The UK Treasury is under growing pressure to identify the local economic regeneration projects that will be delayed as a result of a crackdown on spending by Michael Gove’s levelling up department.
Gove has been banned from signing off any new capital expenditure without Treasury approval in an unusual move that indicates concerns over the ministry’s finances.
On Monday, the opposition Labour party wrote to chief secretary to the Treasury John Glen demanding to know which housing and regeneration projects could drift as a result of the ban.
The letter, signed by shadow chief secretary Pat McFadden, claimed the decision “may lead to delays in necessary housing projects and other capital spending programmes”.
“It is concerning to learn that the Treasury believes other government departments cannot be trusted to make cost-effective determinations with public funds,” it added.
The Department for Levelling Up, Housing and Communities is responsible for allocating billions of pounds in regional regeneration funding.
The agenda was a pillar of the Conservatives’ election campaign manifesto and promised to boost “left behind” areas of Britain.
The funding is distributed through various pots such as the levelling up fund, towns fund and those for brownfield sites and affordable housing.
The National Audit Office spending watchdog and the House of Commons public accounts select committee, which oversees government expenditure, had previously raised concerns over how the money had been used in risk management, governance and impact evaluation.
The intervention by Glen, around the start of February, means that new capital expenditure by DLUHC or the arms-length housebuilding body Homes England must now be approved by Number 11. Previously, Gove’s Whitehall department had the authority to sign off outlays of up to £30mn.
The letter asked whether the Treasury believed that DLUHC had “behaved without due regard to value for money with public funds”. It also asked what triggered the intervention by the Treasury, and whether the next round of the levelling up funds would be affected.
Labour also queried what effect the decision would have on the ministry’s overall capital expenditure “relative to allocation”.
Last Thursday, Labour had raised an urgent question in parliament on the matter. In response, levelling up minister Lee Rowley said there had been “no change to [the department’s] budgets, capital or revenue”.
He added that there had been no alteration to the government’s policy objectives, “and no implications for the government’s policy agenda”.
Asked on the same day about the situation by television channel ITV, Gove said “it is sometimes the case that Sir Humphreys harrumph”, a reference to the fictional mandarin Sir Humphrey Appleby from the 1980s series Yes, Minister.
But he added that “nobody will get in the way of making sure we get money to those who are vulnerable and who deserve it”.
The Treasury was contacted for comment.
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