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

It’s been described as the most famous front door in the country. But the glistening black entrance of No 10 Downing Street is not a portal to the wellspring of power in modern Britain.

That honour lies with the front door of a much grander building round the corner on Horse Guards Road: the HM Treasury headquarters.

Power-hungry prime ministers through the ages have attempted to break the Treasury’s stranglehold over decision-making.

Now, Andy Burnham is plotting his own escape from the dead hand of its mandarins by shifting some of his executive power from London to Manchester, with the creation of a ‘national growth unit’ that he has christened ‘No 10 North’.

When he becomes PM later this month, it is said Burnham will spend one or two days a week in his northern fastness, with one report suggesting that – depending on parliamentary calls on his time – he might base himself there on Mondays and Thursdays, while presumably spending the weekend at his gated home in the town of Golborne, 14 miles west of Manchester.

This move, coupled with his plan to devolve certain powers to elected mayors and local authorities, is calculated to discombobulate the Treasury.

But wresting authority from its Sir Humphreys could prove to be easier said than done, as Keir Starmer and so many of his predecessors can testify.

The level of administrative support and bureaucratic heft surrounding the Prime Minister is no match for the might of the money men in His Majesty’s Treasury, with its serried ranks of number-crunchers and veto power over any legislation that may spook the markets.

It is a measure of the imbalance between the two government offices that while 300 civil servants and special advisers work at No 10, there are more than 1,600 in the Edwardian Baroque Revival building that houses Britain’s finance ministry.

A senior Treasury mandarin once explained to me that nothing goes on in Whitehall, the Cabinet or No 10 that escapes Treasury scrutiny.

Every decision which requires taxpayers’ money, from authorising a review to making a change to the pension and welfare system, passes through the Treasury.

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

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

Indeed, when he attended financial gatherings overseas, Brown refused to stay in the local British embassy for fear of intrusive civil servants.

And it would appear that not much has changed since. Two years ago, a study by the Institute of Government found that the Treasury demonstrates ‘a worrying imbalance of power in government that leads to bad outcomes in spending’.

This, it argued, ‘egregiously’ leads to a lopsided centre of power, meaning the PM ‘lacks the firepower, intellectual support or control of the levers to set and drive strategy, leaving the Treasury to fill the resulting vacuum’.

The current Chancellor, Rachel Reeves, has proved particularly ill-equipped to counter the influence of her civil servants, who regularly use blood-curdling warnings of a run on the pound or spiralling bond yields to keep their ministers in line.

The fingerprints of officials in thrall to the Treasury’s tin-eared economic orthodoxy have been all over her decision-making. It is no accident that Ms Reeves made the biggest political error of her tenure when she sought to address an alleged £20billion black hole in the government finances in July 2024 by cancelling – without consultation – winter fuel payments for ten million elderly people, a decision which provoked such a furious reaction that it had to be reversed 11 months later.

This was a prelude to the imposition of a disastrous succession of taxes on business which have crushed investment, employment and consumer confidence.

As power switches from one big spending socialist to another, the market for British government bonds – the financial instruments used to fund borrowing – has rarely been more jumpy.

The merest hint that the budget to fund Burnham municipal ambitions is in danger of spiralling out of Treasury control would be highly dangerous.

Britain, along with other members of the G7 group of the world’s wealthiest nations, is still counting the cost of the Great Financial Crisis of 2008, the Covid-19 pandemic and Russia’s invasion of Ukraine. Even finding the cash for Burnham’s presumably splendid ‘No 10 North’ will be a street fight.

One thing that Burnham does have in his favour, however, is the Treasury’s growing lack of intellectual firepower.

It has long considered itself primus inter pares among government departments, thanks to a long tradition of recruiting only the most brilliant minds from the finest universities.

But I am hearing more and more complaints from veteran mandarins that there has been a qualitative decline in Treasury recruitment, with a knock-on effect on decision-making.

The problem, they say, is the insidious rise of political correctness. A recent Freedom of Information request made by The Spectator magazine found that the Treasury had stopped using numerical reasoning tests in its recruitment process – tests once considered vital in assessing applicants’ ability to understand often complex financial and economic policies – because too many ethnic minority candidates were failing them. Or, as the Treasury put it in its response to The Spectator, it was dropped ‘due to evidence of the test having adverse impact on candidate diversity.’

To make matters worse, the Treasury’s board has since removed verbal reasoning tests, too.

The lowering of standards around numeracy and reasoning inevitably has a detrimental impact on the standard of financial analysis provided by its recruits

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

Recruits in the private sector are expected to have advanced mathematical skills or a qualification from a top business school, where candidates are required to pass lengthy mathematical and reasoning tests, before they are granted the privilege of an interview.

Andy Burnham may think he has the answers to the nation’s problems with his decade-long strategic plan, as well as the political nous to pull it off by undermining the Treasury.

But prime ministers more robust than Burnham is ever likely to be, have been defeated by the obstinacy and obstruction of the people on Horse Guards Road.

Take the fate of Harold Wilson’s reforms, the PM who made perhaps the boldest efforts to subvert Treasury power. In 1964 he created two powerful new government departments: the Ministry of Economic Affairs, which – like Burnham’s ‘No 10 North’ – was charged with bolstering growth; and the Ministry of Technology, which had a brief to embrace the ‘white heat’ of the ‘scientific revolution’.

Within six years, both had been abolished and the Treasury’s hegemony was more unquestioned than ever.