Philip Hammond was once – very recently, in fact – a politician basically in touch with the consensus of his age. Mildly pro remaining in the EU, enthusiastic about balancing the budget, keen on the relentless march of free trade and global prosperity. He fitted the bill. Nowadays, he looks like man out of touch and out of his time – a strange relic of a bygone age.
To his Left, Labour has abandoned any flirtation with ‘fiscal credibility’ of the kind that was once dictated (perversely) by George Osborne. To his Right, many in the Tory Party have proven remarkably happy to sacrifice austerity and trade at the altar of Brexit. Hammond may disdain of these ideological positions – regarding those who surround him as clowns, jokers and worse – but that is in part because he does not understand his own politics as ideological too. Just because Thatcherism of one strain or another was, for a long time, the centre-ground that does not mean that it springs purely from rational engagement with facts and evidence. It has its own baggage and its own assumptions about the world. Still, though, Hammond is entitled to a little sympathy as he struggles to adjust to the brave new world of British politics. Aren’t we all?
The actual execution of this budget tells us two things.
First, unlike his immediate predecessor at the Treasury, Philip Hammond learns from his mistakes. His team kept expectations so low that anything short of a complete collapse would have drawn a sigh of mild relief. In this regard, Hammond is not unlike Corbyn – the beneficiary of the Westminster circus’ tendency to over or under egg any pudding in sight. Hammond wasn’t going to let himself be talked up onto a ledge – as he was last time around. Learning, too, from last spring’s horrors, Hammond dodged any and all difficult questions about the balance and breadth of the tax base. Tinkering here, rebates there, no real victims.
Second, the budget shows that the Conservative Party still has not found either the urgency or the plan to fully answer the twin challenges of Corbyn and Brexit. The stamp duty rebate for first time buyers will be welcome, but the OBR predicts that a grand total of 3,500 people will actively benefit. £500 million for R&D for a range of tech will be put to good use, but it is a drop in the ocean when stood against the potential drop-off in investment that Brexit threatens. His flagship National Productivity Investment Fund commits £7 billion to tackling the second biggest economic challenge faced by the UK, but it doesn’t even begin spending the money until 2022. This is a Government that feels stuck and the man who was tasked with unsticking it does not appear to be in any rush whatsoever.
And let no-one underestimate the scale of the brewing economic threat, the enormity of which became clear as Hammond was forced to update the Government’s forecasts. Growth, down. Productivity, down. Wages, down. All while national debt grows. The Chancellor can spend a little here and there but he can’t raise the money to pay for it because this Government doesn’t truly believe that it is in for five years. With an election possible, with no majority, with little mandate the Government cannot follow the usual cycle; hit them hard in the first few years, hand out treats as polling day looms. And so Philip Hammond couldn’t be straight with the country – he was forced to try his best at bouncy and benevolent, even though he knows that our economy is anything but.
This well-handled but underpowered budget probably ensures that Hammond lives to fight another day. But the public would be entitled to ask what he actually believes he is fighting for? Either way, there was little here to keep the clowns and the jokers at bay for long.