Keep calm and carry on
He’s known as the Treasury’s ‘safe pair of hands’ – but when it comes to fiscal Nimbys, David Gauke is more than capable of packing a punch
David Gauke’s ministerial office has everything a Conservative Exchequer Secretary to the Treasury could possibly hope for: huge paintings of previous reforming Chancellors, a Tax Personality of the Year trophy and a ‘Pin-Up of the Month’ certificate from the TaxPayersAlliance. The most important feature of all, however, is a sense of quiet calm.
And calmness under pressure, together with a wickedly dry (not to say gallows) humour, has become Gauke’s forte. Fielded repeatedly by the Treasury to combat the ‘Omnishambles’ narrative in the wake of the Budget earlier this year, he was not surprisingly one of the key ministers George Osborne held onto in the reshuffle.
Having had to navigate more U-turns than a Top Gear star-in-a-reasonably-priced-car, Gauke has shown a sangfroid beyond his 41 years. His deadpan demeanour also helps lighten the load. Pointing to his Tax Personality of the Year 2011 award (about which he once told MPs “I find it quite emotional to talk about”), he jokes that its title is ‘perhaps oxymoronic’.
A former tax lawyer whose wife is also a tax expert, he’s certainly found his metier in his current post, which he also shadowed for three years in Opposition. Fresh from a trip to the US where he banged the drum for Britain’s lower corporation tax and greater tax transparency, he’s already preparing for the Autumn Statement. And despite the heavy criticism, he insists the March Budget will be remembered because it “did a lot of really good bold things with our taxes”.
“Although we’ve taken a lot of criticism on cutting the 50p rate, I think the 50p rate was a big sign hanging over the UK economy saying ‘Britain is not open for business’.”
On the vexed issue of pasty taxes, he displays a stoicism that verges on the indefatigable: “I’ve worked out that the £170 increase in personal allowance benefit to taxpayers was enough to pay for 1,300 hot Greggs’ sausage rolls..” He adds the big picture is what matters: “Sometimes, when there’s a huge row over something which is very small in terms of its fiscal impact, it’s better to address that and deal with the distractions and focus on those big issues.”
Gauke gets on well with Danny Alexander but there’s a hint of frustration that Coalition leaking undermined the message earlier this year: “Truth be told in this Budget there was a lot of information that was out there earlier than there should have been and I don’t think that made anybody’s life easier.”
At a time of cuts, Gauke is proud that the Coalition invested in HMRC in November 2010 to ensure it had enough resources to tackle tax evasion and strengthen the large business service.
“Actually it even predates that. When I was in Opposition shadowing this job as part of the usual discussions that Opposition frontbenchers have with civil servants, I said to senior people in HMRC ‘if you think there are particular areas where you think reinvestment would be useful, more money to get greater yields then we are very open to that.’ I think that was a contrast to what HMRC had generally experienced up until that point, they felt they were always the whipping boy they got the toughest spending settlement s consistently in the last Parliament.”
As a Eurosceptic and a man who sees up close the Treasury’s cuts, does he have any sympathy with colleagues who want a cut in the EU budget, not just a freeze? “Yes I do but I think we also have to work on what we can actually achieve. Is there scope for a reduction in the EU budget? I think there’s a very strong case for saying there is, but you can only get that if there is widespread support and is there a consensus for that? It doesn’t look like it.”
When asked about the Labour charge that George Osborne is a ‘part-time Chancellor’, Gauke is suitably loyal. “I see him all the time. He’s very, very engaged in all Treasury matters. As far as political strategy is concerned it’s not as if that is a mile away from having an understanding of the economy..my party is far more likely to be in power after next general election if we get the economics right. So having a strong Chancellor who has influence over a range of Government policies..is I think a very good thing. But George is very focused on the economy, he’s very much on top of it.”
One area where Gauke is set to be called on again to defend the Coalition is the looming child benefit cuts for those earning over £50,000. Some say the Chancellor is ‘happy’ to have a row over this as it rams home the ‘all in this together’ message. Gauke disagrees: “We are not trying to engineer a row over this. It’s going to have a significant impact for those of us affected but the point we would make is that it is right when we are making difficult decisions, particularly on welfare, that that section of the population the top 15-10% make a contribution.”
He accepts that there are people “on £60,000 who won't feel that they are, sort of, super-rich” but insists “the reality is that if you are earning above £60,000 it does put you in the top ten per cent. It might not feel like it, but it does.”
As for fears that HMRC are braced for a bureaucratic chaos, Gauke insists that the new online self-assessment arrangements is “manageable” and means “there shouldn't be the, you know, administrative nightmare, that people are suggesting, although, no doubt we'll… read plenty of newspaper stories saying that it is. I suspect the reality is that this will work alright.”
And what about the Gauke household? The Exchequer Secretary is father to three boys and takes home a ministerial salary that places him comfortably above the threshold. That’s £2500 less in the family budget per year. “Well, I think, we'll just have to cope”, he replies after some hesitation. “Households, I suppose, have to live...we all have to live within our means…just like the country.”
