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15.02.17

Kerslake: Devolving Treasury powers from Whitehall vital for UK

The UK would benefit from further Treasury powers being devolved away from Whitehall, a report by former head of the civil service Lord Kerslake has claimed.

The report did also state that further devolution would also require changes to the way the Treasury is run. Despite this, the report concluded that a total break-up of the Treasury would not be necessary, stating that: “such a reorganisation outweighed the benefits”.

It added that at times the Treasury has been the “resolute blocker of such devolution”, at others such as in the city devolution deals, its enabler, albeit within a framework specified by the department.

Lord Kerslake’s report stated: “The transfer of responsibility for industrial strategy and long-term development to the Department for Business, Energy and Industrial Strategy should be consolidated and strengthened to include promoting city-region development through devolution deals.”

The review of the Treasury then went on to explain the benefit of devolving powers: “This would free up the Treasury, which should concentrate its economic effort on its broad macroeconomic responsibilities in line with a revised and more precise operating mandate.”

The report added: “This should specifically include measures to improve the relative economic performance of different regions, including greater fiscal devolution.”

Other issues alluded to in the report included that whilst the Treasury does manage to attract the most talented civil servants to work there, the current culture of the Treasury often means that people’s talents are not always fully utilised.

The independent review went on to call for the treasury to have greater clarity with regards to its function in order to work as efficiently as possible saying: “The consensus is that whilst the Treasury has considerable strengths, it has also shown significant weaknesses that have contributed to the UK’s economic underperformance.

“It isn’t clear enough about its role, doesn’t staff itself up properly to discharge its key responsibilities, including long term strategic planning, has become overstretched with an increasingly wide brief and shrinking numbers of staff and is culturally unwilling to admit these are issues that need to be addressed.”

Commenting on the findings, Lord Kerslake further emphasised this point: “The Treasury is a small but very powerful department. To make the most of its very capable staff, it needs to fundamentally change both what it does and how it does it.

He added that the department should focus on its core economic and financial roles and work in a much more open and collaborative way.

Shadow chancellor John McDonnell, who commissioned the review, welcomed the report’s findings saying: “The Treasury is our most important economic policymaking institution, but one that has been criticised by some for its approach and attitudes.

“This review will help shape Labour’s economic policy, as well as being a first important step in setting a new direction for the Treasury in the 21st century.”

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