of humour that spared no one. She had a proper respect for ability at all levels – but none for seniority alone. Jill was fearless, and had a healthy disregard for conventional wisdom. She was a fierce protector of her turf and her minister. An added bonus for me was her love of cricket, for she was a long-standing member of Surrey County Cricket Club. Sometimes we would relax between meetings by catching up with a Test match on television or, since long hours were normal, watching the late-night highlights with other members of my Private Office before leaving the Treasury building.
The most important part of the chief secretary’s year is the public expenditure survey, which begins in the summer when each secretary of state puts in a ‘bid’ for his department’s financing for the next three years. These bids set out the ambitions of the department for the years ahead. Rather as the black widow spider dances an odd quadrille with its partner before finally mating, the public spending round has its own rituals. The bids often contain an unrealistic wish list, and are invariably padded so that the minister can be seen to make ‘concessions’ in head-to-head negotiation with the Treasury.
I arrived at the Treasury to find that the bids for the forthcoming years were very high: for the first year alone they amounted to £6 billion more than the sum previously allocated, which was quite unaffordable. In response – the first part of the ritual – I prepared a paper for Cabinet in late July that set maximum spending levels for the next three years. For the first year, over which the greatest battles are always fought, I recommended that we should hold spending to the level agreed by Cabinet the year before – although I proposed spending increases after that. The paper had three purposes: to gain the collective approval of the Cabinet for the sum total of expenditure that was affordable; to convince the markets that we had a sensible policy; and to emphasise that the Treasury was not an Aladdin’s cave to be ransacked. I was firmly backed by the Prime Minister and the Chancellor, and – as I had done some private canvassing – I received support from other ministers.
More surprising was that some of the ministers who had asked me for the largest increases for their departments were strongly supportive of restricting total expenditure: that stern monetarist Nick Ridley, for one, clearly saw scope for cuts elsewhere, whilst being confident that his own budget at Environment required a great deal more money. Nick was not alone; he was merely the colleague whose bid was most obviously at odds with his own philosophy.
Throughout August, the Treasury raked through each department’s bid, enabling me to identify the weak points to attack when I wrote to ministers challenging their assumptions and costings. All this is ritual foreplay to prepare the ground for the detailed one-to-one negotiations between the chief secretary and the spending ministers at which the expenditure levels are agreed. Every subheading of expenditure is pored over at these bilateral meetings, which drag on for many hours. Several meetings are usually necessary before a conclusion is reached. The bilaterals are revealing. They expose vividly the ability of ministers and their personal commitment to their programmes.
The process represents a sharp learning curve for the chief secretary, who has to be able to challenge not only the expenditure figures but also the policy of every department. This is gruelling, but it offers an insight into Whitehall that is unavailable to any other minister. Years later, as prime minister, the bank of knowledge I built up as chief secretary was immensely useful in giving me an understanding of what lay behind ministerial proposals. I often found that the most important point of policy-making was not what was proposed, but why.
Although my first few months as chief secretary were tough, I felt at home at the Treasury, and my two years in the job were amongst my most enjoyable in government. The amount of detail to be absorbed is formidable, but since I believe that every pound of taxpayers’ money which is spent has to be justified I did not mind that at all. I found that I was easily able to absorb and recall at will a huge amount of detail about public spending, which gave me a tremendous advantage in negotiations with ministers. Nor did I find it difficult to predict accurately how colleagues would couch their arguments: I simply put myself inside their minds and considered what I would do in their place. The volume of work meant that I did not contribute much to macro-economic policy-making, but since Nigel Lawson listened to others only as a prelude to announcing what he had intended to do anyway, this did not much matter. I had no ideological baggage on economic and financial policy, and I admired Nigel’s skills.
Nigel carried the role of chancellor with great self-assurance. He had reached the peak of his authority in government, and no trace of self-doubt ever crossed his mind. He often worked in his study at Number 11 Downing Street rather than at the Treasury, summoning officials and ministers when he needed them. When he did appear at the Treasury it was often for large meetings of all his ministers and senior officials. These he conducted like a professorial seminar. Nigel would pronounce. Comment would be invited. Nigel would adjudicate. Policy was decided. Government was made to seem very simple.
Nigel was supported by an impressive team of officials and ministers. Sir Peter Middleton, the Permanent Secretary, was a sharp Yorkshireman, level-headed and pugnacious to the extent of provoking an argument simply for the intellectual joy of having one. An intensely private man, he was a close friend of Nigel, and was very perceptive about events and people. Robin Butler, the Second Permanent Secretary in charge of public spending, had been Margaret Thatcher’s Principal Private Secretary at Number 10, and knew the Whitehall machine and all its ways. No one was surprised when he leapfrogged over more senior colleagues to become Secretary to the Cabinet and Head of the Civil Service. He was easy-going, helpful and efficient – and one of the most competitive men I have ever met, a fine sportsman who excelled at rugby and cricket. The third of the main figures was Terry Burns, the Economic Adviser. Tousle-haired, youthful, genial and without pomposity or malice, Terry was a man of passionate interests. Life was never boring to him, and he never seemed downcast (except momentarily when his beloved Queen’s Park Rangers were having a string of bad results). He had made his reputation as an economic forecaster for the London Business School.
Amongst the other ministers at the department, I had an amiable but wary relationship with Norman Lamont, the Financial Secretary to the Treasury. The Financial Secretary is number three at the Treasury, and after the election Norman must have hoped for promotion to chief secretary. If my appointment was a setback to him, he gave no outward sign of it, although our conversations were usually guarded. We did not share cheery confidences. The erudite Peter Brooke was the minister of state responsible for VAT and Europe. I had first met him in my days as parliamentary candidate for St Pancras North, and he was always ready with a good-humoured story. The final Commons minister, the Economic Secretary, was Peter Lilley. Previously Nigel’s PPS, Peter was rather shy and withdrawn for a politician, but was highly intelligent, with a fine analytical mind, and sometimes surprisingly waspish. It was a talented team, all of whom were to reach the Cabinet. In the Lords, the able Simon Glenarthur had the difficult task, which he performed admirably, of speaking for all Treasury ministers. I often wished that he too had been in the Commons to supplement the talent available there.
In early September I began the detailed bilateral discussions with ministerial colleagues. The toughest negotiator of them all was Peter Walker, the Secretary of State for Wales. Peter believed in the virtues of public spending, and was determined to use it to the full in the Principality. His general air was of a man who did not care whether he remained in the Cabinet or not, and was not remotely interested in being a team player if that meant making concessions to an economic policy he distrusted.
As a negotiating tactic this was devastating. Peter simply asserted that his bids were the minimum necessary; he could not manage with less; the Prime Minister had promised him the money when she gave him a job he had not asked for; he did not much like the Treasury, because it got in the way of good policy; and so, like it or lump it, he expected us to cough up. Since (apart from his opinion of the Treasury) much of this was true, there was not much that could be done with Peter. It was perhaps fortunate for me that most of the Welsh budget was a fixed proportion of the sums available to English departments for the same responsibilities. Peter’s bids, therefore, were only for small
