Chancers of the exchequer

PUBLISHED: 07:00 24 October 2017

Chancellor of the Exchequer Nigel Lawson holds up his red budget box with his wife Therese, outside 11 Downing Street before he presents his 1989 Budget to the House of Commons

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Former - and perhaps future - No. 11 occupants are using uncertainty over Hammond to push their own agenda, says MICHAEL WHITE

Under crushing pressure from many sides Philip Hammond made two mistakes in recent days, three if you include dining with George (“dead woman walking”) Osborne in a public restaurant.

In a Sky interview the chancellor, carelessly referred to the EU’s negotiating team as “the enemy, our opponents” and was forced into a hasty retraction. By way of a contrast he declined to pander to the Hard Brexit lobby by prematurely committing billions to preparing for the ‘no deal’ outcome he still hopes to avoid in Brussels. This time Theresa May retracted for him. Slightly. She assigned a small wodge to the task.

Wrenched from context, it was all enough to trigger reports that two senior ministerial allies (they are always ‘senior’ when anonymous) among the Cabinet’s pragmatic majority had concluded that Hammond is not up to the job in exceptionally difficult times. It is a legitimate point of view, the jibe about the chancellor being a doleful ‘Eeyore’ will stick if he doesn’t ham up the politics a bit better.

But cabinet disloyalists then overplayed their hand by proposing Hammond be replaced by Michael ‘Experts’ Gove. Boris for Archbishop of Canterbury, anyone?

Chancellor Gove apart, everything else is serious, seemingly more so as May and David Davis, her Brexit Bulldog, headed through Storm Ophelia – and those apocalyptic orange skies – to Brussels for one of the ‘surprise’ dinners we so often read about.

Their 90 minute eat-in was with Michel Barnier and Jean-Claude Juncker, who presumably refused to talk at all until they agreed on how to divvy up their drinks bill. As the heaviest drinker at the table (Oliver Robbins and Juncker’s brain, Martin Selmayr were also there) you could see his logic. ‘Shall we just save time and split it two ways, Tess?’

Pending a destructive Selmayr leak of their conversation, as happened once before, the talks seem to have been mildly ‘constructive and friendly’. No breakthrough (of course) and no change to the EU’s existing ‘divorce first’ framework (of course), but a willingness to ‘accelerate’ things. Assuming the 27’s weekend summit agrees that ‘insufficient progress’ has been made to start talking trade terms, the process will stagger on towards 2018 when leading UK businesses will get very nervous indeed.

If, as reported, Angela Merkel and Emmanuel Macron, have been persuaded by EU Council president, Donald Tusk, not to reject the hint of preliminary trade talks in December, that should suffice for now. This is, after all, a negotiation, in which both sides must posture and bluff, threaten to prepare for ‘no deal’ even, talk lofty principles but think grubby cash. That kind of tactical theatre is all Hammond meant by “the enemy”, he did not – as Juncker did last week – invoke the Second World War.

In reality, much talking goes on safely beneath the radar and sensible people involved know the 27+1 all have too much to lose – trade and jobs, money and investment, defence and security cooperation – by a collapse of talks and the prospect of an angry Hard Brexit. Even if the talks do collapse it is likely to trigger fresh crisis-driven negotiations. That is the EU way.

Only faith-based economic fundamentalists – they exist on both sides of the Channel – rejoice at the sight of a Brexit cliff. When it is bathed in strange orange sunlight their spirits soar. The Orange Cliffs of Dover! Is it a signal that the Second Coming is at hand? Or just flames from World Trade Organisation (WTO) rules being undermined by Donald Trump? Either way, it is a false dawn.

Meanwhile, the vicious retaliatory campaign against Hammond (payback for ‘Sack Boris’) by Hard Brexiteers and their allies in the oligarch press, most of it tax-shy and foreign-owned, has, if anything, intensified as November 22 looms.

The chancellor’s best response would be a gaffe-free budget, no pasty tax or bold plan to tackle the funding of elderly care, but something sensible to address student debt and the shortage of affordable housing for the young. Raid pension relief again to help Millennial voters kick the Corbyn habit? Certainly not, say dim-witted right-wingers. No pressure then, Phil.

