Influential figures close to Andy Burnham are urging the potential future prime minister to split up the Treasury, aiming to refocus the government's agenda on economic growth.

This group includes former monetary policy maker Andy Haldane, seen as a likely candidate for Burnham's economic adviser, and former Transport Secretary Louise Haigh, now a key power broker within Burnham's team. Both advocate for dismantling the Treasury to establish a separate department for growth.

Burnham returned to parliament on Monday after nearly a decade as Manchester's mayor. As he prepares to formally challenge Keir Starmer for leadership, he faces pressure to clarify his own economic agenda. Prediction markets are betting on his choice for chancellor, but the greater uncertainty may lie not in the person selected, but in the responsibilities the role will encompass.

In an article for the left-leaning publication Renewal, Haigh argued that concentrating the duties of promoting growth and controlling public finances within a single institution often leads to overly cautious policy outcomes. According to people familiar with the matter, her proposal to separate these two functions into different bodies is gaining increasing support within Burnham's circle.

This idea echoes a suggestion made last year by former Bank of England chief economist Andy Haldane. Sources indicate Haldane is currently providing informal economic policy advice to Burnham and is viewed as a strong candidate to formally assume that advisory role in the future.

In her article, Haigh also proposed reforming the Bank of England, stating "now is the right time to revisit its remit to see if it should include better mechanisms for policy coordination and a greater focus on economic growth."

These proposals reflect the UK's pressing need to boost its economy to escape a cycle of weak economic activity, high debt, and elevated borrowing costs. However, some within Burnham's camp have expressed skepticism to Bloomberg, suggesting these reforms might not be effective.

One individual, who requested anonymity to discuss internal debates, argued that stripping the growth function from the Treasury could ultimately strengthen the Treasury's power, while a new department for economic growth might become a think tank isolated from the center of decision-making.

The person added that enhancing the Bank of England's secondary objective to support the government's economic policy could reignite financial market concerns about inflation risks. A spokesperson for Burnham declined to comment.

Under the proposed split, a new Department for Economic Affairs would be carved out of the Treasury as an independent body, potentially relocated to Birmingham or another major city. Reports on Wednesday indicated Burnham's desire to move parts of a future prime minister's office operations to Manchester.