View from City Road: Few tears for Treasury's fallen

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The Independent Online
Nearly all those who have made the jump from Treasury to private sector have been saying it for years - a radical shake-up of Britain's most powerful department is long overdue. The announcement of dramatic job losses among Treasury mandarins was thus received in the business world with a display of schadenfreude.

Like big companies a decade ago, the public sector still has a surfeit of managers. The Treasury is the Civil Service equivalent of the interfering corporate strategy department, and it is only appropriate that it should downsize its own ranks first.

There is more to it than setting a good example, however. In truth there is not much left for the Treasury to do. Officials work long hours - honing unnecessary memos to perfection or carrying out research that former Treasury economists in the City are doing better.

Devolving budgets to departments will undoubtedly only improve the Treasury's management of public expenditure. Contracting out its economic forecasting and research could well improve the quality of its macroeconomic policy advice. Besides, the Bank of England is certainly more than ready to step into that breach.

The sound of the axe chopping out dead wood is also a recognition of the decline that has already taken place in the Treasury's authority. The boom in City jobs in 1986, before Big Bang, lured away many of the department's best economists. That loss made itself felt in the dismal advice officials gave their ministers over the strength of the economy in 1988 and over joining - and leaving - the Exchange Rate Mechanism.

Officials comforting themselves with a pint or three in the Tap, the top floor bar in the Treasury's grand Whitehall building, will no doubt be musing that the advocates of deregulation have achieved what socialist George Brown, with his Department of Economic Affairs, never managed - trimming the power of Whitehall's mightiest department. The Treasury's role is rapidly being relegated to that of mere book-keeper.