View from City Road: Treasury opens up at a snail's pace

Sir Terry Burns's elucidation of the Treasury's role, in an essay to celebrate the 60th birthday of the London Business School's Sir Jim Ball, is disappointing. Nobody expects Treasury permanent secretaries to be radicals when examining their department's objectives, the structure of Whitehall, or its relationships with the outside world. But the Treasury is moving at a snail's pace.

True, officials now talk - or at least listen - to people in the City rather than having the City's views reported to them by the Bank of England. There is even a plan for officials to spend one whole day a year in industry (or alternatively eat three lunches with industrialists) to apprise themselves better about the economy. The Treasury has also set up a supply side unit as a gesture to the department's remit for the health of the economy.

But this is desperately half-hearted. Far from being committed to the open government proclaimed by William Waldegrave, the Treasury recently refused to supply a single background paper on the decision to join the European exchange rate mechanism on the pretext that policy advice must remain private. But any economics student knows the difference between analysis and prescription.

There is another problem. The ethos of the Treasury is shaped by its historic role in controlling public spending. There is a deep-rooted paranoia that the spending departments are trying to leg the Treasury over, and the culture is therefore of defensive criticism. Few can remember a time the Treasury argued for an increase in spending. But the Confederation of British Industry is right to argue that some public spending - transport infrastructure, training and education - encourages prosperity. So there is a clear conflict between the Treasury's role as an economics ministry and its public spending function.

The supply side unit is a sop. Embarrassingly tiny, it is not even headed by a full assistant secretary. It is not likely to carry much weight in a debate with, say, the second permanent secretary in charge of public spending. There is a strong case for splitting the Treasury into a budget ministry, responsible for spending, and a separate finance ministry, responsible for tax and the economy.

Finally, Sir Terry fails to address the big structural questions. Does it really make sense to have a proliferation of little units responsible for public sector management issues, some responsible to the Cabinet Office, others to the Treasury? Does it make sense to run two tax-raising departments in the Inland Revenue and the Customs and Excise? And should the Contributions Agency not also be merged with the IR?