Liberals may be pleasantly surprised by the Budget – but Tory Party faithfuls could be in for a shock

Philip Hammond has firmly established himself as a steady check on the more extreme excesses of the hard Brexiteers – unlike Theresa May, who is driven primarily by the electorate’s concerns

Click to follow

In November 2009, the dying days of Gordon Brown’s premiership, his Chancellor, Alistair Darling, was named Survivor of the Year at The Spectator magazine’s parliamentary awards. It was a coy compliment from a right-leaning magazine, highlighting how close Darling had come that year to losing his job to Brown’s henchman Ed Balls (the pre-Strictly version). Yet it was also a grudging acknowledgement of how difficult it can be to maintain the second most powerful office in the land – especially when the premier is used to having things his, or her, way.

Philip Hammond, as he delivers his first Budget on Wednesday, will also have emerged as a great survivor. On his appointment, he seemed to exemplify the aesthetic of the Theresa May regime: a safe pair of hands, an older and greyer head than the yuppie-young confidence tricksters of the Cameron years. Hammond was 61 when he took the job of Chancellor; George Osborne had been 38.

Yet it soon emerged that Hammond was altogether too grey, too sage, for the more excitable Brexit bunnies. The details of early rows found their way with regularity into Sunday papers. An early skirmish over immigration drew a public rebuke from No 10 when Hammond publicly floated the idea of excluding students from the Government’s target. (Most economists would like to see British universities allowed to take as many foreign students as possible; Tory voters, and thus the Prime Minister, fear it as immigration by the back door.) May and Hammond already clashed over the independence of the Bank of England, and the regulation of foreign takeovers. By mid-October, Hammond had to deny that he’d threatened to resign; No 10 was left issuing anodyne statements about having “full confidence” in the Chancellor.

And yet he survived. Why? In part, it is because Hammond has firmly established himself as a steady check on the more extreme excesses of the hard Brexiteers. Unlike May, who is driven primarily by the electorate’s concerns, Hammond’s focus has been on retaining Britain’s attractiveness to foreign investors and talking up economic growth – “It is clear to me that the British people did not vote on 23 June to become poorer”, he declared at last autumn’s party conference, before going on to caution against alienating international employers. As indicated by his intervention on student migration, Hammond is fundamentally an economic liberal, who has set himself the mission of salvaging as much of Britain’s openness to movement of labour as possible.

Perhaps that puts the Chancellor on a collision course with the Prime Minister. But the truth is that the PM has found it quite useful to have a proxy when David Davis dismisses off-hand the promise of an EU transitional deal, or Boris Johnson announces unilaterally that we won’t pay for access to the single market. With his dry erudition – Hammond is frequently described as intellectual arrogant by his opponents – he commands the respect of the City. And he can babysit the Cabinet at the same time.

More fundamentally, Hammond and May know that both their necks are on the line if Brexit negotiations fail. The Conservative Party may have no effective opposition – for now. But both have staked their political careers on steering Britain out of the Brexit quagmire and that means, however great their day-to-day differences, they know they have to steer together.

Philip Hammond: Post-Brexit Britain won't 'slink off like a wounded animal'

The advantage for Hammond, of course, is that Brexit is still the only game in town, even on Budget day. Brexit planning is sucking up the energy of the Government in a fashion that is downright dangerous – talk to civil servants in the Department of Transport, or even at Health, and they’ll complain that their political masters are too busy with European matters to agree basic policy directives. So Wednesday’s Budget will be watched closely to see the assumptions it makes about inflation and post-Brexit growth, but on fiscal detail, few people will be offering quite as much scrutiny as usual. Why bother, when you can go another round of “expat versus migrant” in the pub?

The Budget, such as it is, looks unlikely to break much with the Osborne tradition. (Hammond is said to have asked his predecessor for advice.) In a rare anti-market sop, Hammond retains Osborne’s antipathy to the buy to let market, phasing out tax relief on Buy to Let mortgages – although there are inklings he may reverse Osborne’s stamp duty increase. Otherwise, it’s cautious but standard Tory fare: raising the personal allowance before tax is paid on income (although many of the working poor will still pay hefty NI contributions) and heavy cuts on child credit. Much will be made of small gestures – gently increasing the budget again for staff in prisons, for example, despite a 30 per cent cut in recent years – and £1bn for social care, which may provide a bandage to the current crisis but is unlikely to accompany major policy changes until a mooted review concludes. 

So far, so Tory. But what makes Hammond’s policy moves interesting is that he’s one of the few characteristic conservatives left in senior positions. The Brexiteers are innately radical, enthralled by the concept of creative destruction. Hammond is inherently cautious – look at this weekend’s appearance on Peston on Sunday and at how heavily he warned against getting too optimistic about the latest positive economic growth forecast. Perhaps the forecasts immediately following the Brexit vote were over-pessimistic, he admitted, but “if somebody gives you a bit more headroom on your credit card, it doesn't mean you have to rush out and spend it all at once”. Expect to hear a lot more of that on Wednesday and plenty of talk about the need for Britain to shore up “long-term resilience”. This is the rhetoric of a man playing a long game. If Britain emerges as a cautious survivor, so can he.

Comments