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23 November 2017

Hammond faces a challenge Osborne never did: Tory MPs are becoming austerity Nimbys

The Chancellor is not a bad boss, but the Treasury is weak.

By Stephen Bush

One of the most thankless jobs in Whitehall belongs to the civil servant who runs the Budget “scorecard”. This document demonstrates the Treasury’s equivalent of Newton’s third law of physics: for every action, there must be an equal and opposite reaction. For every new spending commitment, taxation must rise or spending must fall.

Until quite recently, when the scorecard left the Treasury, it invariably balanced. But recent Budgets have tended to go wrong. One of those new spending cuts, or an extra tax rise, has proved a little too much for either public opinion or parliamentary sensibilities to bear. In Hammond’s first Budget in March 2017, it was a modest change to the National Insurance contributions of the self-employed – popular in the country but intolerable to Conservative backbenchers (and many freelance newspaper columnists). The year before, the landmine was disability benefit cuts, which prompted Iain Duncan Smith’s cabinet resignation.

The Treasury’s recent difficulties go back to 2015, when David Cameron gained one majority (becoming leader of the first entirely Conservative government since 1997) but lost another: the parliamentary majority for austerity.

Together with the Lib Dems, he had commanded a coalition that outnumbered the opposition by 71 – more than enough to repel even well-organised rebellions. Disagreements were hammered out behind closed doors by the “Quad”: Cameron, George Osborne, Nick Clegg and the chief secretary to the Treasury, a post held briefly by David Laws and then by Danny Alexander. By the time the Budget reached parliament, it had been thoroughly scrutinised.

After 2015, another problem emerged. During his first five years in power, Osborne made sure that for most Conservative voters, austerity happened to someone else. England’s great cities, which all backed Labour candidates in 2010, faced the biggest reductions in their local authority grants. Fiscal retrenchment was concentrated on the expensive few with chronic needs – such as those requiring adult social care – while most voters were shielded from the consequences of the cuts.

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After Cameron was returned to power, however, that approach was running out of road. Nimby – “not in my backyard” – is the derogatory label given to people who support the idea of more housing, provided it isn’t anywhere near them. Since 2015, most Conservative MPs have been austerity Nimbys. They support spending cuts in theory – just as long as they happen to someone else’s constituents.

Achieving this was difficult, even when  the Treasury was unquestionably the dominant force in Whitehall. Under Osborne, the Treasury enjoyed the institutional clout established by Ken Clarke and then Gordon Brown, which was increased further by the political and personal kinship between Osborne and Cameron. Not only did the Treasury control the purse strings; the chancellor had unprecedented powers of patronage. And, unlike Brown, Osborne ran a happy ship: I have yet to meet a Treasury official who hasn’t praised Osborne’s kindness and diligence as a boss, even if they might, a breath later, have nothing but scorn for his economic policies. (Strangely, this reputation does not extend to Osborne’s new fiefdom, the London Evening Standard.)

Philip Hammond’s civil servants find him courteous and good-humoured. He is not a bad boss, but he is a weak chancellor. Even if he were inclined to put in the hours in the Commons bars and tea room to cultivate a following, Hammond has no natural constituency in the parliamentary party.

He is the most vocal Remainer in government, which makes him unpalatable to the Conservative right, and is committed to public spending restraint, which makes him unappetising to the Tory left. When he arrived at the Treasury, there was a quick realisation that the new boss’s weakness made the difficult task of carrying out Conservative promises about public spending even harder.

It’s not Hammond’s fault that he is a political black sheep in the current Tory parliamentary party. He cannot be blamed, either, for the difficult post-Brexit inheritance he received on 13 July 2016, when he became Chancellor. However, he has played a poor set of cards badly. He initially appointed John Glen, the MP for Salisbury, as his parliamentary private secretary. The traditional role of a PPS is to be a minister’s eyes and ears in parliament, and Glen – though MPs find him likeable – also backed Remain.

Astute ministers often appoint a PPS from a different faction, which is why Jon Trickett, now a senior left-winger in Jeremy Corbyn’s team, started his career as PPS to Peter Mandelson. Hammond belatedly fixed his mistake in July, appointing not one but two Brexiteers: Kwasi Kwarteng and Suella Fernandes. Kwarteng is widely considered to have one of the biggest brains in the Commons. (“The only thing crazier than Kwasi,” one pro-European Conservative told me recently, “is that he isn’t a minister yet.”) Fernandes chairs the European Research Group, the organisational centre of the most devout Conservative Brexiteers.

Still, the move came a year too late. The sluggishness is typical of Hammond’s faulty political antennae, which were also in evidence when he began Budget week  by carelessly claiming on the BBC’s Andrew Marr Show that “there are no unemployed people” in Britain.

Until now, though, Hammond has survived despite his lonely views precisely because of the wrath of the Brexiteers. As their hate figure, he has racked up credit with Remainers – even those who disagree with his economic policies. In this government, after all, for every Brexiteer action, there is an equal and opposite Remainer one. 

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This article appears in the 22 Nov 2017 issue of the New Statesman, Europe: the new disorder