I was less keen on the campaign to solve the VAT problems of the national museums and galleries, largely because it was driven by elderly millionaires saying that if we didn’t change the VAT rules they would sell their art collections for profit rather than bequeath them to the nation when they died; they weren’t the most tear-jerking letters to read.
At that time, museums and galleries which allowed free admission were not considered to be conducting a business, and could not therefore reclaim the VAT they spent in running their buildings – heat, lighting, cleaning services and so on – in the way other businesses can. For the same reason, churches couldn’t reclaim VAT on their repair bills.
The museums proposed various wheezes to get around this problem, all totally illegal under UK or European VAT law, but ultimately they kept coming back to the obvious solution: they wanted to charge for entry and run themselves as businesses. And why not, when they could charge a fiver a head and still see tourists pouring through their doors each year?
We held firm during the charity tax review and it was only in 2001, when the situation with the art patrons became critical, that Tony Blair insisted on something being done. This message was conveyed through David Miliband, then Blair’s special adviser, to Ed Miliband, then Gordon Brown’s, in a one-line email saying: ‘VAT and museums: Get this sorted.’
As I was an old veteran of this debate from the charity tax review, I was called in by Ed Miliband, and – despite telling him the dozen different reasons we couldn’t legally do what was being proposed – he kept smiling out of one corner of his mouth and said: ‘You’ve got to find a way… I know you’ll find a way.’
Working with two other great Customs veterans of the charity tax review, Judith Warner and David Ogilvie, we eventually worked out a convoluted mechanism for refunding a prescribed group of museums and galleries their VAT bills, without breaching EU law.
When I told Ed Miliband we’d cracked it, I had my first taste of his Disraeli-style approach to management. He told his entire office that I was a genius, and kept shouting the phrase ‘You’re a genius! You’re a genius!’ at me as I walked away down the corridor. I hope his brother said the same when he told him the good news.
So, in their different ways, the heart-rending letters written by those hundreds of church-going pensioners and the blackmailing letters sent by a few millionaire art patrons turned out to be by far the most effective representations we received to the charity taxation review.
When the art of a well-crafted or even painfully written letter dies out in modern life, our politics will be much the poorer for it, while – conversely – we will never lose the art of political speeches, well written or not, because politicians will never stop making them.
Back in November 1997, long before I was a twinkle in Ed Miliband’s eye, Dawn Primarolo appeared at a charity conference to encourage further submissions to the review, and I was asked to write some suggested text for the speech. I can’t remember what rubbish I wrote, but the feeling of sitting in an audience and hearing my words read out on stage will never leave me.
To me, way beyond being told I was a genius, someone being prepared to read out or sign off my words in their own name remained one of my single greatest thrills in the job.
5
THE TREASURY TYPE
In 1997, if you walked towards what used to be the Treasury’s main entrance, you could look up and see the balcony from which Winston Churchill hailed the crowds in Whitehall and Parliament Square on VE Day. As you entered, stretching up in front of you was an enormous marble staircase to the Treasury’s second floor – plush-carpeted corridors and thick wood-panelled doors, behind which the Chancellor, his junior ministers, advisers and key aides had their offices and meeting rooms.
If you could experience all that for the first time and not feel over-awed, almost intimidated, you have the advantage on me. Frankly, I felt terrified. I’d been summoned across by the Treasury official responsible for charity taxation, Tabitha Jay, a scion of the great Jay political dynasty, not much older than me but a world apart in terms of her authority and confidence.
As she explained to me over a hurried coffee, she was also responsible for about thirty other bits of tax policy and couldn’t afford to spend her time re-writing all of the draft material emerging from officials working on the charity tax review. She’d read the speech Dawn had given that month at the Charities Aid Foundation, said: ‘It looks like you can write’, and was going to propose that I take over from our Inland Revenue colleagues as the main author of submissions and documents for the rest of the review.
Ten minutes and the meeting was over. Tabitha whizzed off to do one of her other thirty jobs and I, having booked the whole afternoon out, went to the pub. And not for the first or last time in my life, my seventh pint brought on some soul-searching. I was torn between wanting Tabitha’s level of responsibility and authority, and not feeling up to it. I wanted to walk up that marble staircase and feel my shoes sink into those second-floor carpets every day, but the idea of having to brief Dawn personally – let alone big, scary Gordon – made my knees shake.
The more I got to know Treasury people, including some ex-Customs Fast Streamers who’d made the jump across, I realised I wasn’t the only one who found the new Brown regime simultaneously exciting and daunting. In pre-Gordon days, even under the avuncular Ken Clarke, there was a strict process and hierarchy by which the Treasury operated. Junior officials briefed their line managers, who briefed their branch heads, who briefed their team leaders, who briefed their directors, who briefed the responsible minister, who made recommendations to the Chancellor.
If the Chancellor wanted to meet to discuss a recommendation, his office would summon the minister and the director, and occasionally the team leader. The official responsible for an area like charity taxation would never get in the room, let alone the poor mugs from the Inland Revenue and Customs actually doing the work. When, in pre-Gordon days, the Chancellor took all the directors and ministers away to his country retreat at Dorneywood to make all his Budget decisions, it physically precluded the possibility of the ‘lead official’ having any input.
