The Treasury has been transformed out of all recognition over the past 20 years. It now has an active social and industrial agenda and targets. Yet it can never escape its traditional role as a ministry of finance, as Alistair Darling recognised yesterday in saying it was now “an exciting time” to be Chancellor of the Exchequer.

Mr Darling addressed the role of the Treasury in the 21st century yesterday at a packed meeting at the RSA, the policy and discussion forum. He did not just refer to Northern Rock or economic stability, but talked much more about social goals, ranging from child poverty to climate change. His central theme was that elusive term “fairness”, which, to his surprise, one questioner asked him to define. It was, he said, about equality of opportunity and aspiration, not just fair processes.

In the past, the Treasury concentrated on macroeconomic policy, notably management of interest rates and the exchange rate, controlling public spending and fixing taxes. As ministers and civil servants said in the memorable 1983 BBC radio inquiry (But, Chancellor by Anne Sloman and the late Hugo Young), the Treasury generally did not seek to interfere as between spending on one thing or another inside departments. It did not have a housing policy as such.

That has all changed. The shift originated in the shock to its self-confidence from Black Wednesday in September 1992, while younger officials were given their head after a reorganisation in 1994 in which the ubiquitous Jeremy Heywood played a key part. The Treasury lost one of its traditional macroeconomic roles in May 1997 when Gordon Brown made the Bank of England responsible for setting interest rates, though it then expanded its microeconomic role across a wide range of social and industrial policy. Mr Brown undertook a large number of reviews into the work of other Whitehall departments, which he and his advisers often treated as subordinate agencies.

Some of this hyperactivity was personal to Mr Brown, but not all. Mr Darling has been less prone to ordering reviews across Whitehall. But he made it clear yesterday that the Treasury does have policies for housing, fighting poverty, promoting productivity etc. And it is now a big spending department via the extensive tax credits programme.

There are two inter-related questions. First, is the Treasury trying to do too much? The number of targets has been cut a lot since the late 1990s, but there is still the risk that it is trying to run all domestic policy. Secondly, while Mr Darling was careful to say that “governments shouldn’t make choices which be left to the individual”, there is now an increasing emphasis on the State trying to change people’s behaviour. There is the real danger of setting goals for conduct, or for economic indicators, such as productivity, over which the Treasury has little direct influence, thus risking disillusionment.

Moreover, any Chancellor will still, ultimately, be judged by the Treasury’s traditional, core tasks of a stable economy and public finances. Mr Darling’s current preoccupations over Northern Rock and containing public sector pay rises would have been very familiar to many of his predecessors.

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