Thirteen years ago, I was appointed to the shadow Treasury frontbench team. Most weeks there would be a team meeting in George Osborne’s parliamentary office in the Norman Shaw building. To reach his office, you would walk through a large open-plan room where his impressive team of advisers would be based – Matt Hancock, Rupert Harrison, Eleanor Shawcross and Rohan Silva.
The room contained not just Osborne’s team. In the same office would be Team Cameron – including Steve Hilton and Kate Fall. The closeness between the two teams was evident even to a casual observer. It was a closeness that survived into government. Silva moved to No 10; Harrison remained at the Treasury, but doubled up as the PM’s economic adviser.
All this was underpinned by a close relationship between the two leading figures in the 2010-2016 governments. Cameron and Osborne were friends and colleagues, never rivals. Osborne wanted Cameron to be a successful leader, and Cameron wanted Osborne to be a powerful chancellor.
There was much talk last week of the Cameron/Osborne double act. It has been reported that Boris Johnson wanted to replicate that relationship with his chancellor and thought it reasonable that he and Sajid Javid should have shared advisers. If the intention was to establish a close partnership, it was a strange way to go about it.
Getting the relationship right is both important and difficult. Important because, unless there is agreement between Nos 10 and 11, it is hard for a government to get much done. Difficult because the interests of PM and chancellor tend to diverge. Prime ministers are usually judged on longevity and popularity. Winning elections counts above everything else. Chancellors are judged on the state of the economy they bequeath. Prime ministers want to please the crowd; chancellors worry that pleasing crowds can be expensive.
How to address this tension? The least common solution was the one adopted by Cameron and Osborne. The central mission of the Treasury – getting the deficit down – was as much Cameron’s objective as Osborne’s. At the other end of the spectrum was the Blair-Brown relationship. Once close, they became rivals but both remained powerful, albeit not quite powerful enough to remove the other. The tensions were not addressed, but government functioned by attrition.
Most of the time the influence of the Treasury will ebb and flow, but it always remains at the heart of government. Obviously the stronger the chancellor, the stronger the Treasury. But the institutional advantages of the Treasury have ensured that its power has remained strong.
A properly functioning Treasury is essential to delivering good government. Without a strong Treasury, pet schemes proliferate, short-term popularity is prioritised, spending control is diminished, and international confidence damaged.
This brings me to the events of last week. The ultimatum to Sajid Javid was wholly unreasonable. It is to his credit that he refused to accept the terms of continuing in office. It would not only have been a personal betrayal of his team, it would also have been a symbolic surrender of the Treasury’s position within government. Far from establishing a partnership of (near) equals, à la Cameron/Osborne, with the chancellor’s people advising the prime minister, the proposal involved leaving the chancellor surrounded by those whose loyalties lay elsewhere. He would have been chancellor in name only.
Where does that leave Rishi Sunak? No one can blame him for accepting promotion. But, bright and astute as he is, he will realise that – sooner or later – he will have to establish a reputation for strength and independence. To the extent that any political laws still apply, a prime minister who loses two chancellors looks more than a little careless. If the new chancellor chooses his moment wisely, he has considerable leverage. And the Treasury? Its influence always returns in the event of an economic crisis. Let us hope that it doesn’t come to that.
David Gauke served in the cabinet under Theresa May