Even if they got their name on a submission that went to a minister, there was a mandatory section saying ‘Approved by…’ where the management chain above them would be listed in order of seniority, just to reinforce the hierarchical structure.
Imagine what a culture shock it was for the Treasury when Gordon, Ed Balls and Ed Miliband came in, and tore down that structure. It didn’t happen overnight, but the more meetings that the Eds had where they appeared to understand the issues and policies better than the directors who were briefing them, the more they insisted on drilling down into teams and talking to the experts. That’s why when Ed Miliband wanted the museums’ VAT problem solved I got dragged in, not my boss.
And by extension, whenever Gordon wanted to talk about a particular subject, the Eds didn’t automatically tell his office to summon the relevant director, but whatever official they thought would be able to answer his questions.
And no matter how junior you were, if Gordon thought you knew your stuff, you’d become his go-to ‘guy’ or ‘girl’. You knew you’d made it when he’d shout out to his office: ‘We need the Surestart Girl’ or ‘Get me the OPEC Guy’. And if he passed you in the corridor, usually without wanting or waiting for an answer, he’d give you a cheery ‘How’s Surestart?’ or ‘What are OPEC up to?’
The Eds were better with names, and with small talk. While they worked hand-in-glove in their adjoining offices, with a shared group of support staff, you would – depending on the issue you were responsible for – usually be dealing with one or the other, and young Treasury officials were forever comparing notes on whom they preferred. But they were both well liked and admired, except of course by those directors who missed their weekends at Dorneywood.
While the machinery of the Treasury was not massively altered in those early days, the cogs began to wo
rk more effectively, each individual knowing their function and how they were contributing to the central goals, even the unstated ones like keeping Britain out of the euro, redistributing income to poor working families and – through his ‘spending teams’ – helping Gordon stretch his right of initiative and veto into every aspect of government policy.
A Treasury that had been humiliated during the early 1990s with the shabby exit from the European Exchange Rate Mechanism, the recession that followed and the House of Commons’ defeat of the 1993 Budget began again to feel – under Gordon and the Eds – back to its most powerful and authoritative, with a clear sense of purpose and mission.
And imagine what it was like for the young Treasury Fast Streamers meeting their contemporaries from other departments in Westminster pubs after work, and comparing notes on what kind of day they’d had. Civil servants from the Foreign Office or Home Office who were still anxiously awaiting their first audience with Robin Cook or Jack Straw would be told casually: ‘Oh yeah, Gordon passed me in the corridor today and asked me what OPEC were up to. Just a quick chat.’
Gordon himself was looked on like a stern father figure, despite his insistence on being called ‘Gordon’ to his face. Like any stern father, officials knew he was tough to please, but that tended to act as a motivation. When he was just a distant figure to me, I always imagined him a bit like Charles Dickens’s Mr Dombey, and when he lost a child, that comparison hit me again. That terrible night in 2002, I was far from alone among Treasury officials, many of us who barely knew him or Sarah on a personal level, in weeping for their loss as though we did.
When Gordon returned to the Treasury after the election in 2005 and then left for the last time in 2007, there was an element of my orchestration in ensuring that officials from every team were in the right place for the cameras to see them cheering him in and applauding him out, but there was no shortage of enthusiasm and affection among the staff who did so.
One of those officials was the long-standing head of the Treasury’s Parliamentary Unit, the wonderful David Martin, who had worked for Chancellors stretching back to Nigel Lawson in the 1980s, and has now sadly passed on. When he was asked at his retirement party in 2009 who was his favourite Chancellor, he replied without hesitation: ‘Gordon’. Why? ‘Well… I mean, for once, we knew what we were doing.’
He recounted that, on the day of Gordon’s departure in 2007, another long-standing and senior civil servant approached him and said: ‘Right, now we can go back to the way things used to be’, to which David said he replied: ‘Why on earth would we want to do that?’
For me, ten years before that day, reflecting on my meeting with Tabitha, I decided that – even if I wasn’t sure I was up to it – I at least had to try my luck in the Treasury. Once the charity tax review was finished in 1998, I started looking for secondment opportunities.
After a failed bid to get a job in Dawn Primarolo’s private office, I tried for a secondment in Tabitha’s old tax policy team. The job would be specialising in transport and road taxes within the indirect tax branch. As long as they didn’t ask me about shipping, I reasoned, I might have a chance. I went for my interview on 10 March 1999, the day after Gordon’s third Budget.
I knew I’d got the job when I bonded with my interviewer, a cerebral middle-aged Scotsman named John Pavel, over the fact that neither of us drove a car, which he said would make us the perfect team. In retrospect, I was very lucky to be interviewed by John, someone who actively liked the idea of working with a rough-and-ready bloke who’d only recently been working on anti-smuggling. He said to me: ‘You’re not exactly the Treasury type’, but he seemed to think that was a good thing.
