The writer is editor of ConservativeHome and a former MP
The relationship between a prime minister and a chancellor can make or mar a government. The worst in modern times was between Tony Blair and Gordon Brown, because the latter wanted the former’s job. The best was between David Cameron and George Osborne, because the latter didn’t — not to the point of seeking to depose his friend and colleague, at any rate.
The one that went most awry was Margaret Thatcher’s with Nigel Lawson in the 1980s, and it is perhaps this tortured partnership that Boris Johnson and Rishi Sunak’s most resembles.
Unlike Sunak, Lawson was not the frontrunner to succeed the prime minister. Indeed, he seems never to have believed himself to be papabile. But like him, Lawson had a policy disagreement with his boss, to whom he had previously been indispensable. And Sunak’s difference with Johnson is even bigger.
Lawson came to believe that the government’s economic policy should be steered by a new guiding star: not monetary policy, but sterling’s value — to which end he wanted Britain to join the Exchange Rate mechanism.
That was central enough, but Johnson and Sunak are instinctively at odds on an even bigger fundamental: tax and spending. Sunak, in line with recent Tory history, is a fiscal conservative, to use a phrase recently put to him about his beliefs that he didn’t deny. Though no ideologue, his worldview and experience combine to favour getting as close as possible to balancing the books.
Johnson, by contrast, is as unorthodox in his conservatism as in almost everything else. Essentially, his prejudices are not so much fiscally liberal as premodern.
At heart, he is more like a crowd-pleasing Roman emperor than a prim, proper contemporary politician. He itches to wow the voters with bread and circuses — or their modern equivalents: higher spending and lower taxes.
His cry is Russell Crowe’s from Gladiator: “Are you not entertained?” This boosterism is an affront to the economic consensus forged by Thatcher, adapted by Blair and pursued by Cameron’s coalition government.
It could not have gained Tory ascendancy before 2015, but Brexit has changed all that. The Conservatives have broken through outside the south-east of England and among working-class voters on a scale unimaginable in modern times. In much of this new electoral territory, the state is bigger, reliance on the public sector greater and the private sector smaller than in the traditional blue heartlands.
Does it follow that the prime minister has the whip hand over his chancellor? That, when push comes to shove, this new Conservative parliamentary party will hold Johnson to his commitment to shun what he called “the austerity of the past”?
There is reason to doubt it. To understand why, imagine the circumstances most favourable to both the prime minister and chancellor: that growth comes roaring back post-pandemic, perhaps paving the way for a quick dash to the polls in 2023.
Even in this scenario, the good news can’t last for ever. For even if interest rates stay low, growth surges, the rise in inflation is temporary and Sunak plays fast and loose with his spending plans, a downturn will come sooner or later.
At this point, two realities would come into play. First, there is a limit to what Sunak could squeeze from taxes on the better-off — on pensions or property, say, which would fall heavily on the Cheshams and Amershams of Johnson’s electoral coalition.
Second, the new Conservative MPs are, in the last and sometimes the first resort, Conservatives. The tax burden is already forecast to hit the highest level since the late 1960s — 35 per cent of gross domestic product by 2025/26. And the tax rises that would deliver the biggest windfall are those that Johnson has specifically pledged not to raise: income tax, VAT and national insurance.
The electoral imperatives of the next election campaign would surely rule out raising them no less than those of the last one did. As the bills for the NHS, net-zero carbon emissions and, perhaps, social care reform start coming in, that leaves only one place for Sunak to go — if he’s still there.
After all, Johnson has already lost one chancellor, Sajid Javid. And it is not beyond imagination for him to lose another. But, unlike Lawson, Sunak has reason to stick it out, since even Johnson, skilled escapologist as he is, can’t evade economic reality forever. He will keep his word: there will be no return to the austerity of the past. Look forward instead to the austerity of the future.
For in these circumstances, the new worker-friendly Conservatives would have nowhere else to turn. No wonder a 2023 election is likely: go early, Johnson will be thinking, before the circuses close down and the bread runs out.