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Andy Burnham, the newly appointed Prime Minister, is embarking on a transformative journey to redefine Britain’s economic landscape by shifting growth policy oversight from the Treasury to a newly established department located in Manchester, dubbed No 10 North. This initiative aims to tackle the long-standing constraints imposed by Treasury dominance over fiscal matters, with Burnham asserting that the significance of this innovation may be underestimated by the public and political observers alike.
A Historical Perspective on Treasury Power
Burnham’s vision is not without precedent in British political history. Numerous Prime Ministers have grappled with the Treasury’s formidable influence over economic policy. From Boris Johnson’s controversial reshuffling of key Treasury personnel to Margaret Thatcher’s preference for her economic advisor over her Chancellor, the struggle for control has been a recurrent theme in Westminster. Additionally, Burnham’s approach resonates with the aspirations of Harold Wilson, who attempted to instil long-term economic planning through the now-defunct Department for Economic Affairs (DEA).
The DEA’s mission was encapsulated in its commitment to ensuring that Britain could “pay our way in the world and produce more wealth inside this country.” Burnham’s current strategy seeks to reignite this focus on sustainable growth by removing the Treasury’s stranglehold on public finances.
“The dual job of growth and control of the public finances sometimes clouds the growth mission,” Burnham remarked, emphasising the need for a dedicated focus on unlocking potential within the Whitehall framework.
Devolution: A Pathway to Growth
Integral to Burnham’s economic strategy is the principle of devolution. His administration is advocating for the decentralisation of powers to regional leaders, particularly metro mayors, to better align growth initiatives that have historically been fragmented across various government departments.
Ruth Curtice, director of the Resolution Foundation, highlights the potential effectiveness of this approach. “No one department has all of the levers – the Treasury don’t own all of the levers,” she stated, underscoring the importance of cross-departmental coordination in areas such as housing, education, and planning.
Burnham’s ally, Louise Haigh, tasked with overseeing No 10 North, echoes this sentiment, suggesting that a collaborative effort could yield more comprehensive and impactful growth policies. The new unit is envisioned as a multi-disciplinary team that draws expertise from various sectors, akin to the Office for Climate Change, which successfully facilitated inter-departmental cooperation.
The Challenges of Treasury Dominance
Despite the ambitious vision laid out by Burnham, scepticism remains regarding the practicality of establishing a counterbalance to the Treasury’s entrenched power. David Gauke, the former Chief Secretary to the Treasury, cautions that the Treasury’s control over fiscal matters will continue to render it the dominant player in economic policy-making.
“There’s a risk that stripping growth out of the Treasury’s remit could exacerbate its focus on austerity,” Gauke warned. The challenge of reconciling the objectives of No 10 North with the Treasury’s priorities raises pertinent questions about the effectiveness of this new department.
Moreover, the limited resources and access to key decision-makers may hinder No 10 North’s capacity to effect real change. Jonathan Portes, a former senior government economist, noted the potential for conflict when policy aspirations from No 10 clash with Treasury directives. “What happens when No 10 wants to do something, and Treasury says no?” he queried, illustrating the historical tension between the two entities.
A New Era of Economic Strategy?
As Burnham’s administration prepares for its inaugural budget, the stakes are high. With looming decisions on taxation and spending, the potential for radical policy shifts, such as the renationalisation of key public utilities, could come into conflict with the cautious approach that the Treasury typically adopts.
While Burnham seeks to foster a new narrative around economic growth, the historical lessons from Wilson’s era highlight the difficulties of maintaining a distinct economic strategy outside of Treasury oversight. The ambitious plans for No 10 North could either pave the way for a more dynamic and responsive economic policy framework or risk being subsumed by the Treasury’s prevailing caution.
Why it Matters
The establishment of No 10 North represents a pivotal moment in British economic policy-making, with the potential to reshape the relationship between regional and central government. By prioritising devolution and innovative growth strategies, Burnham aims to break free from the constraints of traditional Treasury governance. However, the success of this initiative hinges on the ability to navigate the entrenched power dynamics within Westminster. As the government grapples with immediate fiscal pressures and long-term economic challenges, the outcome of Burnham’s ambitious plan will have significant implications for the future of economic governance in the UK.
