confidence" crept in: if Mr Osborne could persuade the public to swallow £113bn of tax rises and spending cuts, surely a modest tax rise on sausage rolls would pass unnoticed. Tough tax decisions, they conclude, are best taken early in a parliament or when money is not so tight. Although the Treasury hates being seen as weak or incompetent, morale in the building remains surprisingly high. Although the Budget u-turns may have been cringe-making for Mr Osborne, a number of officials regard the reversals as "trivial." On the big picture the Treasury's senior team is committed to the task of deficit reduction and shares Mr Osborne's certainty that austerity is not to blame for the recession. They argue the problem would be considerably worse if Britain had Spain's interest rates and are more cautious than David Cameron or Nick Clegg at the idea that the UK would grow more quickly if only the Treasury absorbed more private sector risk for housing or infrastructure projects on its balance sheet. Meanwhile Sir Nick Macpherson, the Treasury's top civil servant, is preparing his team for action if the eurozone turmoil worsens and triggers a credit crunch in Britain. "The Treasury is at its best when it's running on adrenaline," he says. At a senior level, the Treasury retains a strong institutional memory of the 2008 crash. Apart from Sir Nick, senior figures including Tom Scholar, Michael Ellam, Dave Ramsden and Geoffrey Spence were all in the bunker in Number 10 or the Treasury at the time. "We have very clever, creative people here," Sir Nick says. I saw extraordinary things take place here in 2008, in many cases early in the morning. But the recapitalisation of banks and creation of special liquidity schemes was stitched together by a hastily assembled team. As Mr Darling has noted, the Treasury's financial stability unit at the time Northern Rock collapsed in 2007 consisted of "two men and a dog." If today's senior team is stable, the Treasury is grappling with an exodus of staff at lower levels, prompted partly by the department's low pay compared with other Whitehall departments, let alone the private sector. Sir Nick is looking to a new pay structure within the government's pay freeze to retain bright young talent. Treasury insiders dismiss the idea that an institution unable to win an argument on static caravan taxation is not in a fit state to deal with a deepening economic crisis. "Institutionally we are battle-hardened," Sir Nick insists. We are up for it.