Who Should You Back to Be the Next UK Chancellor?

Paul Krishnamurty

June 14th, 2019

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• Sajid Javid to be Next Chancellor at 8/1 with Ladbrokes

The big political betting market of the moment is increasingly looking like a done deal. Boris Johnson has opened up a massive lead in the Conservative Party Leadership race - winning 114 votes out of a possible 315 in the first round. The former Foreign Secretary is now best-priced at just 2/9 with the best political betting sites.

A more competitive side market involves who the winner chooses to be Next Chancellor of the Exchequer. Ladbrokes are offering odds. In reality, this isn’t a wide-open heat, involving a small number of qualified candidates.

Chief Secretary to Treasury is the perfect prep

Recent appointments were all obvious. Philip Hammond was always among the favourites - boasting both economic policy experience and long regarded as an ally of Theresa May. His predecessor George Osborne was Shadow Chancellor and went into the 2010 general election as Chancellor-in-waiting. When Gordon Brown vacated the post to become PM, he chose a predictable, long-term ally in Alastair Darling.

Those last four Chancellors had all held the most important preparatory job - either Chief Secretary to the Treasury in government or opposition. That is effectively assistant to the Chancellor. Darling was Brown’s first pick after Labour won power in 1997. Osborne held the job under Michael Howard when the Tories were in opposition and when he was promoted by David Cameron, the role went to Hammond.

The second most important job obviously involves deep trust and a tight relationship with the PM. With signals pointing so strongly towards Johnson, the winner is extremely likely to be one of his most senior supporters.

Truss a worthy favourite and obvious winner

At risk of aftertiming, I’m afraid to report the best value has gone. Liz Truss was available at double-figures but the odds have crashed into 7/4 with Ladbrokes. She is the current Chief Secretary and, significantly, was a surprising early endorser of Johnson.

Truss is extremely ambitious and originally planned to run for leader. That always seemed delusional but, in reality, it was probably a move to enhance the value of her endorsement. Her swift embrace of Johnson surely came at a price. She will get a very big job and Chancellor is the natural promotion from her current position.

There is a good chance that this appointment is written in stone, so long as Johnson wins. I would price her still shorter - perhaps even odds-on - but remember, backing her effectively involves passing the first hurdle of a Johnson win.

Greg Clark could be Jeremy Hunt’s choice

Were Jeremy Hunt - the current second favourite - to win, different names come into the reckoning. Hiss most significant endorsers are Amber Rudd (12/1) and the unlisted Penny Mordaunt. The one I like on his list is Greg Clark at 25/1 with Ladbrokes - he’s a former Financial Secretary to the Treasury and is precisely the sort of quiet, competent type that would please the markets.

However I don’t think Hunt has much chance at all of becoming leader, so backing his followers makes no appeal. The only rival I give any chance of beating Johnson is Michael Gove. His most significant endorsers are Nicky Morgan and Tom Tugendhat, but neither really strike me as potential Chancellors - more likely Education and Foreign Secretary.

Eliminated candidates could come into the reckoning

The other obvious set of candidates to consider are leadership rivals. Over the coming days, there will be a desperate scramble to secure endorsements from eliminated rivals and their supporters. The Chancellorship is an attractive offer that Gove or Hunt could make.

Mark Harper, Andrea Leadsom and Esther McVey all failed to make the first round cut. Matt Hancock also gave up his place in the race. Leadsom (12/1) has a financial background but few allies. Harper is regarded as competent but this would be a massive promotion from outside the Cabinet.

Hancock could well be Gove’s pick. They were rumoured to be teaming up weeks ago and, frankly, his endorsement is Gove’s last chance. Hancock is a former Paymaster General and was a close adviser to Osborne when he was Chancellor. However 12/1 is short enough, considering he won’t be Johnson’s pick. It would make better sense just opposing the favourite for next leader.

Javid would be a smart appointment by Johnson

Whilst very much expecting Truss to win this market, there is one nicely priced alternative. Sajid Javid is still in the race, but struggling to make the next cut. This despite a widely lauded campaign. He’s running as the candidate who can attract Brexiters and Remainers - with his team pushing polling to that effect.

The Home Secretary’s credentials are rock-solid. He’s a former banker whose earlier roles in government include Treasury and Business Minister. Moreover, he could soften some of Johnson’s negatives and 8/1 with Ladbrokes might just be value.

As he prepares to become PM, Johnson is under constant fire for a history of racist comments. He’s hated by Remainers. Perhaps most damagingly, his campaign promise of tax cuts for higher earners immediately reinforced the Tories image as the ‘party of the rich’.

What better way to counter that narrative than make the highly qualified Javid - who stresses his working-class background - the country’s first Muslim Chancellor? He’s the only appealing alternative in this market to the favourite.