One of the brightest stars of the 2010 intake is already an established minister. What next for Sajid Javid?
Sajid Javid is sharp, razor sharp. Pointing to his shaved head, the Economic Secretary to the Treasury says proudly that his distinctive hairstyle (or lack of one) is all his own work. “Gillette Mach 3 Turbo, takes me two minutes,” he smiles.
Self-reliance, efficiency, cutting to the chase are characteristic features of a man whose impact in Government has helped him underline a reputation as one of the brightest of the 2010 intake’s rising stars.
While others have failed to live up to their promise or are still waiting for promotion, Javid has spent the past year taking on increasingly important roles at the Treasury, covering everything from the Help to Buy scheme and retail banking to pensions, tax credits and payday loans.
With the mini-reshuffle still planned for this autumn and Javid seen as a candidate for bigger things, George Osborne may have a battle keeping him. Javid is careful to stress how much he loves his current post and the personal debt he owes to the Chancellor (who took him on as his PPS in 2011), though it seems inevitable he’ll move up at some point, either inside or outside the Treasury.
Yet rapid advancement seems to come as second nature to the Bromsgrove MP. Unashamedly ambitious, but lacking the sense of entitlement that can plague some of those tipped for greater things, he is certainly used to climbing career ladders.
After becoming a bond trader on leaving university, he rose to become one of the youngest ever vice presidents of Chase Manhattan bank at the tender age of 25. He later became a director of Deutsche Bank and ran its global credit arm in Asia.
It’s a background that has helped hugely in his current role. “I spent 20 years in the financial markets. My specialisation was fixed income markets, I used to buy and sell bonds working on the trading floor for many years,” he explains.
Ever keen to get in a jibe at Labour, he points out the UK was in danger of its very own default in 2010 and says that the Government’s relentless focus on deficit-cutting is still the biggest difference between the two parties.
“You only have to look at the countries I specialised in which were in emerging markets, countries that defaulted on their debts in Latin America, Asia, Eastern Europe. I’ve seen the problems of the past. I’m not saying our problems were anywhere near as bad as that but they could have been had we continued on the trajectory [set by Gordon Brown].”
Not strictly a poacher turned gamekeeper, he nevertheless says his City experience has been an advantage. “I’ve definitely found that my hinterland is very helpful in this job because a large part of what I deal with, the retail banking, consumer banking, the pensions industry, I don’t have to spend too much time studying the background because I’ve been there on the coalface. I can focus very much on getting the right policy solution.
“It also means when I’m speaking to bankers that they are maybe less likely to educate me on what they do and how important it is because it is difficult to tell me something is black when it is actually white. As a result maybe they cut to the chase a lot quicker.”
An ardent admirer of Margaret Thatcher, not least for the way she opened up the City to more (and foreign) competition after the ‘Big Bang’, Javid recalls his time in finance fondly.
“It certainly wasn’t mundane. Working on a trading floor in the City, it is fast paced and it is dynamic, it’s very pressurised, there’s a constant focus on competition, trying to be that bit better than others, you are surrounded by a lot of talent. People in the industry are academically smart, street savvy as well. One other thing I would say is that it is generally speaking very meritocratic and more meritocratic than most other industries and sectors.
“In fact that’s why I got a break. I didn’t have any background in finance, my family didn’t know anyone who worked in a bank until I started working for one myself. My dad was from Rochdale and drove buses. And as they recruit people, the City is colour-blind, at the end of the day all they are interested in is ‘can you do the job and can you come and make money?’ They don’t really care what colour you are, what sex you are, what background you have.”
But it wasn’t always thus and Javid points out that when he first applied for a City job in 1990 there were still “maybe too many barriers and special interests”. He recounts an anecdote that lays bare just how far some parts of the Square Mile at the time had failed to catch up with the Thatcher revolution.
“I was interviewed by British banks and I was interviewed by [US banks] Chase Manhattan and Merrill Lynch. I got offers from foreign banks, I didn’t get an offer from the British banks. I can think why…
“At my Rothschild interview, I can remember it very well, the people interviewing me were seven men sitting on a stage. I was standing while they were sitting. The first question was what school I went to. And when I told them it was Downend in Bristol [a state comp in one of the poorest parts of the city] I don’t think they were impressed. And then they asked me what my dad’s job was and it basically ended with ‘had I thought of applying to a high street bank?’.”
He had a radically different interview with American bank Chase Manhattan. “When I eventually got the job I remember asking the head of HR why they hired me and they said ‘because you don’t wear green wellies and because you’ve got hunger in your belly’.”
