There are some things in life that you can always rely on: the sun will rise in the East, there will be showers in April, and the Conservatives will find a way to put off balancing the books. Although George Osborne – back when he was Chancellor – initially aimed to eliminate the structural deficit by 2015, it has since been pushed back time and time again. His successor Philip Hammond isn’t much better, pushing paying off the deficit until the middle of the next decade, in the 2017 manifesto. At the time, I wrote that their record on the issue meant there was little reason to believe the Tories would even stick with the new date.
So, today’s story in the Times claiming Philip Hammond plans to – once again – delay balancing the books certainly has a sense of déjà vu about it. The paper reports that Hammond is preparing to use the Autumn Budget to ‘acknowledge that the public finances may not be balanced before 2027’. The reasons for the apparent rethink are the ‘unique spending pressures facing the Treasury’ along with the new challenges that have arisen now the Conservatives have lost their majority.
A Treasury spokesman has described the report as ‘speculative’ – but there’s no denying Hammond has an unenviable job on his hands come the Autumn Budget. The majority of the cost-saving measures from the 2017 manifesto are in the dustbin, while Hammond still needs to account for the £2bn gap by the U-turn on NICs for the self-employed, and the £1bn DUP deal. And that’s not even getting onto relaxing the public sector pay cap – as many MPs in the party are calling for.
Put all these factors together and the Conservatives are in a bind with regards to their ‘long term economic plan’. It’s a widely accepted fact among Tory MPs that one of the mistakes made in the 2017 election campaign was not talking about the deficit enough. Where the 2015 campaign was obsessed by the issue, Theresa May barely mentioned it this time around. As the Prime Minister learnt to her cost, austerity measures are a hard enough sell anyway without taking away the main reason why you are doing it.
It follows that any further delay in balancing the books could prove costly to the party brand. When Corbyn promises the world, it’s much harder to counter his pledges if your side doesn’t appear to have a grip on the economy either. It may be that the spending cuts required to get on top of the deficit in the current timeframe are too unpalatable or too difficult to get through the Commons. But if this is the case, CCHQ needs to come up with a new argument to validate their ‘long term economic plan’. They have to work out a way to differentiate their own spending from Labour’s reckless borrowing. Going into another election pretending the deficit isn’t there would lead to electoral disaster for the Conservatives.