Jim Hacker goes back to his apartment above 10 Downing Street after a Cabinet meeting that has not gone well. He explains to Annie, his wife, that there is a financial crisis looming and every department must cut expenditure. Furthermore, he is about to receive a deputation of MPs to whom he has promised a pay rise—and he has no sympathy for them.

Later, Hacker is in the Cabinet Room and berates Sir Humphrey Appleby, the Cabinet Secretary, for the late circulation of papers relating to the last meeting. Sir Humphrey points out that this was in fact the responsibility of Sir Frank Gordon, Permanent Secretary to the Treasury. He adds that the Treasury generally takes the view that if urgent action is needed on the economy, then the Cabinet shouldn’t have too much time to think about it. However, the PM insists on the relevant papers being available 48 hours in advance from now on, and Sir Humphrey leaves to speak with Sir Frank. Hacker remarks on Sir Humphrey’s loyalty in the matter, which is uncharacteristic of civil service officials, who normally stick together. Bernard suggests that it may be to do with the PM’s recent idea to transfer Sir Humphrey’s duties as Head of the Home Civil Service to Sir Frank.

In the Cabinet Office, Sir Humphrey informs Sir Frank of the PM’s displeasure, but assures the Permanent Secretary that he defended him gallantly. Sir Frank then brings up a new problem: the MPs’ pay rise must be denied owing to the financial crisis, but the pay review for the civil service is also about to be brought forward. They agree that their unselfish proposal must be put in just before the next Cabinet meeting to minimise any scrutiny by the MPs. However, the pair are at loggerheads when Sir Frank recommends that they present it jointly. Sir Humphrey emphatically refuses, but persuades his colleague that he will back his findings when the time comes. They also agree that they can’t let the Cabinet adjudicate on the matter, and Sir Humphrey has an “impartial committee” lined up, of which the chairman is a renowned idiot who will follow Sir Humphrey's lead.

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