How Boris Johnson’s post-Covid spending plans are costing him Tory allies

The prime minister is on a collision course with cabinet members over his pledges for a post-Covid spending bonanza, according to Downing Street insiders.

The Guardian reports that a group of disgruntled Tories including Chancellor Rishi Sunak will urge Boris Johnson this week to stop “sidelining his ministers”, as Whitehall officials warn of “a difficult autumn ahead with pressures over hospital waiting lists, social care reform and court backlogs”.

The Sunday Times’ political editor Tim Shipman claimed yesterday that the PM “has grown addicted to making ever more grandiose spending promises” but is keeping Sunak out of the “loop” - setting the scene for a political stand-off.

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Downing Street dramas

Johnson last month announced plans to build a new national flagship to replace the Royal Yacht Britannia within four years in order to help “give British businesses a new global platform”, as The Telegraph reported at the time.

The decision followed a long-running campaign backed by the newspaper for the launch of a new national vessel to showcase Britain’s soft power. “The only problem?” writes The Sunday Times’ Shipman. “Key people” had “no idea” the announcement was going to be made and “no one in government now wants to pay” for the project.

The plan is among a series of “high-profile symbols of growing tensions at the top of government over public spending, which now threaten to dominate Whitehall for the next six months”, he continues.

On one side of the dispute are ministers voicing concerns over “the gargantuan bill looming for Covid recovery”, with Sunak privately warning that “the government is facing a year of crunch spending pledges”. But those fears appear to have been brushed aside by the PM and his No. 10 team, who have “favoured untrammelled spending” on “levelling-up” in the new Conservative-held seats across the so-called red wall in the north of England.

The Guardian reports that Johnson “is said to be keen to go on the offensive with government priorities, particularly plans for infrastructure investment”, even though “the government is facing urgent spending demands”.

A senior No. 10 official told the paper that “it’s no secret that there are huge immediate pressures”, adding: “Hospital waiting times are a huge concern, the court backlog is also looking very difficult, we’re likely to need to spend more in education at the spending review.”

The unnamed insider refused to speculate on a possible return to austerity measures, however, saying: “We never even think about using that word in here.”

Vax and spend

Johnson’s 2019 manifesto committed to maintaining the triple lock to protect pensions - a policy that the Financial Times last week reported will leave Sunak with a £4bn bill to ensure “state pensions rise annually by the highest out of average earnings growth, inflation or 2.5%”.

“Anomalies in wages data pushed the headline growth rate of average UK earnings up to 5.6% in April,” according to the paper, “with economists forecasting that the rate will rise to about 8% by July.”

The Telegraph reports that “Treasury officials are drawing up plans for a pensions tax raid” to help pay down pandemic spending, with possible measures including reducing the pensions lifetime allowance from just above £1m “to £800,000 or £900,000”.

Sunak showed “a willingness to change the threshold” for tax-free pension savings when he froze the allowance earlier this year, the paper continues. But while “tax tweaks” may be in the offing, Downing Street last night “moved to dismiss the possibility” of any adjustment to the pensions triple-lock, “noting that the policy remained the government’s position”.

The chancellor’s team has also reportedly considered raising income tax by 2p to pay for social care reforms. However, No. 10 last night “slapped down any plans to hike income taxes”, says The Sun, which adds that the move would have “risked sparking a mutiny among Tory MPs”.

The funding pressures facing the Treasury are being further intensified by calls for a cash injection into education to help pupils who have fallen behind during the Covid lockdowns. The government faced a barrage of criticism earlier this month when Education Recovery Adviser Kevan Collins quit after ministers allocated £1.4bn for his education catch-up plan, rather than the requested £15bn.

Sunak is also facing demands for additional cash to “fund operations and cancer treatments that have been neglected and to pay for the huge backlog of court cases that have built up”, says The Sunday Times’ Shipman.

Amid growing anger over Johnson’s pledge to splash out on a new royal yacht as his chancellor battles to balance the books, a cabinet source wryly suggested to Shipman that “perhaps Boris can get someone to set up a trust to pay for it” - a reference to the PM’s efforts to find a willing benefactor to fund his Downing Street renovations.

Sunak is unlikely to see any funny side to the nation’s cash conundrums, however. The chancellor told newly launched TV channel GB News last week that he is a “fiscal conservative”, adding: “It’s not my money, it’s other people’s money, and I take my responsibility to that very seriously.”

Coalition balancing

Downing Street has played down the reported dispute between Johnson and Sunak. A spokesperson insisted that the pair “work closely together, and have been in lockstep throughout the most challenging period any government has faced since the Second World War”.

However, The Guardian claims that “Sunak is one of a number of cabinet ministers who are privately pushing Johnson to pay more heed to collective decision-making”.

“The cabinet has to be involved in all the big decisions that reflect what the party stands for, the cabinet needs to be more involved in those decisions,” a Whitehall official told the paper. “All cabinet ministers have to be part of making decisions that are part of a bigger picture. If you aren’t taking decisions as a collective, it is very hard to go out and sell a coherent argument.”

The importance of presenting a “coherent argument” to voters has been thrown into sharp relief by last week’s shock by-election loss in Chesham and Amersham.

The Liberal Democrats’ victory in overturning a Tory majority of 16,000 on a 25-point swing has “rendered the philosophical differences between Johnson and Sunak more acute”, says The Sunday Times’ Shipman.

Tory victories in the May local elections “created a wave of political hubris among Tory MPs and the belief that Johnson might fight and win two more elections”, Shipman writes. But the chancellor “has argued that economic restraint is needed to keep the party’s traditional supporters in the south on board”.

Meanwhile, Downing Street continues to tell “anyone who’ll listen” that Johnson and Sunak are not at odds, says Politico London Playbook’s Alex Wickham. But “there’s no getting away from the fact that cabinet ministers or their teams do not brief The Guardian directly attacking No. 10 if things are all rosy”.