Sajid Javid launched a parting shot at the Prime Minister yesterday after sensationally quitting as Chancellor, warning that Johnson and his aides were risking the “credibility” of the Treasury.
Tensions between Number 10 and Number 11 dramatically came to a head during yesterday’s reshuffle, with Javid resigning in protest over plans to fire his advisers and merge his political team with the Prime Minister’s as part of a single economic unit. The 39-year-old Rishi Sunak, who was Javid’s deputy at the Treasury, was promoted to the biggest economic role in government.
Despite run-ins with Boris Johnson’s chief adviser Dominic Cummings, it was widely thought that Javid would be safe in what was seen as a largely run-of-the-mill reshuffle. However, Javid said he “could not accept the conditions” attached to his reappointment in a letter to the Prime Minister released late last night.
Javid also urged Johnson to “ensure the Treasury as an institution retains as much credibility as possible” and said it was “crucial for the effectiveness of government that you have people are you who can give you clear and candid advice,” interpreted as a criticism of the plans to bring the fiercely independent Treasury under the PM’s aides’ control.
The pound dropped sharply on news of Javid’s departure, but recovered as the City anticipated Sunak’s promotion would leave the path open for higher government spending. Sunak was himself replaced by former Brexit secretary Steve Barclay.
A government spokesman was unable to confirm what the unexpected switch meant for the Budget, which is scheduled for 11 March, having already been cancelled at least once since last summer.
Asked if the fiscal event was going ahead as planned, and if the fiscal rules set out by Javid would still stand, the government’s spokesman said only: “Preparations have been carried out and will continue at pace”.
The move signals less independence for the Treasury during a critical time for the country’s finances, as Number 10 looks likely to embark on a series of expensive infrastructure projects while also dealing with the potential fallout of Brexit once transition ends in December.
But the landgrab was not totally unexpected. Javid has been at loggerheads with Johnson’s chief adviser Cummings for many months. The pair clashed over Cummings’ decision to sack former Treasury adviser Sonia Khan without her boss’ knowledge, while both teams descended into a briefing war with Number 10 dubbing Javid “Chino” – chancellor in name only.
Javid and Sunak were not the only changes at the Treasury. Simon Clarke, who had been a highly effective exchequer secretary, has been moved out of the department, taking a role at the housing ministry. He is being replaced by Kemi Badenoch.
The City’s reaction to Javid’s departure was largely one of confusion with, Tom McPhail of Hargreaves Lansdown saying “the resignation of the chancellor just a few weeks ahead of the Budget was definitely not in the script.
“The forthcoming Budget will probably be more of the Prime Minister’s making than would otherwise have been the case; this increases the likelihood of a bold budget with populist spending announcements,” he added.
Paul Howells, CEO of Accumulate Capital, said “2020 promised to be a period of relative calm… but instead yet another cabinet reshuffle has backfired.”
“Consumers, businesses and investors are crying out for a bit of consistency and clarity from Westminster,” he continued.