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  • Lord Moylan

The Critic: The odd couples - Against the Prime Minister/Chancellor diarchy

Whatever happened in that long-lost Islington restaurant back in the mid-1990s, the result was a striking innovation in the governance of the UK. A country that had been used to Cabinet government found itself run by the powerful duumvirate of Blair as Prime Minister and Brown as Chancellor. Other members of the Cabinet had little say over the course of government, and even over the running of their own department. It is easy to forget how strange and unaccustomed this was.

Of course, one can idealise the way Cabinet government had worked. It was never entirely a college chaired by a primus inter pares, as the text-books suggested. Some beasts were always bigger than others, for personal reasons or because of their office. But it’s clear from Cabinet records that the Prime Minister (even Churchill in wartime) felt a sense of deference to the Cabinet and that Cabinet ministers thought they had a perfect right to comment on major policies being pursued by colleagues running other departments. (It’s always worth looking up the Cabinet memoranda exchanged between Morrison and Bevan about the creation of the National Health Service.) And while the Chancellor of the Exchequer held one of the Great Offices of State, it was not necessarily that much greater than the office of Home Secretary or Foreign and Commonwealth Secretary.

All that was changed by Brown, who sucked power away from both the Prime Minister and his Cabinet colleagues. His technique in dealing with the former seems to have been one of personally tailored verbal terrorism. But with the latter he had a more refined instrument: rather than fund the policies put to him by ministers, he required them to enter into “contracts” with HM Treasury that obliged them to pursue the policies he had settled on for them. Again, this was a development of a prior pattern, in which the Treasury had always queried departmental priorities and sometimes fought back. But Brown took matters to a point where he was effectively the dictator of much domestic policy. Every pound spent had to be in pursuit of something the Treasury wanted. The Prime Minister didn’t get much say. Treasury officials, of course, thought this was wonderful.

The arrangement didn’t survive once Brown moved into No 10 and the accommodating and self-effacing figure of Alistair Darling became Chancellor. Perhaps Brown realised that having the country run by two squabbling titans with little say for anybody else (except John Prescott, whose skill lay in knowing how to separate them in the ring) was not an ideal way to run a G7 nuclear power. It just didn’t work.

But then along came Cameron and Osborne and it did work, first in the context of the coalition with the LibDems, then in a wholly Conservative government. One of the most striking and unusual features of that partnership was the close personal relationship between the two that never seemed to develop into rivalry. It was no doubt good for the country that they could make the new-fangled diarchy work. But it was not good for the constitution, because it helped to normalise and embed a duumvirate arrangement that was fundamentally unstable.

Which quickly became apparent. Subsequent Chancellors, backed by their officials, inherited much of the power and authority exercised by Brown and Osborne but simply couldn’t hack it with their Prime Minister. Which one of them was in charge when it came to policies involving large public expenditures? Was it May or Hammond? Boris or Saj? Boris or Rishi? The public naturally thinks the Prime Minister calls the shots, but those more closely involved know the immense energy now expended by Prime Ministers on trying to get a grip on domestic policy in the face of a Chancellor who sees himself (there has never been a female one) as an alternative head of government. Structurally, the Prime Minister can’t lead the Cabinet or the country because the Chancellor often won’t let him. I don’t think it requires huge radicalism or partisanship to recognise that something has gone badly wrong and that this diarchism shouldn’t remain the norm. It’s no way to run a whelk-stall.

What to do? An old romantic like me would like to see Humpty put back together and Cabinet government restored to what it was like in days of yore. That is probably fanciful and unlikely. But we should at least create a better balance between Prime Minister and Chancellor, ensuring that the former has the power of direction. (All those who think the Chancellor should have that power should put up their hand now and explain why.)

My suggestion is that the new Prime Minister (“whoever she may be”, as Boris is reported to have said) should move the Treasury’s responsibility for departmental spending decisions from the Second Lord of the Treasury (the Chancellor) to the First Lord (the Prime Minister), along of course with appropriate officials.

This would remove from the Chancellor the instrument of control that Brown exploited so ruthlessly to enhance the power of his office and department. It would make clear who was in charge. It would be the biggest change in the management of public expenditure since the post of Chief Secretary was created in 1961 on the recommendation of the Plowden Committee.

And it needs to be done before the new Prime Minister appoints a Cabinet, to avoid a row with a new Chancellor.

I am sure I shall be told on all hands that this modest proposal is unworkable, impossible, ruinous even. I am always open to better ideas. But I am not willing to be told there isn’t a problem. There is – and it needs sorting soon.

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