Occasionally you hear something so radically simple and self-evidently right, that you wonder why no one had ever said it before.
Andy Haldane, the economist who told us he’d given up on ever making the least sense our of pensions, has come up with such a suggestion. He was right about pensions (we’ve created a nonsense) and he’s right about the Treasury, the Treasury should outsource sales.
The Government has struggled to unleash its potential. Liz Truss showed just what happens when you give the sales team the keys to the economy, you quickly find the accelerator but miss the steering wheels and the brakes.
But salespeople will tell you that when they inhabit a side office with ” at risk” over the door, they don’t get much chance to shine. Such has been the case with the Treasury over the years. The finance department has had the front office, economic growth is a shonky backroom.
Haldane, no longer at the Bank of England but now the boss of the RSA has this to say.
Power should be to politicians as money is to philanthropists; it is in the act of giving that they receive. Nowhere is that truer than when it comes to restoring growth to the UK’s stagnating economy.
He cites Gordon Brown , outsourcing the Bank of England from the Treasury so it was autonomous as an example of “giving power away”.
He goes on to argue that as this year’s first magic trick , the Treasury should chop themselves, and the institution over which they preside, in half.
I’m sure I wouldn’t be smiling
The “stem the spend” part of the Treasury needs to be separate from its sales department
.. there should be a separation of the Treasury’s finance and economy ministry functions. The Treasury has always pursued a fiscal-first strategy, ensuring the nation’s books are balanced over the medium term to avoid funding crises. This is a crucial role and requires a singular institutional focus supported by appropriate fiscal rules.
Every successful business did not put this department in charge of sales. But Haldane argues that’s what’s happened at the Treasury
.. that focus has meant policies to deliver sustained growth have played second fiddle. The Treasury’s fiscal-first strategy has come at the expense of too little attention to growth and too little sustained public investment in the infrastructure and social capital needed to support it.
Haldane explicitly calls for the Treasury’s growth function (its sales team) to be surgically removed, devolved to Darlington and run as a separate unit which he dubs “the Economy Ministry“. I guess that’s as close as an economist gets to talking about sales.
And he sets out a governance structure where neither finance or sales have the upper hand – where the casting vote on prudence v growth rests with the CEO
Responsibility for the UK’s national growth mission should sit, statutorily, with a tripartite body comprising the prime minister, chancellor and economy minister. The PM would have the casting vote in the event of a trade-off, or stand-off, arising between fiscal and growth objectives.
When you look at the awkward attempts of many at the Treasury, and their fifth columnists in the regulators , to stymie growth to maintain fiscal rectitude, you can see what Haldane means.
The Mansion House reforms are met with the same polite coughs in today’s Whitehall clubs as the Minister’s outlandish suggestions were met by Sir Humphrey yesterday.
The result is a watering down of intent to the point where many of the bold initiatives come to nought, success being counted by the lack of take-up, the de-risking of hope.
If we are to have meaningful change in Government, it has to start at the Treasury , which is where our economic and fiscal battles have fought us to stagnation.
As a salesperson, I had no difficulty with Darlington, relocating the sales function to the North East would be a damn good idea, if we are serious about regional regeneration , why not?
I would have no problem with the tripartite structure, I never had time for actuarial functionaries calling the shots but always respected that my job was to get things done, not to determine the priorities. Sales and Finance should be subordinate to a governance framework where the ultimate decision maker is separate from both.
Most of all, I’d welcome having some fresh air and not to have to breathe the bad breath* of the risk management team. Let’s face it, operations and sales need to be separated for reasons of corporate hygiene.
- NB Mike Harrison- that last bit’s a “sales euphemism”.