Ban on Gove’s ‘piggy bank’ risks blocking regional renewal plans

Good morning With Stephen away for some well-deserved R&R, Inside Politics comes to you today from 200 miles north in Manchester.

Perhaps appropriate given Manchester played an unintended role in initiating one of the most notable shifts in the Whitehall machinery in recent memory.

Sir Humphreys cleared his throat

When Rishi Sunak gave mandarins new desks, ministers new titles and Whitehall departments new brass plaques in last week’s reshuffle, the Treasury had already quietly undertaken some reorganizations of its own. Senior Secretary Michael Gove had, as a gleeful Labor adviser later said, had his “piggy bank stolen”; Number 11 had banned him from making any new investments without her consent. Previously, the Department of Leveling Up, Housing and Communities was able to underwrite its own spending on investment projects of up to £30m.

The alleged trigger for this crackdown seems to have been a Talk here last month. Gove originally hoped to announce four new pots of money to local authorities and mayors. But the Treasury apparently felt rebuffed and the bean counters stepped in.

Her attempt to regain control of his department’s finances was inevitably downplayed: “Processes change,” deadpan Secretary Lee Rowley told MPs on Thursday in response to a pressing question on the issue, while Gove himself rejected it “Sir Humphreys clears his throat”.

But this is no small tinkering. It’s an extreme measure, taken only when there are genuine concerns about a department’s spending. The decision to rein in Gove’s spending will pollute the machinery at both the ailing Ministry and Number 11, as every project, no matter how small, has to be approved.

So is such a draconian intervention just the result of an overzealous speech? Not everyone thinks so.

Gove’s department had been inundated with billions of pounds worth of post-election local regeneration funds, hundreds of bids from councilors and an army of Red Wall Tories wanting something for their campaign pamphlets. It has faced local supply shortages and increasing external scrutiny over where the money is going.

So it wasn’t long before the department was hit with warnings of the National Audit OfficeThe Public Account Selection Committee (twice) and the Government’s Internal Audit Office on fund management, capacity and poor impact assessment.

Addressing her pressing issue last week, Labor’s Lisa Nandy alluded to “rumours” that “the affordable housing budget has not been spent and there are also unspent compensation funds which are now being recovered from the Treasury Department”. . When I asked Gove’s department about underspending on their Affordable Housing Fund, they simply said the Government remains “committed” to its entire £11.5billion scheme.

And yet: DLUHC’s investment ban also extends to Homes England, the independent housing organization that Gove hoped would spearhead its broader regional regeneration goals (see trailing this government approval the Leveling up White Paper from January 2022).

When the Treasury told me last week that the impact of the issuance ban on Homes England would be ‘minimal’, a very well placed housing expert replied: ‘No way. Try to say that to the majority of the organization that runs land, brownfields, investments and so on.”

There is a risk of “potential paralysis” in Homes England, they said, adding: “Furthermore, what does that say about it being Gove’s recovery body – and Gove’s agenda?”

It’s the right question.

Gove’s white paper – and indeed one Speech to the Liverpool Convention of the North a few weeks before launch last February – made it clear that he had welcomed government intervention as a means to bring about impactful change in places outside the Southeast. But a year later, when Rishi Sunak’s reshuffle erases “Industrial Strategy” from the Whitehall nomenclature (with the abolition of the Department of Business, Energy and Industrial Strategy) and the Treasury takes Gove’s purse, will that plan be quashed?

hp Some Gove watchers think his main aim, as time runs out in this Parliament, is to secure his legacy under a Labor government – to keep his ideas alive enough that the next group cannot drop them.

Try now

Gourmet friends rave about it the white swan on the fence, near Burnley. They report a warm welcome, despite arriving late and sweaty from a long walk, followed by a reasonably priced, Michelin-starred, locally sourced menu. Speaking of which, I’m looking forward to finally leaving The Spätrows later this month in Manchester, now also in the Michelin Guide. The restaurant used to be in such a small space that I never managed to sample their great selection of spaetzle and dumplings, but has now moved to the Red Bank near Victoria Station.

need more? Manchester Museum will reopen next weekend after a £15m overhaul, complete with a new dinosaur, golden mummies, a South Asia gallery – in partnership with the British Museum – and a Chinese culture gallery.

Top stories today