nicked Austin thank you for joining us
thank you very much real time today on
this rather surprisingly eventful day we
were told not to expect any surprises
and number 10 is telling us of Sajid
Javid resignation nothing to see here
move along totally ordinary nikki were
in the treasury for many years is that
how it feels to you as you watch today
unfold no I clearly mr. Chavez
resignation was not expected it wasn't
in the script it certainly hadn't been
briefed but these I mean on the one hand
these things happening reshuffles on the
other hand they don't normally happen to
transfers and transfers resigning is
always quite a serious event obviously
mr. Chavez resigned Norman Lamont I
think it's fair to say was sacked Nigel
Lawson definitely resigned but in each
of these cases it didn't end very well
for the prime minister at Torsten does
this have any echoes in history are we
looking at a rather unique moment I
think the the thing that is slightly
unique about it is because chances do go
whether by choice or not the unique
thing is that it the degree of which the
timing of their going is semi by
accident I think is unusual the level of
the level of going into a process
whether reasonably accessible relaxed
attitude so whether or not you would
have a chance to by the end of the day
is unusual okay well do not go into
reshuffles in doubt about who the
Chancellor is coming out and that
appears to have been how we started
today and we've ended with one outcome
buy that is unusual and what we're being
told is that all number-10 wanted was a
David Cameron George Osborne
relationship nothing to see here
perfectly normal just two teams humming
as one but that wasn't quite how it was
in those days was it George Osborne had
his own specially selected team that was
number ten crawling all over the budget
nor less well are these first say that
in opposition the cam
Osborn advisers were pretty
interchangeable they all work for the
same floor in in in their office but
once in Downing Street the teams were
very separate yes they worked very
closely together but it was on the basis
that the Treasury was there to take the
lead in advising on economic issues and
it's also in fair say Cameron didn't
have an economic advisor so it was very
clear where the advice was coming from I
think I think this is qualitatively
different I don't think we should be
cover is like everyone in Westminster
and other advisers loves talking about
advisers as if that's the issue like the
relationship between in David Cameron
and George Osborne's teams was to do
with the principal's it was to do with
the relationship between David Cameron
and George Osborne the advisers the
structure of your advisors who sits in
which office all the rest is all window
dressing that's what follows from the
structure of the relationship between a
prime minister no chance and that is
what matters which is why if it's true
that the reason he is going is because
of that they made suggestions for
changing individual sets of advisers
then that is a bad way to decide who
your Chancellor is because the advisors
are not the issue issues are you either
want an individual to be your Chancellor
to take the big economic decisions with
you the new taking or you don't and it
does not matter who knows it's worth
recalling that Nigel Lawson resigned
over mrs. Thatcher choosing to have
Allen Walters as her advisor but
actually the reason why Nigel Wilson
really resigned wasn't since there was a
big difference of of policy now in this
case I don't think it's about policy but
I think it's about the correct role and
relationship between number 11 and
number 10 now mr. Javed as I understand
it and I'm not close to these matters
had an unfortunate experience in the
summer where his advisor was marched out
of Downing Street and so to try that on
a second time on a wholesale scale is
basically saying we
want to be in charge and you're going to
be subordinate that's what it comes down
to basic I mean look chances are
subordinate but the relationship at its
best rests on a degree of creative
tension the Prime Minister's there to
lead the government to win elections but
the Chancellor and the Treasury are
there occasion needs say well hang on a
second we ought to worry about the
economy and it is a form of check and
balance and where the relationship works
well governments tend to be very
successful but it it does I mean they're
not equals but in a sense the Chancellor
is sort of first among equals when it
comes to the rest of the cabinet and
historically whether it was George
Osborne Gordon Brown Ken Clark Nigel
Lawson they were treated in that manner
but maybe no more or not for the new
occupants tenancy what what implications
would that have if it's if so if they
aren't trying to subordinate the
Chancellor and therefore the Treasury
what could that mean well the first we
don't know where this is going to end up
King Clark
always told me that after John Major had
sacked Norman Lamont it made it
impossible for him to sack he came Clark
now the new guy I didn't know he by all
accounts he's very talented guy he may
be another Ken Clark but actually the
current Chancellor is currently in a
stronger position and Sajid Javid he's
got a budget coming up you know if he
were to threaten to resign that could be
really quite dangerous for mr. Johnson
who certainly be finished finishing time
for mr. Cummings who knows who might
suspect in any case as a result of
