Treasury needs 'radical reform'

The Treasury is "broken" and needs radical reform after 10 years with Gordon Brown at its helm, shadow chancellor George Osborne is to say.

Mr Osborne will say that taxpayers have paid an "astronomical price" for the confusion of the Treasury's role and responsibilities under Mr Brown's stewardship.

He will call on Mr Brown's successor to give up many of the additional spending and policy-making powers which the Chancellor has gathered at the Treasury over the past decade.

And he will urge the next chancellor to abandon Mr Brown's efforts to micro-manage Government activities through more than 1,000 targets and Public Service Agreements (PSAs) with other Whitehall departments.

In a speech to think tank Reform in London, Mr Osborne will accuse Mr Brown of forgetting the "tedious but essential task" of controlling public expenditure, which should lie at the heart of the Treasury's activities.

Instead, he will say, the Chancellor has turned the Treasury into one of Whitehall's major spending departments - with expenditure on items like child benefit and tax credits totalling more than £20 billion a year - even though it is "one of the worst at spending money".

And he has ventured on to the turf of other Whitehall departments by commissioning policy reports on issues ranging from climate change to transport, housing and planning.

Mr Osborne will say that whoever is appointed chancellor after Mr Brown becomes Prime Minister on June 27 should focus the Treasury's work on three core objectives: enhancing the stability of the economy; making the economy more effective; and ensuring value for taxpayers' money.

Independent reports commissioned by the Chancellor are now driving forward Government policy across a range of departmental responsibilities, demoralising the departments involved and making it impossible for the Treasury to evaluate the implementation of the policy in value-for-money terms, he will say.

Overspending on doctors' contracts, NHS computers, the Olympics and tax credits themselves have been caused by the fact that "no one is keeping an eye on how the money is spent", Mr Osborne will say.