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It was bad news for Sajid Javid when the Prime Minister pledged to keep him as Chancellor.

Not nearly as bad for him, you may counter, as if Johnson hadn’t.  But you take the point.  There is tension if not between the two men then at least between some in their camps.  (Dominic Cummings has been known to be just a little sharp about Javid.)

The Prime Minister’s commitment, made less than a month before the general election, succeeded in its purpose – namely, to shut down speculation that Javid would be replaced at the Treasury, if Johnson won big, by the coming man of the Government: his deputy, Rishi Sunak.

A view from the Treasury is that this choppy water has smoothed out.  It is keen to stress that the working relationship between two men is not only excellent, but a partnership on which much of the Government’s work is built. And it has examples to hand.

But even more significantly, it portrays the Treasury not as a cowed department, bamboozled by the voters’ endorsement of Brexit and dominated by a resurgent Downing Street, but as the continuing powerhouse of government.

One insider tells ConservativeHome that the department will become nothing less than “the Government’s internal think tank”.

Let’s start with what should be uncontentious.  Sources claim that Javid won the internal debate over tax and spending with the aid of Isaac Levido – who stressed to Political Cabinet, pre-election, that the Tories could not simply mimic Labour, and display a Nick-Timothy era tolerance of public spending growth.  They needed to frame an electoral choice.

And so to pre-election new fiscal rules (the Tory manifesto lists two of them) and a post-poll squeeze on current spending and the slaughter of “sacred cows”.

There is a new Cabinet public spending domestic delivery committee; the Treasury has been empowered to go through departmental spending line by line, to ensure that spending plans are in line with Johnson’s priorities; it and Number Ten are “in 100 per cent agreement”.

But what’s to stop the departmental Sir Humphreys from simply presenting the same old projects under brand new headings – linking them to the delivery of 50,000 more nurses; 20,000 more police; an Australian-style points-based immigration system; net zero emissions by 2050 and investment in science?

“We have the numbers,” the Treasury counters.  Which raises the question of how the effectiveness of all this extra cash will be monitored.  It is at this point that the conversation begins to get interesting – from a political point of view at least.

The inside view from the department is that there are three main reasons why the manifesto avoided public service reform.  First, the exigencies of Brexit gave Ministers little time to plan.  Second, the Conservatives didn’t plan for having so big a majority.  Third, Johnson was determined not to risk a 2017-style document.

But the Treasury has not given up on seeking to drive reform – even if that means Javid stepping on other Cabinet Minister’s toes.

Consider its drive to take ownership of the Government’s skills programme.  Late last week, it was reported that the Chancellor “will make them a central theme of his March Budget”.  And his support for HS2 has been heavily briefed (to the irritation of some in Downing Street).  The skills pitch contained a spoor (talking of “we have the numbers”). “Treasury officials have been collating research on the drivers of regional disparities”.

It is against this background that our source’s wish to turn the department into the Government’s internal think tank must be seen.

To the Treasury, it has a history of departmental predominance; “the numbers”, and a tradition of driving radical reform when it wants to.  Which is does – at least under this Chancellor.  According to the pro-building Sun, he sees eye to eye with Downing Street on planning reform.

But there is more.  The department has a long interest in seeking to free up the demand side of childcare.  Sources speak sympathetically of Liz Truss’s quest to ease up on the ratio of childminders to children.  It failed, ConHome pointed out.  To which we got the response: “but she was right”.

Then there is the police.  “Does anyone really believe that policing in Scotland is worse now that it has a single force rather than eight?”, this site was told.  Maybe not.  However, merging forces in England and Wales would raise big questions, some structural (such as the future of police commissioners).

There are others.  The manifesto doesn’t mention such reforms at all.  Indeed, it promises to “enhance the Green Belt”.  This would not be easy to square with building on bits of it.  Furthermore, pressure from Tory MPs has a way of frightening change off: consider the fate of fracking.

And to turn from the external to the internal: were the Treasury to work as the Government’s think tank – presumably with more SpAd experts working to that brief – what would become of Number Ten’s Policy Unit?

It waxes and wanes depending partly on the strength of the Prime Minister, and partly on that of its own leadership – and in both contexts it is currently in the ascendant.  Johnson has his near-landslide size majority, and the Unit is vigorously led.  Munira Mirza was a co-author of the manifesto and is a Downing Street force second only to Cummings – when it comes to intellectual drive and policy formation, at any rate.

The growth of Downing Street Ten as a driving force since the Blair era provides a context in which to see the Treasury’s ambitions.

The Theresa May-Philip Hammond relationship went sour almost from the start. David Cameron and George Osborne got on famously well; Tony Blair and Gordon Brown famously badly.  Looking back to the pre-Blair era takes us to John Major and Ken Clarke.  Weak Prime Minister, strong Chancellor: not the template here.

Johnson’s majority positions him to be more like Margaret Thatcher, during her post-1983 landslide, when it comes to his relationship with his Chancellor.  She was dominant.  And at that point, the Exchange Rate Mechanism was not even a speck in Nigel Lawson’s eye.

However, Javid is not really comparable to the man who became one of the most formidable of Britain’s post-war Chancellors.  Lawson was never a leadership contender.  Javid stood against Johnson and lost, though he ended up running a creditable campaign.

If Javid is identified with any cause – as Lawson was with tax reform – it is with infrastructure spending.  He pushed for £100 billion more of it when seconding Stephen Crabb’s Conservative leadership campaign in 2016.  Now he is getting his way.  But Number Ten is much more weaponised a creature than in Major’s Day.  Whether it is signed up to the wider ambitions of some in the Treasury remains to be seen.

82 comments for: The Treasury fights back. How it plans to drive radical reform – and become “the Government’s internal think tank”

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