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14 March 2018

The “light at the end of the tunnel” looks like more cuts and lower growth

Philip Hammond’s Spring Statement failed to properly lay out government’s groundwork for the battles to come.

By Stephen Bush

With escalating tension between London and Moscow and Rex Tillerson’s exit, Philip Hammond’s Spring Statement was always going to struggle to make headlines – but even on a quiet day the speech would have struggled.

It speaks volumes that the major talking point is a consultation on abolishing the penny, and indeed if you had “consultation” on your bingo card you’d have done pretty well out of the Chancellor yesterday. Part of the problem is the government’s parliamentary weakness and part is that Hammond – rightly from a policy perspective – has ended the United Kingdom’s odd practice of having two major fiscal events in a year.

In the longterm, there are many benefits to be had from that approach, but the immediate political consequence is that the government forgoes an opportunity to set the terms of debate at Westminster, a particularly valuable firebreak after a period in which the economic debate – from the future of a troubled rail franchise to the collapse of Carillion to the pressures on the NHS – has been on Labour-friendly territory.

While it’s difficult for Hammond to do that, having made a virtue of taking the tools to do so out of his hands, he could still have sought to lay out rhetorically what the government sees as its dividing lines with Labour and lay the groundwork for the battles to come. But ultimately he did neither.

There is light at the end of the tunnel, apparently. Except that light looks an awful lot like more cuts and lower trend growth. The Conservatives are in a pretty odd place at the moment for a variety of reasons, chief of which is the prolonged regeneration of their leader. But the oddest and most avoidable position is that the Tory mouth talks as if austerity is ending and the cuts are coming to a close, while the Conservative hand votes for more spending restraint and for the pressure on public services to continue.

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