what's happened today his life
expectancy in Danny's streets has
probably contracted a bit but I mean to
answer your question you know if if
actually the deal is that he is going to
be totally totally subordinate and take
instructions from number 10 that will
have interesting consequences
is in the long run because it probably
means higher spending bigger deficits
the absence of difficult decisions now
normally in politics it's the first year
of a parliament you take the tough
decisions now so far this government as
far as far as I can see his only focused
on spending decisions as I speak to
spending more money on the health
service and so on I mean in a sense the
test for this regime will be is the
budget prepared to take difficult
decisions to deliver on a fiscal plan
okay I think just make it like concrete
so there's two different kinds of
changes that happen because of what's
happened so there's there's the relative
power relationship between number-10 the
Treasury and we'd have no idea where it
turns up but the direction of travel is
clearly into a week of relation weaker
power for the Treasury who knows how far
goes it's clearly all else equal leads
to more some more spending on or you
know a different kind of process for
decision take in the years ahead
there's more specific issues there which
is like what is the big question facing
this government you'll have to decide by
Christmas this year when it's done its
second budget and it's spending with you
how is it reconciling the wish to look
like a new government one that is in
blunt spending a lot more money not only
as austerity ended the cuts but it feels
different as well as delivering the
large increase in capital spending and
it's weighing that up against the
trade-off which is we've committed to
fiscal rules which are quite tough on
the current budget side I the day-to-day
Public Service spending side but we
haven't quite accepted in our heart of
hearts that although we've become a big
state Conservative Party that we're not
we haven't haven't given up on being a
low tax Conservative Party and that is
basically the underlying tension do you
stick to these fiscal rules and put up
taxes to deliver their spending
increases you want to feel like a
different government or do you in the
end bottle on the tax rises and then the
pressure comes back on the fiscal and
while that Chancellor was there who'd
put that fiscal wall in place and had it
accepted in the manifesto the chance of
buckling on the fiscal wall was low the
chance on that is now significantly
higher the chances of us not having the
brand new set of fiscal walls that have
just been put through a manifest into a
lecture lasting even the length of this
year I think has now gone up quite
significantly but that will be quite
damaging to the government's economic
credibility I mean it's possible
my guess actually is
government will stick with those rules
it might use a bit of smoke and mirrors
in order to do it although with an
independent fiscal council in the form
of the Office for Budget Responsibility
that is more difficult and it was in the
past but I think to lose a Chancellor
and then just to throw out some rules
which were in your manifesto it does
raise quite serious questions but
whether you're interested in having a
credible economic policy one suggestion
was that they number 10
Dominic Cummings did want to raise some
taxes now as is traditional straight
after an election if you've got the
majority to do it and it might be that
maybe that's what we see a bit more of
there's clearly there's clear difference
of gun Holness okay about how much
you're prepared to engage in
controversial tax rises particularly
around things that where elements are
number 10 maybe happy to say that
revenue raisers will be particularly
heavy on the top will allow them to
deliver a leveling up agenda and a
chancellor who is was attached to the
traditionally to a low tanks agenda
being in some ways understandably
cautious about those individual measures
also has been cautious because these
things are complicated things that sound
easy like flat rate and pension tax
relief have a lot of wider implications
how you do that for divine benefit
pension schemes is complicated so
rightly we'll be saying we need to get
this right so there's definitely may
have been elements of that in this
package but the bigger picture is what
it is with the new chancellor ball with
the old chancellor which is where the
contents of your fiscal rule where your
tax revenues come from and does that
allow you to feel like a different
government or is it basically more the
same just in terms of use as if you were
at the treasury for a long time the time
pressure on the new chancellor is
extraordinary and this is a big moment
for our country choosing a new path on
the rest of it this is not just any old
budget either new government new
majority and he's got a matter of weeks
not many to work out what he wants to do
yes now in a sensible world they put the
budget but budget back you don't have to
have a budget in March you can have it
in April in fact you don't really need a
budget at all
we're committed legally to 2ob our
forecasts by the end of March okay
already not gonna get that all right
okay look look but let's assume a
go-ahead I think the first question is
how much the new chancellor as chief
secretary to the Treasury has been
involved in discussions hitherto so some
Chancellor's involved chief Secretary's
a lot you know Ken Clark thought nothing
about involving all his ministers in
discussions whether he took much notice
of them was another matter but other
Chancellor's you know the chief
secretary virtually found out what the
budget was on the day so I don't know
you know about about that degree of
involvement what is certain is Verte
it's relatively easy to take decisions
out of a budget at this stage it's
relatively easy to take decisions which
involve changing a tax rate
unfortunately the government seems to
have ruled out the easy options of
raising tax rates which are far easier
to deliver and actually easier to sell
compare and contrast the twenty or
billion George Osborne raised from
increasing the VAT rate 20 percent with
the measure to put taxes on pasties
we've probably raised a few hundred
million and and that's important and
it's certainly the case when it comes to
complicated policies that a Chancellor
really needs to have got their head
around it they need to be in a position
to make the intellectual case which is
my you know the great tax reform in
Chancellor there's like Nigel Lawson
were making a case for tax reform years
out from the measures they took even
Gordon Brown would have used a long
process to begin to create a consensus
in favor of a higher tax to me and I may
be being very naive here the idea that
suddenly they're gonna introduce the
biggest reform to pensions in my
lifetime out of thin air seems to me a
remote one similarly you know so-called
mansion taxes
as Torsten will now raise a whole lot of
difficult and interesting issues and so
I just would be I would be quite
surprised if I know these things have
been briefed but I kind of assume they
were briefed differently just so they
were clean radical thoughts Laden
thinking radicals is definitely the easy
bit of the radical thoughts on the
siding which slide which is they're not
I think it's very unlikely we're going
to see big tax changes like that
announced in firm ways in this budget
they're not going to be like we're gonna
do it exactly like this this tax rate
these pop pension rules I think the
question is does this Chancellor have
time to make his peace with announcing
direction of travels the number ten
would like him to do and is he able to
do that in a way with enough sense of
where he might end up after
consultations have run their course or
what does he end up feeling railroaded
into announcing some things where he
doesn't know where they end up where you
are basically building intention down
the line and that is death and the a
risk if he's not already been thinking
through those issues as Nick says if he
hasn't been part of those discussions
today then is a high risk you do not
want to be announcing consultations on
hard areas of tax policy if you don't
know what the answer is but to make a
sort of a narrow point Austin to be able
to make the budget add up he needs to
have firm proposals having just the idea
that we're gonna do something about
pensions one day does not allow you to
score nobody's got to Moses that's true
but they're spending views in the autumn
doesn't have to announce the total
amount of spending he doesn't want to in
this budget he can wait and that is I'm
pretty certain what we will end up
seeing because they are not going to get
to the firm policy proposals on tax and
we will end up seeing some consultations
and then they'll come back in the autumn
and announce the big stuff which is in
in one sense it's a form of actually
having a later budget this just then
becomes another rather insignificant
signposting event and then some down
payment is they will see like
entrepreneurs relief will see some
things or will see some down payments on
higher taxes but the hard stuff is all
to come can you just think about
something you said earlier about how the
Treasury is this sort of bit of the
brain in government that is always
thinking about responsibility and
and not spending more than we've got it
sir well what could it look like that
there's this government or what could
this country look like if we hadn't had
a Treasury like that for years other
countries we can point to because we
could be moving into that sort of period
if Dominic Cummings has that kind of
intent and doesn't think that bit of the
brain functions and just wants to
neutralize it
not have it as part of the organs of
government that's that's a whole new
dispensation it's quite doable a bit
like is this happened in this country in
1972 effectively Edward he took over
economic policy he had an unelected
official who so William Armstrong who
was described at the time as the Deputy
Prime Minister who effectively was the
Prime Minister's enforcer and sort of
policy lead and Anthony Barbour who was
there then Chancellor was perhaps one of
the weakest Chancellor's in in living
memory now the term was calling all the
shots so I think he's pretty it's fair
to say that during that period number-10
called the shots
so we can spend your precedence but with
what effect well in the case of Heath's
of rampant inflation I wouldn't blame
the three day week there was a lot of
things but things got out of control
a failed income spur failed
anti-inflation policy and a seriously
difficult set of public finances which
the Labour government then inherited in
74 in in one sense it was the beginning
of the video that the downhill slope to
Wars the IMF in 76 so look we're in a
different world fortunately these days
