Is the action man Gove ready for a daring investment adventure? | Philippe Inman


Michael Gove has become the Mr Fixit of the UK economy. As Rishi Sunak gives the appearance of someone obsessed with only how and when to reduce the national debt, it is up to the member for Surrey Heath to define the government’s next steps.

As the new boss of Whitehall’s most awkwardly renowned department – for ‘leveling up’ Housing and Communities (DLUHC) – it is Gove and not the Chancellor who appears to be tasked with joining the random dots on the map. from Boris Johnson to a brighter, more equal and more planet-friendly future.

In recent discussions in the House of Commons, Gove has shown that his brief is far-reaching. Asked last week On the lack of rail tracks in North West Leicestershire, he happily stepped on the toes of Transport Secretary Grant Shapps to say that the region “could not have had a safer champion in the games needed to secure the [rail] investment required ”.

With the Home Office, the Education Ministry and the Treasury also in his sights, not to mention the thorny subject of decentralization, Gove added, “We need to make sure that all communities feel they are have the right investment not only in transport, but in skills, schools and making sure the streets are safe and communities can take back control ”.

It is clear that Gove is the man of action in the cabinet, one who not only takes care of its immediate file, but also tackles the big issues facing the country.

As he sets out to shape a bolder Britain, he could refer to reports that show how areas of the country not known for their prowess in the private sector – or more at least – could benefit significant public investment. It would be an investment discreetly thrown away by Treasury officials after it was found to offer little money for every dollar spent.

The last thinktank Be The Business productivity index shows that businesses with between two and 249 employees in the North East and North West of England have improved during the pandemic at a faster rate than companies of the same size in London and the South East. Still in its infancy and with just 1,000 respondents across the country, the index nonetheless illustrates how companies, even in disadvantaged areas, are using technology, improved management skills and innovative ideas to increase production.

Importantly for Gove, the index shows that infrastructure investments in the Northwest and Northeast will have a receptive audience of promising companies.

However, a separate study of Cardiff and Nottingham Trent Universities, based on a wider range of data, reveals the very weak base from which improvements in private sector productivity outside London and the South East begin.

It may seem obvious when the UK Competitiveness Index, now in its 21st year, shows that the former industrial area of ​​Blaenau Gwent in Wales is the least competitive locality. Not far behind are the battered economies of Redcar and Cleveland in the northeast, and Mansfield in the eastern Midlands. Sadly, South Tyneside is also in the top 10 worst performers, and Kingston on Hull, Stoke-on-Trent and Sunderland aren’t far behind. In contrast, the London boroughs occupy nine of the top ten places.

One of the report’s authors, Professor Robert Huggins from Cardiff University’s School of Geography and Planning, says there is a link between areas that climb in productivity rankings and public investment. Liverpool, Leeds, Glasgow and Clyde Valley are among those improving lately. However, Huggins says the only major factor that has changed is the City Deals, the agreements between Whitehall and key cities that predate the current government.

“The problem for the UK is that such funding remains limited both in terms of the amount of funding available and the limited number of places that can access it,” he said.

Worse, he says, is that these deals remain exceptions, and rather than the competitive landscape improving, “the UK is likely to become more uneven, with less competitive locations having to grow at the same pace. the slowest “.

Gove will have to heed these warnings as he continues his negotiations with the Treasury. He shares Sunak’s sympathies for the free market, but seems more open to the idea that long-term public investment complements private sector spending and will not make people in disadvantaged areas stand up.

There is always a risk that regions which have not seen a lot of government money for half a century will not know what to do with it. But if these reports show one thing, it’s that the risk is worth taking.

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