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Sunday, June 20, 2021

Who is paying for Johnson's off-the-cuff policy making?

The obvious answer to that question is of course that us taxpayers are paying, but that assumes that the government can find the money in the first place after a fiscal-busting pandemic and facing a war-footing-style out-of-control national debt. Over the last year, all the fiscal rules set down by Gordon Brown, George Osborne and their successors have been smashed as the country struggles to emerge from its covid-induced coma with an intact economy. At some stage we are going to have to either start tightening our belt and paying off the debt, or write a new set of rules that allows for the sort of investment needed without worrying about the consequences.

Unsurprisingly, Boris Johnson appears to be a subscriber to the latter philosophy, not because he has no regard for consequences, though that trait has defined his personal and political life, but because he is a popularist, and knows that big projects and liberal largesse wins votes. The Chancellor of the Exchequer, because he is the one who ultimately has to deal with the consequences is in the first group. And so we are back to the normal tensions of government, in which the Treasury is pitched against the Prime Minister for control of policy, or are we?

The loose cannon in all of this is Boris Johnson himself, who apparently thinks he cannot be restrained by the normal rules of government, hence we get articles such as this one in the Times, where the Prime Minister is painted as having gone rogue, leaving his colleagues to play catch-up:

When Boris Johnson recently pledged to buy a new royal yacht and set up a 21st-century version of the postwar Marshall Plan to fund green growth in the developing world, the ideas were hailed in Downing Street as evidence that post-Brexit Britain is playing a global leadership role again. A picture was painted of a royal flagship touring the world as a visible symbol of Britain’s soft power, drumming up trade.

The only problem? Key people had no idea the announcements were going to be made and no one in government now wants to pay for them. Under the surface, both have instead become high-profile symbols of growing tensions at the top of government over public spending, which now threaten to dominate Whitehall for the next six months.

“No one in the Treasury had a clue about the new Marshall Plan until it appeared in the media,” said a senior Whitehall official. That included the chancellor, Rishi Sunak. Insiders say no spending request has even been received. A No 10 source admitted: “The Treasury seems to be getting increasingly irritated that we keep announcing things without telling them.”

The Conservatives’ loss in the Chesham and Amersham by-election on Thursday, where the Liberal Democrats overturned a Tory majority of 16,000 on a 25-point swing, has rendered the philosophical differences between Johnson and Sunak more acute.

Behind the scenes, tensions are growing over the gargantuan bill looming for Covid recovery. Sunak is among several cabinet ministers who are letting it be known privately that, when the government is facing a year of crunch spending pledges, important decisions need to be made by the cabinet, rather than by a small clique in No 10.

The Treasury is under pressure to find more for Covid education catch-up, to help pupils who have fallen behind during the pandemic; for health catch-up, to fund operations and cancer treatments that have been neglected; and to pay for the huge backlog of court cases that have built up.

It is not only No 11 that does not want to find the £200 million needed for the replacement for the Royal Yacht Britannia, which was decommissioned in 1997. The Cabinet Office, which was originally asked to devise the plans, the Department for International Trade, which was originally expected to benefit from them, and the Ministry of Defence, which has now been saddled with the project, are all in the dark about where the money is coming from, not least because the MoD is fighting to plug a £16 billion black hole in its annual budget.

“There is a huge row going on about the royal yacht and who is going to fund it,” said one senior Tory who is close to several cabinet ministers. “The seeds are being sown for an almighty set-to between Boris and Rishi over spending.”

Another official confirmed: “The royal yacht is a complete and utter shitshow. When it was first floated, the PM wanted it to be built in Britain. It was given to [Cabinet Office minister Michael] Gove to sort out, but it became clear that under procurement rules it could only be built here if it was a navy thing with a bunch of fake weapons on board. So Gove passed it on to the MoD. The Treasury stayed out of it.”

A cabinet source, reflecting on Johnson’s initial plan to get others to pay for the renovation of his Downing Street flat, joked: “Perhaps Boris can get someone to set up a trust to pay for it.”

As the article points out these tensions have been exasperated by last weeks by-election result with Tories now facing the reality that levelling-up means taking money from voters in places like Chesham and Amersham and giving it to places like Hartlepool. 

The paper says senior cabinet ministers are now concerned that the differing needs of the red and blue walls, the institutional divisions between No 10 and the Treasury, and the philosophical differences between Johnson and Sunak are a hairline crack through the government. Is Johnson starting to discover that he cannot always have his cake and eat it?

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