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How to tame the Treasury beast

To fix the machinery of government, Gordon Brown’s fief must be drastically cut to size

ON TUESDAY morning a couple of government ministers descended on the home of a Mrs Hipsey, a pensioner in Greenwich, southeast London. Their aim was to publicise the Warm Front and Home Heat programmes. No, these aren’t reality TV shows but schemes to keep pensioners cosy. “Because I do not want any pensioner to go cold we will now do more than ever before to help pensioners through the winter months,” declared one of the visitors, before admiring her home’s government-funded insulation.

This is the sort of stunt to be expected from politicians, the photocall sure to be covered in the local freesheet. But is it what the Chancellor of the Exchequer should be doing? Gordon Brown was taking the credit for the heating handouts as if he were pulling the cash from his own pocket. Margaret Beckett, whose department runs the project, was merely the supporting act.

A week earlier, the Chancellor was pronouncing on the Respect Action Plan, emphasising the need for parenting contracts and faster youth justice. He is providing £52 million for parenting classes so has every right to involve himself in this crusade to create a pleasanter society.

There seems to be no area of government that Mr Brown does not count as his territory. The Government’s summary of the role of Her Majesty’s Treasury says it “aims to raise the rate of sustainable growth and achieve rising prosperity and a better quality of life, with economic and employment opportunities for all”. That sounds a suitable definition for the role of the Government itself and does not leave very much for any other department to call its own.

Hence the Chancellor has become a hugely powerful figure. His desperate desire to succeed Tony Blair indicates that he sees even more power to be assumed, but that may be partly because there would then be a different Chancellor, probably one who would find the job description somewhat reduced. For the time being Mr Brown, with his tight grip on the nation’s purse strings and his stubbornness, can make or break policies. His adherence to means testing is an effective veto on the Prime Minister’s preferred route to pension reform; he was certainly not going to pay for Mr Blair to fly around in the equivalent of Airforce One and that plan was halted well before take-off, just as so many other projects have been.

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This is not Cabinet government as it should be. There have been plenty of critics of the way in which Mr Blair allows his administration to be run, but what is needed is a government structure that would enshrine change. While David Cameron is sending forth commissions to investigate everything from productivity to the calorie content of Chocolate Oranges, he should launch another to study how the workings of British government could be improved.

Downsizing the Treasury would be a suggestion guaranteed to win the approval of civil servants in other departments. An easy option might be to split the Treasury into its tax gathering and funding functions. That is the model adopted in Australia. “The Treasury provides advice to the Government on a range of matters including: economic, fiscal and monetary policy,” explains the Australian Government’s website. Imagine that: advice rather than instructions.

Divided into two, neither department would have the weight of today’s Treasury. And neither department head would justify the current title. In Germany, the Chancellor runs the show. Being called Chancellor of the Exchequer may encourage megalomaniac tendencies. The Cameron commission might find the more prosaic term finance minister appropriate, or treasury secretary, which is what John Snow has to settle for in the US.

The commission should investigate other potential divisions of responsibility. In particular, it should query whether having a single individual as head of both the Cabinet Office and the entire Civil Service is an ideal way to run things. Sir Gus O’Donnell, who fulfils the dual tasks, is a highly able individual, but even he is finding the role taxing. Overwork must explain how he came to invite a militant Muslim cleric to address a Whitehall reception recently. The invitation to the man known as Abu Yusuf, who had been criticised for appearing to support suicide bombers, was described as “an unfortunate oversight” and withdrawn.

Such oversights become inevitable when people are trying to do too much. Sir Gus brought in the consultants McKinsey to advise on restructuring the Cabinet Office, but the brief probably did not encourage them to suggest that heading the sprawling Civil Service was a more than full-time job and the Cabinet Office should have a top civil servant of its own.

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The Cameron commission should talk to civil servants, from whom it would glean that they are not enamoured of the special advisers who have flourished in Whitehall under new Labour. The blurring of the line between servants of the Crown and those political beings who infiltrate the corridors of power as advisers is dangerous. Alastair Campbell provided the most obvious example of this, bossing around civil servants as much as he did Mr Blair but, apparently, accountable to no one.

Sir Gus has backed the idea of a Civil Service Act that would enshrine Whitehall’s independence and clarify just how limited the role, and number, of special advisers should be. Sir Humphrey would have been appalled by how these outsiders have clogged up government machinery. Mr Cameron has time to construct a plan for making it more efficient and accountable. He may eventually reap the benefits.