In a bold move to reshape the economic landscape, Prime Minister Andy Burnham has announced the establishment of a new department, dubbed No 10 North, aimed at decentralising economic policy from the Treasury to promote sustained growth. This initiative, based in Manchester, is designed to enhance long-term economic planning and empower regional leaders, a significant shift in the UK’s approach to economic governance.
Reimagining the Role of the Treasury
Burnham’s ambition to diminish the Treasury’s long-standing control over public finances is reminiscent of historical attempts by past Labour leaders. The Prime Minister draws parallels with Harold Wilson’s short-lived Department for Economic Affairs (DEA), which sought to provide a more strategic framework for economic policymaking. The DEA’s mission began with a simple yet profound directive: the necessity for the UK to be self-sufficient and productive.
“The dual job of growth and control of the public finances sometimes clouds the growth mission,” Burnham remarked in a recent interview, emphasising the need for a dedicated focus on economic expansion. He envisions No 10 North as a vehicle to remove bureaucratic impediments and facilitate innovative growth strategies that can originate outside the traditional confines of Whitehall.
Devolution as a Growth Strategy
A cornerstone of Burnham’s plan is the empowering of metro mayors through devolution, which he believes will allow for more coherent and effective policy coordination across various sectors such as housing, education, and urban planning. Ruth Curtice, director of the Resolution Foundation and a former Treasury official, posited that this integrated approach could significantly enhance the effectiveness of economic policies.
“Given what a priority this is, we’re going to put more force behind it,” Curtice suggested, highlighting the potential benefits of a unified strategy. Former adviser Michael Jacobs echoed this sentiment, advocating for a growth unit that draws expertise from multiple government departments to foster a holistic approach to economic development.
The Skepticism Surrounding No 10 North
Despite the potential benefits, skepticism remains regarding the feasibility of this initiative. David Gauke, a former Conservative chief secretary to the Treasury, pointed out that the Treasury’s authority over taxation and expenditure will likely remain dominant. “The Treasury is always going to be the most important department,” he asserted, suggesting that a separate growth unit might merely amplify existing fiscal constraints.
Furthermore, the structural challenges facing No 10 North cannot be overlooked. Jonathan Portes, a former senior government economist, raised concerns about the inevitable clashes between No 10 and the Treasury: “What happens when No 10 wants to do something, and Treasury says no?” Such conflicts could undermine the effectiveness of Burnham’s proposed reforms.
Ambitious Plans Amidst Fiscal Constraints
As the government prepares for an impending budget, the new cabinet faces a pressing need to navigate complex decisions on taxation and public spending. Burnham’s vision includes ambitious proposals for the renationalisation of public utilities and substantial tax reforms, which may conflict with the Treasury’s instinct for fiscal caution. Louise Haigh, Burnham’s ally overseeing No 10 North, has previously lamented the Treasury’s tendency to prioritise immediate debt concerns over long-term economic outcomes.
As the discussions intensify, the historical context of Wilson’s DEA serves as a poignant reminder of the challenges that lie ahead. The DEA, which sought to implement a national economic plan, ultimately faltered under the weight of institutional resistance and was dissolved by the late 1960s, with its powers reintegrated into the Treasury.
Why it Matters
The establishment of No 10 North represents a critical moment in the evolution of UK economic policy, as it attempts to address the longstanding imbalance of power favouring the Treasury. Burnham’s initiative could pave the way for more innovative and regionally focused economic strategies, but its success hinges on overcoming deep-rooted institutional inertia. As the country grapples with pressing economic challenges, the effectiveness of this new approach may well determine the trajectory of the UK’s economic future. The stakes are high, and the coming months will reveal whether Burnham can indeed rewrite the rules of economic governance in the UK.