24 November 2021

Why are Downing Street and the Treasury at war?

Tensions between No 10 and Rishi Sunak are being reported in nearly all the papers.

Photo by Hollie Adams/Bloomberg via Getty Images

Disagreements between Downing Street and the Treasury have once again burst out into the open. “Treasury sources” criticised the government in the Guardian, while the Treasury was blamed for an explosive briefing by a “Downing Street source” speaking to the BBC’s Laura Kuenssberg, which has since been reported in nearly all the papers.

One of the biggest political achievements of Rishi Sunak’s Treasury team was getting Boris Johnson to sign up to a very austere fiscal framework in March 2021. Last month’s spending review, in contrast, was a defeat: essentially all of Sunak’s headroom went on increased public spending and the first real-terms spending increase many parts of the British state have received since Labour lost office.

There are some Sunak wins in the Budget: that 3 per cent limit on infrastructure spending is essentially there as an anti-Johnson (who has never encountered an infrastructure project he didn’t like) measure. But on the whole, it was a much more Johnsonian fiscal event than it was Sunak’s Budget.

One big difference between the two is over the role of Dan Rosenfield, the Prime Minister’s chief of staff, who after a rocky start in Downing Street has found his place essentially as the PM’s point-person in talks with the Treasury. Rosenfield is an old Treasury hand and unlike the Prime Minister doesn’t mind causing ill-feeling: one repeated dynamic during the discussions about the comprehensive spending review and other Downing Street-Treasury talks is Sunak asking to speak to the Prime Minister alone: some say this is because the Chancellor thinks he is more likely to get his way in that situation, others say it is because Rosenfield lacks political antennae.

That’s the heart of the Downing Street-Treasury disagreement: are the recent difficulties over tax-and-spend about the manner that policy announcements are communicated and presented, or about their substance?

The problem for both Johnson and Sunak is that Conservative MPs don’t like the tax rises that come with Johnson’s more free-spending instincts, but they don’t want the spending cuts that would accompany Sunak’s low-tax approach. Grumbling about the Prime Minister and his operation is, in part, a substitute for facing up to that altogether less comfortable reality.