Truss attacks on the Treasury highlight Tories’ deeper failure

Boris Johnson sometimes joked that he dreamt of shaking up the Treasury by making John Redwood, the former cabinet minister and Thatcherite radical, his chancellor of the exchequer. It stayed a dream. His first two chancellors were orthodox fiscal conservatives.

Liz Truss, the frontrunner to succeed Johnson as prime minister, is given to similarly puckish musings. Asked if she was tempted to split the Treasury into finance and economics ministries, she replied that she “wouldn’t want to give them advance warning”. 

Taming the Treasury has been a theme of Tory politics as far back as Margaret Thatcher, who cleared out senior officials and reorientated economic policy. For the iconoclastic Truss, the parallel is irresistible. Her charge is that it is too cautious and its “bean-counting” has stymied growth. It helps that her rival Rishi Sunak was until recently the chancellor, so lambasting the orthodox (and anti-Brexit) Treasury is also a useful line of attack on him.

The Treasury, like the rest of Whitehall, is not above reform. One former insider laments its rigidity in resisting efficiencies if they front-load spending. Others cite resistance to infrastructure projects or the undue weight it places on market reactions. (In the Treasury’s defence one can cite its bold pandemic response and that you need a ministry which thinks about deficits and debt.)

Tory radicals, Truss included, depict the Treasury and the wider Whitehall variously as a woke, obstructive, rigid and Remainer “blob”, this last appellation being attached to anybody deemed difficult. But where the machine is not working as ministers wish, it may not be for the reason they have lit upon.

The shrill onslaughts make Tories sound like mourners at their own funeral, dredging up alibis for their inability to drive through their policies. The primary reason the government agenda has been derailed is the pandemic. But after that, the main cause is political weakness.

In the past six years the UK will soon have seen four leaders, political stasis over Brexit and, for most of that time, a chancellor and premier at odds. Johnson’s political insecurity and his vacillations begat a series of weak cabinet ministers. If there is a blob frustrating reform, it is a political blob.

If Johnson felt that Sunak’s Treasury was the obstacle many now suggest, one has to ask why he did not find a chancellor with whom he could work.

Speaking to a range of former Treasury officials, aides and ministers offers a clear view on how to get the best from the department. First, they reject splitting it into separate economics and finance ministries as a disruptive distraction from pressing issues. Despite her quip, it seems Truss largely agrees.

All stress the importance of a prime minister and chancellor who are aligned. The best example of this is David Cameron and George Osborne, though the early years of both Thatcher and Tony Blair were also successful. Should she win, Truss looks likely to choose her longtime ally, the business secretary Kwasi Kwarteng, along with a like-minded ministerial team.

Truss does want Number 10 to take a more central role in economic decisions. With the exception again of the Cameron government, previous attempts to do this have not worked well. Either, as with Sunak, a combined No 10/No 11 unit is absorbed into the Treasury. Or the move creates division, most famously when Thatcher’s economic adviser Sir Alan Walters prompted Nigel Lawson, her chancellor, to quit. Some Treasury personnel changes are likely. Truss allies expect Tom Scholar, the permanent secretary, to move on soon, while the number two role is vacant.

Former insiders dismiss talk of the Treasury subverting policy, saying officials crave clear direction and work hard to implement the manifesto. But one adds that “they do see their role as ensuring the economy is well managed”. This means ministers need to be able to make an intellectual argument that stands up to scrutiny and that the Treasury can sell to the markets. “It’s not enough,” he warns, “to point at a picture of the Laffer curve and say ‘see’.”

All identify the greatest obstacle to effective administration as weak political leadership. Whatever the arguments over her economic policies, Truss is right that clear direction is vital. On this point, either contender will be an upgrade on Johnson, though they must choose ministers on ability not fervour.

And determination is not the same as rigidity. Truss’s undignified retreat over an ill-judged plan to slash the public sector wage bill shows the value of good advice. Challenging orthodoxy must mean more than cutting and pasting from rightwing think-tank pamphlets and dismissing doubts as “declinism”.

Leadership contests rarely bring out the best in politicians. If the next prime minister can bring strategic leadership, strong ministers and a focus on delivery, they will find a Whitehall that responds to their demands. If, instead, they persist with assaults on the woke warriors, footdraggers or Remainers of Conservative caricature as an alibi for poor policies or weak leadership, they may find the public tiring of a government that appears unable to manage.

The Tories have been in power since 2010. With the exception of the pandemic and Ukraine crisis, the country is the one they have bequeathed. After 12 years, problems in Whitehall are no longer an excuse for political failure. They are a sign of it.

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