EEYORE, A ONE-MAN BREXIT ROAD BLOCK

AS the guardian of the nation’s finances, presiding over historically low levels of unemployment and a remarkable improvement in the public finances, Philip Hammond ought to be shouting from the rooftops about this Government’ s successes.

He also ought to be straining every sinew in his body to ensure that Britain is in the best position possible economically during the battle of wills between London and Brussels over Brexit.

But instead of arming Theresa May with the strongest hand with which to negotiate a successful deal, the Chancellor seems to be acting as a one-man road block against Brexit.

Instead of extolling the entrepreneurial brilliance of British firms and the world-class institutions in the City of London, he has reverted to the remainer instincts which he struggled to cast off when he delivered an upbeat Spring Statement in March.

To the huge frustration of Brexiteer Cabinet colleagues, Hammond has returned to the pessimism of the past and the reservations about the UK leaving the EU which led to him being disparaged as Eeyore.

What’s worse is that the Chancellor is being miserly in the extreme with money that fellow ministers are quite justifiably demanding as they prepare for all eventualities in the final Brexit arrangement.

For example, the Home Office needs millions for border controls; the Department for Environment, Food & rural Affairs will require huge sums to compensate British farmers who will no longer be in receipt of EU Common Agricultural Policy subsidies; Her Majesty’s revenue & Customs expects it will need 11,000 more staff.

There was a point when it seemed that Hammond had swallowed his misgivings about Brexit and was happy to do his bit.

In his Spring financial statement, he proback nounced with great fanfare that in the current financial year he would allocate £1.6billion towards Brexit preparations (part of a larger package of £ 3.7billion that was first announced last year). But his tune has changed. Even if all the money promised by him in March were to be released now and passed on to the six Government departments most affected by Brexit, it would be a mere trifle for Britain’s £2trillion economy.

Indeed, considering what is at stake for the nation during the negotiations with Brussels, Hammond’s failure to come up with sufficient funding starts to look like a wilful dereliction.

As someone who has written about economic matters for more than 40 years, to me Hammond’s failure – or, more worryingly, unwillingness – to grasp the nettle of Brexit and back it up with the appropriate resources does not come as a major shock.

My view is that since he arrived at the Treasury in the chaotic days following the 2016 EU referendum, Hammond has been missing in action.

WHATEvEr one may think of his predecessors at No11, Gordon Brown and George Osborne, they were at the heart of Government with vision and imagination on how best to drive the nation’s economy more smartly.

Brown was the architect of radical ideas designed to deal with the scourge of youth unemployment, and understood how important it was for Britain to be a leader in global finance. Osborne executed the task of restoring some order to the public finances, never forgetting that the Tories are the party of enterprise. He cut company taxes to the bone (without sacrificing overall revenue receipts), supported great innovation and came up with the idea of the Northern Powerhouse (though that now looks to have withered).

The great challenge of Hammond’s tenure has been delivering a Brexit that ensures our future economic stability. The Chancellor has been in an extraordinarily strong position to put some muscle behind our negotiators to make sure they have all the tools they need to defy the toxic combination of remainers in the Cabinet and civil service, and leaden Brussels officials.

It is no secret, for example, that there are highly developed electronic means of easing the frictions at customs posts, including the border between Northern Ireland and the Irish republic. Electronic surveillance is already part of the infrastructure at a similar border between Sweden (inside the EU and customs union) and Norway, which is outside, as well as on the Swiss border, through which traffic crosses in and out of the European Union. Only a lack of resources has prevented these electronic systems from being implemented so far.

As this paper has reported recently from Felixstowe, one of the biggest container ports in the whole of Europe, old- fashioned customs officers in peaked caps are largely a thing of the past. Shipments to and from the rest of the world are processed by technicians sitting at screens using barcodes (not dissimilar to those familiar to us all from supermarkets) to process goods of all kinds.

The cost of installing such advanced technology at every port of entry, including at the Irish border, would be enormous – perhaps upwards of £20billion. But it would be a relatively small price to pay to make sure that exports and imports from the EU, some £ 553billion involving 200,000 businesses, could be maintained without any prospect of interruption or damage to confidence.

Given the resources available, HMrC could start investing now to show that Britain is prepared for any eventuality and will not be bullied over its own sovereign border with Ireland. In many ways, the endless row over customs and physical trade is a red herring. Of course manufacturing exports are critical, and the idea of a ‘march of the makers’ once backed by Osborne cannot be abandoned.

BUT as Hammond himself made clear at the recent meetings of the International Monetary Fund in Washington, financial and other services are where Britain has the greatest competitive advantage, running big trade surpluses with the EU and America.

Last year alone, Britain had an export surplus of £69.9billion on services with the rest of the world. Even so, the Treasury is not doing enough to make sure the City keeps its competitive edge. It is outrageous that when the Government started the process of selling back to the public its shares in royal Bank of Scotland this week, it chose four American banks to do the job. Yet two of Britain’s own banks, Barclays and HSBC, are both global players in investment banking and were left at the starting post.

Failure to put them on the list was like excluding England from a World Cup draw in which they were favourites.

Mr Hammond can justly claim that by keeping a tight rein on the public finances, he is delivering economic stability that will protect the UK from a disorderly departure from the EU.

But in doing so, he is depriving the great arms of the state – from HMrC to the Immigration Service – of the resources they need to face down Brussels and ensure we can broker a deal on frictionless trade with the European Union. The Chancellor’s penny pinching and obduracy are in grave danger of working against the greater public good.