There hasn't been a ‘big chancellor' since Osborne: IFS chief gives final mark

The Guardian

14-06-2025

'In my lifetime, who have been the big chancellors?' says Paul Johnson, as he prepares to hang up his spreadsheets as the director of the Institute for Fiscal Studies. 'You've had Healey, Lawson, Clarke, Brown. Arguably Osborne. We haven't had one since then. They're the long-lasting ones.'
The fact that Rachel Reeves is not on that list will elicit no surprise in No 11, where Johnson is seen as a nitpicking critic, naive about the constraints of politics.
Supremely confident and resolutely wonkish, throughout his 14 years at the top of the IFS thinktank the 58-year-old economist has exuded a baffled frustration at the standard of political debate about fiscal policy.
He is critical of George Osborne's deep spending cuts, which had 'really negative long-term effects' on some public services. But he praises the former Tory chancellor's single-mindedness.
'You knew where he was coming from, because he had a pretty clear idea on the fiscal side, at least: we're doing austerity, we're bringing the size of the state back down to where it was pre-financial crisis and we're largely doing that through spending cuts.'
By contrast, he expresses exasperation with Labour's partial U-turn on the winter fuel allowance – though he admits the pressure to do so was external.
'I don't think people have any sense of scale,' Johnson says. 'This was partly the fault of the government, of course, but this was a small thing, a billion pounds or so, which is now going to make virtually no savings at all.'
Reeves took the public by surprise when she announced the winter fuel cut, blaming what she claimed was a £22bn hole in the public finances.
Johnson, once a Treasury civil servant himself, concedes there is some information the chancellor could not have known about before Labour came to power. For example, the Home Office failed to account properly for spending on asylum seekers – but, he argues, both major parties were well aware there was a reckoning coming.
'We said that all the way through the last election. And the parties just said, 'no, no, no, no'. Until after the election. When they suddenly made up – or partly made up – 'oh, look, we've discovered a black hole. We never knew anything about this.' So it's really frustrating.'
Johnson reserves his strongest condemnation for Reform UK and the Green party, whose approach to fiscal policy during the last election he decries as 'outrageous'.
'I do put Reform and the Greens in exactly the same bucket here. Not just to be politically balanced, but because they are very, very similar, in the sense that Reform had, I can't remember, £100bn, £150bn of tax cuts and no spending cuts. They just said: 'We'll just get some efficiencies.' And then the Greens had massive unfunded spending increases.'
And Johnson sees this unwillingness to face reality as increasingly worrying, given the pressures on spending are only likely to increase.
'If you look over the next five to 10 years, what have we got coming down the line? We've got at least £20bn on defence spending, probably. Continued increases in health spending. Huge pressures on social care. Pension spending. You're going to lose £30bn of revenue from taxing petrol. You put all of that together and you've got a really big challenge.'
Labour has promised not to increase the main revenue raisers, including income tax, VAT and national insurance. But Johnson is sceptical that much more can be raised from the wealthy and insists moderate earners will eventually have to pay more, unless spending is slashed.
'There's a choice here. You can stop all sorts of handouts to pensioners, and you could ration some of the things that you get on the NHS. You could have less focus on some aspects of the education system. But if you want all of those things, then you'll probably going to have to pay more tax,' he says.
Surrounded by boxes in his utilitarian office in Bloomsbury, Johnson is preparing for a fresh start. He will shortly take up a post as provost of Queen's College at Oxford.
Sign up to Business Today
Get set for the working day – we'll point you to all the business news and analysis you need every morning
after newsletter promotion
Pondering how he will feel when Reeves delivers her second budget, and he is not there to deliver his familiar acerbic commentary, he says: 'It's going to be very weird in the autumn. I'll probably be sat in a committee meeting, and I will definitely miss it. It's going to be quite hard. I will miss the drama, the sense of being slightly on the inside, sort of explaining things to the public.'
Successive chancellors – Johnson has marked the homework of eight – have waited with trepidation for the IFS's assessment of their plans.
Jeremy Hunt, who held the post from October 2022 to July last year, said: 'Paul was often the swing vote as to whether a budget unravelled. You never really relax until after the IFS verdict.'
Some leftwing economists accuse him of being too sympathetic to austerity. 'I find it extraordinary how little accountability has been applied to the IFS, and Johnson in particular,' says James Meadway, who advised the former shadow chancellor John McDonnell and hosts the Macrodose podcast.
Whether his influence has been for good or ill, the era of economic policy Johnson has witnessed close up has certainly not been auspicious.
He arrived in post in 2011, when the scars of the global financial crisis were still visible. Fresh shocks followed from the Brexit referendum, the Covid crisis and the surge in energy costs after Russia's invasion of Ukraine – coinciding with Kwazi Kwarteng's brief tenure in No 11.
He says the two referendums on his watch – Brexit, and before that, Scottish independence in 2014 – were the hardest period for the IFS, because the institution took a clear view on the fiscal implications of the decisions, causing it to be accused of partisanship.
'We are narrowly economic. And so, in both cases, the economic and fiscal issues, I think were perfectly straightforward. But I think it's perfectly reasonable to have to balance them against other things,' he says.
'I think there is a perfectly good case for Brexit from a point of view of sovereignty and controlling your borders and so on, but we know that over the short and medium run, it's going to have a negative economic effect. Of course it is.'
As far as today's government is concerned, he detects an unwillingness to confront the public with unavoidable tradeoffs.
Asked whether he is optimistic about the future for fiscal policy, as he heads off for a quieter life, Johnson says: 'I have moments of optimism. I had a moment of optimism at the Labour party conference last year when Keir Starmer basically stood up and said: 'There are tradeoffs here and, you know, we want growth and if that means a road through your back garden, tough.' And I thought here's a prime minister who's actually talking about tradeoffs. It's been less obvious since then.'
Returning to the winter fuel debacle, the eternally bemused Johnson says: 'They [ministers] feel pushed by us, the electorate. Now, is that their fault for not selling it properly? Did they announce it at the wrong time? Is it the electorate's fault for not being serious? Is it just a reflection of our fractured country? I don't know, but it's quite hard to be optimistic, because you do think, 'if you can't do that, what the hell can you do?''