Almost all the Treasury’s current problems have their origins in the decade when Gordon Brown was Chancellor. His successor was always going to have a difficult time even before the credit crunch, Northern Rock and the 10p tax row erupted.

The story is a mixture of the personal and the organisational. Mr Brown was an extraordinarily powerful Chancellor. Along with Ed Balls, his long-serving close adviser (and for a year a junior minister), he dominated the Treasury. Mr Balls was the policy gatekeeper. Civil servants knew that he was the key to influencing Mr Brown’s often slow process of decision-making. This had advantages, but it left many officials feeling excluded, and sucked energy and independence out of the department. So when the two departed in June last year, the head had been removed, while all the other ministers and advisers were also replaced, and much of the Brown team went to No 10.

At the same time, in pursuit of efficiency, the Treasury has been almost completely reinvented. The old Treasury, dominated by long-serving officials, has been replaced by a much younger and less hierarchical department.

Many officials left for higher salaries in the City and others retired, so that only half those remaining have had three or more years of experience in the Treasury.

The Brown era also brought big changes in its responsibilities, with interest rates being set by the Bank of England, but with the Treasury involving itself, often without success, in other areas from the administratively flawed tax credit system to welfare and industrial policy. The brash style of younger officials seeing themselves as the vanguard of Brownism made the Treasury even less popular than usual. As the Cabinet Office’s capability review noted last December “some stakeholders and government departments believe that the Treasury would improve outcomes if it acted with greater humility and in a more open and inclusive way”.

Alistair Darling took over a partly hollowed-out department lacking the institutional memory that the Treasury prized in the past. This immediately became apparent in the summer when Northern Rock became a pressing problem. Ministers - as well as some senior Bank of England officials - felt that Treasury civil servants initially lacked the necessary authority and grip as the crisis developed. This was one reason why the experienced Tom Scholar moved back to the Treasury in January.

Mr Darling has also had to cope with a predecessor looking over his shoulder. Mr Brown knows that Treasury decisions will be crucial to his prospects, so has not been able to resist interfering. His refusal, for a long time, to acknowledge the problems posed by abolishing the 10p tax rate made Mr Darling’s task much harder. And there are other examples of No 10 involvement, where the patient and put-upon Mr Darling has had to make the best of this messy process of decision-making. He has not been allowed to be his own master.

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