The Budget will be a compromise between Boris Johnson and his mighty chancellor

The direction of the government will depend on Rishi Sunak and the prime minister’s relationship – the echoes of Nigel Lawson and Gordon Brown are unmistakeable

John Rentoul
Saturday 23 October 2021 13:21
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<p>‘That way? Are you sure?’ </p>

‘That way? Are you sure?’

I promise this is the last time I will mention the Tony Blair and Gordon Brown TV series until next week (Monday’s episode, the fourth of five of Blair & Brown, is on Iraq), but the echoes of the relationship between prime minister and chancellor are too loud to ignore as we approach the Budget on Wednesday.

When the Blair vs Brown tensions reverberated, they were compared with the difficult relationship between Margaret Thatcher and Nigel Lawson, which contributed to her downfall. New Labour learned more than one lesson from that rift. Tony Blair learned that the issue of Europe could be used to divide the Conservative party; while Gordon Brown learned that the Treasury could be immensely powerful across economic and social policy.

David Cameron and George Osborne learned a rather different lesson from the Blair-Brown tension, which was that it was better for a government if Nos 10 and 11 Downing Street worked in partnership. Their joint economic policy was not as pro-growth or as pro-poor as it could have been, but it was pursued effectively – until the government went down in flames, that is, inevitably on the issue of Europe.

The relationship between Boris Johnson and Rishi Sunak is like Blair-Brown and Cameron-Osborne, in that the chancellor wants the prime minister’s job – but in other respects, it is different from both.

It is different from the toxic brotherhood of Blair and Brown in that it is the chancellor who is the upstart. Brown resented Blair because Brown had been the senior partner, and had been usurped. Johnson now resents Sunak because the chancellor was appointed as an inexperienced minister who would do No 10’s bidding, but he was catapulted to a position of towering stature by his skill in handling the coronavirus crisis. By virtue of his popularity, Sunak is unsackable – “unassailable” was the word Thatcher used of Lawson, just before he assailed himself.

That resentment – I don’t think it is as intense as Brown’s brooding refusal to accept Blair’s superiority – means that the Johnson-Sunak relationship is also different from the Cameron-Osborne one. Osborne calculated, probably rightly, that Brown could have succeeded Blair earlier if he had given him unstinting support, and he thought, probably wrongly, that his path to the top job lay in sticking closely and loyally to Cameron. He may have been wrong because that strategy overlooked the certainty that the issue of Europe would tear the Conservative Party apart. Osborne had a premonition of that, in advising Cameron, privately and not very forcefully, that the referendum on EU membership was a bad idea. But it would have torn the party apart whether or not Cameron had promised a referendum, and whether or not he had won it.

By contrast, Johnson and Sunak have a personally amiable but professionally rivalrous relationship. That has meant some tough discussions between the two about the Budget that the chancellor will announce on Wednesday. These did not involve the shouting and swearing that Blair and Brown sometimes indulged in, but I understand that firm and incompatible positions were taken and had to be negotiated inch by inch.

The friction produced some hostile exchanges among camp followers. The bust-up between Kwasi Kwarteng, the business secretary, and the Treasury two weeks ago was vintage Blair-Brown. Shortly after Kwarteng said on 10 October that he was engaging with the Treasury over ways the government could help industry deal with high natural gas prices, a Treasury “source” told Sam Coates of Sky News: “This is not the first time the Beis secretary has made things up in interviews. To be crystal clear, the Treasury are not involved in any talks.” The same message was delivered to Shehab Khan of ITV News, who asked: “So, did Kwasi Kwarteng just make that up?” The Treasury source replied: “Yes.”

Later, Sunak said those comments were nothing to do with him, but the whole point of using an anonymous “source” rather than an on-the-record spokesperson is that the minister can disclaim responsibility, and Coates and Khan wouldn’t use those words unless they were clearly being delivered on the authority of the chancellor.

The Treasury is a jealous god, guarding its right to smite any hint of public spending that has not been authorised in its marbled halls, especially if it involves bailing out private companies. But this spat was the by-product of a bigger argument between the prime minister and Kwarteng on one side, and Sunak on the other, over green policies in the Budget, with next month’s UN climate change summit in Glasgow very much in mind.

Johnson and Kwarteng forced Sunak to agree to subsidise the shift from gas boilers to electric heat pumps for home heating. They also got the Treasury to agree to switch green levies from electricity to gas bills, thus encouraging the consumer to switch to cleaner electricity in the longer term.

Those tough negotiations took place in the wake of the real Budget, which was last month’s decision to raise taxes to pay for the NHS backlog. That was a joint decision in which Sunak took the lead, insisting that any higher public spending after the coronavirus emergency would have to be paid for from taxes rather than borrowing. So there won’t be much left to announce in the notional Budget that Sunak will deliver on Wednesday, except the spending review – the public spending plans for the next three years – although there will be the green policies and shiny new announcements (but little cash) on such things as nurseries, veterans, museums and sports pitches.

The tension between No 10 and the Treasury will define the rest of Johnson’s time as prime minister. Johnson has been prime minister for only two-and-a-quarter years but already the inevitable drumbeat of speculation about the succession will be audible behind much of the reporting of politics. I read Sunak’s interview in The Times today – “Booster jabs will prevent lockdown, says Rishi Sunak” – as a pitch to anti-lockdown Tory MPs, the first-stage selectorate in a leadership election. Equally, I read Liz Truss’s interview with The Daily Telegraph – “Liz Truss: Britain cannot be dependent on China” – as a pitch to Tory MPs with an anti-Chinese-government sentiment.

The prime minister has tried to balance the great power of Sunak by promoting a rival to the Foreign Office, but it will be the relationship between him and his chancellor that will determine the government’s course for the foreseeable future, just as it was with Thatcher and Lawson, and Blair and Brown.

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