Hammond has done his best in a dysfunctional government
An air of unreality hung over the Chancellor’s worthy proposals in today’s announcement
MORE than most chancellors delivering a Budget, Philip Hammond looked today like a man captive to, rather than shaping, the political and economic context in which he spoke. Last night’s media fiasco, in which Number 10 suddenly seized control of a pre-Budget briefing, symbolised a much greater dysfunctionalism in a failing government.
To an absurd extent the Chancellor was tasked by his own colleagues with curing that sickness and restoring Theresa May’s administration to vigorous health with a single Commons speech. But that was never within his power — is it within anyone’s? — and imposed entirely phoney expectations upon a budget that was never going to be more than workmanlike.
Operating as best he could within the parameters of fiscal reality, Hammond reeled off a series of worthy proposals. To help prepare Britain for the scientific and technological demands of the post-Brexit era, schools will receive £600 for each extra pupil they persuade to take maths A level.
To narrow the productivity gap — Hammond’s abiding obsession — there will be £1,000 career-development grants for teachers in areas where standards need to be raised urgently. As widely trailed, the Chancellor announced measures to speed up property development and the construction of 300,000 homes a year. Housing should now be at the heart of the government’s political strategy, the best possible response to the sense of intergenerational injustice that helped to drive up Jeremy Corbyn’s share of the vote in the general election.
The railcard for those aged between 26 and 30 will be welcomed, but voters in that category fret more about the property ladder and how to secure a place on it as they start to have families. The politics of the Eighties were energised by the council-house sales. The politics of our time present a broader dilemma: the fear of a generation that it may never own property. What the Chancellor announced today is no more than a start.
As he had to, Hammond addressed the scandalous delay of up to six weeks for recipients of universal credit: a small but necessary step away from technocracy and towards social justice. There were measures to encourage research and development and embrace AI. As far as fiscal constraints allowed, the Chancellor pledged more resources for the NHS and a phased rise in public-sector pay.
Looming over all this was a profound — and profoundly unhealthy — mood of unreality. Hammond finds himself wading through the swamp of the posttruth era, in which emotions trump facts and rational policy debate is swamped by political zeal.
For weeks he has been simultaneously warned that he must be Tiggerish about the economy and its prospects after Brexit — but that he deserves to be sacked if he makes a single error. Not even Tigger would have been reckless enough to bounce through a minefield in the Hundred Acre Wood.
Yet the Chancellor’s internal party opponents see no contradiction in their demands for flamboyance and surgical precision. It used to be an immutable rule of politics that to govern was to choose. To an alarming extent, those who occupy the great offices of state are now applauded by their own side when they demonstrate a gift for doublethink: the capacity to hold two contradictory points of view.
Too many of Hammond’s colleagues expected him to deliver a budget of radicalism, with little apparent care for the limitations of the parliamentary arithmetic delivered in June. To be fair to the Chancellor, he was conspicuously excluded from the election campaign — a campaign that failed to celebrate sufficiently his party’s hardwon economic achievement since 2010 and the fall of the deficit by two thirds from its post-Crash levels.
With a comparable indifference to logic, Hammond’s critics want him to trigger a housing bonanza — but not to upset Tory voters who live in the green belt or to give councils too much latitude to borrow and build. Quite rightly, Conservative MPs would be appalled if he suddenly squandered the gains of the past seven years, principally achieved by fiscal conservatism and monetary activism. They understand the abiding appeal of tax-cutting and the particular need to honour the government’s promise to raise the personal allowance to £12,500 by 2020.
Yet they also expect Hammond to find a blue magical money tree to match Corbyn’s red-leaved orchard. Those who campaigned for Leave in last year’s referendum are desperate to justify their ludicrous pledge of a £350 million-a-week dividend for the NHS when we leave the EU. Too many demand a quick-fix end to austerity without acknowledging the risk to economic stability.
All chancellors face political dilemmas. But the atmosphere in which this budget has been prepared and delivered has revealed a pathological refusal to confront the harsh facts. Hammond is routinely accused of failing to enthuse about Brexit, and of jeopardising the nation’s economic prospects by failing to dance a jig of excitement about its departure from the EU.
Yet it is the imminence of Brexit that has chilled the economy, not the Chancellor’s personality. In the past year Britain has experienced the slowest growth of the G7 countries, weighed down by inflation, business uncertainty, the fall in the pound and declining living standards.
Hammond often speaks of the need to “future-proof ” the economy and maintain “head room” to accommodate the unpredictable consequences of Brexit. That head room is shrinking dramatically for reasons mostly beyond his control. There was little intrinsically wrong with today’s Budget. But, as Hammond well knows, it was no more than a well-intentioned situation report, delivered on the road to a world of bleak uncertainty.
It is the imminence of Brexit that chilled the economy, not the Chancellor’s personality