And he had a point – I wasn’t. I may have been able to get onto the Fast Stream, but becoming a Treasury Fast Streamer is far tougher and requires an even greater level of self-assuredness and natural authority – which was why so many young graduates were able to thrive in the atmosphere created in Gordon’s Treasury. It was egalitarian, yes, but only if you’d got through the door in the first place. And that remains a problem to this day.
Now, as then, the Treasury’s recruitment process for Fast Streamers specifies the minimum requirement of a 2:1 degree. Their current recruitment literature says: ‘We want to do everything we can to ensure that we reflect the society we serve’, but while the recruitment forms, tests and interviews will be daunting to many candidates, they would be routine to many others who made entrance applications to grammar school, private school or Oxbridge.
The Treasury’s standard application form for more senior jobs contains a sequence of three sections for ‘Higher Education’, ‘Subject of Postgraduate Research’ and ‘Professional Qualifications’. These are not mandatory fields but it would surely take a particularly confident soul to leave them blank and carry on in good heart with the rest of their application, hoping that their prospective Treasury manager would carry on reading it with an open mind.
That matters if, like me, you have friends or colleagues who are naturally intelligent, hugely creative and politically astute, but could never even get their foot in the Treasury’s door – let alone have the chance to rise to the most senior positions – because they did not go to university, or because they would be unable to present themselves as a ‘Treasury type’ at interview, even though, having worked in the Treasury and seen many of its failings first-hand, I could guarantee some of the individuals I know who fit that bill could do a far better job.
It may be extremely difficult to broaden the base from which we select our politicians because of all the financial and practical barriers that lie in the way of people becoming MPs, but for the Treasury and the rest of the civil service, widening the field of civil servants they recruit should be relatively easy, simply by removing some of the unnecessary restrictions on who is able to apply and reviewing the type of tests they must take to prove their calibre.
Nevertheless, on that spring day in 1999 when John told me I’d got the job, I didn’t care who else could get into the Treasury and – for the time being – I didn’t care whether I was up to doing the job or not. I was just delighted that I had the chance to try, and I practically danced down the marble staircase on the way out.
6
A TRUCKING MESS
‘Right, now you’re here, let me tell you what’s really going on.’
That Gordon’s Treasury was a well-drilled machine is illustrated by the fact that, on each of the three occasions I was appointed to jobs there, my predecessor or manager sat me down on my first day and said: ‘Right, this is what we’re actually doing’, with ‘we’ used interchangeably and indistinguishably to mean the team, the Treasury and Gordon’s staff.
In the case of the transport tax job, John Pavel explained that we were trying to switch the burden of taxation from income to consumption in order to reward work; that motoring was historically under-taxed and annual above-inflation increases in fuel duty were the best means of addressing that; but that we didn’t want to look anti-motorist or anti-haulier so we were using road tax (aka vehicle excise duty or VED) to direct tax cuts in their direction, all targeted at ‘greener’ cars and lorries, but in no expectation of any serious environmental impact, and never to give away any big money.
John then told me about trucking. He said the British haulage industry was massively inefficient, with just too many small, old haulage firms for the amount of work to go around. In that kind of market, haulage contracts would always go to the lowest bidder and the small hauliers were finding themselves increasingly under-cut by competitors from the continent. Ultimately, the continental hauliers were just more efficient operators, but the small hauliers blamed their loss of business on high rates of diesel duty and VED in Britain, compared to the rest of Europe.
I was in charge of the VED end of things, and I loved the role. Within a week or two of starting, I was summoned to Economic Secretary Patricia Hewitt’s office. She was due a visit from junior Transport minister John Rei
d ahead of the first meeting of the ‘Road Haulage Forum’, a sop to the two main hauliers’ trade bodies, the Freight Transport Association (FTA) and the Road Haulage Association (RHA).
Reid came in, leant back on his chair, put his feet up on Patricia’s meeting table, and went through a succession of Bourbon biscuits with one hand and cigarettes with the other, a nod to his later outspoken opposition to the ban on smoking in public places. Not only that, but – between bites of Bourbon and drags of fag – he harangued my minister, in a way that made me feel rather aggressively defensive on her behalf: ‘You’ve got to give me something, Patricia. These hauliers are killing me. They’re going to walk out of this meeting if we’re not careful.’
Reid was promoted to the Cabinet shortly after that, but whenever I saw him over the next decade, I always looked back to his slightly bullying attitude in the meeting, right down to putting his feet up on Patricia’s desk and smoking without permission. I didn’t even know I had a ‘list’ at that stage in my career, but he went on it from that moment.
At that first Road Haulage Forum meeting, the FTA and RHA demanded a study of comparative fuel duty and VED rates across Europe, and John Reid agreed wholeheartedly. Patricia nodded sagely and said we’d be happy to consider a study of comparative costs, but that we would need to look at the total tax burden on haulage firms, including income and corporation taxes (lower in the UK), and a comparison of overall efficiency.
Power Trip Page 3