Lib Dems Unveil Radical Plan to Replace Treasury with New Growth Department
The Liberal Democrats have announced a significant and radical policy proposal to abolish the Treasury and the Department for Business and Trade, replacing them with a new 'department for growth'. This move aims to create a more cohesive and long-term economic vision for the United Kingdom, addressing what the party describes as systemic issues in current economic governance.
Critique of 'Treasury Brain' Mindset
In a speech delivered at the headquarters of UK Finance in London, Daisy Cooper, the Lib Dems' deputy leader and Treasury spokesperson, launched a scathing critique of what she termed the 'Treasury brain' mindset. Cooper argued that this approach, focused excessively on short-term fiscal imperatives, is actively dragging the country down and hindering sustainable economic progress.
Cooper stated, "For too long, political parties without a vision for growth have allowed the Treasury tail to wag the political dog." She cited examples such as the initially proposed cuts to winter fuel payment eligibility, which were later reversed, labelling them as "a short-term Treasury tax-grab driven by the desire for immediate bankable cuts."
Structural Overhaul and Relocation to Birmingham
The proposed new department would be formed by merging substantial sections of the Treasury with parts of the Department for Business and Trade. This entity would be tasked with a mandate to boost long-term prosperity, improve living standards, and ultimately end the cost of living crisis. In a bid to rebalance the economy away from London's dominance, the department would be headquartered in Birmingham.
Cooper elaborated on the perceived flaws of the current system, saying, "The Treasury is disconnected from the real economy. Despite holding all the economic power, the Treasury isn't responsible for policies on business or trade. This leaves British business jumping through hoops, speaking to three, four, five different government departments before they can get an answer."
Creation of a Separate Expenditure Department
Under this plan, the Treasury's traditional role of overseeing departmental spending would be transferred to a new, smaller department for public expenditure. This body would be established specifically to monitor departmental budgets and ensure value for money, allowing the growth department to focus solely on strategic economic development.
Cooper emphasised that this structural change addresses a long-identified problem: "In most other countries, these roles are split up. The Treasury does too much—fiscal policy, economic policy, and controlling government spending. It is over-centralised, drives short-term thinking, and simply isn't designed to deliver long-term economic growth."
Political Context and Appeals
This policy announcement marks the Lib Dems' most substantial move since the general election, following internal criticisms of an overly cautious and policy-light approach under leader Ed Davey after the party secured 72 MPs in 2024. Cooper's speech also included an open appeal to moderate Conservatives, particularly in light of recent comments by Kemi Badenoch suggesting centrist ideas are no longer welcome in the Tory party. "Moderates are welcome in ours," Cooper asserted.
The proposal finds potential alignment with ideas being developed by Prosper UK, a new group led by moderate Tories Andy Street and Ruth Davidson, which is focused on generating policies for economic growth. Cooper highlighted the UK's current economic stagnation, describing it as "stuck in a doom loop of low economic growth," and attributed this partly to a lack of coherent economic strategy under Keir Starmer's leadership, as well as the prevailing short-termist approach.
