Does the Treasury wield too much power over government?

Mar 27, 2024

The podcast dives into the Treasury's significant power and influence over public spending and tax policy. It debates criticisms of the Treasury's short-term approach and micromanagement tendencies. Experts discuss the need for long-term planning and transparency in fiscal decision-making. There’s exploration of the Treasury's role in driving economic growth, alongside the complexities of public contracts. The conversation touches on enhancing the Treasury's effectiveness and the culture of fear affecting policy evaluations within government. A nuanced look at improving collaboration among departments is also presented.

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Episode notes

Intro

00:00 • 2min

Navigating Treasury Dynamics

02:27 • 36min

Navigating Short-Termism in Fiscal Policy

38:16 • 17min

Navigating Industrial Strategy and Economic Growth

54:52 • 9min

Treasury and Economic Growth

01:03:34 • 7min

Navigating Political Nervousness in Policy Evaluation

01:10:26 • 2min

Enhancing Treasury Effectiveness

01:12:14 • 5min

The Treasury is perhaps the most powerful department in Whitehall. Its ownership of public spending means it has direct control over the money available to the rest of government, while the Treasury’s responsibility for tax policy gives it enormous influence over the finances of households and businesses.

But criticism of the department’s influence on government policy is almost as old as the institution itself, with frequent complaints about the “dead hand of the Treasury” or attacks on the department’s “orthodoxy”.

However, a recent IfG report found many of the fiercest criticisms to be overblown: many simply represent a dislike of a budget constraint. The department plays an important function in effectively managing public spending and guarding against financial disorder. It has also consistently been a champion of economic growth, though there is debate about how that is managed against its responsibility for managing government spending. While the department has clear strengths, there are clearly problems with how it functions. The Treasury often takes a short-term approach, is frequently accused of micromanaging other departments, and wields excessive influence over government policy relative to the rest of the centre.

So how can these problems be addressed? How much are they due to the relative weakness of other departments or the incentives facing Treasury ministers? And just what impact does the Treasury have on government policy making?

Our expert panel exploring these issues and more featured:

• James Bowler CB, Permanent Secretary of HM Treasury

• Anita Charlesworth, Director of Research at the Health Foundation and former Director of Public Spending at HM Treasury

• David Gauke, former Chief Secretary to the Treasury, Lord Chancellor and Secretary of State for Work and Pensions

• Giles Wilkes, Senior Fellow at the Institute for Government and co-author of Treasury orthodoxy, and former No 10 special adviser for industrial strategy

The event was chaired by Dr Gemma Tetlow, Chief Economist at the Institute for Government

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