borrowing is very cheap and the way the
markets take revenge on profligate
governments is usually through the
exchange rate and the brilliant and the
British people for some reason seem
amazingly relaxed about the devaluation
in a way which they weren't when there
was a fixed exchange rate so I don't
think I think you know
the risk for the traditional Treasury is
you cry wolf through often and too early
nevertheless if you carry on spending
more than you raise in tax significantly
over a long period it tends to end badly
which is why in the end you need
something like the Treasury don't have
to be called the Treasury but you need
somebody who actually is gonna worry
about the public finances and in a sense
represent the taxpayer because this is
also about the value for money which you
get from your tax pound and if you just
spray money around and let's face it a
lot of the difficult decisions have yet
to be taken this is the decade when
demographic pressures really build up
the government has yet to take any
position as far as I can make out on
long term care it's made lots of
commitments on spending and at some
point somebody is going to have to
prioritize but if you've got a muted
Treasury and that may have been the
intent it certainly looks like it
and a chancellor who came to office on
those terms some of the building blocks
over there from the you're talking
economy but you can't go into uh
something nick said earlier like this is
it he's not firing another chancellor no
I
exactly I it's easy I think some of the
reactions today is the chance has been
sacked this is Johnson taking over
treasurer I think actually this could
actually rebound in the end the new
chancellor if he's as good as everybody
says years and the Treasury actually
will be ultimately empowered not
necessarily in short run but if the
Chancellor you know has a clear strategy
asserts it is persuasive couldn't
actually go down well in the country
things could easily change that I don't
and I don't think Johnson really is that
interested in running the Treasury I
mean he's interested in announcing
spending commitments which make him
popular and you think he's just being a
good photo opportunity on this pass a
bit by his chief adviser I mean no as
he's always tempting to blame advisers
for everything and advisers in yen
coming
I think it it's a reasonable proposition
to try and create a more cohesive Center
many Prime Minister's have sought this
some have been more successful than
others but I and for all I know you know
he may part at a subconscious level of
wanted mr. Javid
to resign I'd simply don't know you
spent an hour trying to persuade him not
to but that doesn't preclude everything
but you wouldn't you you don't go into a
day proposing like having a round with
your Chancellor unless you're prepared
for him to go and if you did if you did
do your very unwise because if you went
in for me do you think your transfer was
a genius don't let them walk out but you
don't know walk out over this you would
have found a way through these just not
important I mean it's madness
okay so the advisers are exactly know
you suggested that this could when we
look back five years from now whatever
looked like the moment of overreach by
Dominic Cummings by the number ten
machine that could be how this is
remembered because it's created this
moment of chaos it's not the beginning
of his Maoist revolution it's possibly
there but a Fife is a dispensable
revenge old advisors advisors who spend
their time promoting themselves and
becoming stars of their own drama
there's only one way this is gonna end
up the only issue is when aren't you
seen either things are the way they've
always been in politics and in so many
bits of the landscape they're not I
think we should be a couple there's so
things are definitely different in terms
of political coalition's how elections
take place you know or referendums
turning up rather than not serving up
those things are different but
government isn't permanent revolution
there is a long haul for years of this
government it's got a majority things
need doing in policy terms yes big
changes can happen but in the end the
constraints and the structures that
exist about making change actually
happen on the ground are as real as ever
they don't change because you just want
them to the the ability within a
government of different people sitting
in different departments to have to make
collective decisions together not all
just be told exactly what's going to
happen it's still the same so I lot of
the constraints that drive a structured
operate
it does are still there yes you can we
can individual bits of them but the
whole system will not run as one
permanent revolution and actually look
the the government's this is as good as
it gets
the one thing from the golden premises
from mr. Johnson I mean the one thing we
know is that in the modern world
governments move from being popular to
very unpopular incredibly quickly if
they had been to the popular bit and the
point when a prime minister becomes weak
he actually has to worry about about his
team yeah and at that point advisors
easily dispensable we've seen this we
saw it with Charlie wheeler and we sort
of Alastair Campbell it's a point when
them when the indispensable because
Timothy they all these people who've
briefed themselves as geniuses and
everybody writes articles about how
they're determining every single nook
and cranny of government strategy the
