The PM needs to act like a leader and stop Ham­mond’s acts of ‘sab­o­tage’

The prob­lem is that the Trea­sury is run by some­one who seems ap­palled at the whole idea of Brexit

The Daily Telegraph - - Comment - FOLLOW Fraser Nel­son on Twit­ter @Fraser­nel­son; READ MORE at tele­graph.co.uk/ opin­ion FRASER NEL­SON

No one both­ers to ask Philip Ham­mond how he would vote if the Euro­pean Union ref­er­en­dum was held again. The Chan­cel­lor has never tried to dis­guise his dis­may at the ref­er­en­dum re­sult, or that he feels his job is one of dam­age lim­i­ta­tion. When he forces him­self to be op­ti­mistic, it doesn’t last long. This week, he had in­tended to say that he backed the Prime Min­is­ter’s plans to pre­pare for Brexit talks end­ing in no deal – but he ended up talk­ing about a cliff-edge Brexit, with aircraft un­able to land in Bri­tish air­ports. Such hor­rors are sel­dom far from his imag­i­na­tion. He seems con­vinced that it will all end very badly, and that the only ques­tion is when.

The talks, cer­tainly, are not go­ing well. There was no sur­prise that the lat­est set stalled yes­ter­day, with Michel Barnier talk­ing about “dead­lock” as if this West­min­ster wran­gling is to blame. Bri­tain wants free trade, and is pre­pared to of­fer money – but the EU wants to agree about the money first, and talk trade later. It’s an odd way to con­duct any ne­go­ti­a­tion, and many of our al­lies are amazed that we agreed to this se­quenc­ing. “You’ve made so few mis­takes in your his­tory,” one am­bas­sador told a Cab­i­net mem­ber re­cently. “But agree­ing to talks, in this way, is one of them.”

With each wasted month, the chances of talks fail­ing seem to rise. This is why so many Cab­i­net mem­bers are ner­vous about Mr Ham­mond’s re­fusal to coun­te­nance such a sce­nario: no deal would be a disas­ter, he says, so he doesn’t want to waste tax­pay­ers money study­ing it. But with­out a plan for no deal, his col­leagues say, Theresa May would be forced to sign what­ever Brus­sels gives her. And they won­der if this is pre­cisely what Mr Ham­mond has in mind.

Ox­ford Eco­nom­ics keeps a run­ning tally on the like­li­hood of Brexit out­comes, and puts the chances of no deal at 21 per cent, which is far from neg­li­gi­ble. Gov­ern­ment pre­pares for all kinds of un­likely things: nu­clear strikes, Rus­sian in­va­sions, killer bird flu, a Cor­byn gov­ern­ment. In most con­tin­gency plan­ning, the re­sults are hard to imag­ine. But if Brexit talks fail, or if an agreed deal is ve­toed by a far­away par­lia­ment, we know pre­cisely what would hap­pen in April 2019: we’d trade with the EU as we do with the United States. So, World Trade Or­gan­i­sa­tion rules and mild tar­iffs. Prepa­ra­tions can start right away.

But the Chan­cel­lor has been ar­gu­ing that such prepa­ra­tion would un­der­mine the Prime Min­is­ter by mak­ing it look like Bri­tain is ne­go­ti­at­ing in bad faith. His col­leagues, how­ever, say it’s quite the op­po­site: surely pre­par­ing for no deal is the surest way to guar­an­tee a good deal. This point was made to him in pri­vate, months ago. Then in Cab­i­net a few weeks ago, in blunt terms by Sa­jid Javid and Jeremy Hunt, both of whom were suc­cess­ful busi­ness­man be­fore en­ter­ing pol­i­tics. To them, this isn’t pol­i­tics but an is­sue of ba­sic com­pe­tence – and the duty that gov­ern­ment has to its cit­i­zens.

The com­pro­mise that Mr Ham­mond of­fered was set­ting aside £250mil­lion to al­low White­hall de­part­ments to plan for all Brexit sce­nar­ios – deal or no deal. But, to the fury of his col­leagues, he has placed strict rules on how his (rel­a­tively mod­est) sum can be spent. Un­der a sys­tem set up by Gor­don Brown the Trea­sury can mi­cro­man­age other de­part­ments by set­ting con­di­tions on every al­lo­ca­tion of cash and Ham­mond is mak­ing sure that the “no deal” plans do not move be­yond pa­per­work. So, yes, he’ll al­low a re­port on how to ex­pand the port at Dover. But not a penny is to be spent on com­puter sys­tems, for ex­am­ple, that might help process this ex­tra trade.

To a great many Cab­i­net mem­bers, this is not a com­pro­mise but sab­o­tage. They be­lieve Ham­mond is per­son­ally hold­ing the gov­ern­ment to ran­som. He thinks his pro-brexit col­leagues are itch­ing for an ex­cuse to walk out of talks and would ac­ti­vate a “no deal” plan as soon as it is com­plete. So this ex­plains that lat­est round of gov­ern­ment in-fight­ing, and fury so deep that Tories have been pulling out of tele­vi­sion in­ter­views lest they’re asked what they think of the Chan­cel­lor. At the heart of this lies fear, mis­trust and dys­func­tion. It’s not a sit­u­a­tion that prime min­is­ters would usu­ally tol­er­ate. But most mem­bers of the Cab­i­net be­lieve Mrs May is too weak to sack Mr Ham­mond – so an­ar­chy rules.

This leads us to the ex­tra­or­di­nary spec­ta­cle of a for­mer Tory Chan­cel­lor, Nigel Law­son, say­ing that the cur­rent Tory Chan­cel­lor should be sacked. To the Brex­i­teers, the next few weeks in trade are cru­cial. All would like a good deal, but think the best way of talk­ing about the up­side of no deal. For ex­am­ple, As­so­ci­ated Bri­tish Ports says that places like Hull and Southamp­ton stand ready to take the strain off Dover, and could do with the ex­tra in­vest­ment. There’s talk about a Free Port in Belfast, to help the North­ern Ir­ish econ­omy. It’s the kind op­ti­mism you won’t see from the Trea­sury.

The prob­lem is that the most im­por­tant Brexit depart­ment is not that for Ex­it­ing the Euro­pean Union but HM Trea­sury. And if it’s be­ing run by some­one who seems ap­palled at the whole idea of Brexit, then this is a prob­lem. If the Trea­sury won’t fund a “no deal” plan, there will be no plan –which weak­ens the whole gov­ern­ment. To send David Davis to talks in Brus­sels un­der such cir­cum­stances is, as Ge­of­frey Howe might have put it, send­ing the open­ing bats­men to the crease only for him to dis­cover that his bat has been bro­ken by the club trea­surer. As the cap­tain looks on, help­lessly.

As one of those tipped to suc­ceed Mrs May puts it: “There is one root prob­lem, in all of this, and that’s lack of lead­er­ship.” No other Prime Min­is­ter would tol­er­ate such be­hav­ior from the Chan­cel­lor, at such a del­i­cate time. Yet again, we hear the most calm and co­her­ent voices com­ing from out­side the Cab­i­net: Kwasi Kwarteng yes­ter­day join­ing Ja­cob Rees-mogg and Do­minic Raab in try­ing to make sense of the mad­ness. If the Prime Min­is­ter can’t, some­one else must.

This time last week, Mrs May was won­der­ing if she can carry on as leader. The an­swer is that she can, but as long as she be­haves like one. This means telling her Chan­cel­lor to make bet­ter prepa­ra­tions for a “no deal” sce­nario, or re­plac­ing him with one who will.

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