Will the budget divide ‘hawkish’ George and ‘One Nation’ David?
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Version 0 of 1. Sometimes, the significant developments in politics are the things that do not happen. “Non-events, dear boy, non-events”, as Harold Macmillan did not say. One of the events that has not happened yet is a great bust-up between David Cameron and George Osborne. It has not all been sweetness and light between them since they became the most famous neighbours in Britain. Their temperaments are not the same, they approach politics from different perspectives and they are not ideologically homogenous. This may become more visible in this parliament. Now they are running an all-blue government, they are no longer united by a common enemy. The Lib Dems aren’t there to be battled against. As his retirement from the premiership rises on the horizon, the prime minister will be thinking about what posterity will make of him. The chancellor’s focus will be on securing a future for himself as the next occupant of Number 10. They have been known to quarrel behind closed doors. The chancellor wanted the prime minister to sack Iain Duncan Smith; IDS is still in post. Osborne was in charge of the 2010 Tory election campaign, which Cameron later concluded was a mess. He deprived his friend of that role for the 2015 election. When they’ve been having an internal argument about economic policy, the prime minister has been heard to remind the chancellor that he, Cameron, has a first in PPE while he, Osborne, merely has a 2:1 in history. Their achievement – and it is an impressive one given the long history of rocky relations between the two offices – is to have kept their arguments friendly, their differences contained and their divisions almost wholly veiled from public view. That is a testimony to both the bond between them and the discipline of their respective teams. It has been one of their party’s greatest strengths. Historically, this is highly unusual. It was David Lloyd George’s dictum that “there can be no friendship at the top”. One of two things have tended to happen when a prime minister and a chancellor have been together for a while. Sometimes, the chancellor has grown powerful enough to shaft the prime minister when the incumbent becomes vulnerable. Lloyd George dethroned Asquith. Macmillan supplanted Anthony Eden. Gordon Brown plotted for a decade before he eventually levered out Tony Blair. The other, more frequent thing that has happened is that the prime minister has fallen out with, tired of or sacrificed his chancellor when the government has become unpopular. John Major sacked Norman Lamont in the wake of Black Wednesday. Harold Wilson let Jim Callaghan carry the can for the devaluation crisis of the early 1960s. Margaret Thatcher fell out with both Geoffrey Howe and Nigel Lawson. Macmillan went through four chancellors. There are examples from history of Numbers 10 and 11 working in harmonious tandem, but it is the exception, not the rule. Both men were keen students of that bad history, especially the uncivil wars of the Blair-Brown years. They noted that the separate fiefdoms of the Treasury and Number 10 were almost designed to cause a split and made a conscious decision to arrange their working lives to prevent it. So from the beginning, and to this day, the chancellor and his key aides attend the prime minister’s two daily meetings with his most senior staff. When the prime minister is absent, the chancellor takes the chair. In the run-up to the budget, there is an intense schedule of discussions between Number 10 and Treasury officials. Tony Blair and his staff were lucky if they got 48 hours’ notice of what would be in a Gordon Brown budget – never mind be consulted about its contents. Personal ties – they are godfathers to each other’s children – matter. So does a similar background: public school and Oxford. By far the strongest bonding agent has been a mutual recognition that their fortunes are interwoven. “The foundation of their relationship is the understanding that they rise or fall together,” says a person with a ringside seat. The nadir of George Osborne’s chancellorship was his omnishambles budget of 2012. A lot of voices urged David Cameron to remove his then deeply unpopular neighbour. He wouldn’t hear of it. When the prime minister was under huge pressure from his backbenchers over Europe, and beset by rumours of a challenge to his leadership, the chancellor had his back. Convergence of ambition has also locked them together. Cameron’s goal is to be remembered as the Tory leader who rebuilt the party into one that is again capable of regularly winning elections. Osborne hopes that will be his inheritance. He flirted with the idea of a job swap to the Foreign Office to plump up his CV. But he concluded that his ambitions would be better served maintaining his grip on the Treasury’s many levers of power and patronage and building his network of support among Tory MPs. The prime minister could not have done much more to advertise that he wants to be succeeded by his next-door neighbour. He has effectively elevated him to the number two of the cabinet by awarding him the title first secretary of state. When the prime minister is absent abroad, the chancellor will be his stand-in at PMQs, an opportunity to audition for the leading role and to try to create a sense that he is “the natural” successor. His first outing as the understudy was solid, but marred by a cheap crack about the Labour leadership contest, which was the more misjudged because it came in response to a question about suicide bombing. Even his friends recognise that the chancellor can find it difficult to suppress his inner sneer. One explains that he was at the side of William Hague during the Tory party’s most miserable years. “He saw the Conservative party’s nose being rubbed in the shit for year after year. He’s never forgotten it.” The chancellor’s obsession with setting traps to torture Labour can in part be seen as revenge for those years of humiliation. Cameron is not quite like that. For sure, this prime minister has his ruthless streak. Just ask Nick Clegg and all those ex-Lib Dem MPs who were cannibalised by the tactics employed by the Tories during the election. But he is less fixed on gaining a day-to-day tactical edge. “George lives for the game, the cut and thrust of politics,” says one close observer of both men. “David is more likely to say, ‘God, I just want to spend more time with Sam and the kids.’” That also shows up in their politics. Ideologically, Osborne has the sharper edges, which has gained him fans among those Tories who regard Cameron as too mushy. At the funeral of Margaret Thatcher, a tear leaked from the chancellor’s eye. Before the election and even more so since, he has defined himself as a fiscal hawk. By contrast, Cameron greeted his surprise majority as an opportunity to rebrand himself as a “One Nation Tory”– the tradition of consensual Conservatism that Mrs T despised. “One Nation. We should never have let that go,” the prime minister has been heard to say to his inner circle. Opinions will differ about the extent to which he means it, but friends say that he sees himself as a “compassionate Conservative”. The budget is now 10 days away and it will be an early reveal of how and whether the Cameron ambition to be remembered as the leader who revived One Nation Toryism can be reconciled with the more Thatcherite inflection of his chancellor. In the budget he produced just before the election, Mr Osborne set out a plan that envisaged very severe spending cuts in the early part of this parliament. The Office for Budget Responsibility memorably called it “a rollercoaster”. It now looks as though he could have some scope to moderate it. Among other things, tax receipts have been flowing in at a higher level than anticipated. My guess is that the prime minister would like his chancellor to make the ride a bit less stomach-churning. In their search to find savings from the welfare budget, ministers are clearly targeting tax credits for the working poor. They have been rolling the pitch with the argument that credits are being abused by companies that exploit a taxpayer subsidy to pay their workers badly. This is a problem, but if the government’s solution is simply to slash at credits without any compensating measures to raise wages, then they have been warned of the consequences. One of those doing the warning is Boris Johnson, the chancellor’s rival for the succession. In an interesting intervention last week, he said: “Before we start hacking back on in-work benefits we’ve got to look at low pay from corporations that could be coughing up much, much more to help.” Squeezing the incomes of millions of the less affluent will be even more jarring if the chancellor also cuts the top rate of tax to 40p. Punishing the poor while rewarding the rich would make a mockery of the prime minister’s desire to be seen as a “compassionate Conservative”. He does not like to be mocked. A prime minister with no more elections to fight will increasingly have his eye on his legacy. A chancellor hoping to succeed him will be paying more attention to pleasing the Tory party. Can those ambitions be reconciled? Can “One Nation” Dave be squared with “hawkish” George? That is a big test for this government and their double act. |