Follow the money

When Sir Keir Starmer finally stands down as Prime Minister of the UK - and please let it be soon - I have some advice for his successor.

Of course, it won't be seen, and wouldn't be heeded if it were, but I make it in all seriousness, nevertheless: don't rush to appoint a new Chancellor of the Exchequer to your cabinet, consider instead abolishing it, or at least temporarily suspending it while reimagining it. It is painfully apparent that the relationship between the Prime Minister and Chancellor has always been, and under the status quo will always be, one of tension - and usually not a creative one. The two main 'great offices of state', based uncomfortably next door to each other at numbers 10 and 11 Downing Street, have different agendas which are bound to clash - the Prime Minister always wanting to spend more on pet projects and the Chancellor, the holder of the purse strings, determined to resist or curb such impulses. 

Disharmony is designed into the very fabric of the relationship, creating a bunker mentality between the two adjacent camps. One only has to look at the rapid deterioration of relations between respective postholders, from Margaret Thatcher and Geoffrey Howe to Tony Blair and Gordon Brown; from David Cameron and George Osborne to Liz Truss and Kwasi Kwarteng, to see how quickly these partnerships can turn sour, if not toxic. And while the Chancellorship is in the gift of the Prime Minister, who retains the right to sack or reshuffle the incumbent, the fallout from doing either can be fatal to a premiership. That is why I suggest a pause to review the usefulness of the ancient office to modern governance.

Because here's the thing: while the office of Chancellor of the Exchequer is far older than that of Prime Minister (predating it by some five hundred years), the latter forms the government in the monarch's name and appoints the cabinet. The man considered the first Prime Minister of the United Kingdom, Sir Robert Walpole (from 1721 to 1742), never used the title, preferring to be known as First Lord of the Treasury. Indeed, that title is embossed on the brass letterbox of 10 Downing Street and remains the title by which the Prime Minister is officially known to this day. In the official pecking order, the Chancellor is the Second Lord of the Treasury.

And that's why I counsel an urgent review. A Prime Minister (as Starmer has discovered to his cost, as ministers stampede for the exit and challengers loom) carries the can for failure, yet his or her government stands or falls on the funding made available to government departments to support policy pledges. The decision for this remains in the gift of the Chancellor. Therefore, while the Prime Minister can set the legislative programme based on his or her party's manifesto, the Chancellor wills the means to deliveur on it - or, to put it crudely, has to be persuaded to stump up the necessary cash. This tends to lead to the Chancellor hoarding the tax revenue like a dragon jealously guarding its purloined treasure. There have been occasions in the past where the Prime Minister has also been concurrently Chancellor, fulfilling the roles of both First and Second Lords of the Treasury. The last time this happened was in 1923 under Stanley Baldwin, the Conservative Prime Minister, and it is a cautionary tale.

Baldwin's refusal to accede to Winston Churchill's pleas to fund rearmament in the 1930s in the face of German remilitarisation led to bitter wrangling between the two men, with Churchill saying, "I wish Stanley Baldwin no ill, but it would have been much better if he had never lived." (One dreads to think what Churchill's animosity might have looked like!) The reason this arrangement has not been repeated in over a century is the growing complexity of modern government, taxation and economy, to the extent that it is almost inconceivable it could work for long if tried today. So why am I advocating it now? 

In reality, I'm only proposing a temporary respite under an incoming PM while Prime Ministerial authority is stamped on spending in order to deliver on his or her agenda. Starmer's downfall has been his utter failure, after two years in post, to deliver the change he promised the electorate. Having won a landslide victory at the General Election in 2024 the economic growth that was meant to fund that change has stubbornly failed to materialise, the fault for which must be laid squarely at the door of number 11 and the inflexibility of Rachel Reeves' cherished 'fiscal rules'. And yet it is Starmer who is taking the rap. To avoid his fate, I suggest the incoming new First Lord of the Treasury initially take the reins, thereafter leaving a technocratic Finance Minister on the European model to crunch the numbers and count the beans. Surely, having led a successful election campaign, the least a new the Prime Minister has the right to expect on taking office is that the Treasury will take the lead from its First Lord?

After all, s/he who pays the piper, calls the tune... right?



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