Please see below my recent article for Conservative Home:

In the early days of this government, I was asked by the Prime Minister how I ran the Policy Unit for Margaret Thatcher. I sent him a presentation on options for establishing a strategic policy vision and direction, and briefly described the way Number 10 worked when I was a young senior adviser there.

I urged him to keep the crucial manifesto headline promises of levelling up, getting Brexit done and not raising the main taxes as central drivers of policy. The overall aim must be the greater prosperity of the many by expanding the economy, making and growing more things at home and showing how Brexit freedoms could lead to more and better paid jobs and more businesses.

These aims could then fuel matters for Prime Ministerial leadership and decision, and delegated matters for the different departments of state. Each Cabinet Minister should be told what is expected of them and how their department fits in with the general strategy. That needs to be agreed on appointment.

Thatcher had a much smaller staff at Downing Street than more recent Prime Ministers. There were three of us, senior civil servants, who talked to her a lot, knew her mind and helped her fashion government speeches, decisions and interventions and chair committees to resolve disagreements. The Principal Private Secretary ran her diary, ensured two way communication with all government departments and Ministers, organised meetings, sent out letters of confirmation and instruction following individual or collective decision and filled her daily boxes with work.

As Head of the Policy Unit, I provided briefs on all the main meetings she attended or initiated, ensuring her views and the strategic vision of priorities and aims could be reflected in what she and the government did. I sent her proposals to start work streams in government to fulfil manifesto and other promises, and to remove or amend departmental proposals that did not fit with the strategy.

I ensured she had bilaterals with leading Cabinet members to avoid misunderstandings and to enable them to voice their worries or request more support when carrying through agreed major policies. The Head of the Press and media department was her voice to the third estate, reflecting her views and answering criticisms as need arose. She had a Political Secretary for Conservative events and party correspondence.

She was pleased with the results of this structure and said she thought it helped her achieve more. For example I helped her drive through the whole wider ownership policy of everyone an owner. The work embraced home purchase, more self employment, personal pension savings, employee share schemes and the privatisation programme.

The Social Security Secretary led a wide welfare review with emphasis on personal pensions and other savings, the Treasury led the share ownership and privatisation policy , the Employment Department worked on qualifications, training and simplifying self employment, and the local government and Environment department pursued the housing initiatives led by Right to buy.

The system worked for a variety of reasons. The most important was we three knew her mind or made sure we found out her view on a topic before telling the rest of Whitehall or the press. They knew when we spoke we spoke for the PM. It was relatively easy for other departments to work out the view in many cases, as there were some clear precepts and priorities that would always influence decisions.

The occasional much-debated big speech charted the future in important areas and led to work across relevant departments to see it through to implementation. The speech was always thoroughly prepared and shared in draft with those Ministers likely to be affected. We tried to ensure there was always consistency, clear direction and language that made it relevant to people’s lives. I tried to keep our work strategic, as the PM should not try to do the jobs of Whitehall departments for them. Number 10 is a leader and change maker, not a means of implementing policy.

The work of the PM and Ministers was not done once the policy was announced. Indeed that to me was the formal commencement of the actions, not the end result after a sometimes long and argumentative process to arrive at an answer.

It was important to supervise implementation and check that all was working as intended. It would be no good for the PM to set out what she wanted, for there to be no follow up work to make sure it happened. This might well be the job of named Ministers, but for the big items there also needed to be reports back to the centre. The twice weekly briefing sessions for PM Questions ensured departments had to keep the PM up to date with topical or fast changing items.

The task of writing the big speeches gave me plenty of time with the PM on a regular basis for what was in effect a series of long seminars and reviews of government policy and actions. We checked the speech drafts for accuracy and for relevance to the state of play the government needed to manage or alter.

Policy Unit members had access to the PM on their specialist topics as well as through me. They did not have any licence to instruct Ministers elsewhere in government, and were urged to be careful if Ministers asked for a steer. There was no Policy Unit view for outside consumption, only the Prime Minister’s view. The Policy Unit view was worked through and argued out in private and put to the PM who could run with it if she wished.

