Forum for National Recovery: Independent central bank urged: Structure of government

AN INDEPENDENT central bank and a radically reformed Treasury were demanded by prominent industrialists and economic commentators as part of a programme of structural change in the government of the UK.

Howard Davies, director general of the Confederation of British Industry, said the myriad responsibilities of the Treasury - including management of the Civil Service - was hampering its effectiveness as a department of state. The 'negative culture' perpetuated by its public expenditure divisions flowed through the Treasury's other activities.

'That empire does need breaking up, opening up. The case for separating the Treasury (functions) into a ministry for economic growth, and a public spending ministry is a sensible one,' he told the meeting.

There needed to be a redefinition of where the Government's responsibilities in relation to industry began and ended. 'It is not impossible to construct a more proactive role in government that does not fall at the 'We are not picking winners' fence.'

Echoing previous speakers, he portrayed an independent central bank as not just desirable, but inevitable. 'I assert that it will happen. If we are moving towards economic and monetary union, it will happen.'

But all those in favour of radical structural change at the heart of government had to work for it with tact and diplomacy, Mr Davies went on. 'It is very easy to slip into ritualistic abuse of the mandarinate. I do not think that is helpful. Treasury people are for the most part human beings. If you prick them, they bleed.'

Sue Slipman, director of the National Council for One Parent Families, argued that Britain had become 'virtually a one-party state' because there was no effective opposition to the Conservative government.

Ms Slipman, once prominent in the now-defunct Social Democratic Party, told the meeting: 'For the first time in my life, I am not a member of a political party. What most people are looking for now is some form of oppositional growth whereby ideas are put into the public domain. If the Labour Party is rethinking its strategy, then it is doing so in private cabals; it is not talking to people on the ground who are trying to renew the political process.'

Sir Peter Kemp, until recently second permanent secretary in the Cabinet Office, said it was up to those who expressed dissatisfaction with the status quo to work for changes themselves, and not constantly to expect others to take the initiative. The notion that governments have endless power, endless money to do things is a bit of a cop-out. I belong to the wing that says we should be doing very much more for ourselves.'

Professor Peter Hennessy, historian of Britain's system of Cabinet government and of the Civil Service, traced the country's economic ills to the traditional sacrifice of the productive base on the altar of finance.

'Unless you have a thriving productive base in terms of goods and services and a seed-corn mentality . . . all the financial tinkering in the world is not going to save you. If only we could rediscover an obsession with production which was reflected in the ministerial pecking order, if we could get that right, the finance would take care of itself.'

Kevin Carey, who is unemployed, said the notion of the sovereignty of Parliament was 'plain daft'. He went on: 'There must be less secrecy in government, proportional representation. That way there would be less patronage handed out in so partisan a way.

'We are living with a government that has championed philistinism. What passes for Cabinet wisdom would not have passed muster in Winston Churchill's nursery.'

David French, the director of Relate, the marriage guidance organisation, said the social costs of the recession were enormous. The average cost to the taxpayer of a divorce or separation involving young children, was around pounds 10,000, in terms of legal aid and social security costs. Last year Relate helped 70,000 couples.

But no one department of state was responsible for co-ordinating polices on the social aspects of the recession. 'There is a complete absence in our field of effective mechanisms for dealing with these problems,' he said.