Artwork for FTWeekend Comment - issue dated 15.02.20
© Jonathan McHugh 2020

The writer, a former head of the Downing Street policy unit, is a Harvard senior fellow

It is quite a feat for Boris Johnson to have made a martyr of the mild-mannered Sajid Javid. Insisting that the former chancellor of the exchequer ditch his advisers, a month before one of the most important Budgets in a generation, made Mr Javid’s resignation inevitable. While badly executed, No 10 Downing Street’s land-grab nevertheless makes sense.

At a time when Britain is extricating itself from the EU, seeking to forge new trade deals and bridge the north-south divide at home, it is vital that the prime minister and chancellor have a strong working relationship. But Mr Javid’s standing with Mr Johnson had deteriorated to the point where Treasury officials were worried their influence had diminished. He had won some battles — notably over a commitment to balance the books over the lifetime of this parliament — but he never felt secure.

The growing number of whispers from “senior Treasury sources”, and Mr Javid’s pre-emptive backing for HS2, the high-speed rail scheme, infuriated Mr Johnson and his chief adviser Dominic Cummings. Just as a wary David Cameron blocked Mr Cummings from becoming a special adviser in 2010, so Mr Cummings sought his revenge upon Mr Javid’s team.

Mr Johnson is right to seek a relationship that looks more like the close collaboration between George Osborne and Mr Cameron than the toxic battle between Gordon Brown and Tony Blair. Mr Javid was no Mr Brown. The former Labour chancellor used No 11 as a fiefdom from which to control all of domestic policy, while Mr Javid was mostly lobbying damp squibs at an exasperated centre. Nevertheless, the levels of mistrust were unworkable.

Messrs Cameron and Osborne were equals with a deep pre-existing friendship. The problem for Mr Johnson is that he is a loner. He does not have that kind of partner in politics and is overly dependent on Mr Cummings. Rishi Sunak, the new chancellor, is well versed in finance and an impressive performer, but he lacks experience and has no power base of his own. To achieve anything like the close collaboration enjoyed by Messrs Cameron and Osborne, Mr Johnson will need to treat Mr Sunak as a trusted equal and sometimes cut out Mr Cummings.

The proposal to create a joint team of special advisers serving both Nos 10 and 11 was understandably a flashpoint for Mr Javid, who was used to having his own team and is also known to be loyal to his staff. But it could work well if it is simply a more formal version of the situation that existed during the coalition government, when Mr Osborne’s emollient chief of staff, Rupert Harrison, worked closely with his counterpart Ed Llewellyn in No 10.

Much will depend on how “joint” is interpreted. You cannot “take over” the Treasury by holding a handful of advisers hostage. That misunderstands just how lopsided the power relationship between Nos 10 and 11 is.

The Treasury is a vast department containing thousands of brilliant brains who work on policy, compared to about 30 in No 10. Even during the Cameron-Osborne entente cordiale, the Treasury’s hauteur could be maddening. The prime minister’s policy unit shadowed every department except the Treasury, which jealously guarded its secrets. Even the cabinet secretary was kept at arm’s length: during the 2015 spending review meetings, he and I would often receive no advance papers, which left us, as intended, on the back foot.

The Treasury is an unusually powerful finance ministry, responsible for tax, much of economic policy, finance and expenditure. It has institutionalised resistance to all sorts of things, including building key worker housing, devolving skills policy and giving more financial autonomy to cities. Moreover as Budgets have become a piece of theatre in their own right, a metric by which chancellors are judged, we get the razzle dazzle of the short-term gimmick — tax complication instead of simplification.

The Treasury does, of course, play a noble role on behalf of taxpayers, as an unsentimental brake on excessive spending. Mr Javid battled to secure that commitment to balance the books; Mr Sunak may find himself under pressure to soften this line by a prime minister who is keen to woo his newly acquired northern voters. However Mr Sunak is well known to be fiscally conservative, just as his predecessor was. It seems unlikely that he would have been appointed if there was a secret plot to unleash a new spending spree.

There is a case for curbing the Treasury’s role in departmental spending. It creates a sort of learned helplessness in departments whose spending envelopes are determined not by what they need to run services, but by the room to manoeuvre that remains after borrowing rules and taxes have been set. There are powerful arguments for separating finance from the management of departmental expenditure, and moving budgetary responsibilities into something like the US Office of Management and Budget.

Mr Cummings’s ambitions do not seem to extend that far — yet. At the moment, the government needs to stumble to the Budget with a credible chancellor who can show that he is not a puppet. That should not be impossible.

Mr Johnson is running his government largely as a chairman, with Mr Cummings as chief executive. The lesson of Thursday’s debacle is surely that when it comes to his chancellor, he must run that particular relationship himself — and build a team that can deliver good government through open debate and compromise.

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