Support 100 years of independent journalism.

  1. Politics
  2. UK Politics
24 October 2017

Philip Hammond won’t borrow big in the Budget

The Chancellor believes the deficit and debt are too high for a splurge on housing. 

By George Eaton

There has been much excitement at Sajid Javid’s apparent conversion to Keynesianism. Appearing on The Andrew Marr Show on Sunday, the Communities Secretary hymned the virtues of borrowing to invest. 

“Taking advantage of record low interest rates can be the right thing if done sensibly,” he said (though Brexit is pushing borrowing costs up). Sources subsequently said that Javid wanted £50bn to fund a new housing programme in next month’s Budget. (Labour, whose fiscal rules allow for borrowing for investment, have called for £250bn for infrastructure over the next decade). 

But at Treasury questions earlier today, the Chancellor, Philip Hammond, pointedly distanced himself from this proposal, stating that it was not government policy. Hammond, a passionate fiscal conservative, is not preparing for a Keynesian splurge.

Allies point out that the Treasury responded to the most recent borrowing figures by emphasising that “government borrowing is still far too high at over £150m a day” and that “our national debt is still too high at £1.8trn [87.2 per cent of GDP], or £65,000 per household.” Though Hammond is expected to postpone the government’s budget surplus target from 2025 to 2027, this represents a softening, rather than an abandonment, of austerity. 

In the view of Hammond’s allies, his refusal to set aside large amounts for a “no-deal” Brexit is consistent with his “prudent” approach. But as the Chancellor has learned, not all Conservatives, to put it mildly, share that view. 

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. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. 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 weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy