Our political insider casts an eye over recent Westminster events as bus funding remains an issue and the Budget looms
In my last column, I asked whether there would ever be sufficient funding for the bus industry to maintain service levels or even increase services and grow patronage across the country. The recent Transport Select Committee report on its “Buses Connecting Communities” inquiry raises this thorny issue again.
The Committee made a series of recommendations which in themselves were perfectly fair and even reasonable, at least in an ideal world. However, at no point did the Committee set out how much its recommendations, if implemented, would cost.
It’s all very well Select Committees producing reports with a series of perfectly sensible recommendations, but what’s the point if there is no extra money around to fund them? It made me wonder whether such committees should be required to undertake a proper assessment of the financial implications of any recommendations as part of any inquiry they carry out.
The committees would almost certainly have to buy in expertise to carry out such assessments, and that could cost money – money that perhaps they don’t have. However, I have a hunch that many transport economists would be willing to advise the Transport Committee on a pro bono basis for the status it might bring them. But making worthy recommendations without properly assessing what they might cost to implement just seems pointless.
Interesting PM appointments
For now, however, I want to turn my mind to those recent appointments made by the Prime Minister when Parliament returned from the summer recess. Two appointments stand out.
First, moving Darren Jones out of the Treasury, where he was Chief Secretary, and appointing him to the same position within No 10 – an entirely new role – was interesting enough. However, Keir Starmer appointing himself a Chief Economic Adviser in the form of Baroness Shafik was just as eye-catching.
The Prime Minister is clearly seeking to strengthen his and No 10’s control over economic and budgetary policy, something that historically Chancellors have strongly resisted. When Margaret Thatcher appointed Alan Walters in this role, then Chancellor Nigel Lawson took exception and, in due course, the pair fell out.
The Prime Minister is clearly seeking to strengthen his and No 10’s control over economic and budgetary policy
So, why did the Prime Minister make these appointments? We are clearly entering into a critical phase for this government, which perhaps explains why, after a very difficult first year in office, Mr Starmer has also strengthened his wider communications team, while a reshuffle of junior ministers is also rumoured to be on the cards.
Labour is at only 20% in the polls, only just ahead of the Conservatives and the Lib Dems – and a whopping 10 points behind Reform UK. The autumn Budget could be make-or-break time for this administration, so the Prime Minister clearly saw a need to strengthen No 10’s control over economic and budgetary issues.
The Chancellor’s weakening role?
However, I wonder what Chancellor Rachel Reeves makes of all of this. It is said officially that she is perfectly happy with it and has even discussed the appointments with the Prime Minister.
Maybe that is true but, if Mr Starmer had made clear this was what he was going to do, she was hardly going to resist unless she was prepared to resign – just as the Conservative Chancellor Sajid Javid did in February 2020 when he refused Boris Johnson’s request that he sack his Treasury special advisers.
Some may justifiably argue that, by strengthening No 10’s role on economic and budgetary issues, the Prime Minister has solidified the links between No 10 and the Treasury. However, history suggests this is a generous and optimistic interpretation.
The alternative interpretation – and it is one with which some Labour MPs I’ve spoken to privately agree – is that the Prime Minister is losing patience with his Chancellor.
The Budget last autumn has failed to deliver any growth, inflation is stubbornly high, the cost of government borrowing is now at its highest level since 1998, and that infamous fiscal “black hole” has doubled in size since the general election and is still growing.
Having promised that she would not come back for more tax increases following last autumn’s Budget, I fear the Chancellor has no choice but to do just that.
My hunch is that… the Chancellor will have to make a series of spending cuts
What somewhat protects Ms Reeves’ job is that her political fortunes have, so far at least, been inextricably linked with those of Mr Starmer. He could move her in a cabinet reshuffle, of course, but she would presumably refuse that demotion so it would amount to a de facto sacking anyway.
So, the alternative interpretation is that, by strengthening his role on economic and budgetary issues, the Prime Minister has undermined the Chancellor’s authority, and very publicly so; further, that Ms Reeves’ authority may gradually ebb away. This is clearly an interpretation shared by the Tory press and perhaps, in private, by many more Labour MPs.
Budget prospects
The Treasury has just announced that the next Budget will be on 26 November. I have no doubt that various tax rises are on the way. The issue is whether they will be enough to stabilise the markets and start to address that fiscal “black hole”.
My hunch is that they may not be and that the Chancellor will have to make a series of spending cuts too in the Budget, which may have implications for bus funding. Indeed, there are rumours that the Prime Minister is looking to return to the thorny issue of benefits cuts. Good luck with that one!
