SIR RICHARD v. SIR ANDREW
Sue Cameron reports from
a Whitehall on the brink of war between its two great powers
SIR TERRY Burns is said to have taken with him two gifts when he relinquished the Treasury permanent secretaryship. One was a peerage — compensation of sorts for having been pointedly frozen out by the Chancellor, Gordon Brown. The second was a pair of World Cup tickets for the England v. Argentina match bestowed on him at his leaving party by the self- same Chancellor Brown.
Whether Lord Burns's gratitude restrains him from sniping at his erstwhile master remains to be seen. What is certain is that his replacement as permanent sec- retary by Sir Andrew Turnbull, a more tra- ditional Treasury knight, has coincided with a renewed struggle for supremacy in Whitehall. The Treasury has launched an audacious bid to win control of the govern- ment machine. It is demanding the right to monitor the performance of all Whitehall departments as part of its comprehensive spending review.
Sir Andrew has immediately swung in behind his Chancellor. Everywhere else in Whitehall, mandarins and ministers are mobilising resistance to Treasury hegemo- ny. As Sir Bernard Ingham, Margaret Thatcher's former press secretary and doughty veteran of many power struggles, privately remarked this week, 'Unless departments are utter, total poodles, this must mean the start of war in Whitehall.'
Meanwhile the interests of the other great Whitehall power, Sir Richard Wil- son, who as Cabinet Secretary outranks all Other civil servants, are very much involved. As the battle rages, he and the Prime Minister seem to be biding their time — waiting perhaps to pick up the pieces. For months now Sir Richard and Mr Blair have been planning to strengthen central control over the rest of Whitehall — but not via the 'Treasury. Their scheme is for a revamped Cabinet Office that would take a firmer grip on strategy and act as a counter-weight to the Treasury.
Whitehall insiders scorn suggestions that this puts Sir Andrew and Sir Richard on a collision course. They point out that the two have long worked together, that Sir Richard himself did a brief stint at the Treasury and that he was certainly instru- mental in Sir Andrew's appointment there. All the same, Sir Andrew was one of the unsuccessful contenders for Sir Richard's job, which must lend a certain piquancy to Whitehall's current conflict. And, as one old Whitehall hand remarked, 'A man- darin's deepest instinct is to fight for his department. Nowhere is this more appar- ent than at the Treasury, which is second only to the Vatican in its overwhelming belief in its own doctrines.'
Certainly a self-confident Treasury seemed to carry all before it when its com- prehensive spending review was first announced last week. Mr Brown was acclaimed for both his prudence and his generosity. Charlie Whelan, his spin doc- tor, was reported to be in triumphalist mode. Top Treasury civil servants, their morale doubtless boosted by Sir Andrew's efforts to build bridges between officials and ministers, discussed their tactics. They explained that they had 'spending teams' standing by to ensure that all departments keep to the public service agreements each will be forced to sign with the Treasury.
The same officials made it plain that they did not see the need for a powerful, revamped Cabinet Office along the lines favoured by Sir Richard Wilson and Mr Blair. One senior civil servant asked bland- ly why there should be any counterbalance to the Treasury — other than that provid- ed by the No. 10 policy unit and the Prime Minister. He added, with just a touch of arrogance, that Mr Blair was backing Mr Brown.
Such talk suggested that Sir Richard was being outflanked. There were mutterings in Whitehall that the Cabinet Secretary and the Prime Minister had missed their chance at Whitsun, when they might have published their report on strengthening the Cabinet Office (Sir Richard had fin- 'shed it by then), appointed a ministerial supremo to implement their proposals and so stolen a march on the Treasury. Yet just as the Treasury seemed set to become Whitehall's overlord, its position started to look a little less secure. Close examination of the spending review figures suggested departments had done rather better than the Chancellor originally intended — the total increase in spending was higher than predicted in the March budget.
Meanwhile ministers and civil servants in some of the great central departments like the Home Office and Education made it known through the press that they intend- ed to flout the Treasury's new controls. And there were suggestions that the Trea- sury could do little to bring them to heel — especially as some ministers had evidently been given a fair hearing when they took their complaints about the Treasury to Mr Blair. Then came the Deputy Prime Minis- ter John Prescott's announcement that he had breached the Treasury's defences against hypothecation — the earmarking of tax revenue for particular uses.
Admittedly the breach is a small one, hedged about with limitations. It will enable local authorities to raise money through such measures as parking fees. The money raised can then be earmarked for spending on improvements to public transport. The drawback is that Mr Prescott cannot at present compel local authorities to tax and spend in this way.
He has, however, established an impor- tant principle — one the Treasury loathes because it would undermine its power. Mr Prescott made it his business to mention hypothecation in his television and radio interviews on the comprehensive spending review and to say that this was the first time a government had done such a thing. Meanwhile the Treasury was furiously play- ing down the significance of Mr Prescott's hypothecated schemes, even though some estimates suggest they could be worth up to £1 billion in total.
Ironically, the man at Mr Prescott's side when he was first negotiating the scheme was none other than Sir Andrew Turnbull, who was the Deputy Prime Minister's per- manent secretary until last month. Sir Andrew will doubtless take comfort from the Treasury's not having sold the pass on hypothecation at national level. All the same, he must have some rueful reflections when he recalls his time with Mr Prescott.
Down the years there have been many attempts to alter the power balance between the Treasury and other depart- ments. Ultimately the deciding factor is political will. While the will of Mr Brown and the Treasury is clear, it is unlikely that they can impose their regime on reluctant departments. The form that Mr Blair wants for his government is still unclear. If he is determined to reshape it and give it more centralised direction through the Cabinet Office, then he and Sir Richard Wilson will win the battle for Whitehall.
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