--- By Dan Hedley, NCC Director of Policy

Andy Haldane, CEO of the Royal Society of Arts (RSA) and former Chief Economist at the Bank of England, complained recently about the deadening impact of ‘Treasury Brain’ on the UK’s productivity aspirations:

"Like those of its human counterparts, the Treasury department brain has two sides. There is a fiscal hemisphere that safeguards the public purse using logic and reasoning and a growth hemisphere that stimulates growth using creativity and imagination. Unlike in the population at large, however, the Treasury brain is not equally balanced; it is fiscally dominant." 

- Andy Haldane, ‘It is time to rewire “Treasury Brain”’, FT 15Mar2025

Drawing his analogies from the neuroscientific work of Prof. Iain McGilchrist, Haldane concludes that the Treasury mindset has become entirely left-brain dominant - that is, fixated  with narrow-attention on applying logic to problems immediately at hand.  Or in political parlance on ‘fiscal policy’.  

Haldane’s follow-on point is that this leaves a dangerous absence of right-brain thinking in UK policymaking which, by its left-brain nature now lacks the imagination, creativity and ambition that only right-brain thinking delivers.  

Haldane’s remedy?  The simple “institutional fix” of leaving left-brain narrow focus to Treasury and ‘Treasury Brain’, and giving right-brain generative and productive focus to a new economic ministry with a fresh mindset of its own - in line with other G7 nations.  

Policy brain-fog

The 2025 Labour Conference in Liverpool presented the same curious paradox of left-brain and right-brain thinking for those of us concerned with UK economic productivity.  

While the Prime Minister and Chancellor delivered rousing speeches about "national renewal" and becoming the fastest-growing G7 economy, the underlying tension between fiscal orthodoxy and genuine reform remained unresolved. 

The Productivity Puzzle Remains Unsolved

Rachel Reeves's insistence that fiscal rules are "non-negotiable"² signals a troubling continuation of the Treasury view that has constrained productive investment for decades. Her swipe at those seeking to "slacken fiscal rules"—widely interpreted as targeting Andy Burnham²—reveals Labour's reluctance to challenge the bond market orthodoxy that prevents serious infrastructure investment. For a government promising to "kickstart economic growth," the commitment to fiscal conservatism appears fundamentally at odds with the scale of investment required to address Britain's productivity crisis.

The Chancellor's announcements on skills and youth employment^2,3, while welcome, fail to address the systemic underinvestment in productive capacity that NCC has consistently highlighted. A library in every primary school and youth work placements² are valuable but insufficient responses to an economy where, as Paul Sweeney MSP noted at a fringe event, "oligarch enterprises have taken control of so much of the key industrial infrastructure"⁴.

Financial Services Reform is still the Missing Revolution

Despite Labour's promise of a Modern Industrial Strategy¹, the conference revealed little appetite for confronting the financialisation that diverts capital from productive investment. The government's approach to pension reform—mentioned only briefly in fringe events⁵—lacks the boldness needed to redirect the UK's vast pension assets toward productive domestic investment rather than speculative financial instruments.

The "Build Construction Debate" fringe event highlighted critical skills shortages and low productivity threatening infrastructure delivery⁶, yet the government's response remains trapped within existing financial frameworks that prioritise short-term returns over long-term productive capacity. This represents a fundamental misunderstanding of how financial services could serve the real economy—precisely the awareness gap NCC seeks to address.

More Fiscal Discipline is the Wrong Answer to Real Grievances

The conference's obsessive focus on countering Reform UK^2,7,8, while politically understandable given current polling, risks missing the deeper economic anxieties driving voter discontent. Starmer's attacks on Farage's "grievance politics"⁹ ignore legitimate frustrations about economic stagnation that NCC's research consistently documents. Labour's strategy of fiscal responsibility combined with modest redistribution fails to offer the transformative economic vision needed to address these grievances substantively.

The irony is palpable: while denouncing Reform's economic illiteracy², Labour embraces the same Treasury orthodoxy that has undermined productive investment for generations, merely packaged with more progressive rhetoric about workers' rights and social justice.

Human Behaviour is Often a Root Cause of Institutional Dysfunction

Finally, in case anyone is interested in the neuroscience behind Western democracies' over-reliance on left- brain thinking (as distinctly from more right-brain Eastern regimes), this RSA Animate's short film on Iain McGilchrist explains...

Sources

[1] Kickstart economic growth https://labour.org.uk/delivering/economic-growth/

[2] Labour conference 2025: Five main takeaways from ... https://labourlist.org/2025/09/labour-conference-2025-rachel-reeves-speech/

[3] Reeves warns of harder choices to come as she hints at tax ... https://www.bbc.co.uk/news/articles/cy041perldwo

[4] UK economy being 'sabotaged' by lack of state investment ... https://labourlist.org/2025/09/labour-party-conference-uk-economy-we-own-it-paul-sweeney/

[5] FGF at Party Conferences 2025 | Full programme https://www.futuregovernanceforum.co.uk/party-conferences-2025/

[6] 'The Big Construction Debate' Sets Out Skills & Productivity ... https://www.ceca.co.uk/the-big-construction-debate-sets-out-skills-productivity-vision-at-labour-party-conference

[7] Labour conference 2025: Five key takeaways from Keir ... https://labourlist.org/2025/09/labour-conference-starmer-speech/

[8] Five takeaways from Keir Starmer's conference speech https://www.bbc.co.uk/news/articles/c36krle3894o

[9] PM Keir Starmer's Labour Party Conference speech in full https://labourlist.org/2025/09/labour-conference-2025-keir-starmer-speech-in-full/