The author of the Government’s report on climate change is to quit the Treasury after friends said that he was frozen out of Gordon Brown’s inner circle.

With embarrassing timing, Sir Nicholas Stern’s departure was announced a day after the Chancellor confounded expectations of a big shift towards a new environmental agenda in his Pre-Budget Report.

Mr Brown’s move to raise taxes on flights and motorists’ fuel were seen as minimum concessions to calls for tougher environmental action and disappointed green campaigners.

One well-placed government source told The Times that Mr Brown had to be persuaded within the Treasury even to take the steps he did, such was his lack of enthusiasm for green taxes.

Sir Nicholas, 60, one of the Chancellor’s most senior officials as Second Permanent Secretary to the Treasury, is to leave in March to return to academic life, taking a chair at the London School of Economics in June.

He was poached in 2003 from the World Bank. But several Whitehall sources told The Times that Mr Brown did not like some of the advice he received from Sir Nicholas, including some “home truths” about long-term trends in the economy, and he never broke into the Chancellor’s tight-knit inner circle.

He subsequently lacked a real role and spent most of his time working on major international reports on global warming and alleviating poverty in Africa. His doom-laden report on the risks of failing to address climate change, published in October, caused tensions within the Government by triggering a debate on environmental taxes and leading to calls for big policy changes.

The Chancellor, who commissioned the report, had intended its focus to be on the case for international action to tackle global warming as a counterweight to arguments by President Bush that such any action would be at the expense of economic growth.

Sir Nicholas’s conclusions did have a global focus, saying that the economic costs of failing to act would, over time, far outweigh those of action now. He proposed carbon taxes or carbon trading schemes and investment in low-carbon technology.

But his stark warnings of overwhelming evidence of global warming highlighted differences between Mr Brown — who wanted to avoid unpopular tax rises — and David Miliband, the Environment Secretary, who pressed for green taxes, including a big rise in tax on gas-guzzling vehicles.

Tensions between Sir Nicholas and the Chancellor long predate the publication of his report on climate change, however, and were apparent soon after he was recruited to the Treasury to give heavyweight economic advice to Mr Brown.

His appointment was seen as part of a transition in which Mr Brown would rely more on nonpolitical officials for economic advice and analysis. He was also head of the Government Economic Service.

The following year he was made director of policy and research for Tony Blair’s international commission of Africa, in a broadening of his original role at Treasury.

His appointment to head the review of the economics of climate change, announced in November last year, was said by a friend of Sir Nicholas to be another sign that he was no longer working closely with Mr Brown. In a Treasury statement, Mr Brown paid tribute to his “major contribution to the Treasury”.

Sir Nicholas declined to speak to The Times, but he issued a statement saying that he had been planning the move “for some time” and had hugely enjoyed working with Mr Brown.

Money man

• Born 1946, educated at Peterhouse, Cambridge, and Nuffield College, Oxford
  
• Lectured in economics at Oxford and Warwick universities
  
• Taught at the London School of Economics from 1986, as Professor of Economics and Chief Economist
• Worked for the European Bank of Reconstruction and Development as chief economist from 1994
• Joined the World Bank in 2000
• Appointed to the Treasury in 2003

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