But it has not been a good week either for chancellors past – or even future ones, if we half-believe John McDonnell or fancy wasting a fiver on Jake Rees-Mogg for No 11. Take a special bow for a destructive intervention, former chancellor, Nigel (“no cliff”) Lawson. Lord Lawson of Blaby took the opportunity of a visit to BBC TV’s Daily Politics studio to accuse Hammond of being “very close to sabotage” in refusing to spend more preparing for a ‘no deal’ Brexit. In fairness, it was probably unintentional, he graciously emphasised.

The peer’s answer? “Probably a reshuffle”. It allowed the Daily Mail a “Sack Saboteur Hammond” splash headline with a highly defensive rider (“and that’s the word Nigel Lawson, not the Mail, chose to use”) in brackets. To my ear that bit of buck-passing sounded a bit Harvey Weinstein (“I never touched her and anyway she was up for it”), though the Mail’s rejoicing at liberal Hollywood’s hypocrisy about the film mogul overlooks its own. As with Jimmy Savile and others, tabloid showbiz reporters must have heard some of the Weinstein gossip too.

As regular readers know, White’s First Law of Reshuffles is: First Name Your Candidate. Lord Lawson did not do that, but we can assume it is unlikely to have been Govey. Both are journalists by trade (“teenage scribblers” as Lawson loftily said of others) and I have known both a long time. Lord Lawson is a serious man with a silly side; with Michael Gove it is the other way around.

When Lawson’s formidable analytical brain tells him to be disloyal to lesser colleagues – Thatcher, Major, Cameron, Osborne and now Hammond – he does it with gravitas. Gove’s knifing of Boris Johnson’s leadership bid was high camp, less gravitas than gravel.

I first encountered Margaret Thatcher’s future chancellor (1983-89) on the campaign trail with Ted Heath in 1970. A financial journalist turned (wouldn’t you know?) editor of the Spectator, Lawson was in the process of being defeated for the Labour-held marginal of Eton and Slough. He won Blaby when Heath was ejected from power in February 1974. As a young man he’d written speeches for Harold Macmillan and I once heard him say the old boy used to call City grandees ‘banksters’. Excellent.

But young Lawson moved with the times, away from Macmillan and Keynesian demand management towards Milton Friedman’s monetarism and Thatcher, at least for a while. As the opposition whip on Denis Healey’s 1977 Finance Bill he engineered the Rooker-Wise amendment. Named after two pugnacious Labour left-wingers, it index-linked the main tax allowances to (then double-digit) inflation, unless parliament voted to decouple them – as it often has done since 1977. Easy revenue to be had simply by freezing allowances (fiscal drag) is too tempting to resist.

In its day Rooker-Wise enhanced ‘honesty in taxation’ (forcing successive governments into ‘stealth taxes’), a good day’s work for which Lawson deserved to share the byline with Labour’s Jeff Rooker and Audrey Wise.

But Hammond should know – and probably does – that Lawson’s subsequent record in No 11, the most qualified candidate for chancellor in decades, was pretty mixed. He got the budget into surplus while slashing 3p off basic rate and cutting the top rate of tax from 60p in the pound to 40p. Yes, you read that right: for most of Thatcher’s time the top rate was 60p (and she wanted him to cut it only to 50p).

Lawson helped deregulate the City in the 1986 Big Bang, paving the way for its current pre-eminence and for the crash of 2008 (as even he admits). He simplified the tax system, promoted privatisation, and helped cut unemployment. He privately opposed the poll tax and wanted to anchor volatile sterling to the embryo-single currency, the exchange rate mechanism (ERM), but did not resign when Thatcher vetoed it. He covertly shadowed the German mark instead. And, of course, the cumulative effect was the Lawson Boom which ended in inflationary tears and – after a power struggle with Thatcher – in his resignation in 1989. It turned out to be the beginning of the end for her too.

I recall this not out of malice. I enjoy clever, confident people like Nigel Lawson, ones who are also funny (if not always intentionally: on television he called Remain’s Anna Soubry MP a “complete fanatic”). But all bold politicians who try to get things done make some bold mistakes. Lawson is no exception. His current offence is insensitively arrogant backseat driving, for which he should have lost his licence long ago.

