James Forsyth James Forsyth

Order, order! It’s up to May to stop this ministerial bickering

She can ill afford to lose her Chancellor only three months after appointing him

issue 22 October 2016

Even by the accelerated standards of modern politics, this is fast. Three months after the Chancellor was appointed, the Treasury has had to deny that he has threatened to resign. No. 10, for its part, has had to declare that the Prime Minister has ‘full confidence’ in Philip Hammond. It is telling that neither felt that they could just laugh off the reports. So what is going on?

The most innocent explanation is that Westminster is still adjusting to the return of normal relations between Downing Street and the Treasury. David Cameron and George Osborne did everything but actually merge the two. Indeed, until the coalition came along, they planned to work out of the same office in No. 10. Even with Nick Clegg in government, Osborne attended the two key daily Downing Street meetings. The Conservative pair never disagreed with each other in public, or even in cabinet. And this bond has continued even after they left office. Cameron asked his former communications director Craig Oliver to make sure that Osborne came out of his book on the EU referendum well. The closeness of this relationship meant that whoever succeeded Cameron and Osborne as the residents of Downing Street would be seen as more distant from each other. So ministers are taken aback to hear Hammond airing his own, different views in cabinet.

But that is only part of the story. Brexit has exacerbated the institutional tensions between the Treasury and the rest of the government. When it comes to Britain leaving the European Union, the Treasury is most concerned with the short-term economic implications, while No. 10 is looking at the broader political picture. Both Hammond and Theresa May might have campaigned for Remain, but they are now coming at the exit negotiations from different perspectives.

In terms of a deal, the most contentious issue is how open the UK labour market will be to EU nationals.

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