Javid went on to start work in New York and was put on ‘LDCs’ (“‘less developed countries’, which then became known as ‘emerging markets’, it’s more PC,” he jokes). He worked in defaulting nations Argentina and Brazil, finding a knack for trading and hard-nosed negotiation. “I did really well and promotions kept on coming.”
But did he end up dealing in the complex financial instruments and derivatives that are now indelibly associated with the crash of 2008? The minister points out that the key issue is whether people entering into such transactions “actually know what they’re purchasing”. “At the end of the day, derivatives are a mechanism for shifting risk. Partly where it started to go wonky was because people entering into transactions didn’t appreciate that they had shifted risk, not eliminated risk.”
Yet he also stresses that central banks were partly to blame too as they flooded the world with money because of low interest rates, forcing traders to look for any advantage on tight margins. “Partly the authorities were to blame for not regulating properly. But also as a banker for 20 years, whenever there was a financial crisis you could guarantee that the Federal Reserve would cut interest rates to a record low to in effect indirectly bail out banks.
"That became an understanding on trading floors around the world, that bankers felt interest rates would be cut, it became known in the industry as ‘the Greenspan put’ [short for a ‘put option’, a policy that led to greater risk-taking]. Gordon Brown had his version of it when he stood up in Parliament and he had said he’d abolished the cycle of boom and bust, which was exactly the same concept which Alan Greenspan had…if you were a banker and believed what Gordon Brown told you then you would think ‘why don’t we take on more risk because there’s going to be no bust?’ That encouraged excessive risk taking. It helped to feed the risk-taking frenzy.”
Still, was he one of the few canaries down the coalmine and did he have any idea of the coming crash? “I knew along with many people at Deutsche Bank that ‘this party is going to end’, we didn’t know when but at that time I was running the trading floor in Asia. It was both my view and that of many other risk-takers of Deutcshe Bank. We didn’t know when things were going to go wrong but felt strongly that there would be a correction in the markets at some point. The timing was the difficult thing.
“Markets work on a herd instinct so that when things happen they happen very quickly. I would go so far as to say it was one of the major reasons Deutsche Bank was not bailed out – they were just a little bit more prepared.” The pride in his voice at his former employers resisting bailouts is palpable.
After his 20 years in finance, Javid’s thoughts turned to Westminster. He’d studied politics and economics at Exeter (and is a contemporary and friend of ConservativeHome founder Tim Montgomerie) and was keen to get involved. With the expenses-fuelled departure of Julie Kirkbride, he was overwhelmingly selected to fight Bromsgrove and took the seat comfortably in 2010. His talents were quickly spotted by the Chancellor, who has supported him ever since.
“I’ve been blessed with having both a very good boss and a mentor throughout my working life. That started when I was at Chase [Manhattan] to help me get along and do well and it just happened to me that way when I entered politics too,” he says.
“The world of politics is very different to the business world. My first opportunity was as PPS to John Hayes, who was great. The real big break was getting asked to be George’s PPS which taught me a lot about how Government works at very high levels and how decisions are made, but also what I was lacking. I had a background in finance but I didn’t have a background in politics. I needed to learn much more about the process, I still do. I still feel that there’s lots to learn and George is a great person to learn from and be a boss at the same time.”
One reason Osborne likes his minister is his radical edge, and in many ways Javid sounds more economically dry than even his boss. He clearly loathes moral hazard and has said RBS and Lloyds should not have had state bailouts. Early in the Parliament he had a 10-minute rule bill to cap the national debt at 40% of GDP. Does he still back the idea?
“The fact that I had a 10-minute rule bill tells you what I think about the concept. One of the joys of being in Government is collective responsibility,” he smiles. “We look at these issues together. Sitting in this job now, there are things, ideas and future policy, you can come up with, but the approach I take is to discuss them robustly internally, in private first, to try and convince my colleagues and also listen to their ideas and then hopefully have that influence on policy. And I feel in this role that I am getting an influence on policy which is ultimately at the end of the day why I came into politics. You have ideas that you would like to see considered and seriously taken.” Could the idea make the next Tory manifesto? He doesn’t rule it out but is suddenly, uncharacteristically coy. “I’m putting forward my ideas for the manifesto. And when they come out you will be able to look at them.”
