ALEX BRUMMER: Andy Burnham thinks he has all the answers… but this is why the all-powerful Treasury will fight his plans

It has been described as the most famous front door in the country. But the glossy black entrance to No 10 Downing Street is not a gateway to the source of power in modern Britain.

That honor lies at the front door of a much larger building on the corner of Horse Guards Road: HM Treasury headquarters.

Power-hungry prime ministers through the ages have tried to break the Treasury’s grip on decision-making.

Now Andy Burnham is planning his own escape from the dead hand of the mandarins by shifting some executive power from London to Manchester by creating a ‘national growth unit’ he calls ‘No 10 North’.

When he becomes Prime Minister later this month, Burnham is said to spend one or two days a week on his fast in the north; One report suggests he could be based there on Mondays and Thursdays – depending on what parliament calls for on his own time – and possibly spend the weekend at his gated home in the town of Golborne, 22 kilometers west of Manchester.

This move, combined with a plan to devolve certain powers to elected mayors and local governments, is calculated to confuse the Treasury.

But as Keir Starmer and many of his predecessors can testify, wresting authority from the Sir Humphreys may be easier said than done.

The level of administrative support and bureaucratic heft surrounding the Prime Minister is no match for the power of the money men in Her Majesty’s Treasury; It has rows and rows of number crunchers and veto power over any legislation that might spook the markets.

Current Chancellor Rachel Reeves has proven particularly ill-equipped to counter the influence of her civil servants, writes Alex Brummer

It is a measure of the imbalance between the two government departments that No 10 employs 300 civil servants and special advisers, while the Edwardian Baroque Revival building, which houses the British Exchequer, employs more than 1,600.

A senior mandarin at the Treasury once explained to me that there was nothing in Whitehall, the Cabinet or Number 10 that escaped Treasury scrutiny.

Every decision requiring taxpayers’ money, from granting review permission to making changes to the pension and benefits system, goes through the Treasury.

Gordon Brown was so suspicious of Treasury snooping during his decade as Chancellor that he and his chief aide Ed Balls would retreat to a teller room in a quiet corridor to avoid being overheard by civil servants.

Their thinking was that if anyone should leak details of future government policy, it would be them, not some Machiavellian permanent secretary.

In fact, when Brown attended financial meetings abroad, he refused to stay at the local British embassy for fear of interference from civil servants.

And it seems like not much has changed since then. A study by the Institute of Government two years ago found that the Treasury displayed ‘a worrying imbalance of power within government leading to poor spending outcomes’.

He argued that this had led to a ‘flagrantly’ unbalanced center of power, which meant the Prime Minister ‘lacked the firepower, intellectual support or control of the levers to determine and direct strategy, leaving it to the Treasury to fill the resulting vacuum’.

Current Chancellor Rachel Reeves has proven particularly ill-equipped to counter the influence of her civil servants, who regularly use blood-curdling warnings such as a rise in the pound or soaring bond yields to keep her ministers in line.

Officials in thrall to the Treasury’s stubborn economic orthodoxy have their fingerprints all over its decision-making processes. It is no coincidence that Ms Reeves made the biggest political mistake of her term in office when she tried to solve the alleged £20bn black hole in government finances in July 2024 by canceling, without consultation, the winter fuel payments of ten million older people; This decision sparked such an angry backlash that it had to be reversed 11 months later.

This was a prelude to a disastrous succession of taxes on business that crushed investment, employment and consumer confidence.

As power passes from one big-spending socialist to another, the market for British government bonds, the financial instruments used to finance borrowing, has rarely been this active.

the slightest hint budget Funding Burnham council’s ambitions could be quite dangerous, in danger of slipping out of the Treasury’s control.

Britain, along with other members of the G7 group of the world’s richest countries, is still counting the costs of the 2008 Great Financial Crisis, the Covid-19 pandemic and Russia’s invasion of Ukraine. Just finding the money for Burnham’s presumably magnificent ‘No 10 North’ will be a street fight.

But one thing that works in Burnham’s favor is that the Treasury increasingly lacks intellectual firepower.

It has long considered itself first among equals in government departments, thanks to its long-standing tradition of recruiting only the brightest minds from top universities.

But I am increasingly hearing complaints from senior mandarins that there is a qualitative decline in Treasury recruitment, which is negatively affecting decision-making.

The problem, they say, is the insidious rise of political correctness. A recent Freedom of Information request by The Spectator magazine revealed that the Treasury has stopped using numerical reasoning tests – tests once vital in assessing applicants’ ability to understand complex fiscal and economic policies – in its recruitment process; because many ethnic minority candidates were failing these tests. Or, as the Treasury put it in its response to The Spectator, it was canceled ‘due to evidence that the test had a negative impact on candidate diversity’.

Brummer says prime ministers who were more powerful than Burnham would have been were defeated by the stubbornness and obstruction of the people on Horse Guards Road.

To make matters worse, the Treasury board also eliminated verbal reasoning tests.

Lowering standards of arithmetic and judgment inevitably has a detrimental effect on the standard of financial analysis provided by those employed.

This also puts the Treasury at an intellectual disadvantage when it comes to dealing with high-flying employees of blue-chip banks like Goldman Sachs.

Private sector recruits are expected to have advanced mathematical skills or a qualification from a top business school, where candidates must pass lengthy maths and reasoning tests before being granted interview privileges.

Andy Burnham may think he has the answers to the country’s problems with his ten-year strategic plan, and that he also has the political acumen to achieve this by undermining the Treasury.

But the prime ministers, more powerful than Burnham would have been, were defeated by the stubbornness and obstruction of the people on Horse Guards Road.

Consider the fate of the reforms of Prime Minister Harold Wilson, who made perhaps the boldest effort to overthrow the power of the Treasury. In 1964 he created two powerful new government departments: the Department of Economic Affairs, charged with promoting growth like Burnham’s ‘No 10 North’; and the Ministry of Technology, which issued a briefing to embrace the ‘white heat’ of the ‘scientific revolution’.

Within six years both were abolished, leaving the Treasury’s hegemony more unquestioned than ever.