At the outset of what Philip Hammond vowed would be “the last spring Budget”, he recalled that one of his predecessors, Norman Lamont, was sacked just 10 weeks after promising the same. The new Chancellor need not fear such a fate. Hammond and Theresa May, friends since Oxford University, have learned to manage their differences and the Prime Minister is determined to project stability before the Brexit negotiations. When the Chancellor observed that the Prime Minister had already announced two of his measures for women, she warmly heckled back: “It is International Women’s Day!”
Hammond’s speech was not just that of a man who has no fear of being replaced by a Conservative. It was also that of a man who does not fear being evicted by Labour. The Chancellor’s biggest announcement was not a giveaway but a tax rise. National Insurance for five million self-employed workers is to be increased by 2 per cent, in apparent defiance of the Conservative manifesto. Only those earning less than £16,250 will be spared (the rest will pay £93 extra next year). Here is a tax rise on the very entrepreneurs the Tories have long lionised. But faced with a shambolic Labour, Hammond believes little political damage will result. Indeed, the tax burden is at its highest since 1982.
Worse for households, none of the large welfare cuts due this April were softened by Hammond. Though £2.5bn was provided to limit the social care crisis (spread over three years), this is paltry when set against the £4.6bn cut since 2010. Hammond promised to explore parental benefits for the self-employed (such as paternity and maternity leave) and to achieve a long-term funding solution for social care (he is not the first Chancellor to do so). But any sweeteners were deferred, another sign that May is not seeking a snap election.
The Chancellor’s natural caution has been enhanced by Brexit (a word which was entirely omitted from his statement). Though the OBR’s borrowing and growth forecasts have improved since the Chancellor’s Autumn Statement, the fiscal outlook remains grim. As Hammond was good enough to note, the government is set to borrow £100bn more than expected before the EU referendum. The deficit will in fact rise next year from £51.7bn to £58.3bn – a fate that George Osborne always sought to avoid. But as Osborne’s former adviser Rupert Harrison noted, that is “not such an issue now”. The days when the Chancellor was troubled by the opposition are long gone.
The man now universally known in Westminster as “spreadsheet Phil”, on account of his dry as dust manner, surprised expectations by peppering his speech with Osborne-esque gags – all of them at the opposition’s expense. “They don’t call it the last Labour government for nothing,” he observed (plenty of Corbyn’s MPs fear he is right). The Labour leader, he quipped, is “so far down a black hole that even Stephen Hawking has disowned him.” Corbyn’s party, he added later, knows all about “driverlesss cars”.
For an explanation of the Chancellor’s seeming hubris, a glance at the latest opinion polls is all that is required. Though his caution reflected the fear that he could yet be undone by Brexit, Hammond has shown that he regards the official opposition as non-existent.
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