The coverage of Andy Burnham’s Manchester speech focused on the plan for devolution and the goal of reducing the spatial economic inequalities that have plagued the UK. The theme in the speech that will grab the attention of Whitehall is what the plan does to the centre of government. Burnham’s “No.10 North” aims to move part of the prime minister’s office to Manchester. His team is reported to be weighing a separate set of changes, on what to do with a weak No.10, a Cabinet Office that has taken on too much, and whether to break up the Treasury.
The Institute for Government has set out the problem in detail through its Commission on the Centre of Government. Its analysis is that No.10 is too weak to set clear strategy and that the Cabinet Office has grown too large and lost focus. When the prime minister does not give direction, the Treasury fills the gap, because it holds the money and makes the major choices at spending reviews. Thomas Pope and Hannah Keenan, writing for the institute last week, argued that the right response is to strengthen No.10 and reform the Cabinet Office, leaving the Treasury in one piece.
If Burnham’s aim is a more strategic centre, what is the role of a No.10 for the North? One approach is to move most of the main functions of the PM’s office out of London. Another is to build a second centre, standing alongside the Treasury and the departments while speaking for the regions. The focus will be bringing utilities and transport infrastructure under local public control while driving forward plans for reindustrialisation. A third role is to have a smaller body that brokers between mayors and Whitehall without managing either. Each implies a different relationship with the Cabinet Office and the Treasury, and a different answer to who decides when a mayor and a department disagree.
What to do with the Treasury is the biggest conundrum about the centre of government. In the speech, Burnham promised to respect the fiscal rules, which ensure that day-to-day spending matches government revenues. At the same time, his team is reported to be considering dividing the Treasury, with a new economics ministry alongside a finance department. The pull towards this is understandable, because the Treasury is the strongest part of the centre and is accused of practising a stifling orthodoxy. Reorganising a department is slow and expensive, with the IfG putting the cost of past changes at between £15m and £175m. It was tried before under Harold Wilson in the 1960s and was not a success. That said there is a case for a department focused on growth and economic revival rather than monitoring public money.
There needs to be a stronger operation around the prime minister with a Department for the Prime Minister and Cabinet able to set strategy and stay the course. When the centre has no strategy of its own, the money is handed out first and the direction is meant to follow, which often means it never really does. The clearest recent case is levelling up: the white paper setting out the plan appeared in 2022, after the 2021 spending review had already allocated the funding. A No.10 North that cannot set strategy would have the same issue.
Across this series we have argued that the mark of a strategic state is the ability to set a direction and hold to it over time, against the pull of the next fiscal event and the next election. Britain has struggled to do that for several decades, and the symptom is a habit of reorganisation, whether by drawing functions into the centre, moving it, splitting a department or creating another unit. To make a substantive impact, Burnham will need to show that his No.10 for the North will be different. Given the decisions deluging the centre on energy, AI, infrastructure, defence and so on, it will still be necessary to build a centre that can set strategy for the whole of government. There is no avoiding that essential task.