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The rise and decline of the No 10 Policy Unit

Fifty years ago, Harold Wilson instituted the team of advisers that would help shape modern Britain. Will Keir Starmer learn from their example?

By Anthony Seldon

Ever since Ramsay MacDonald headed the first exactly 100 years ago, Labour governments have begun with a bang and ended with a whimper. No bang was more instantaneous than Gordon Brown granting the Bank of England independence within a week of the May 1997 general election. But renewal in office subsequently has been a challenge for all Labour governments.

Will Keir Starmer be able to avoid this fate? The Labour leader is approaching power policy-light, and within months of entering Downing Street he may be swamped by infighting and budgetary woes. A strong policy offering from No 10 could make all the difference.

Fifty years ago, a Labour prime minister thought he had found the solution to renewal. “I want you to come into Downing Street to be my eyes and ears,” the party’s third prime minister, Harold Wilson, said to Bernard Donoughue, a 39-year-old academic at the London School of Economics on the eve of Wilson’s return to No 10 in 1974. “My biggest regret when prime minister between 1964 and 1970 was I didn’t have my own independent policy advisers in No 10,” he told Donoughue.

Wilson was particularly concerned by the lack of expert firepower to combat the power of the Treasury. In his first term, he had set up the Department of Economic Affairs (DEA) to counter it. An unholy turf war ensued in which the Treasury won out, and the DEA was closed in 1969. “I need you working for me at the heart of No 10,” he insisted to Donoughue, who recruited a team including Gavyn Davies, then aged 24, who went on to be chair of the BBC; Andrew Graham, later master of Balliol College, Oxford; and Dick Smethurst, later provost at Worcester College, Oxford. “I didn’t want anyone with political ambition. They had to be totally focused on the PM and task,” Donoughue, the father of the Policy Unit, now in his 90th year, told me.

Downing Street has changed little since the premiership of David Lloyd George (1916-22). It was he who established the modern No 10 and the vaulting ambition of the PM by creating the Cabinet Office – though after he fell in 1922, the centre contracted. As prime minister, MacDonald thus found in 1924 and then 1929-31 that he had too few levers to pull in No 10. The centre waxed during the Second World War, but it shrank back after 1945 under Labour’s second prime minister, Clement Attlee, and was still a tiny outfit when Wilson set up the Policy Unit 30 years later.

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The name “Policy Unit” was dreamt up after its advisers set about their work; it was never a perfect title. The body, which has survived for 50 years, had three initial characteristics: it worked solely for the prime minister, it was academically rigorous, and it operated independently of Whitehall officials.

Donoughue ensured no more than ten people ever worked in the unit and that churn was almost non-existent. Labour’s fourth prime minister, Jim Callaghan, had been foreign secretary since 1974 and had no direct experience of the unit: “Jim has asked me whether he should retain it. I told him he should keep both the Policy Unit and you,” Wilson confided in Donoughue. It soon proved its worth, giving Callaghan advice during the International Monetary Fund crisis in mid-1976 that minimised the damage from cuts – and won the grudging support of the Treasury.

The Policy Unit’s heyday was in its early and middle periods. Over the past 20 years, as it grew in size, and rival units such as the Strategy and Delivery units came and went, inertia has kept it alive. Margaret Thatcher after 1979 made the unit her own, and it gave her agenda-changing advice under three formidable heads, John Hoskyns, John Redwood and Brian Griffiths. The first, Hoskyns, went – without Thatcher’s knowledge – on holiday with Donoughue in the south of France to find out the tricks to making the unit work. John Major relied heavily on its then head, Sarah Hogg, as did Labour’s fifth prime minister, Tony Blair, on Andrew Adonis. Both Hogg and Adonis, in reflecting the different prime ministers’ thinking and temperaments, kept them on a strategic policy path.

But in the past two decades, the Policy Unit has been in decline, despite periodic successes when led by Nick Pearce (2008-10) under Gordon Brown, and by Camilla Cavendish (2015-16) under David Cameron. The rising numbers of special advisers flooding the corridors of No 10, causing general confusion, didn’t help. The former cabinet secretary Andrew Turnbull is convinced the policy unit became “too big and lost its focus”. As Donoughue foresaw, a Policy Unit staffed by people with political and personal ambitions no longer works effectively together as a team for the PM.

The declining effectiveness of the prime minister, addressed in the Institute for Government report launched by Major and Brown in March, has become a serious concern. Britain has a hollow centre, and strategic clarity is not helped by the PM and chancellor often having different agendas.

All Labour’s plans after 2024 will come to nothing if it wins the general election but can’t fix the hole at the centre. The party’s most effective prime minister, Attlee, created modern Britain with a tiny No 10 staffed with highest-grade officials and advisers. Starmer can’t go back to that, but a small, smart Policy Unit could give his premiership the turbocharge it needs.

Anthony Seldon was deputy chair of the Institute for Government’s Commission on the Centre of Government

[See also: What does Labour Together want?]

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This article appears in the 22 May 2024 issue of the New Statesman, Spring Special 2024