Lib Dems plan to replace Treasury with growth department

The Liberal Democrats have announced they would break up the Treasury and replace it with a new department of growth based in Birmingham if they were in government.

The party said the new Department for Growth would be tasked with boosting long-term prosperity, improving living standards and easing cost-of-living pressures.

Under the plans, the new department would assume responsibilities for business and trade, while a new department for public spending would also be created.

Setting out the policy at a news conference, the party's deputy leader Daisy Cooper said the move would end the "doom loop" of "short-term Treasury tax grabs" and allow the government to focus on economic growth.

"We want to get rid of this anti-growth Treasury," Cooper said.

She said opening a department for growth in Birmingham would "send a strong signal - because a significant indicator of the imbalance in our economy is the yawning gap between the UK's capital city and every other city and all other parts in the UK".

The BBC has asked the Treasury for comment.

A Labour Party spokesperson said: "The Lib Dems can slice up the Treasury all they like, but it won't make their sums add up."

The Labour spokesperson said the Lib Dems had "inflicted damaging austerity on the country" when they were in the coalition government with the Conservatives from 2010 to 2015.

The Labour government, the spokesperson added, had already closed 11 London government office buildings "to spread opportunity across the country".

As the UK government's economic and finance ministry, the Treasury controls public spending and sets the direction of the UK's economic policy.

But the powerful role of the Treasury has been flagged as a blocker on economic growth and the political will of governments past and present.

Cooper - the party's Treasury spokeswoman - said the Labour government and others before it had fallen victim to what she called "Treasury brain".

"For too long, political parties have allowed the Treasury tail to wag the political dog and it must stop," Cooper said.

The Lib Dem MP said the Treasury "does too much" and enabled the government to make decisions that were not in the best interests of the economy, citing the decision to raise tax on inherited farmland.

The Lib Dems said the new Department for Growth would have responsibility for setting taxes, devising growth strategy, deciding on strategic national infrastructure projects and setting rules on public spending.

The Department for Business and Trade would be merged into the new Department for Growth, and a separate Department for Public Expenditure would oversee public spending.

The Lib Dems say the move would align the UK with countries such as Australia, Ireland and the US, where economic strategy and day-to-day spending are managed by separate departments.

The party did not provide any detailed costings for the policy.

But the party said it would be affordable and any upfront cost would be outweighed by the economic growth it would achieve.

The Lib Dems said the new Department for Growth would be cost-effective because existing government buildings could be used.

In a question session, Cooper told reporters the plans would not result in any cuts to civil service jobs.

Scrapping the Treasury was not an "attack on civil servants", she said, insisting it was about restructuring the government so it was focused on growth.

There have been calls from others for the Treasury to be scrapped, including from Lord Glasman, the founder of the Blue Labour campaign.

Lord Glasman has proposed giving the Treasury's powers to the prime minister and creating an economics ministry to oversee his economic policies.