We adjusted the view in the light of her responses. I met the Special Advisers in other departments from time to time but did not regard it as any part of my job to guide or employ them. Our relations with Whitehall usually took place via a formal Private Secretary letter from Downing Street reflecting the PM’s view or informal guidance and arguments in official meetings preparatory to briefing Ministers or in our case the PM. I ensured the Policy Unit was at all times a working part of the civil service with career civil servants as well as directly recruited experts.

There is a modern relevance to all this. A Prime Minister needs a few advisers that he trusts who have sufficient delegated authority to get things done across Whitehall. It needs to be done in a constitutional way, respecting the fact that Cabinet members should be the main source of advice and information on their remits.

Where a senior adviser thinks a department and its Cabinet member are taking a wrong direction which can damage the overall government strategy and outturn that has to be put privately to the PM and the two of them have then to agree how change will be achieved with minimum damage and preferably with no press knowledge. There can only be one government policy at any time, so where there is disagreement advisers need to help the senior politicians arrive at a suitable collective decision.

This should not always be a compromise as sometimes one course is right and the other full of danger, so a clear choice needs to be made. Any good Cabinet Committee required careful preparation to ensure Cabinet members could freely express reservations amid criticisms whilst keeping the integrity and coherence of the overall aims and vision. Where the dispute was the usual Treasury versus spending department one the PM was usually the decisive voice. Number 10 needed a strong negative capability to stop needless change or complexity, as well as a strong positive view of what government could and should do to improve the lives of the nation.

Inflation usually kills magic money trees. Responsible advanced countries normally tell us there is no magic money tree, knowing as they do that their growth is soon killed off by inflation.

The magic money tree has been renamed Modern Monetary Theory. The idea is the Central Bank creates money in its accounts as only it can do, and buys up government debt with the money. The government can then issue more debt as there is a willing buyer at a low rate of interest. The government can afford more debt because the rate is so low, and because it owns the Central Bank who buys up lots of their debts anyway.  The state ends up owing lots of money to itself.

Using the Central Bank and government debt is just a complex way of disguising it. They could as well simply instruct the Central Bank to print  the extra  money and give it to them to pay the government bills. Indeed both the Fed and the Bank of England had powers to do this during the pandemic.

If you carry on doing this when the economy is near full capacity it is very inflationary. Government gives itself money to buy goods that others are trying to buy and to hire Labour working for others. Only by bidding up prices and wages does the state grab these  resources . Others who still want them either go without or bid higher again. An inflationary spiral sets in.

Now the U.K. economy is back to pre pandemic levels with low unemployment there is no scope for magic money trees and considerable inflation risk. Inflation is too much money chasing too few goods. Government has to incentivise more production to help bring the price rises down. It needs to change its pro imports policies for energy, high energy using industrial products and food.

The Establishment tells us the Bank of England is independent. They remind us that the Bank is charged by law to control the creation of money and the rate of interest in order to keep inflation at around 2%. Inflation is currently at 5.4% and is widely forecast to rise above 6% by April, more than 3 times the target. Inflation as  measured by the old RPI index is already at 7.5%.

It is curious that the defenders of the idea of an independent Bank do not criticise it for such a  failure, nor offer explanations of why this  has happened. Most are happy for the government to take the blame , forgetting they could not tell the Bank to print less money or to raise the interest rate.

I supported the massive creation of cash in 2020 and the ultra low rates. The anti covid measures were a huge hit to output and incomes so there did need to be a large offset. When the recovery gathered pace in 2021 I advised the ending of money printing or QE by the Bank. It was obvious inflation would take off if the Bank kept boosting the amount of money.

The government got away with the massive money printing when the economy  was in covid measures depression. They could allow the Bank to print and they could spend it routed to them as near zero interest loans which the state then bought up. These are not state debts we now have to pay off as the state owns the debt as well as owes it. Once the economy showed strong  recovery then printing, borrowing and spending returned to being inflationary as Latin America and Zimbabwe can tell you.

