Public finances crisis may persuade HMT of the need for reform

Every solar system needs a fixed point to revolve around – and in the solar system of government, that immutable object is the Treasury. For centuries, HMT has laid down the spending rules and distributed the cash, defining the orbits of the spending departments. Secretaries of state may govern their own little worlds, but it’s the Treasury that determines their climates.

Those climates are now, of course, increasingly chilly. But while the Exchequer is making plans to bring a new ice age to the atmosphere, there are hints that officials are prepared to give departments and local authorities more freedom to generate a little heat for themselves.

The most obvious sign that the government’s rhetoric about the benefits of localism has traction among the Treasury’s notoriously intransigent officials came in Nick Clegg’s Liberal Democrat conference speech, when the deputy prime minister announced new freedoms for local authorities to borrow in order to invest. Meanwhile, think-tank the Institute for Government seems optimistic that the Treasury will ramp up pilots of ‘place-based budgeting’. The son of ‘Total Place’, this involves pooling public funding streams within a local area in order to foster better collaboration.

This is clearly not a revolution; and George Osborne is no revolutionary. With the public finances in their current condition, the Treasury’s grip on the central purse strings will be tighter than ever. But the very pressure created by the fiscal crisis may persuade proudly conservative Treasury officials to consider new approaches – approaches that enable sun-starved secretaries of state to play a more active role in shaping their own weather.