Treasury permanent secretary Sir Nicholas Macpherson today expressed doubt over the benefits of dividing Treasury functions during a Public Administration Committee hearing.
Responding to a question from Kelvin Hopkins MP on whether there was a case for separating the economic and financial functions of the Treasury, Macpherson said he did not think there would be a benefit.
Hopkins said: “In the 1960s the government did actually split economic policy from finance with the DEA [Department of Economic Affairs] and quickly the Treasury grabbed it back and put it back into the Treasury – is there a case for separating those functions?
Macpherson answered: “Look, you’d expect me to be biased, I come from the Treasury, but I would have concerns about messing about with the machinery in the Treasury.
“In the end, especially in a crisis, the really big issues come back to the Treasury, whether you like it or not.”
He added: “There is quite a big cost in rearranging deck chairs. My general advice would be to set a high bar before trying to create the ideal Whitehall structure.”
When pushed by Greg Mulholland MP as to whether the Treasury should relinquish some functions to the Department for Business, Innovation and Skills, Macpherson said: “I think that it is possible for a finance ministry to have quite a strong economics ministry function within it, which can actually result in better public spending decisions.”
“Of course, there is a role for the Department for Business and the Department for Business and the Treasury work closely together,” he added.