Sorry, Theresa, but you’re handcuffed to Hammond now!

LAST week, a Treasury staffer was sitting at her desk, cutting out a newspaper coupon offering discount tickets to Legoland. Entry to the popular theme park can cost as much as £ 45 during the holiday season, and she was planning to take her children. Suddenly there was a knock at the door, and in walked Philip Hammond carrying a stack of identical coupons that he’d spent the week painstakingly clipping from the newspapers delivered to his private office. With one kind gesture, Spreadsheet Phil had become Splash Zoo Phil.

The Chancellor has had a rough couple of months. Widely touted for the chop following the Election, he was sent to Coventry – not to mention Ilford, Bristol and Scunthorpe – during the campaign. No sooner had he received his post-Election reprieve, than he found he had become the Cabinet pinata, subject to being briefed against on everything from Europe, through public sector pay to his reportedly regressive attitude towards women train drivers.

A narrative began to form around Westminster that Hammond was once again a dead man walking. Assailed by critics on left and right, it was only a matter of time before Theresa May sidelined him, or drew a final thick red accounting line under his political career.

But as Parliament rises – or drags itself exhaustedly to its feet – for the summer recess, that analysis is wide of the mark. Because like it or not, Philip Hammond’s and Theresa May’s political fortunes have become inextricably entwined. Suddenly, and unexpectedly, they need each other.

TO UNDERSTAND this new and unlikely alliance, you have to rewind to the tensions that precede it. When May succeeded David Cameron, her relationship with Hammond was described to me as being akin to that of ‘an elderly married couple’. They weren’t in love, but there was a degree of closeness and mutual respect, borne of years of shared experience.

But when exposed to the tender mercies of May’s notoriously dysfunctional inner circle, that relationship began to fracture.

Her team would sit in meetings and openly discuss ways of deliberately infuriating the Chancellor. Hammond’s team reportedly viewed May’s team as being ‘economically illiterate’, which was something of a euphemism. In reality, they thought they were lunatics.

But now May’s toxic lieutenants have gone. I’m told Hammond was among the Ministers who made the sacking of Fiona Hill and Nick Timothy the price for their continuing support of her premiership. And both No 10 and No 11 insiders confirm that, as a result, the relationship has been recast.

‘For the first time there’s a sense of moving forward together,’ a Hammond ally tells me.

Which may seem a rather optimistic analysis, given the internecine flame- war that exploded after last Tuesday’s Cabinet meeting. But paradoxically, the effect of this infighting has been to push the Prime Minister and her Chancellor closer together.

From May’s perspective, the attacks on Hammond were also a proxy assault on her own authority. Hence her well-publicised demand that the briefings cease. Similarly, the attacks gave Hammond an empathetic perspective into the brutality of Theresa May’s post-Election world. The official line is the Chancellor is untroubled by last week’s assault. But according to friends, he found the personal nature of some of the comments bruising. Especially the argument he is aloof, even callous, towards colleagues.

I’m told he spent the morning of the Election texting his best wishes to the numerous candidates he’d campaigned for during his tour of exile, a laborious exercise given his infamously fat-fingered approach to the use of social media.

‘The idea all he cares about are spreadsheets and graphs is a caricature,’ one MP tells me.

A caricature Theresa May would recognise. In the age of the political populist, the unflashy utilitarians are now seen as representing an electoral liability. Which again, is helpful in the construction of this new alliance. When May looks at Hammond, she does not spy a future leadership challenger.

AND this is what lies at the heart of their fledgling rapprochement. Not the banishment of the aides, or the acidic comments of the plotters. Cold, hard politics. Two things will determine May’s and Hammond’s fate: Their capacity to safely deliver Brexit, and their ability to demonstrate that austerity will not continue to be prosecuted with such vigour that it fatally undermines the Prime Minister’s pledge to bring deliverance to those struggling to make ends meet.

On Friday, the potential significance of a strengthened May/Hammond axis emerged, when May sided with her Chancellor over an extended Brexit transition period.

It was no coincidence this was seen as a victory over hard Brexiteers Michael Gove, Boris Johnson and Liam Fox, just over a week after they had been fingered for the anti-Hammond briefing.

Gove is viewed as being especially close to the scene of the crime by his colleagues, with one Cabinet minister telling me: ‘We didn’t have any of this nonsense before. If you want to know where this is coming from you just have to ask yourself who’s new around the Cabinet table.’ For what it’s worth, friends of Gove deny this, claiming he is relaxed over the transition period. And it’s true there is some old-fashioned Nixonian rat-copulating going on, with Cabinet rivals framing one another for their own duplicity. But there is no denying it was an important win for Hammond over his critics.

And it is about to be followed up by a new, united front on austerity. I’m told Hammond and May have agreed there will have to be some loosening of the deficit straitjacket. Some Ministers have been pushing for a dramatic announcement to indicate the hard times are officially over – ‘something the voters can see from space,’ is how one phrased it. But both the Prime Minister and her Chancellor are concerned that such a seismic shift of policy would risk destroying the Conservatives’ reputation for fiscal credibility. So instead, over the next few weeks, we will see a softening of language, as the groundwork is set for a gradual easing in the Budget.

‘If you’re three-quarters of the way through a marathon, you don’t suddenly turn round and run back to where you started,’ one Treasury Minister told me. ‘But what you can do is slow your pace, or even stop to take on water.’

Events have conspired to throw Philip Hammond and Theresa May together. She knows if she were to dispense with his services now it would be seized on as further evidence her administration is crumbling. Similarly, he is aware that were she to be deposed, he would almost certainly be deposed with her. To secure their immediate futures, and their legacies, both must now succeed.

For t he t wo ol d ri vals, t his might just be the beginning of a beautiful friendship.