Jeremy Hunt has described how he won the trust of HM Treasury civil servants when he became chancellor in 2022 amid a period of turmoil in the department.
In a whirlwind 50 days where Liz Truss led the country in September and October 2022, Treasury permanent secretary Tom Scholar was sacked by chancellor Kwasi Kwarteng, who was then himself dismissed by Truss and replaced with Hunt following a mini-budget which spooked the markets – with Truss then calling it quits a week later.
Hunt, who remained as chancellor in Rishi Sunak's administration until Labour’s general election win last July, has explained what it was like to come in as chancellor at this tumultuous moment in an interview with the Institute for Government for its ‘Ministers Reflect’ series.
“I think it helped that I had been a minister before,” he said. “I will never forget the first meeting I had in the chancellor’s office in the Treasury, which was probably about six o’clock on the Friday evening. And you know, there’s a big table in that office and there were probably about 14 of the top civil servants from the Treasury there, led by the permanent secretary James Bowler, and that was their first chance to size me up, really.
“My default is that you trust people until they prove you wrong, and this proved to be a completely trustworthy group of people – very smart. And what I really liked about them was that they were not afraid to say what they really thought and so we could have very open discussions. I’d say what I thought, they would give me their instant reaction – it was a proper discussion.”
Hunt said he “probably had to earn that trust” because of Scholar’s sacking just a week earlier, and he suspects, “with the benefit of hindsight, that one of the reasons the mini-budget went so badly wrong was because officials didn’t want to tell Kwasi Kwarteng if they thought that elements of it were a bad idea, because their boss had just been sacked, and so… there was a kind of nervousness there”.
Hunt said Treasury officials had also “lost a lot of confidence” in ministers because “the government had just announced a budget that had unravelled, and that’s the Treasury’s patch.
“Patently things weren’t going well and we were having a market collapse, so I think there was a lot of nervousness in the Treasury about all those things going wrong in its territory,” he said.
Hunt said he therefore “needed to establish a working relationship of trust” and that the first thing he said to the senior officials was “we’re going to do what’s right for the country, even if it means that I’m a Ken Clark chancellor who bequeaths a healthy growing economy to his political opponents – we have to do the right thing for the country.
“And I hope that contributed to the trust that built between us,” Hunt said.
Hunt added that the department is “full of very smart, very committed public servants” and that he found “it was really easy to have very open discussions about radical changes that I wanted to make or was considering making”.
He said the system “depends on civil servants being able to talk really openly to ministers about things that they know have worked in the past and things that they know have failed in the past” and “as a minister, you have to have the confidence to listen.
“I found Treasury officials brilliant at that, but I would say it was equally important when I was foreign secretary and I was talking to people who were experts, for example on policy towards Iran,” he added.
“By the same merit you need to listen but also be able to challenge and have a good discussion, and then you generally get the right outcome.”
Growth focus should be embedded ‘in Treasury DNA’
Hunt said the thing he felt was “missing” at the Treasury when he arrived was a lack of “discussion about growth, about how you actually grow the size of the pie” and that he spent a lot of time on growth initiatives as chancellor.
He said it was “not a problem to make sure that growth got enough focus when I was chancellor, because I was the boss” but that he didn’t manage to “permanently change the institutional focus so that it remained that way after I left”.
He said he thinks Rachel Reeves “in fairness, is very interested in growth and I’m sure they’re carrying on having lots of discussions about things like planning reform” but that he believes “it should be as much part of the DNA of the Treasury as the tax and spend side”.
Mission-led government is a ‘PR construct’
Hunt also took aim at Labour’s “mission-driven” approach to spending.
“I’m not really a fan of PR [public relations] constructs like ‘mission-led government’,” he said. “I think you need to have a tangible target that you can really hold ministers to account, and it’s got to have the personal commitment of the prime minister and the chancellor – that’s much more important."
However, Hunt said he is also “a little bit sceptical of the use of government targets to get results.
“I understand why we do them a lot, but I think in practice after a year or two, people find a way to game a target,” he said.
He added: "I think the real thing that matters is that the prime minister and the chancellor need to be very clear in their mind about the big long-term changes that they want to outlast them when they’ve left the job. And they need to make sure that they carve out enough of their time on a weekly basis and their brain space on those long-term changes, and not just on the short-term firefighting.
"And I think the risk is you forget that the window you have to really do those changes is your first year or two in a parliament."
Hunt said he found that the best way of carving out time for strategic long-term change was to have all his meetings on the Monday, and that he shared this tip with the health secretary Wes Streeting in December.
"A month ago I met a Department of Health official who said: 'You’ll never guess what’s happened, but he started doing all his meetings on Mondays just like you!'," Hunt said.
Civil servants aren't 'main culprits of watering down policy'
In the interview, Hunt talked about the importance of embracing policies that are "sufficiently radical, so that when they end up being watered down by the Whitehall machine – because this person doesn’t like this element of them, or these people are sceptical of that element – that you still end up with something that represents meaningful change".
Pressed on who he meant by the "Whitehall machine" , Hunt said: "Well, it’s sometimes the civil servants who say, ‘Oh, this policy is a bad idea because it’s going to upset the Americans’ or, ‘This policy is a bad idea because it’s going to lead to an increase in regional disparity’, or whatever.
"But it’s more often the politicians in the system, the No.10 spads [special advisers] who say, ‘Oh, don’t do this because it’s going to upset this person’ or, ‘Don’t do that because it’s going to upset that person’ – and that, I think, is one of the things that can lead to really bad policy making. We try so hard to avoid upsetting different groups of people that in the end the changes governments make become vanishingly small, and they think they’re doing something really big.
"You know, ‘the biggest investment in defence since the Cold War’, or ‘the biggest package of measures to tackle child poverty for 30 years’ – everyone loves those slogans. But actually when you look at the substance, it’s often been really watered down, and you end up with a cycle of over-promising and under-delivering which leads to popular cynicism that elected politicians really aren’t making the big changes they promised."