Chancellor hints at ‘easing off’ on austerity
The chancellor, Philip Hammond, signalled yesterday that the government would ease up on its austerity programme, saying the Conservatives were “not deaf” to the message of the election result.
In interviews in which he also criticised Theresa May’s team for sidelining him during the election campaign, Hammond said he accepted that “people are weary of the long slog”. But he insisted that, with the deficit still at 2.5% of GDP, government borrowing was “not sustainable in the long term” and he left open the possibility of raising taxes to fund more generous public spending.
Asked whether he would go ahead with £3bn of cuts to local government funding, he replied: “We’ve set out a series of measures that are already legislated for. We have other proposals that we will now have to look at again in the light of the general election result and in the new parliament. I will be delivering a budget in the autumn and you will find out then what we are proposing. There’s not going to be a summer budget or anything like that.”
Pressed on whether the government would have to change direction, particularly if it did a deal with the Democratic Unionist party (DUP), which is opposed to cuts to the winter fuel allowance and the end of the triple lock on pensions, he replied: “We will look at all these things. Obviously we are not deaf. We heard a message last week in the general election and we need to look at how we deal with the challenges we face in the economy.
“I understand that people are weary after years of hard work to rebuild the economy after the great crash of 200809, but we have to live within our means.
“We have never said we won’t raise some taxes. We are a government that believes in low taxes and we want to reduce the burden of taxes overall for working families.”
Speaking on the Andrew Marr Show and Peston on Sunday, Hammond stressed that he had already taken some steps to relax the austerity programme set by his predecessor, George Osborne. He said that when he became chancellor last summer he had pushed back the target date for getting the budget into surplus “into effectively the middle of the next decade”.
Hammond played a relatively low-key role during the Conservative election campaign, with May refusing to confirm that she would keep him as chancellor.
In a sign of new confidence, he said: “We didn’t put enough energy into dismantling Jeremy Corbyn’s economic proposals … We will now do that ... which I would like to have done during the campaign.”