Few know better the acute pressures facing Hammond, now worse than those chancellor Lawson faced in 1983 – after Thatcher had won her greatest battles. The suspicion must be that Lord Lawson has regressed to being an 85-year-old teenage scribbler himself. The thought is compounded – as it is with other prominent Brexiteers – by his views on climate change. It’s OK to change your mind about big things. Scepticism over the cost of future proofing against climate catastrophe is fine too. But an Oxford PPE graduate, even one with a First like Lawson (and Cameron), simply doesn’t have the background to do the climate science. He’s been suckered, as much by his own vanity, I suspect, as by the prospect of a high profile platform, the praise and the free lunches.

‘Hang on,’ I hear you say, ‘Michael Heseltine (84) is quite pleased with himself too.’ But Hezza has stayed a player, much closer to the world of Westminster and Whitehall than Lawson. What’s more, his dyslexic’s instincts for what’s right for British business may be more intuitive than those honed in cerebral economic journalism. But they are also those of a man who made his own fortune, something Lawson’s forebears did for him.

And Ken Clarke, where does he fit in on the ex-chancellors tiger shoot? John Major who was briefly at No 11 and Gordon Brown, whose 10-year tenure exceeded Lawson’s record, confine themselves to occasional interventions, the better for being rare.

As for Norman Lamont, a modest as well as impish ex-Treasury chief, he has always been a Brexiteer, but does not say too much. Alistair Darling, also modest by nature, rarely intervenes on the Remain side either.

In March, Lord Lamont warned Remain peers against undermining Brexit by amending the Article 50 bill and thereby risking what the Daily Express called their own ‘abolishment’. In August, Lord Darling warned against rising consumer debt. Neither is one of nature’s Shere Khans.

Leaving aside vengeful George Osborne – if only for a moment – Clarke is the big ex-Treasury beast most actively still on manoeuvres, still an MP at 77, still able to muster a croaky version of Shere Khan’s jungle roar.

This week the only Tory MP to vote against the A50 Bill disappointed ardent Remainers by telling BBC Radio 4: “It is not the aim of my amendment to reverse Leaving. We are leaving the political institutions of the European Union.”

Note the word ‘political’. Clarke’s concession to the Brexit majority in the Commons – most MPs in all parties do not believe in Brexit but were browbeaten into voting for it – is significant. But he does not extend it to the economic institutions.

The sheer volume of amendments tabled to the EU (Withdrawal) Bill has stalled the committee stage, forcing largely untested chief whip, Gavin Williamson, to try and enforce party discipline against bolder Remain Tory MPs.

Some are consorting with the enemy in all parties at Westminster across a range of issues, including the centralising threat to devolved powers for Cardiff, Edinburgh and (‘Knock, knock, is anybody there?’) Belfast, the autocratic ‘Henry VIII’ provisions the bill gives ministers to amend or abolish repatriated EU regulations and – of course – the terms of the final deal/no deal. Undeterred by threats of abolishment, the Lords are also organising. David Davis, a veteran troublemaker who knows more than most about backbench revolts, is taking it seriously. It is a common feature of weak governments, weakly-led, that a lot of talent ends up on the backbenches, the kind of talent which leaves headline-grabbing to Peter Pan Brexiteers (‘Dreams do come true, if only wish hard enough’) like Nadine Dorries and Peter Bone, while quietly organising in smoke-free rooms.

Shadow chancellor, John McDonnell’s confirmation of this cross-party activity – is it the kind of behaviour he and Jez deplored in their own rebellious middle age? – on a Sunday TV sofa illustrated the perils as well as the opportunities here. There is no Commons majority for a ‘no deal’ Brexit, he said, ‘no deal for no deal’, as it were. But Tory MPs are already aware of the taint that would attach to them voting for anything with Jeremy Corbyn’s name attached to it. ‘Crush the Red Saboteurs’ and ‘Enemies of the People’ the Daily Mail would thunder, its imitators in hot pursuit.

So interest seems currently to be focussed on less toxic amendments, one of them tabled by Clarke, Chris Leslie, a Labour shadow chancellor in the distant past BC (Before Corbyn), and others.

It would insert May’s two-year ‘implementation’ phase from her Florence speech into the Bill, enshrining a single market transition for industry and commerce after March 2019. As things stand – and they quickly change – the other cluster to watch is shepherded by the former attorney general, Dominic Grieve, sacked by David Cameron for refusing to take the law as well as the economy over the cliff.

