Treasury should be broken up and moved to Birmingham, say Lib Dems

The Treasury should be broken up and replaced with a “Department for Growth” based in Birmingham, the Liberal Democrats have said.

In a speech on Tuesday morning, Lib Dem deputy leader Daisy Cooper attacked the Treasury as “anti-growth” and proposed a radical shake-up of the British state.

Under the Lib Dems’ plans, the new department would set taxes, oversee economic strategy, set fiscal rules and approve major infrastructure projects with “a mandate to boost long-term prosperity, improve living standards and end the cost-of-living crisis”.

Overseen by the Chancellor, it would also merge with the current Department for Business and Trade, while a separate “Department for Public Expenditure” would oversee departmental spending.

The move to Birmingham is intended to “send a strong signal” that the Lib Dems are committed to closing the gap between London and the rest of the UK, the party said.

Ms Cooper said the new department would “focus minds” as she warned the country was “stuck in a doom loop of low economic growth”, with the Treasury too focused on the short-term.

The proposal follows calls to break up the Treasury from experts including former Bank of England chief economist Andy Haldane in January 2024.

But the idea stretches back decades, and was previously attempted in the 1960s, when Harold Wilson created a Department for Economic Affairs to oversee long-term economic strategy.

While the department lasted for five years before being merged back into the Treasury, it was largely moribund after just two years, seen as having lost a Whitehall turf war with the older department.

The Lib Dems pointed to other countries with similar arrangements, such as Australia and Ireland, where taxation and spending are managed by separate departments.