wind changes they go life goes on
these guys aren't elected they are
dispensable if you're an official you're
totally dispensable and so I I think
it's dangerous to be too focused on the
advisers yes I'm sure
mr. Cummings would be very influential
he starred in channel 4 dramas in the
form of mr. Cumberbatch but you know
he's not going to be there in five years
time could end just talking about the
the central mission of this government
as they've articulated it levelling up
that phrase if you'd had the if you were
in the Treasury as they'd come back into
office with their majority in December
having heard what they had to say I mean
looked at their manifesto in the rest of
it when you have had much of a clue what
leveling up was really about do you
think they really know what it's about I
think I think they've got a perfectly
reasonable objective very similar
actually to the objective of New Labour
II in the early 2000s the sense that
London and the South East has grown
rapidly that they want to ensure that
this divergence in growth in living
standards
between regions is reduced it it it's a
sensible objective if you want to
promote social cohesion it's a sort of
objective you should be pushing forward
the problem is always the transmission
mechanism you know government since the
war generally have been committed this
policy would argue that the Thatcher
government maybe was less committed than
others you know you can throw money at
regions that tends not help you can do
make long-term changes all of which are
very technical and boring but require
incredible focus and attention and you
know a Delivery Unit and the Prime
Minister sitting around a table and
focusing on every last detail
not because Prime Minister's actually
can do this single-handedly but it needs
prioritization now it may be that this
is gonna be miss Johnson's mission and
he will see through wholesale change to
the system of further education which
has defied other governments you've been
I don't think what and I'm a bit more
positive they in a sense of look what
are we done so far so far we've agreed
our high-speed to broadly they leave
aside how are we and stuff but we've
agreed to high speed to that is not the
answer to regional levelling up whether
or not you think it's a good thing or
not is kind of slightly you know by the
vibe and that's not what it actually
achieves but there are things that we
know would make a difference like
intricity transport within smaller urban
regions we've seen a bus announcement
that's vaguely in that direction
although relatively small in scale we
know that skills would make difference
we know that an overhaul which they are
planning but will need the kind of
operational delivery focused nick is
talking about on t levels and sorting
out our apprenticeship system those
things are the right kind of policy
levers that are being talked about they
would make a difference over the long
term in the short term what will they
have to show for their money large
visible infrastructure projects in
places that conservative ministers
haven't tended to turn up to in the past
so there be combining
visible things with long-term policy
change that with the right delivery
focus could could start to deliver
change and in the end I think you know
all governments need a mission otherwise
they're just making a thousand decisions
without any overarching objective that
is a perfectly good mission for the
country I'm actually the gaps on living
standards in Britain of actually of
anything probably been closing slightly
over the recent years but the gaps on
productivity have not and having that as
your core objective is a that's a good
thing for a government to be doing I
think as you slightly say most
governments with the possible exception
of the 1980s have wanted to close those
gaps but we haven't delivered on it and
I think in some areas I don't think it's
true to say efforts weren't made in lots
of areas but if we focus specifically on
in further of education for example I
think it is fair to say we haven't tried
hard enough in the past then it's about
time we do but I mean I agree with you
and I think actually what a lot of
progress has been made if you look at
the great northern cities they are in a
far better state and far more dynamic
that the challenge is the northern towns
the places which aren't in City room
they come in two different categories
you know Barnsley you know backbone is
far more difficult if you don't have a
university to drive innovation and to
attract a broader range of people into
the area including entrepreneurs some of
them actually unreachable so to speak on
turning places I think I don't think you
can cut these places off you shouldn't
be defeatist and and they've been a huge
number of experiments over the years
some more successful than others so I
think if I was there I would be wanting
to really try and produce the best
evidence of what you know no I mean just
because there have been a lot of
experiments over the same time when
governments have a lot of money they
tend to spray around but there been
periods actually when resources have
been pretty constrained but as Halston
says you can focus on particular
transport schemes and so on and I agree
with Austin I think on infrastructure
particularly railways I think the North
has lost out and I do mean
that decisions be made on high-speed too
and I don't want to go on about it you
said you say that Nick but it doesn't
