Osborne will 'break up the Treasury empire'

George Osborne has vowed to slim down the Treasury should the Tories win power, breaking up the empire built by Gordon Brown during his time as chancellor.

The shadow Chancellor is planning to transfer many of the responsibilities acquired by the Treasury, including its management of the array of tax credits, to other departments. He said the Treasury will abandon its "current wider remit" to concentrate on its main task of controlling Britain's deficit.

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"The Treasury has become a huge great spending department," he said in an interview with The Wall Street Journal. The distribution of benefits to parents, for example, will be handed to the Department of Work and Pensions, he said.

Mr Osborne added that he had not ruled out tax increases to combat Britain's growing public debt and warned that he would be looking again at the Government's commitment to the pension pots of public-sector workers. "Public-sector pensions do need to be reformed," he said. "We don't feel bound by any deal done by the Labour Party and the trade unions."

Vince Cable, Treasury spokesman for the Liberal Democrats, has called for banks to be hit with a £2bn tax on profits. He said that a temporary 10 per cent levy on profits would be a fair price to pay for the billions pumped into the banks by the Government. He added that the tax should remain in place until banks could be split up into those carrying out risky investments and those handling traditional deposits. "£1 trillion of taxpayer support has gone into keeping the British banking industry afloat," Mr Cable said. "It is only right for the taxpayer to get a fair deal for the guarantee they provide to the banking industry."