Lib Dem MP ‘despairs’ over party’s plan to scrap Treasury and replace it with Birmingham-based ‘growth department’

The Liberal Democrats’ plan to scrap the Treasury and replace it with a “Department for Growth” based in Birmingham has already been criticised by its own MPs, with one saying they “despair” over the policy.

In a speech on Wednesday morning, Lib Dem deputy leader Daisy Cooper attacked the Treasury as “anti-growth” and proposed a radical shake-up of the British state.

Under the Lib Dems’ plans, the new department would set taxes, oversee economic strategy, set fiscal rules and approve major infrastructure projects with “a mandate to boost long-term prosperity, improve living standards and end the cost-of-living crisis”.

She also said a smaller department for public expenditure would be set up to “oversee departmental spending and ensure value for money”.

But one Lib Dem MP said they “despair” at the policy, telling The Independent: “At a time when the government is imploding and people are crying out for serious policies, we announce this.”

However, Ms Cooper argued that the Treasury in its current form is “disconnected from the real economy”.

She said: “The Treasury does too much. Fiscal policy, economic policy and controlling government spending. In most other countries, these roles are split up.

“The Treasury enables governments to go for short-term tax grabs that suit political cycles over the need for long-term growth.

“And the Treasury is disconnected from the real economy. Despite holding all the economic power, the Treasury isn't responsible for policies on business or trade.

“In short, the Treasury is over-centralised it drives short-term thinking, and it simply isn't designed to deliver the long-term economic growth that we need.”

Ms Cooper argued the plan would boost investment in the NHS, renewable energy and defence, as well as helping to make economic growth a priority and “get Britain growing again”.

She also claimed the new structure could improve UK-EU relations, reset the relationship between the government and business and raise “around £25bn a year to fix public services and the cost of living crisis”.

The MP for St Albans also justified the decision to place the new department in Birmingham by arguing that closing the productivity gap between the UK’s second biggest city and London would add £12bn a year to the economy.