Sir Humphrey savours final taste of power

DIANE COYLE

Economics Correspondent

Stacks of chairs line the battleship grey corridors. Dusty net curtains lie in heaps at the bottom of windows. The basements flood. One visitor reported collecting a friend from a completely bare office so cold that he was working in his overcoat and scarf.

This is Her Majesty's Treasury, banker to Whitehall and at one time to the world. But the visitor, himself a former mandarin, said: ``It felt like a ghost town. All the buzz has vanished.''

As a flagship of the Private Finance Initiative, it is due to be sold and redeveloped before the end of the century. Never luxurious beyond the imposing entrance hall and ministerial suites, it has become extremely run-down.

The one-time mandarin argued that a new Labour government would have to transfuse fresh blood into the department if it was looking to the Treasury to spearhead a new economic policy.

In the aftermath of this week's announcement of draconian cuts in social security running costs, Whitehall insiders say the drastic pruning of the civil service is in danger of damaging control over public spending.

However, the Treasury plans to impose further large-scale job cuts on other departments, including the Inland Revenue, the Employment Department and even the Central Statistical Office. Civil service numbers are due to fall by at least 39,000, to 477,000, in the next two years.

It is just over a year since the Treasury implemented its own ``Fundamental Expenditure Review'' which reduced senior staff numbers by 25 per cent and will shed 250 jobs in total. The rationale for these cuts was that Treasury officials would exchange their day-to-day involvement in the running of other departments for purely strategic control. But other officials say this has not happened.

One senior official from a spending department said: ``For the sake of saving pounds 5m they are putting control of the pounds 260bn expenditure total at risk.'' He said the Treasury could not maintain control with so many fewer staff.

Another said: "Their talk has changed but their culture has not. In Whitehall, financial control over other departments is influence and power. If you delegate it, you give away power and the Treasury is packed with the brothers, sisters and cousins of Sir Humphrey. They are not going to do it.''

This scepticism is not universal - there are spending officials who believe the talk is sincere. However, all agree that the delegation of control has not happened yet.

One described the resulting chaos: ``They are finding out what it is like to have to deliver results without the resources to do the job. It takes four weeks to get any kind of decision out of them. They are managing their work by deadline.''

The Treasury building itself is an apt symbol of the shambles. ``Labour could find itself in the same position as Harold Wilson's new government, with spending out of control and the cracks papered over,''said one insider.

Staff and building

t The Treasury has a staff of 1,140, down from a recent peak of 1,400 in 1993 and around 2,000 in 1975. It is due to drop to just over 1,000 by next year. Total Whitehall numbers peaked at 747,000 in 1975, and will fall to 477,000 by 1997 - the smallest since Neville Chamberlain's days.

t The Treasury's Grade II Whitehall building was designed by John Brydon at the turn of the century - with long corridors to accommodate the queues of the public waiting to see officials. Costs of refurbishment of the 360,000sq ft block is estimated at pounds 100-200m. Work is due to be completed before the end of 2001.