Sajid Javid resignation: A power-struggle about policy as well as control

The departure of Sajid Javid as chancellor is the consequence of a power-struggle between Number 10 and Number 11. That much is obvious.

But what were the disagreements about? Control, without question. Personality clashes almost certainly played their part but fundamental differences over policy feel like they are also at the heart of this falling out.

Boris Johnson insisted on the dismissal of Javid’s advisory team precisely because he didn’t like the advice they were giving him.

In four weeks time, on March 11, the government is set to deliver its first budget since winning the election. It’s a time to be bold, a moment to begin the process of delivering on the promises made during the campaign.

Boris Johnson’s instinct, and that of Dominic Cummings, is to spend. The government plans to unleash a fiscal stimulus to boost the economy but Sajid Javid’s fiscal rules are making that difficult.

Javid designed his rules as a public declaration of prudence, a pledge to spend thoughtfully and responsibly.

  • Sajid Javid explains the reasons behind his resignation as Chancellor

He had to fight to get them included in the manifesto but eventually the Conservatives pledged not to borrow money to fund day to day spending and to balance the current budget by 2023.

These commitments mean that the government now finds itself constrained. The forecasts for economic growth are weak and there isn’t much room to spend without raising taxes.

Javid and Mr Johnson during a visit to Curzon Street railway station in Birmingham earlier this week. Credit: PA

Stories have started to appear in the press about potential tax rises, particularly on wealthier households: a mansion tax, a cut to pensions tax relief for high earners, tighter rules on capital gains tax.

Javid seemed to be nervous about the idea of implementing all or indeed any of them.

“I’m a low tax person, I want to keep taxes as low as possible,” he insisted when I interviewed him in Birmingham two days ago. “I admire people who have worked hard and achieved financial security.”

The pound jumped on the back of news of Javid’s resignation. Investors suspect that his fiscal rules may follow him out of the door in the months to come.

Hemmed in by a set of rules they were never keen on, faced with the need for tax rises to fund their spending ambitions it may be that Boris Johnson and his team decided it was time for a change.