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If the Tories can mess up a Budget, how will they handle Brexit?

15 March 2017

1:09 PM

15 March 2017

1:09 PM

After Philip Hammond delivered his Budget last week, he went to speak to a meeting of Conservative backbench MPs. Several were deeply alarmed about his tearing up of their manifesto pledge not to raise National Insurance. One asked him how sure he was about all this. Might they find themselves going out to defend this tax rise to their constituents, only to find him abandoning the policy later? No, the Chancellor replied, he would not change his mind. This tax rise was centrepiece of Budget, so could not be scrapped. He was not for turning.

For a Chancellor to abandon his main Budget policy within a week is nothing more than extraordinary. It suggests a staggering lack of communication, forethought and basic political competence. Mr Hammond spent days claiming – bizarrely – that he had not broken his manifesto pledge. He sought to hide behind a law, passed after the election, that pledged not to raise Class 1 National Insurance contributions but said nothing about Class 4 contributions, which he raised from 9 per cent to 11 per cent. As we argued last week, it was a dishonest argument and would be seen so by voters. It would make many wonder if they could ever again trust a Tory tax promise.

Now, it seems, Mr Hammond agrees. His letter, released to colleagues, accepts that he had an obligation to be compliant ‘not just with the letter but also the spirit’ of his manifesto. That this thought appears not to have occurred to him before his Budget is a staggering reflection on his judgement and what remains of his personal authority. His Budget was followed by a briefing war between No. 10 and No. 11, as allies of Mr Hammond and Theresa May blamed each other for the mess. In the end, the Prime Minister won and the Chancellor was ordered into a retreat as humiliating as any in postwar political history. But Number 10 should remember that tensions between a Prime Minister and a Chancellor rarely end well for either side.

In a way, it is encouraging that the Conservatives have – belatedly – realised the importance of manifesto pledges. Mrs May may have a low regard for the document, which was assembled by aides of David Cameron who never imagined he would win a majority and be asked to implement it. But if she wishes to be freed from the pledges of the 2015 Tory manifesto, she should call a general election and issue her own.


But to govern in such a haphazard way is nothing short of shocking. Mr Hammond has already raised doubts about whether the Conservatives can be trusted to keep firm promises. Now it is no means sure that he – or the Prime Minister – can be trusted to implement policies they lay out in the House of Commons. Mrs May may well be about to face a new Scottish referendum, fighting that campaign while carrying out most complex negotiations this country has faced in its postwar history.

This fiasco will be watched with amazement in European capitals. If Theresa May’s government caves under pressure, then her opponents in Brexit talks will apply pressure. If her red lines can be rubbed out after a few more days’ reflection, how seriously can anyone take anything that she says in such negotiations?

Mr Hammond has endangered wider credibility. What, now, are the financial markets to make of his Budgets or his promises? What more will he revoke after a few days, admitting that he had not given it enough thought? At a time when the UK government needs to borrow £140 million a day to meet its bills, credibility is a precious commodity. It now seems to be in tatters.

Mrs May has, understandably, focused on getting Brexit right. Her policy so far has been clear and assured. But she now faces questions on how well – and even whether – the rest of her government is functioning. What are we to expect now about her idea of bringing back Grammar Schools: will her Education Secretary be forced to make this announcement, only to row back after further reflection? What about the great white elephants that she has continued, HS2 and the Hinkley Point reactor? If she is in the mood for backtracking, why not save the taxpayer a small fortune by abandoning these too?

And then: what about the future of Chancellor? Mr Hammond had presented himself as a safe pair of hands, someone who would not engage in the clever-dick politics that characterised George Osborne’s time in the Treasury. Instead he posed as a competent, sensible finance director. That reputation is now in shreds. For him to get into such a mess in his very first Budget, suggests that he lacks the basic political competence for the job.

Theresa May faced Jeremy Corbyn in the House of Commons straight after announcing the U-turn But Corbyn, predictably, missed the open goal. A weak opposition has made the Conservatives lazy, unable to see the most basic problems lying around the corner. They Tories now give the impression of a party that only seems able to function properly when being dangled over a cliff by their opponents. It was said of David Cameron that he only had two modes: panic, or complacent incompetence. It would be unfortunate if Theresa May’s party demonstrated only the latter characteristic.

This is the leading article from the forthcoming issue of The Spectator, on newsstands tomorrow – or delivered to you from just £1 a week.


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