This provocation argues that the power of the UK’s Treasury leads to overcentralisation and short-termism. Breaking it up would benefit the UK.
- The UK’s Treasury is unusually powerful, combining responsibilities for government budgets, finances, economic policy and tax policy.
- This power leads to pessimism, short-termism, and overcentralisation throughout the UK government.
- This could be solved by splitting the Treasury up, moving budgetary responsibility to a strengthened Prime Minister’s department and economic policy to a new Department for Growth.
HM Treasury is universally respected for its power and competence. But this power comes at a price. Putting a single department in control of public spending, government finance and economic policy means that what the Treasury says in Whitehall goes.
This leads to problems: it makes departments more pessimistic and short-termist, and it entrenches the over-centralisation of the British state.
Splitting the Treasury up would help fix this. The report recommends moving budgetary responsibility to a genuine Prime Minister’s department and economic policy into a new Department for Growth, leaving a smaller finance ministry in the Treasury’s place.
This change would help the British government be more long-termist and make better decisions.
Giles Wilkes and Stian Westlake