The Bank was right at the end of last year to at last end QE or money printing. The  Fed has carried on printing  and has presided over a worse inflation than we have. It should stop immediately. The Bank of England should now be careful not to overdo further tightening as they and the Treasury are now slowing the economy too much. It would be quite wrong for the Bank to tighten when the Treasury is about to increase taxes far too much.

Russia plans to play China and Europe off together over the supply of gas. They are in discussion over selling more of their gas to China via a new pipe still to be built at the same time as they are seeking to close the deal on further supply of gas to Germany via the new Nord Stream 2 pipe now completed. Hungary has signed up to fifteen more years of Russian gas with supply via a southern pipeline that avoids Ukraine, the source of transit capacity under the prior agreement.

Now the EU has confirmed the important role of gas today and going forward in  the EU energy mix this strengthens  Russia’s bargaining position as a big supplier of a crucial source of energy for much of the continent. Hydrogen is some way off as an alternative gas to meet emissions targets next decade and beyond. The USA can only complain that her European allies have weakened the western position. The current US/Russia disagreements about Ukraine are complicated by the gas route to western Europe across that country, with Russia clearly keen to cut off Ukraine’s revenues from this source.

The UK currently is not reliant on Russian gas. We depend on Norway and Qatar primarily. It makes producing more of our own gas even more important to our national security and reliability of supply. We should reduce our import dependence on the continent for both electricity and gas, as the two are interlinked with gas still an important fuel for power generation as well as for the direct heating of factories and homes. With Germany closing all her nuclear power stations and pledging to run down her large coal generation sector, and with Poland also under pressure to cut out the coal, the continent will  have an even tougher energy position to negotiate. That is why the UK needs to concentrate on self sufficiency, and on ensuring a margin of capacity over demand even when the wind does not blow. The EU has ambitions over Ukraine which are no longer partly our responsibility.

The conventional media, the Labour opposition and a handful of Conservative MPs are out to topple the Prime Minister. The method is well known, as it was used extensively against Mrs May and took a long time to get rid of her. That was animated by a major battle over policy, where those who wished to see her replaced were shocked by her close working with the civil service establishment and opposition parties to dilute or thwart Brexit. We felt this was against the clear wish of the  public in the referendum and against the spirit of the Conservative Manifesto. The way the civil service negotiated, surrendering our position with the approval of the PM,was in conflict with  the strategy the Brexit Secretary was trying to pursue and was unacceptable.

The current rebels do not seem to be united in fundamental criticism of policy or in defence of the Manifesto. They are trying  to get to 54 Conservative MPs  who want a vote of No Confidence based on the strong feeling shared by many that senior officials in Downing Street who devised elaborate rules for the rest of should  have led by example. The PM has apologised and claims most of this happened without his presence or initiation . The  facts and gloss placed on this by Sue Gray who is investigating will shape how many more Conservative MPs seek a change at the top as a result.

It is difficult to buy into the idea that whips could credibly threaten to remove grants from constituencies of MPs who were disloyal. Money  is distributed on the decision of Ministers, not whips. Ministers are guided and  supervised by officials when allocating money to ensure the law and budget rules are followed. A Minister cannot make a decision based on favouritism or spite.

The rebels need to recall that they need 180 Conservative MPs  to get rid of the PM. They have to win the confidence vote as well as securing it. They may be holding back some letters pending the Gray Report or because they judge they are a long way off having a majority. They may simply have failed to persuade more than a handful that now is a good time to change Prime Ministers.

For me what matters most is how the PM now develops a post lockdown agenda. There needs to be an early move to take control of GB/ NI trade. There needs to be a change of energy policy. We need tax cuts. If the PM can complete Brexit and tackle the cost of living crisis he can ride out party gate. If he does not use the majority to help people be better off then partygate and the poor organisation of Downing Street will weigh ever more heavily on the minds of MPs already cross about recent news coverage.