Institutional tinkering between Nos 10 and 11 is no substitute for confronting the trade-offs inherent in policymakingby Tim Pitt / March 6, 2020 / Leave a comment
As Rishi Sunak prepares for his first Budget next week, much has been made of the apparent No 10 takeover of the Treasury, following Sajid Javid’s resignation as chancellor over the prime minister’s demand he sack his advisers.
Tension between Nos 10 and 11 has a long history, of course: think of Margaret Thatcher and Nigel Lawson; and the Treasury is full of tales of how bad relations were when Tony Blair and Gordon Brown were neighbours. Allegedly the first indication Blair would get about what was in his government’s Budgets would come the day before they were delivered, when his principal private secretary would be invited over to the Treasury. Ed Balls, then Brown’s chief economic adviser, would only at that point allow him a quick glimpse of the fabled Budget spreadsheet.
The current prime minister seems determined not to let this happen, taking control of the Treasury by imposing a joint team of advisers on his new chancellor. Centralised power has obvious appeal, but it is not without risks. More importantly, whatever the institutional setup, there is no escaping two simple truths: that there are no easy answers to the deep structural challenges facing the UK economy; and that you cannot avoid the fundamental trade-offs involved in economic policymaking.
In many ways tension between the two buildings is inevitable. Partly this stems from personality: prime ministers and chancellors tend to be highly ambitious individuals with strong views, and are often political rivals. Partly it is institutional: prime ministers usually—often for good policy and political reasons—want to spend money, while the Treasury sees its job as ensuring the sustainability of the public finances and that taxpayers’ money is spent responsibly.
The prime minister’s desire to seek a closer working relationship is understandable. The chancellor has at his disposal well over 1,000 Treasury officials to work up his ideas; the PM has just a couple of dozen. So No 10 is always largely reliant on the Treasury to work up tax and spending proposals, which means that when the prime minister and chancellor don’t agree, the latter has a major institutional advantage. From the Treasury’s perspective, a more joined up approach also has its advantages: Whitehall departments should no longer be able to go above its head to No…