MONDAY VIEW: Can David and George be pals for much longer
My old friend Nigel Lawson once described the relationship between the Prime Minister and the Chancellor as the most important one in the Cabinet.
If the two see eye to eye, then, whatever the pressure of ‘events’, as former Prime Minister Harold Macmillan described them, the pair have a better chance of success in economic policy than if they are at loggerheads.
Lord Lawson made this observation from bitter experience, and well before the advent of the Conservative-Liberal Democrat coalition brought the relationship of Prime Minister and Deputy Prime Minister to the fore.
Bosom buddies: One wonders how long the harmony between Prime Minister and Chancellor can last…the eurozone crisis is an event
Nevertheless, with due respect to Mr Nicholas Clegg, the Lawson Rule probably still applies.
Macmillan made his famous remark in reply to a questioner who asked him what, as Prime Minister, he feared most.
His full reply was: ‘The opposition of events, dear boy’ – a brilliant riposte, which enabled him to take a swipe in passing at his political opponents.
Macmillan was Chancellor for a very short time – 1956 – but as Prime Minister, from 1957 to 1963, he saw off a number of chancellors with whom he disagreed, including Peter Thorneycroft, who became Chairman of the Conservative Party many years later, and Selwyn Loyd, whom he sacked.
Lawson fell out with Mrs Thatcher when she discovered, a long time later, that he had instructed the Bank of England to conduct exchange rate policy so that the pound was ‘shadowing the D-mark’ – the Chancellor having decided that the Germans knew better than all his monetarist advisers how to control inflation.
He in turn duly fell out with her when she brought Sir Alan Walters, her favourite economic adviser, back to Downing Street without consulting him.
The Chancellor, quite understandably, found he did not like being ‘second guessed’ by a mere prime ministerial adviser. Now, in the cases of both Macmillan (a predecessor much admired by David Cameron) and Mrs Thatcher (or Meryl Streep as she will no doubt be known by the younger generation) we had prime ministers who took a great interest in economic policy.
When things went wrong between Macmillan and his chancellors his inclination was either to sack them or not to be too solicitous in urging them to reconsider threats of resignation.
In David Cameron and George Osborne we have a close political partnership. But from all accounts the Prime Minister himself takes very little interest in the Treasury.
True, his close adviser in the recent high profile negotiations, or non-negotiations, in Brussels was Sir Jon Cunliffe, a former Treasury man.
But the general impression is that, ever since Osborne wrong-footed the new Prime Minister Gordon Brown over inheritance tax in 2007, Cameron has stood in awe of Osborne’s skills.
It is no secret in Whitehall that the Chancellor has spent more time plotting politically in Number Ten – I hasten to add with the Prime Minister, not against him – than he does in his own department.
On the other hand there is no doubt that George Osborne is lord and master of economic strategy, with all that this entails.
That is all very well when things are going smoothly, and for his first eighteen months in the job Osborne appeared to be riding high.
Although we had a lowriding economy, that was all part of the plan, and he can claim the UK has won credibility on the bond markets as a result of the course he has followed.
However, things have gone terribly wrong, and everybody knows it. The crisis in the eurozone will almost certainly make things a lot worse.
Some of the ‘disaster scenarios’ in Whitehall and the Bank of England make most poor economic forecasts for 2012 look optimistic!
One wonders how long the harmony between Prime Minister and Chancellor can last…the eurozone crisis is an event.
- MONDAY VIEW: Charity is the remedy to our economic woes
- Chancellor George Osborne poised to back Vickers banking curbs
- George Osborne sets the date: 2012 Budget will be in March amid gloomy forecasts of negative growth
- Europe "plotting revenge on the City" following David Cameron"s veto
- Marriage tax break pledge renewed by David Cameron after Nick Clegg attack