Reflections on politics of the week

Old King Coal is dethroned; is the Treasury the problem; the institution of the shadow cabinet; and the search for a new cabinet secretary

These snapshots of stories are helpful for me to set down some thoughts without the full treatment of an essay, so I will continue to put them together on an occasional basis. I hope they provide some interest or utility to readers too: speaking for myself, it can be a valuable service if people occasionally point out the significance of news items that I might otherwise have missed.

A diamond is a chunk of coal that did well under pressure

Monday 30 September 2024 was a hugely important day in the industrial history of the United Kingdom. At midnight, Ratcliffe-on-Soar Power Station in Nottinghamshire stopped generating power, and, as of that moment, the country no longer used coal to make electricity. It draws down the curtain on an industry which is 142 years old, beginning when the world’s first coal-fired power station at Holborn Viaduct began operating on 12 January 1882.

The decline in our reliance of coal has been relatively steep. In the early 1980s, the UK generated 80 per cent of its electricity by burning coal, but that proportion had halved by 2012. As renewable energy has become more advanced, efficient and productive, so the use of coal has dwindled, and in 2019 zero-carbon electricity generation overtook fossil fuels for the first time. Last year just one per cent of the UK’s electricity came from coal; gas accounted for 32 per cent; wind power provided 29.4 per cent, nuclear energy was 14.2 per cent of the total, biomass represented five per cent, solar power another 4.9 per cent, hydropower, including tidal generation, added 1.8 per cent. We imported 10.7 per cent of our energy.

In the years between Holborn Viaduct Power Station opening and Ratcliffe-on-Soar winding down yesterday, this country has burned approximately 4.6 billion tonnes of coal, emitting 10.4 billion tonnes of carbon dioxide. This is more than CO2 than most countries have ever produced from any source, a testament to the abundance of coal in the UK and to our leading role in the Industrial Revolution.

On the other hand, we are the first G7 nation to stop using coal altogether. The Climate Change Act 2008 established targets for reducing carbon emissions by 2050, and the Climate Change Act 2008 (2050 Target Amendment) Order 2019 committed the UK to achieving a 100 per cent reduction in greenhouse gas emissions by that date, using the emissions levels of 1990 as a baseline. The Scottish Government set an earlier date for this milestone of 2045 under the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019. To co-ordinate these reductions, in 2020 the previous government established the Interministerial Group for Net Zero, Energy and Climate Change, comprising ministers from Whitehall, the Scottish Government, the Welsh Government and the Northern Ireland Executive.

When he was appointed secretary of state for energy security and net zero in July, Ed Miliband pledged that energy generation would be carbon-neutral by 2030. On 25 July, he introduced the Great British Energy Bill into the House of Commons, legislation which will establish a publicly owned investment and energy generation company called Great British Energy with its headquarters in Aberdeen.

Recently the timescale, cost and necessity of achieving net-zero carbon emissions have become fiercely political and contested issues. I don’t intend to rehearse the arguments, but rather observe those developments we cannot change. We have phased out the use of coal after seeing it dwindle and diminish rapidly over a period of about 15 years, and it will not be coming back. It is a particularly striking development for me: I grew up in the North East of England, and my parents were both from Lanarkshire, rich coal country all round. When I was born, around 240,000 people were employed in the coal-mining industry, while that figure had been closer to 700,000 when my parents were born. Last year, it was 350.

This year has also marked the 40th anniversary of the year-long miners’ strike which proved such an epic and decisive power struggle between the trade union movement and the Thatcher government. It began on 6 March 1984, when there was a walkout at Cortonwood Colliery near Rotherham, following an announcement by the National Coal Board that the pit would close due to the fall in the price of coking coal. It grew into nationwide industrial action under the leadership of Arthur Scargill, president of the National Union of Mineworkers, but the government was well-prepared and determined. The last striking miners returned to work on 3 March 1985, but the future of the industry was obvious and bleak. Pits continued to close and the industry was privatised in 1994; in 2001, production of coal was exceeded by imports for the first time. On 18 December 2015, Kellingley Colliery, the country’s last deep coal mine, closed. Aberpergwm Colliery, a drift mine in the Vale of Neath in south Wales, re-opened in 2018 and is now the UK’s only coal mine.

