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Manchester’s Peel Group already owns around 30% of its Yorkshire counterpart but is bidding to take it over in a deal that would value the firm at around £600m

Development group Peel has increased its takeover offer for fellow Northern firm Harworth Group.

Peel’s offer of 177.5p per share for the parts of the company it does not already own values Rotherham-based Harworth at nearly £600m. Harworth said it would evaluate the new bid with its advisors, but recommended shareholders do nothing in the short term.

Peel already holds nearly 30% of Harworth’s shares, but launched a takeover bid in August through a subsidiary. Harworth said the first bid undervalued the company and last week announced a move away from the residential property market in efforts to streamline its operations.

Last week also saw Harworth publish half year results for the six months to the end of June in which EPRA NDV was £697.7m, compared with £725m in the same period last year. It also saw a £16.9m fall in the value of its residential portfolio over the period.

A spokesperson for Peel said: “Harworth’s defence document highlights rather than addresses the issues faced by the Company. It announced a further decline in NAV and cash flow, while remaining silent on the Company’s short-to-medium term outlook. Instead, it flags a new strategy lacking credibility but promising ‘long term’ returns for shareholders. Peel’s revised offer provides shareholders with the certainty at completion of a highly attractive cash alternative at a fair price and 40% premium.”

Harworth responded with a statement to the Stock Exchange which said: “There has been no engagement between Peel and Harworth over the course of the offer period. The Harworth board is evaluating the revised offer with its advisers and a further announcement will be made as appropriate.”

Harworth originated as the property wing of UK Coal, and many of its earliest properties were former mining sites in the North and the Midlands. It currently has holdings of more than 15,000 acres across 100 sites, and specialises in developing industrial and logistics developments for sale.

He identified “putting digital ID on hold” as an example of how he had already “taken difficult decisions in this job in relation to reprioritising government spending” and vowed to continue to “take difficult decisions to make sure the economy remains on track”.

Digital ID is a striking choice of example. Burnham announced that he was abandoning the scheme in the days before he became prime minister so that he could focus on policies affecting the everyday cost of living.

But the spending was then, within the new government’s first few days, re-allocated to cut VAT on household electricity bills.

So in that sense it was not a reduction in public spending, just a reprioritisation. And in any case, the former cabinet minister Darren Jones criticised Burnham at the time on the grounds that the government had not yet allocated the money for digital ID.

Certainly the signs from Healey’s first major speech as chancellor last week were that he wants to reassure the markets, promising to “control public spending” and praising Rachel Reeves for beginning to “recover Britain’s fiscal discipline”.

Burnham and Healey would hardly be the first PM-chancellor double act to adopt different tones and emphasise different priorities in their public appearances.

As a junior minister at the Treasury almost 25 years ago, Healey was engaged in the question of how to boost growth around the country, long before it became central to Burnham’s vision for Britain.

But there are people in government who are beginning to wonder whether their economic visions are quite as aligned as expected. “It’s what everyone is thinking and some of us are vocalising,” one government source said.

There are also those who fear the adverse political consequences of a Labour government seeking to go out of its way to demonstrate its fiscal credibility. Arguably that was behind the removal of the Winter Fuel Allowance for most pensioners as one of Sir Keir Starmer’s first acts, an early factor in his political demise.

For Labour’s political opponents, all this amounts to a question of whether the prime minister is willing to disappoint his own MPs. Yet it’s worth remembering that with winter fuel the frustration in parliament was primarily caused by the furious reaction of Labour MPs’ constituents.

Arguably this presents a more fundamental tension: are the kinds of policies needed to soothe the markets politically deliverable given Labour’s electoral coalition and its need to shore up the ‘progressive’ vote?

The Budget is only six weeks away and will be the first and most important sign of the new government’s answer to that question.