Support 100 years of independent journalism.

  1. Politics
3 October 2016

Philip Hammond shows that Brexit means bigger government

The Chancellor's pledge to take "whatever steps are necessary" to protect against "turbulence" was a defining moment.

By George Eaton

Near the outset of his conference speech, Philip Hammond indulged in a favoured Conservative sport: mocking Ed Balls. “I think his Charleston is probably better than his economic analysis!” he quipped of the former shadow chancellor’s turn on Strictly Come Dancing.

Balls may be gone but his fiscal policy lives on. The new Chancellor confirmed that he had abandoned George Osborne’s budget surplus target in order to allow borrowing for investment – the very stance that Labour advocated at the last election.

The investment announced by Hammond remains modest (£2bn for housebuilding on public land and £3bn for private builders) but it is the direction of travel that counts. “When times change, we must change with them,” the Chancellor declared, echoing Keynes’s “when the facts change”. He warned, however, that the “task of fiscal consolidation” would continue and that “the deficit remains unsustainable.” There will be no spending splurge.

But in the most significant line of his speech, Hammond vowed to take “whatever steps are necessary” to “protect this economy from turbulence” (a homage to Alistair Darling and Mario Draghi) The Chancellor, who has struck a more pessimistic tone than some of his colleagues, signalled that the state stands ready to act. Rather than less government, as free marketeers hoped, all the signs are that Brexit will mean more.

The only new announcement in Hammond’s speech was a pledge to guarantee funding for all UK-EU projects signed while Britain remains a member. But this is only the beginning of the interventionism that will define his Treasury reign.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. A weekly newsletter helping you fit together the pieces of the global economic slowdown. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

“We are leaving the European Union,” Hammond declared early on. But he warned: “It is equally clear to me that the British people did not vote on June 23rd to become poorer, or less secure.” That was a signal that the Chancellor will seek a softer Brexit than some of his colleagues would like. But Hammond’s words acknowledged the hard landing that the UK could endure. If the market is unable to stop people becoming poorer it will fall to the state to do so. Leviathan has risen once more.

Content from our partners
How to create a responsible form of “buy now, pay later”
“Unions are helping improve conditions for drivers like me”
Transport is the core of levelling up