Sajid Javid's spending statement on Wednesday will be a charade

Over the past two decades the Treasury has been run by a heavyweight, able to square up to a prime minister in the second most important political job in the land. Think of Gordon Brown in the Blair years or of George Osborne in the Cameron years. In their more understated ways, Alistair Darling held his own with Brown when he became prime minister, as did Philip Hammond with Theresa May.

But it is Boris Johnson who is calling all the shots in his relationship with Sajid Javid. The chancellor suffered the indignity of having Sonia Khan, one of his special advisers, summarily dismissed last week by Dominic Cummings, the PM’s right-hand aide. And on Wednesday Javid will deliver a spending statement to the House of Commons whose content has essentially been dictated by the prime minister.

The timing of the announcement, which will set out how much departments responsible for public services will get to cover their day-to-day spending in the year between April 2020 and March 2021, was highly suspicious even before this week’s frenzy about a possible early election. There is no compelling reason why these expenditure limits have to be fixed now rather than after 31^st October, when it will be clear whether Johnson has indeed visited upon Britain the fiscal as well as economic calamity of a no-deal Brexit. Obviously, the sooner that departments know what they will be getting, the better they can plan, for example in hiring permanent staff rather than using more expensive agency workers. But in 2015, when Osborne set out a four-year plan from April 2016, he did so in late November.

All the signs are that the statement on Wednesday, which will go ahead if necessary in writing given the likely disruption to the parliamentary timetable, has everything to do with electoral politics and nothing to do with sober public budgeting. Thanks to a stream of pre-announcements by the prime minister we already know much of what his chancellor will say. On Friday Johnson announced more money for schools in England at a cringe-making event, as the journalist-turned-prime minister who does his utmost to avoid press scrutiny took questions from children. In a rare interview, with the Sunday Times, he then announced more money for cash-starved local councils, including extra funding for social care.

In a further indication of Johnson’s electioneering intent, the funding for schools stretches beyond 2020-21, the formal time-frame for the chancellor’s statement. The headline figure the prime minister sought and got was that schools will get more than £14bn over three years. That exaggerates the boost to funding. Ministers are using the discredited device of totting up all the additional spending over the period, thus for example counting the first year’s increase three times. The reality for those who actually have to run schools is that they will receive an extra £2.6bn in the next financial year, followed by further rises of £2.2bn in 2021-22 and £2.3bn in 2022-23, when funding will be £7.1bn higher than now. In real terms, the increase by then will be £4.3bn reckons the Institute for Fiscal Studies in a briefing note published on Monday.

The case for injecting more money into Britain’s public services after years of austerity is clear. Indeed, it had already started last year when May responded to rising public disquiet about the NHS by insisting upon a big boost to health spending between 2019-20 and 2023-24. But the right approach is to conduct a multi-year spending review across government, as has been the norm over the past two decades (with only one exception, for 2015-16). The chancellor now promises a review in 2020 to cover subsequent years. However, that will be a half-baked affair given the fact that for the two biggest-spending public services, health and education, budgets have already been set beyond 2020-21.

Hammond had planned to hold a spending review this year. When announcing that intention, in March 2018, he said that responsible budgeting went through three stages. “First you work out what you can afford. Then you decide what your priorities are. And then you allocate between them.” The current process turns on its head what the former chancellor rightly had in mind.

Given the fact that the budget now occurs in the autumn, the case for delaying the spending statement beyond the Brexit deadline of 31^st October was overwhelming. Only then can it be grounded on meaningful official economic and fiscal forecasts. Only then will the chancellor be able to set out spending plans for public services as part of an informed overall judgment about fiscal policy.

Javid’s statement this week makes sense only in narrow political terms for a prime minister expecting an election imminently. It speaks volumes about the unusual weakness of the Treasury, which has for years been the pet hate of hardline Brexiters who cannot abide its spreadsheets showing that their dream will be a nightmare. They should not exult too soon. A healthy balance of power between the prime minister and chancellor has long been vital for any government that wants to survive more than just a few weeks.