Gauke then adds a caustic swipe that seems direct as much at Tory as Labour critics of child benefit cuts: “I think there’s a lot of people who are in favour of reducing the deficit but then when it’s something that affects them there can be a degree of fiscal nimbyism. The reality is that every section of society is having to make a contribution.” He adds: “We can’t pretend that there can be sections of society which we can completely protect from deficit reduction…”
But there is one particular section that seems immune so far: the wealthy elderly and their winter fuel allowance, TV licences and other universal benefits. Looking ahead to the post-2015 landscape for such benefits, Gauke rules nothing out: “What will happen in the future will happen in the future”.
And as if to show the Treasury’s willingness to look at benefits across the spectrum, Gauke points to the abolition of age-related allowances in the Budget as “as sensible policy”, despite it being derided as a ‘Granny Tax’ in the post Budget wash-up.
“I believe some people have used that phrase”, he says with a wry smile when reminded about the term, but insists “to some extent” the row has now died on over the abolition of an “unjustified complexity in the tax system.” “It's a matter of principle. Why should your personal allowance be higher when you're 65 than when you were 64, or, higher still when you're 75?”
So could pensioners be convinced on cuts to elderly benefits by similar appeals to reason, for example if it is put to them that they would be helping future generations?
“I think we'll cross that bridge if and when we come to it” Gauke replies, before suggesting that the age-related allowance row is an example of an argument being won. “Once we kind of got the message over and it had been explained, you know, quite a lot of pensioners… took the view that that was reasonable and would expect to make a contribution towards deficit reduction. But I would make those remarks very much specifically related to age-related allowances.”
Gauke is a great believer in tax transparency. So, was it a good idea of the Greek journalist Kostas Vaxevanis to print details of the Swiss bank accounts held by Greeks? "The point I would make is the UK HMRC have made use of data that has been obtained from whistleblowers and we are determined to make use of it, quite a lot of money is coming in as a consequence of that. It is important that the UK does have a culture where people pay their taxes, 92% of people pay their tax that is due, That’s a really important culture to have and one worth preserving. As a Government we are very keen to do that which is why we put strong messages out about evasion...On tax transparency, I’m in favour of taxpayers being able to see exactly what they’ve paid"
For a markedly reliable minister, Gauke did seem to drop the ball this summer when he told the Daily Telegraph that it was ‘morally wrong’ to play cash in hand to get discounts. “If people look at the quotes as to what I actually said, as opposed to the headlines, I very much stand by that point. I don't think it is right to… try to negotiate a discount if you're helping somebody evade paying taxes.” But otherwise? “It's perfectly reasonable to pay cash. It can be the most convenient thing to do, and if you're paying your window cleaner, you know, I've absolutely no problem with that at all” he replies. ”Getting a discount I think is a problem and I think it would be surprising if a Treasury minister thought otherwise.”
So has he ever paid cash-in-hand? “Yeah, I mean I will pay our window cleaner, you know, 20 quid however often he comes round” he replies. “I've no problem with that at all. The problem is, as I say, it's negotiating the discount.”
That experience aside, David Gauke has established himself as the classic ministerial ‘safe pair of hands’. But as others, such as Justine Greening and Mark Hoban, move on from the Treasury while he stays put, perhaps he has become a victim of his own success?
“That's a very kind way of asking the question” he replies, smiling. ”I'm delighted to be doing the job that I'm doing. The Treasury is at the heart of all Government decisions and, you know, to be honest I enjoy working with George. I'm in no hurry to move on to anywhere else. I certainly don't consider myself a victim to still be in the Treasury.”
When asked to name his favourite Chancellors in history, Gauke instantly replies ‘Nigel Lawson’, before swiftly adding ‘Geoffrey Howe’. In fact the portrait of Henry Pelham, the 18th century deficit-cutting former Chancellor and Prime Minister, that hangs in his office is in part a tribute to Lawson, who put the painting up in his own room back in the 1980s. State-educated but a child of the Thatcher era, Gauke is as far from the ‘Tory toff’ stereotype as you can imagine.
Indeed, when the minister isn’t pouring over the finer points of tax policy, he keeps an eye out for his childhood football team, Ipswich Town. Given the Tractor Boys’ fading fortunes, perhaps the experience has been good practice for dealing with bad news – at times a familiar experience for this Government.
Gauke laughs loudly. “I can be grateful that however hard it gets [ex-Manager] Paul Jewell has had a harder time of it than any ministers – until his recent departure. Most of the last 30 years have been a period of gentle decline. That can toughen you up a bit.”
To make matters worse, Ed Balls is a fan of Ipswich’s great rivals – and currently more successful - neighbours Norwich City, and Gauke recalls a debate on a finance bill clause relating to the Champions League which “ended up in a fairly lengthy debate on members of the committee’s footballs teams – and there was quite a lot of banter about Ipswich and Norwich.”
Gauke may laugh, but Balls’ brand of banter seems to get under the skin of David Cameron at PMQs. But why is the PM so riled by the Shadow Chancellor when George Osborne manages to stay calm during Treasury Questions?
“Ed is fairly incessant. If you are at the front bench it is fairly constant. There must come a time for anybody where their patience could run out. That’s the nature of Ed…” Gauke replies. And Balls, he says, “has got the shortest temper of anyone you would find” – so when “the Prime Minister described him as the most annoying man in politics, I could see where he was coming from.”
As the Autumn Statement gives way to the New Year battle over child benefit, that contest between the Tractor Boy and the Canary – and his party’s own ‘fiscal Nimbys’ - looks like it will get even more of an edge.