Cutting the Treasury down to size

On Sunday, the economics correspondent for The Guardian, Richard Partington, wrote an article about the new government’s economic prospects, suggesting that the chancellor of the Exchequer, Rachel Reeves, might relax the fiscal rules in her Budget on 30 October. Essentially, it is anticipated that the Treasury will allow itself to borrow more generously in order to invest in infrastructure: Reeves said in her speech at the Labour Party conference in Liverpool last week that it was “time that the Treasury moved on from just counting the costs of investments to recognising the benefits too”.

Partington identified “unlocking investment” as a central requirement of the government’s plans to encourage growth. He acknowledged the creation of Great British Energy (see above) and the National Wealth Fund as key drivers, but argued that Reeves must bring about a change in fiscal culture at the centre of government.

She will also push to change the infamous Treasury view, with a drive to change its culture away from one of a doom-laden fiscal department, to one focused on economic growth.

Identifying the culture and institution of HM Treasury as a barrier to growth is by no means a new theme in British politics. Liz Truss’s brief, 49-day premiership in September/October 2022 concerned itself with challenging and defeating what she called “Treasury orthodoxy”, which she felt led to excessive caution, conservatism and sluggish pace in policy-making and had held back the country’s economic growth. Having appointed her old friend and ideological ally Kwasi Kwarteng as chancellor, within days she sacked the permanent secretary to the Treasury, the highly respected Sir Tom Scholar, who had been in post since 2016.

This did not happen in a vacuum. Earlier in the year, following the publication of the book he had co-authored with economist Jonathan Haskel, Restarting the Future: How to Fix the Intangible Economy, Stian Westlake, chief executive of the Royal Statistical Society and a former policy adviser in Whitehall, had written an article in The Guardian. This proposed that the Treasury had the wrong culture and incentives to drive growth, and should be broken up into three distinct parts: the spending teams which represent its budgetary function, reinforced by subject experts, would be corralled into something resembling the United States Office of Management and Budget and placed in the Cabinet Office; responsibility for economic policy would be transferred to what was then the Department for Business, Energy and Industrial Strategy to form a new Department for Economic Growth; and borrowing, taxation and financial regulation would be brought together in a small and functional finance department, Westlake drawing comparisons with those of Australia and France.

This is a long-standing topic of debate. The institutions of financial and economic policy-making in the UK are very old: the English Treasury was established as a separate part of the Royal Household in about 1126, while the first Exchequer budget was drawn up in 1284. The latter was originally an accountancy process rather than an organisation, though the Court of Exchequer became one of the three main law courts in the mediaeval period, along with the Court of Common Pleas and the King’s Bench. The King’s treasurer became lord high treasurer in the 16th century and was one of the most important officers of the state, a de facto prime minister. It was the custom for the office to be held in conjunction with that of treasurer of the Exchequer.

By the 17th century, it was becoming frequent for the office of treasurer of the Exchequer to be put into commission, that is, exercised collectively by a small group of people rather than an individual, with the role of lord high treasurer then falling vacant. This was first done in 1612-14, with a commission of six lords of the Treasury appointed, then again in 1618-20, 1635-36 and 1641-43. It became more and more frequent until the Duke of Shrewsbury, appointed lord high treasurer by the dying Queen Anne in July 1714, resigned the office 10 weeks later shortly after the arrival of the new Hanoverian monarch George I. A new five-man commission was created in October with the Earl of Halifax as first lord of the Treasury and the office remains configured in that way, with the first lord now invariably being the prime minister.

The common complaint about the Treasury is that it is too powerful and does too much, specifically that it sets and collects taxation, determines public spending and is responsible for general economic policy. I detailed the history of the Treasury and attempts to curb its excessive dominance over government policy in an essay in November 2022, shortly after the fall of Liz Truss and the accession to the premiership of Rishi Sunak, the 23rd prime minister since Walpole to have held the office of chancellor of the Exchquer at some point (10 held the two posts concurrently at some point, the last being William Gladstone in 1880-82).

There have been a number of different institutional and structural attempts to curb the Treasury’s power. Clement Attlee defused a cabinet rebellion in 1947 by appointing Sir Stafford Cripps minister of economic affairs while Hugh Dalton was chancellor of the Exchequer, giving him a small secretariat and the newly established Central Economic Planning Staff to take responsibility for the long-term planning of the economy. Six weeks later, however, Dalton was forced to resign after a foolish and clumsy Budget leak, and Cripps succeeded him as chancellor, taking the Economic Affairs Office back to the Treasury and re-establishing a single point of control.

