Government would work better if HM Treasury was split up, former senior Cabinet Office minister Michael Gove has said.
Speaking on the Lord Speaker’s Corner podcast, the former chancellor of the Duchy of the Lancaster said it would be better to “end” the Treasury than “mend” it.
“I think that if you look at the structure of the Treasury, it sees its role principally as spending restrictions or spending reduction, budget control and supporting financial services,” Gove said.
“What it doesn't think about is growth in a sufficiently coherent way. And it also thinks less about other aspects of the economy than it does about financial services. And I personally would think it is better to end it than to mend it in a way.
“And I think that the argument put forward by folk like Francis Maude, that you should split the Treasury up, has a great deal of merit.”
Explaining how his split-up of the Treasury would work, Gove said: “Ideally, you'd have spending control in the Cabinet Office, you'd have the equivalent of a sort of office of management and budget, and you would have an economics ministry, which was dedicated to making sure that government policy overall was oriented towards growth, innovation and creativity.”
Gove, who was chancellor of the Duchy of Lancaster from 2019-2021, added that he believes that “fundamentally a very strong prime minister and a very strong chancellor can make the Treasury work for them”.
In Lord Maude's review into civil service governance and accountability in 2023, he called for a new-look centre of government with an Office of Prime Minister and Cabinet, an Office of Budget and Management and a streamlined Treasury. Maude suggested an Office of Budget and Management should take on current Treasury responsibilities for public spending and major cross-cutting functions like financial management, commercial procurement and project delivery.
Departments 'didn’t like' levelling up
Gove, who became a peer in May and is now editor of The Spectator, also described in the interview how the levelling up agenda – which he led as secretary of state for the then-Department for Levelling Up, Housing and Communities from 2022-2024 – struggled to progress after coming up against scepticism from other departments.
Asked why it was “held up”, Gove said: “Folk in the Treasury were sceptical about what we were doing. They thought that this was just old-fashioned regional policy in new clothes. And other government departments didn't like the idea in particular of devolving areas.
“So the Department for Education didn't like the idea of devolving aspects of the skills budget to local areas. The Department for Work and Pensions didn't like the idea of devolving support for employment to local areas. And as I say, Treasury ministers overall in particular thought that we were attempting to push water uphill. And that if you really wanted to promote growth, then making a particular emphasis on left-behind areas was a very long-haul exercise that would not generate the rapid growth the country needed.”