Grieve’s amendment which has Tory, Labour and Lib Dem support – presumably the SNP delegation would vote for it too – would, in effect, give MPs a veto on the terms of Brexit, something ministers, the Mail and the Hard Brexit crew are keen to avoid.

Cameron’s petty act of appeasement didn’t work with faith-based colleagues any more than previous leaders appeasements did after Margaret Thatcher was overthrown and switched sides. But Grieve remains that increasingly rare parliamentary creature, a respected and authoritative lawyer, who is a mere 61. Labour’s Keir Starmer, who is 55, also fits that bill. Neither has yet developed the theatrical and rhetorical flair required for politics’ Premier League – nor have May or Hammond – but they serve to reassure the watching public (as distinct from the non-watching majority) that much-vaunted ‘sovereignty’ ultimately resides in parliament, not in Downing St.

Will the Trimmers who bend with the wind or the Men of Principle (who bend more subtly) prevail in the end? In politics it is rarely possible to predict with much certainty.

Virtue is not always rewarded, nor vice punished. This past week both Liz Truss – who is Hammond’s titular deputy – and Jeremy Hunt, health secretary, said they are Remain converts to Brexit because of the arrogance of Brussels. Oh dear.

Trimmers both, and Hunt has also been tipped to take over from Spreadsheet Phil at No 11. He is a decent man, doing a difficult job with the NHS in cash-strapped, demand-led times.

But he is not a politician to change the weather and was lucky to escape fatal damage over Rupert Murdoch’s first BSkyB bid when culture secretary. So best to hang on to Hammond, Theresa, the pack will soon tire and move on to a new craze. Bitcoins perhaps? Joining the US medical regulatory regime after leaving the EU’s? Attacking Ryanair’s Michael O’Leary for saying British planes really might be grounded by a ‘no deal’ Brexit? What does he know about planes compared with The Mogg?

In turbulent times the unthinkable becomes thinkable, if only for a few seconds. Last week Paul Goodman, thoughtful ex-MP and pro-Brexit editor of the ConservativeHome website, provoked derision for a Times article that ran under the headline ‘Osborne might return as a British Macron’. No, I don’t think it likely either. Had the latest of the Treasury’s Shere Khans remained an MP – as he initially promised – everything might now be different. But Osborne’s calculations missed May’s self-harming general election and he took BlackRock’s shilling and Fleet St’s bully pulpit.

Worse, he has used his platform at the Evening Standard as bombastically as the weightier Nigel Lawson does on a bad day, harrying May indiscriminately and without visible gallantry, the Harvey Weinstein-style which will not easily be forgiven.

If Brexit goes badly and the search intensifies for scapegoats, Osborne’s name will be high on the rollcall of saboteurs. But well-connected Osborne also stays in the Westminster loop and treason is always a matter of dates.

ConHome’s Goodman highlights the lurch of both main parties towards extreme and wishful ideological positions. He also notes recurring gossip – more in the FT this week – about talks to form a centrist party, united for moderation and against Brexit.

Just look at what technocrat Macron achieved with En Marche, they say: from zero to Elysee hero in just a few months. But hang on. Isn’t that escapist wishful thinking too? Macron has not yet achieved much, but is having to defend himself from charges that he is the ‘president for the rich’.

He is not even the EU boy wonder any more now that Sebastian Kurz (31) is set to take rich Austria down the Polish-Hungarian route to shrill nationalism, Trump-Putin-Xi style, on the EU’s sensitive eastern flank.

Madrid and Barcelona may – or may not – have taken a step back from the Aragon-Castile divorce in Spain this week. But the investigative reporter who exposed Panama Papers corruption in Malta, the EU’s smallest state, has just been killed by a car bomb. Another headache which could head Brussels way and expose fragility.

In troubling times it is little wonder that so many people seek comfort in simple solutions, plot their escape route in dingy corridors or see omens in an orange sky which may be nothing more substantial than wind-blown Saharan sand.

It ought to remind us how inter-connected we all are, but may do just the opposite. What is needed is clear-sighted vision, not sand in our eyes.

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