After the general election of February 1950, Attlee revived the post of minister of economic affairs and installed Hugh Gaitskell, effectively making him deputy chancellor though without a seat in the cabinet. Like Cripps, he was responsible for central plannning of the economy, though Attlee also wanted him to stiffen Cripps’s resolve in resisting pleas for higher public spending. Also like Cripps, his tenure was short: in October 1950, Cripps resigned as chancellor and Gaitskell succeeded him, again uniting the office with that of minister of economic planning.

There would be other attempts to dilute the Treasury’s power. The most significant was Harold Wilson’s creation of the Department of Economic Affairs in 1964, again assigning it responsibility for central planning and economic growth. Even under the forceful, if increasingly drunken and unpredictable, George Brown, the DEA could not really hold its own against the entrenched interests of the Treasury, and it was abolished after only five years. Edward Heath’s creation of the Department of Trade and Industry in 1970 was in part another attempt to create a counterweight: it brought together the Board of Trade and the Ministry of Technology, the latter having taken responsibility for aircraft supply from the Ministry of Aviation in 1967 before absorbing the Minister of Power in 1969. But Harold Wilson, returning to government in March 1974, divided the DTI into three smaller parts, the Departments of Trade, Industry, and Prices and Consumer Protection, and the Treasury’s grip on economic and financial policy was once again assured.

The last seriously formed plan to dismember the Treasury was that devised by Lord Birt, Sir Tony Blair’s strategic adviser, before the 2005 general election. Dubbed “Operation Teddy Bear” to disguise its radical nature and the threat it posed to the incumbent chancellor, Gordon Brown, it initially envisaged a finance ministry in charge of taxation, financial services and international markets, and an Office of the Budget and Delivery, which would either be an independent entity or part of the Cabinet Office. The scheme was watered down, with the OBD to remain under the auspices of the Treasury, in an attempt to sell the deal to Gordon Brown, but in the end it was abandoned and Brown presided over an unmolested Treasury until becoming prime minister in 2007.

The lesson of history here, bearing in mind Partington’s original Guardian article, is that reforming the Treasury is hard: it jealously guards its accreted powers and attracts the best and brightest of the civil service. Wilson and Blair also failed in their hopes of breaking the Treasury’s stranglehold on economic and financial policy because they had politically powerful chancellors; Jim Callaghan (1964-67) was able to contain and manage the wayward George Brown, while Gordon Brown (1997-2007) simply refused to accept the structural changes, and Blair decided it was not a fight worth pursuing. Truss, meanwhile, was in Downing Street for so short a time, amid so many other crises, that there was never any breathing space to think about machinery of government changes.

None of this means that reducing the size and power of the Treasury is impossible or destined to fail. But a prime minister who sincerely wants to change the machinery of economic policy-making must possess some or all of these characteristics: patience, determination, political strength, attention to detail, persuasiveness, the ability to build and manage coalitions within his or her party and a substantial amount of bloody-mindedness. Otherwise the exercise can easily seem more effort than it is worth. Given how closely Sir Keir Starmer and Rachel Reeves have worked together since she was appointed shadow chancellor in 2021, I doubt we will see another assault on the Treasury’s powers for some while yet.

Shadow cabinet reform: everyone’s favourite subject

As the Conservative Party conference rolls on in Birmingham and the four remaining candidates for leader seek support and favour, Tom Tugendhat, the shadow security minister, told Scottish journalists that he wanted the party to change “from being a Westminster club to a national movement”. In pursuit of that goal, he undertook to include the leader of the Scottish Conservatives, the newly elected Russell Findlay MSP, in his shadow cabinet, and to participate in Holyrood shadow cabinet meetings, either in person or remotely, every fortnight.

This is not the most radical proposal ever devised in the heat of a leadership election. Given how familiar many people have become with video conferencing thanks to the Covid-19 pandemic, it seems a modest but eminently sensible idea that the leaders of the Scottish and Welsh Conservatives should at least be able to take part in shadow cabinet meetings, so that the different parts of the party are better co-ordinated and more unified. Last week, James Ford suggested in an article for CapX that there should also be a directly elected leader of the Conservative Party in London—Greater London does, after all, have a slightly larger population than Scotland and Wales combined—and if such a post were to be created, the incumbent should also be invited to attend shadow cabinet meetings.

As I say, this is not the sort of idea to set the heather on fire. Yet some social media users reacted as if this was constitutional vandalism of the highest order. One protested:

The main reason it’s not fine is that the electorate can’t hold them to account… the whole principal of parliament is you can theoretically remove representatives that you don’t like

Another merely observed “Theatre of our democracy vanishing down the drain”, with someone else adding “So not accountable then? Bad idea”. Perhaps the award for melodramatic pearl-clutching went to the author of this tweet:

So unelected people will have a say in the supposedly democratically elected parliament..? So why go through the inconvenience and expense of elections? Is he being advised by Putin?

