The Liberal Democrats came under fire after proposing scrapping the Treasury.
Sir Ed Davey’s party suggested replacing the economic ministry in Whitehall with a Department for Growth based in Birmingham.
The Conservatives tore into the uncosted Lib-Dem plan.
Shadow chancellor Sir Mel Stride said: “This announcement is nothing more than a gimmick.
“It will do nothing to address the real challenges facing the economy: high welfare spending, high taxes, weak investment and rising debt.”
A Labour Party spokesman stressed: “The Lib Dems can slice up the Treasury all they like, but it won’t make their sums add up.
“We’ll take no economic advice from the Tories’ former coalition partners in government, who inflicted damaging austerity on the country, with families still paying the price.”
The Treasury has just over 3,100 staff, according to the Institute for Government.
The Lib Dem proposal risks causing uncertainty for them as if the nation’s economic ministry was moved to the Midlands many of them would have to relocate or find another job.
But in a speech in the City, 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 Growth Department in Birmingham 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”.
Overseen by the Chancellor, it would also merge with the current Department for Business and Trade, while a separate “Department for Public Expenditure” would oversee departmental spending.
The move to Birmingham is intended to “send a strong signal” that the Lib Dems are committed to closing the gap between London and the rest of the UK, the party said.
Thousands of civil servants have already been moved out of London to the regions as governments seek to rebalance Britain’s economy.
But completely axing the Treasury would be a huge gamble and would risk causing communication problems if the new economic ministry was away from the heart of Government, with teams of civil servants having to shuffle between London and Birmingham for meetings.
As part of moves to open up Whitehall, civil service internships are also being restricted to people from working class backgrounds.
Ms Cooper said the new department would “focus minds” as she warned the country was “stuck in a doom loop of low economic growth”, with the Treasury too focused on the short-term.
The proposal follows calls to break up the Treasury from experts including former Bank of England chief economist Andy Haldane in January 2024.
But the idea stretches back decades, and was previously attempted in the 1960s, when Harold Wilson created a Department for Economic Affairs to oversee long-term economic strategy.
While the department lasted for five years before being merged back into the Treasury, it was largely moribund after just two years, seen as having lost a Whitehall turf war with the older department.
The Lib Dems pointed to other countries with similar arrangements, such as Australia and Ireland, where taxation and spending are managed by separate departments.