what about you gonna be going on about
it but I think it helped all 25 years
ago I am but it's not it doesn't take a
lot of the resource which is available
and what worries me is if you're if
you're really serious about prioritizing
it I probably wouldn't have wanted to
put all my eggs in one basket there's a
bit of optimism on this okay another
thing is it like what is really hard
there are hard questions in economic
geography about places that are totally
disconnected all I would say is Britain
is a small country and England in
particular is a small country there are
very few places that is totally
impossible they are not part of a
broader ecosystem so I think we should
be like there's too much for people
saying oh look Midwest America the
middle of nowhere it's really hard for
these places we've had we've seen big
population falls in some Mid American
cities you know Trump and other things
I'm really really careful that is not
what Britain looks like Britain is a
small country places can be connected
opportunity can be spread in a way that
it's not harder to do in a big country
tall sancho don't ask you about the
report you just produced your think-tank
here produced this week about those
seats those voters yet
helped Boris Johnson to this majority
what what do we know about what they'd
like from this chancellor doesn't make
them well I think maybe whether it's
surgeon Jared or issue sooner I think
Matt's affair as a fair statement there
but the it's not for me to say what they
would want I mean what they want people
should go and ask their board in terms
of what they wait to tell us about those
places Rodney individual vote ISM what
it tells us is that a lot of the myths
about them are misplaced so it is not
true that these are the oldest places in
Britain
most of the seats that switch from the
labor to sodas are middle aged seats
they're pretty much spot on the national
average they are not the poorest places
in Britain although most of them in the
north of it below average income but
there they are not the poorest parts of
the north of England they're the
middle-income parts of of the north and
more importantly it is not true to say
they've been declining
historically all the time their relative
decline is broadly a post 2010 feature
and I would be worried if I was in those
seats looking at slow employment growth
since the financial crisis a slightly
bigger pay squeeze since then house
prices growing a whole
the rate in these seats as compared to
the rest of the country and the most
important thing I think to take away
from the research work is that it is the
story that is young people are all
leaving these seats are moving to London
is the opposite of the truth these seats
are defined by much lower rates of young
people moving out of them and also much
lower rates of people moving into them
either from other parts of the UK or
from abroad so slower migration rates
and the the combination of those two is
creating a demographic kind of stasis
which is different to the rest of the
country and actually about it so I took
one thing away the policymakers need to
think much harder about it's that the
palm of these seats is not people
leaving it is that they are less
connected to the country more generally
either whether people leave or whether
people come into them and that is that
does mark them out and that's not what
policy has an answer to the sun's gone
down on this extrordinary reshuffle day
what will the move be like in the
Treasury tonight I think I think it's
like slightly confused if you know
unexpected changes in Chancellor's are
always difficult to respond to yes you
think develop budget in a few weeks time
and suddenly the main man's gone you got
someone new now it's great he's in the
Treasury so that's a start
of trend remember lost purse Saint John
Major went to number 10 Norma Lamont
stepped up to being Chancellor that was
something you know you could you could
cope with Norman had been there for
years done several jobs but and I think
they'll just be a degree of uncertainty
about the future but I think but also
about intent about in change but what
was a little tune up to but you know if
you work in the Treasury you're used to
rationalizing adversity and so the first
response will be well like we've got to
make this work we've got to adjust to
the new modus operandi and but there'll
be an underlying view also that look in
the long run the pendulum will swing
we're in destructive and that's all
support hasn't perspective like how
individuals feel on the day of us
like a collective reshuffle is important
what really matters is the big decisions
how much we spending what are we taxing
what we're borrowing as a country and
how serious do we look as a nation that
is the big things that matters
that's what people in the Treasury in
the end care about yes confusion a
slight anxiety about the process that's
got us here but in the end give it a few
weeks and what matters is the big
decisions that were taken those in the
budget and that we've taken him in the
second budget in this autumn it's what
we focus on exactly I mean I wouldn't
even give a few weeks I think but sort
of 24 hours 48 hours and we settle down
you know chance has come and go our
prime ministers come and go if you're a
permanent official you just have to work
with all of them and you do the best you
can that's a good lesson for life
doesn't do the best you can both thank
you very much indeed with spring attack
you