This is all pretty self-evident nonsense. Let’s be charitable and ascribe it in the main to unfamiliarity with the nature of the shadow cabinet, but the point I tried to make was that it has little formal status outside whichever party is in opposition, and certainly has no statutory existence. It is not a public body. Some specified members of the opposition are given additional salaries for their official duties; the practice began with the Ministers of the Crown Act 1937 and is now governed by the Ministerial and other Salaries Act 1975, under which the leader of the opposition, the opposition chief whip in the House of Commons and up to two assistant whips, the leader of the opposition in the House of Lords and the opposition chief whip in the House of Lords are paid additional salaries. Other members of the shadow cabinet and the opposition front bench do not receive extra pay, nor is the composition or role of the shadow cabinet set out anywhere in legislation.

For this reason, the idea of “holding to account” members of the shadow cabinet simply does not arise, and anyone who was not a member of either House would not “have a say in the supposedly democratically elected parliament”. Shadow cabinets exist to advise party leaders and provide party spokesmen and others with a convenient forum in which to discuss policy and tactics. They have no formal power because they have no formal existence, and the party leader is bound in terms of their composition, if at all, only by internal party rules.

Older readers may remember that when Michael Howard became leader of the Conservative Party in November 2003, he initially appointed a radically slimmed-down shadow cabinet of just 12 people, with members focusing on broad policy areas and shadowing several departments, rather than mirroring the composition of the government. Tim Yeo, for example, represented the party on “public services, education and health”, while David Curry held a brief covering “local and devolved government affairs”. It was a bold idea, though Howard diluted it in June 2004 by increasing the size to 15 and then abandoned it entirely when he formed an interim shadow cabinet after the 2005 general election. But the point is that he had absolute freedom to do so, and to include anyone he chose.

There is, I think, an interesting and more profound point here worth exploring on another occasion about social media’s combination of instant, blazing outrage, superficial understanding of how politics works and a strange, pseudo-legalistic sense that something “improper” or even “unconstitutional” is being done. (There is an analogy, perhaps, with how often now you will find right-wing users on Twitter ready to denounce their political opponents as “traitors” and guilty of offences against the law, the constitution and the state.)

If I were to give the next leader of the Conservative Party any advice on the composition of the shadow cabinet, it would focus on keeping its size manageable. I have written elsewhere about how bloated and therefore ineffective the cabinet became from 2007 onwards—though, to his credit, Sir Keir Starmer seems to have reined that tendency in and it currently has 22 members with another four “also attending”, still a few too many but heading in the right direction—and this to an extent applies to the shadow cabinet too. Experience and common sense tells anyone who has ever been in a meeting that there is a size above which a gathering ceases to be a useful participatory forum for discussion and instead becomes an audience for a series of presentations and monologues. My hunch is that the number is around 20 or 22; Starmer’s shadow cabinet hovered around the 30 mark, which is too many.

In terms of the personnel, however, it is wholly a matter for the next leader. There are no constitutional proprieties to be observed, because the shadow cabinet is not a creation of our constitutional arrangements. It is a functional body to help manage the party of opposition, and is not held accountable by Parliament or the public because it has nothing to be accountable for. Whether there are any interesting developments in his role and composition, we must wait until next month to discover. I suspect many of you will have one or two issues above it on your agenda of things to worry about.

A burnt-out Case

A very brief note, but Simon Case yesterday finally announced that he was retiring from the post of cabinet secretary due to an ongoing and severe neurological condition. His departure has been expected for many months, with uncertainty only over the timing, and the prime minister will be relieved that he can now start the process of finding a successor (the vacancy notice is here if anyone wants a change of scene). I wrote about the likely candidates at the end of August, though the truth is that, inevitably and rightly, Starmer will choose whom he wants.

However, one potential successor whom I mentioned and who had been widely discussed will not be in consideration: Dame Sharon White, former second permanent secretary to the Treasury and until recently chairman of the John Lewis Partnership, will be a member of the interview panel which will assess candidates and report to the prime minister before he makes a final choice. The panel will be chaired by Baroness Stuart of Edgbaston, former Labour MP and currently first civil service commissioner, and will also include ex-cabinet secretary Lord O’Donnell and Brian McBride, lead non-executive director at the Ministry of Defence and previously president of the Confederation of British Industry.