But his stance is clear: “I certainly believe in lower taxes. Economically they are helpful in terms of the incentives they create. Also, I just think out of principle, it’s right that people get to keep more of the money that they actually earn themselves. I’ve always been a low tax Conservative. I think that when it comes to future tax cuts, they have to go together with the other objective we have, which is a lower deficit. The kind of tax cuts you can make that quite quickly can start bringing in extra revenue for the long term because of the economic activity that they generate. I continue in my job to see it as my responsibility to keep looking for other tax cuts we can make and help build that case.”
The minister is also a noted Eurosceptic. Though the eurozone has turned the corner, he’s still wary and is delighted the PM has promised a referendum on the UK’s membership. “The best outcome is we do have a renegotiated relationship. I’ve done thousands of negotiations in my job in business and you never go into a negotiation without some sort of weapons in your arsenal, so we are right to have a referendum as it increases our ability to negotiate. I think the European Union should be much more focused for us on free trade in goods and services. If the British people decide that they want to leave the European Union, that’s not something I’d be afraid of.
“In my 20 years in business I’ve worked around the world, I think we are already a global player, an international country when it comes to business. I want that to happen inside the European Union and we can reform it and focus it on trade and ensure it is not insular looking. We can all be better off inside the European Union if it can change some of its ways. But as I say, if the British people decide the decision is they want to leave the European Union, then that isn’t something that I’d be afraid of, I’d embrace the opportunities that would create.”
Raised as a Muslim but married to a Christian wife, Javid is in many ways a model of modern Britain as well as of social mobility. The couple have four children and the minister’s favourite pastime outside work is simply being with his family.
Family is deeply important to him, not least as his parents taught him of the virtues of hard work and self-improvement. His father, known as ‘Mr Night and Day’ because he had two jobs, started as a cotton mill worker before becoming a bus driver and then funding his own business. As the son of immigrants, he says it’s important to stress that many from ethnic minorities back the Government’s immigration policies. He rejects as a generalisation the idea that second generation immigrants are somehow 'tougher' on the issue than their parents, but says it's clear times have chaged.
“Our parents came here genuinely, my father was actually in his village in Pakistan and there were companies coming to recruit, begging him to come to Britain. At that time, with the nationality laws and with a Pakistan passport, he could come here quite easily.
“He came here, started working in a cotton mill in Rochdale and worked every single day of his life. He came here legitimately. Where there is zero tolerance among the community is where people come to Britain illegally or maybe even legally, but have no interest in working or contributing – just seeing what benefits they can accrue. There’s no tolerance for that.” He adds that the Coalition’s plans to charge health tourists to use the NHS are not opposed by the Asian community he knows.
But despite his own and his father’s admiration for Mrs Thatcher, the Conservatives remain hamstrung in chasing the votes of ethnic Britons. Is that more a question of culture than policy?
“It’s fair to say, the facts show that at the last election more people from ethnic minority backgrounds voted for Labour than Conservative and it’s natural for Conservatives to explore what are the reasons for it, going beyond just policy issues. My father’s time when he came to Britain, I remember him telling me stories about some of those posters ‘If you want a nigger for a neighbour, vote Labour’. These kind of things stick and seep into people’s consciousness and they pass them on to their children. I’ve said in the past that what Enoch Powell said, people do remember that. He did not represent the Conservative Party’s opinions then, he got thrown out and even then there was a lot of misperception of what the Conservative Party stood for. But because the perception is there we are right to look at ways to try to change that.”
Of course, one of the best ways to change the party’s image among Asian voters is to have able, eloquent Asian ministers on the media putting the case as forcefully as a certain Sajid Javid has been. Put to him that his very presence in Government is a key to persuading ethnic voters that the party is for them, the minister has a glint in his eye. “Well, it can’t be
unhelpful, can it…?”
JAVID ON… CAPPING PAYDAY LENDER CREDIT RATES
“We now have a regulator with teeth. Part of those teeth is the ability for the new regulator to impose caps if it sees fit, to impose marketing restrictions, to even ban and shut down companies.”
JAVID ON… LABOUR’S SINGLE DIP
“The only recession this country has had in recent times was the one under the previous government. And not just a recession but the mother of recessions.”
JAVID ON… THE BANKING COMMISSION
“I’m not saying we won’t listen to the debates that take place in Parliament or elsewhere but our response was deliberately very comprehensive. And I think that’s where it will stay.”
JAVID ON… HELP TO BUY
“We are coming off an all-time low of housing starts…we only intended it as a temporary intervention and the FPC will review it in three years’ time.”
JAVID ON… HIS CHILDREN’S FAITH
“They’ve been to mosque and they’ve been to church. We are both quite relaxed about it, when they are older they can decide what faith is for them.”