How Dave and George can avoid a terrible rift

The Treasury will be the engine room of David Cameron’s government. It will have to be, given the ghastly economic inheritance. But the economy will be only one of the incoming Chancellor’s headaches — his department will be in no fit state to do the leading.

The Treasury — once the citadel of high-quality policy advice and the driving force behind the economic and financial reforms which revived Britain in the 1980s — now lies prostrate. It is a casualty of Gordon Brown’s personality, ten years of trench warfare between him and Tony Blair and the appointment of a new Chancellor, broken backed on arrival.

This financial crisis has brutally exposed some of this. With each twist over the past year the Treasury has often seemed, by turns, rudderless and indecisive. So when the Conservative team arrives at Great George Street it will not just be a damaged economy that needs repairing and revitalising but the policy machine itself. There is probably little or nothing wrong with the officials, just the way they have been led by politicians.

Morale is low. ‘Riddled with cronyism and sycophancy’, ‘a shadow of its former self’, ‘all but broken as a source of serious policy advice’, ‘totally demoralised’. These are not my views but those of a number of former senior civil servants with whom I have spoken. Exaggeration perhaps? They cannot all be cynical or chippy pensioners.

On Day One officials will want to know, and we should tell them, three things: what the Treasury is henceforth to be for, what its main priorities are going to be, and how ministers expect officials to tackle them.