Andy Burnham is far from the first prime minister to dream of taming the power of the mighty Treasury. Boris Johnson all but forced the resignation of Sajid Javid by handpicking his team; Margaret Thatcher favoured her economic adviser Alan Walters over Nigel Lawson, prompting the latter’s furious resignation; and Tony Blair and Gordon Brown’s power struggle was the stuff of Whitehall legend. Burnham’s approach harks further back still to Labour prime minister Harold Wilson’s Department for Economic Affairs (DEA), a short-lived attempt to bring long-term thinking to British economic policymaking.
The PM made the historical analogy as he gave fresh details this week of his plan to take control of growth policy from the Treasury and hand it to a new No 10 department in Manchester. The DEA was responsible for drawing up a national plan for the economy, which began with the timeless exhortation: “We must pay our way in the world and produce more wealth inside this country.” The baleful influence of the Treasury, with its stranglehold over the public finances, has long been lamented by leftwingers, who accuse it of short-term thinking and ingrained, institutional caution. Burnham hopes the new prime minister’s department, overseen by his powerful cabinet ally Louise Haigh, will open the space for some fresh thinking.
One of the few detailed policy publications the new cabinet has so far produced was on radical plans for devolution. The PM hopes handing additional powers to metro mayors will help bring together growth policies now scattered across Whitehall. Ruth Curtice, director of the Resolution Foundation thinktank and a former longtime Treasury official, says coordinating across these different policy areas – housing, education, planning and so on – could be the most effective use of the new Manchester-based unit.
These were meant to bring a regional dimension to growth and industrial policy – but were scrapped by the 2010 Conservative-Lib Dem coalition. George Osborne went on to create and empower city region mayors as the focus for devolution. Given the pair’s joint interest in devolution, Raja argues that far from clipping Healey’s wings, “this is one of the more merged tag teams in No 10 and No 11 that we have seen”.
Yet not everyone is convinced that it makes sense to create a policy counterweight to the Treasury. Former Conservative chief secretary to the Treasury David Gauke says the Treasury’s control over tax and spend, which it will maintain under the shake-up, means it is inevitably powerful. He also questions whether No 10 North can work: “You’re going to have this office, which will get at best a day a week of face-time with the PM, and little access to other ministers – and it will be trying to push the government in a more pro-growth direction.” A Treasury source stresses that, as the initial government announcement said, No 10 North will focus on “local growth”, and in particular devolution – rather than taking over economic strategy from No 11.
The Treasury has “lent” a small number of staff to the new unit, while its second permanent secretary, Beth Russell, who was instrumental in the creation of the Treasury’s own northern outpost, the Darlington Economic Campus, has been working closely with the Manchester team. More civil servants are being transferred from other departments, including housing and local government, and former Times journalist Sam Lister has been appointed as No 10 North’s director. However, Whitehall veterans point to the new department’s relatively modest resources thus far.
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