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In a bold move aimed at redefining economic policy in the UK, Prime Minister Andy Burnham has announced a new initiative designed to decentralise control from the Treasury and establish a dedicated department in Manchester known as No 10 North. This shift aims to empower local leaders and drive long-term growth strategies, a response to the mounting challenges posed by inflation and the cost of living crisis.
Reimagining Economic Governance
Burnham’s proposal is not without precedent. Historically, Prime Ministers have often grappled with the Treasury’s significant influence over fiscal policy. From Boris Johnson’s controversial reshuffling of the Treasury team to Margaret Thatcher’s preference for her economic adviser, the struggle to balance power between No 10 and the Treasury has been a recurring theme in British politics.
Drawing parallels to Harold Wilson’s short-lived Department for Economic Affairs, Burnham’s plan seeks to reinvigorate the government’s approach to economic planning, which has often been hampered by what critics refer to as the “Treasury brain.”
“The dual job of growth and control of the public finances sometimes clouds the growth mission,” Burnham remarked. By placing growth initiatives under the direct purview of No 10, he believes it will enhance the government’s capacity to remove barriers to economic development.
The Role of Devolution
A key aspect of Burnham’s strategy is a renewed focus on devolution. His administration aims to provide metro mayors with greater powers, thereby consolidating growth policies that have previously been fragmented across various government departments. Ruth Curtice, director of the Resolution Foundation, emphasised the importance of this approach, stating that effective coordination across areas like housing, education, and planning could significantly enhance regional economic performance.
Burnham’s vision aligns with historical attempts to embed a regional focus in economic policy, reminiscent of the regional development agencies created during the Blair-Brown era. Sanjay Raja, chief UK economist at Deutsche Bank, believes that the collaboration between Burnham and his chosen Chancellor, John Healey, marks a crucial partnership in pursuing these devolution goals.
Challenges Ahead
Despite the ambitious nature of the No 10 North initiative, sceptics warn that the Treasury’s entrenched dominance over tax and spend matters may undermine its effectiveness. David Gauke, a former Conservative chief secretary to the Treasury, cautioned that the new unit might struggle against the Treasury’s established authority, which continues to shape the government’s fiscal landscape.
The Treasury has already indicated that No 10 North will centre on local growth rather than assume broader economic strategy responsibilities. As the initiative unfolds, challenges are likely to arise, particularly regarding how conflicts between No 10 and the Treasury will be resolved. Jonathan Portes, a former senior government economist, highlighted the critical question of how policy disagreements will be managed, given the Treasury’s historical reluctance to yield control.
A Vision for the Future
With a critical budget approaching, Burnham and his cabinet face pressing decisions on tax and spending that will ultimately shape the UK’s economic landscape. While the ambitions for radical reform, including the potential renationalisation of utilities and tax overhaul, may clash with the Treasury’s cautious approach, Burnham’s drive for a more dynamic economic policy could signal a transformative moment in British governance.
The historical reference to the Wilson era serves as both an inspiration and a cautionary tale. Although the aspirations for a dedicated economic department faded in the past, there is hope that Burnham’s vision will succeed where others have faltered.
Why it Matters
Burnham’s initiative to establish No 10 North represents a significant shift in the UK’s approach to economic governance, aiming to empower local leaders and drive sustainable growth amid ongoing economic challenges. By decentralising power from the Treasury, this plan could pave the way for a more responsive and innovative economic policy framework, potentially reshaping the UK’s economic future in profound ways. If successful, it may not only alter the dynamics of government but also provide a model for addressing regional inequalities across the country.
