Well said Sajid Javid over spending dangers – Bill Carmichael

Javid, who felt compelled to resign after the Prime Minister demanded he sack his team of advisers, managed to be both impeccably polite, ostensibly loyal and excoriating in his assessment of his relationship with the Premier.

Incidentally, fair play to the former Chancellor. Many ambitious politicians would have caved in and sacrificed their underlings in order to keep their job. Javid refused and his loyalty speaks highly of him.

Back in the Commons, Javid said Number 10’s bid to gain control over the Treasury was “not in the national interest” – and that the Chancellor must be free to offer the Prime Minister “candid advice” and be able to “speak truth to power”.

And he fired a well aimed barb at Prime Minister’s adviser Dominic Cummings, widely seen as the man behind plans to rein in the Treasury, saying: “Advisers advise, ministers decide and ministers decide on their advisers.”

All very embarrassing for the Prime Minister, who looked distinctly uncomfortable during this statement. But I think comparisons with Sir Geoffrey Howe’s devastating resignation speech in 1990 are a little overblown.

Howe famously likened Ministers in Margaret Thatcher’s government to batsmen being sent to the crease only to discover their bats had been broken by the team captain.

Back then Thatcher had been in power for over 10 years and was in serious political trouble over the unpopular poll tax. Howe’s speech was seen as the killer blow and a few weeks later Thatcher was gone.

In contrast Johnson is a few weeks into what – barring some unforeseen disaster – could be a five-year term after a resounding election victory. Javid’s words will wound, but they won’t destroy.

But his statement is interesting because it reveals a clear fault line that runs through the Government between the big spenders and more fiscally cautious traditionalists.

During the election Johnson made some big spending pledges, not least on “levelling-up” to help the North and reduce regional inequalities, but also massive increases for the NHS, education and the police. Johnson wants to switch on the spending taps.

The IFS think-tank this week warned that borrowing will increase to about £63bn next year – £23bn more than the latest forecasts – and that the new Chancellor Rishi Sunak will have to increase taxes or bust borrowing pledges.

Let’s not forget that when the Conservatives entered government in 2010 to inherit an economy wrecked by Labour profligacy and the 2008 financial crisis, they promised to balance the books in a few short years. Ten years later we are still awaiting that promise to be fulfilled. The current target is that we will break even in 2022, but that looks increasingly in doubt.

Borrowing money when interest rates are low may seem a good strategy – but it is a gamble. At some point interest rates will rise and the world economy could easily be derailed by something unforeseen such as the current crisis over the corona virus, which is already causing havoc.

Describing himself as a “proud, low tax Conservative” Javid pointed out that the UK’s tax burden is already the highest it has been for 50 years, adding it is morally wrong for the country to live beyond its means. He told the Government to “keep spending under control, keep taxes low, to root out waste and pass the litmus test, rightly set in stone in our manifesto, of debt being lower at the end of the Parliament”.

Well said that man! All eyes now focus on Rishi Sunak, MP for Richmond, who is currently preparing the Budget. He strikes me as sharp as a tack, likeable and an excellent media performer and perhaps he will prove more than a match for Johnson and Cummings.

But squaring the circle between the Prime Minister’s ambitious spending plans and fiscal responsibility will be his toughest test yet.

I suspect the new Chancellor is about to discover the truth of the saying attributed to Jean-Baptiste Colbert, finance minister to King Louis XIV: “The art of taxation consists of so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing.”