A Critical National Infrastructure superministry could fix Britain

Burnham’s aim is to drive growth by disempowering the centre, devolving fiscal and financial powers to regions and big cities; to reindustrialise failing regions through shaping markets and taking increased state ownership and control. The outcomes are supposed to be felt at human level. 

NEETS will get into jobs or training places. Blighted coastal towns will be revived. Universities will become regional economic powerhouses. Council homes will get built. And public services will become cheaper.

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But turning around a stagnant economy, in a stagnant world, against the headwinds of global tension and tariff wars by reversing the core dynamics of the British state is a task that will take well into the middle of the next decade.

So as well as vision, it will require political statecraft. First, because civil servants are trained to be generalists; to operate within an unchanging system and rise through it without ever becoming experts in defence, law enforcement, farming etc. So even the best are culturally resistant to change.

Second, in the free market era, Whitehall became a series of semi-autonomous departments, attuned to delivering outcomes through managing and regulating “their” part of the private sector at arms’ length. 

Since this created a bonanza of opportunity and influence for the private sector, the Treasury necessarily positioned itself as gatekeeper. That bridge you want to build with the help of your favourite civil engineering contractor? No. Those frigates you can only purchase from one supplier? Twice no.

Third, because this exploited an inbuilt weakness in the Cabinet Office: its chief minister is the only person in the Cabinet without executive power.

Result? Nothing much gets done. When ministers reach for the levers of power, they find they are more like knitting needles, with whose points they must use to try to move a very unyielding steering wheel.

Burnham’s ally, the former transport secretary Lou Haigh, proposed the radical solution of splitting the Treasury in two.

It was an argument made as early as 2014, by the Nesta think-tankers Giles Wilkes and Stian Westlake. They wanted to hand “budget responsibility” to Downing Street and economic policy to a new Department for Economic Growth. But it is hard to see a change of that magnitude happening without an electoral mandate.

Wilkes popped up again, in the aftermath of the Truss debacle, to co-author a report advocating, instead, the creation of a more powerful Downing Street. And it appears that Burnham has adopted this form of the solution, rather than Treasury breakup in the short term.

So what matters now is that the Treasury uses its levers of power and expertise to facilitate rather than hinder the investment-driven, place-based, redistributive growth that Burnham desires.

The fixes here have to be simple – both cultural and systemic. First, the Office for Budget Responsibility must be told to align its metrics with those of the Treasury. 

There is a ridiculous but fatal provision in George Osborne’s original Budget Responsibility and National Audit Act, passed in 2011, which states that, while the Treasury can tell the OBR what kind of forecast it should make, it “must not make provision about the methods by which the Office is to make any such forecast, assessment or analysis”.

The effect has been fiscal policy stasis. Rachel Reeves had a theory of growth based on the perfectly sound assumption that if you borrow to invest, it will generate growth potential in the near term and start paying for itself with higher tax receipts, exports and productivity.

But the OBR’s economists did not accept her theory of growth. Instead, they marked Reeves’ homework according to their own pet theories, which say Britain is incapable of breaking out of its low growth and productivity trap.

Replace “must not” with the words “may” in the 2011 Act – possibly the shortest piece of legislation ever proposed – and you solve the problem: economists working at the OBR and Treasury must align on the assumptions, even if they differ in their calculations.

This is not just a technical fix: it’s a sovereignty and democracy issue. And unless Burnham picks a chancellor prepared to grasp it, all the aspirations of the Manchester speech will be thrown back at him in the form of an OBR Economic and Fiscal Outlook that says, simply, “Sorry, mate, not happening”.

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The machinery of government change I would make instead is to create a Critical National Infrastructure superministry: water, energy, telecoms, space and public transport all managed from a single building, with the function of regulators largely absorbed back into government.

Its single mission would be to end decades of rent-seeking and asset stripping, and make the public utilities run for the benefit of the British people, not foreign hedge funds and – ludicrously – foreign state-owned utilities.

I first proposed this in a paper for Exeter University about what a wartime British state might look like – but the more I think about it, the more it looks like a peacetime vehicle for the change Burnham wants to enact. It could even be co-located in Manchester.

Use the CNI Superministry to create greater ownership and control of the unexciting systems our economy rests on – food, fuel, transport etc – and the job of a future economics ministry becomes to shape and prioritise the exciting bits. 

The Treasury, of course, must balance the books long term, manage the £3 trillion debt pile in a way that eventually shrinks it, and avoid spikes in the cost of borrowing by careful management and narration of fiscal policy. 

It must set a sensible inflation target for the Bank, maintain financial stability, promote business confidence, and co-ordinate macro-economic policies with as many G7 countries as are willing. 

That’s a massive job, even once Burnham has taken a chunk of governmental power and relocated it to Ancoats. The success or failure of his project will – as it did for Starmer – depend on whether the Treasury can be persuaded to like it.

Paul Mason’s new book Reds: A Global History of Communism is published by Bloomsbury on August 27