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Meet the new Chancellor, same as the old Chancellor

nintchdbpict000271811319“Call me Philip” Hammond didn’t apply smug factor 50 before his speech to Tory party conference, but he didn’t need to. Beneath the boring exterior and the truly, truly awful jokes is a politician whose programme is little different to his unlamented predecessor’s. Yes, in tune with his boss’s whole nation conservatism, Hammond has woken up to the role the state can play in stimulating the economy and making things a wee bit better. That said, so had Osborne. Before his unceremonious disposal, the deficit and austerity had largely become political window dressing* for a more, how should we say, sensible approach to economic management. The slower, steadier austerity of the old Darling plan necessity forced on Osborne in 2012 had given way to a Keynesian-lite iteration of Ed Miliband and Ed Balls. Not that it was politic to admit this.And so Hammond is picking up where Osborne had left off. Nevertheless, for politics watchers the speech was entertaining as a plod along a tightrope can be. The long-term economic plan, which never existed, has found itself replaced by the “flexible and pragmatic” plan. A phrase that won’t be finding its way to a leaflet near you, Hammond’s message, like Osborne’s previous trajectory, has economic and political necessity stamped all over it. One of the architects of Tory austerity, Hammond was keen to lay claim to the book balancing rhetoric that served Dave well. Making sure the public finances are sorted is a top, but not the top priority of his economic strategy. And for good measure, he had a go at the “la-la-land” (his words) approach of John McDonnell. Apparently, borrowing while interest rates are at historic lows is not the thing to do, but of which more momentarily. In practice, the Tory manifesto surplus commitment has got itself kicked into the long grass along with all the other decisions May has singly avoided these last three months. Yet for those Tories mono-maniacally wedded to cuts and small-statism, provided they don’t look too deeply (and the odd sacrificial lamb is hauled onto the slab), there was enough rhetorical gruel here to keep them sated. After all, with all May’s party management problems, she can ill-afford a division opening up on economics.

With the right flank covered for now, the Keynesian turn addresses two pressing problems. If Brexit isn’t going to mean wrexit, the state has to intervene to stabilise British capitalism. As overseas investment is likely to wind down once negotiations get underway and given the PM’s idiot preference for a hard Brexit, insulating the economy from shocks is a big ask. Unpicking commercial ties and supply chains built up over 40 years of EU membership is as uncertain an endeavour as it is fiendishly difficult. Oh, and remember that thing called the world economy? Instability there hasn’t gone away either. Undoing Britain’s ties to the EU would be hard at the best of times, but should a new tsunami of crisis break over the world economy then things could get very messy indeed. Having the state undertake industrial activism now and into the immediate future to meet housing demand, provide investment, and sort out the productivity puzzle (which really isn’t much of a puzzle).

Then there’s political positioning vis a vis Labour. The media and assorted “friends” of the party may have written it off, but May certainly hasn’t. Remember – again, that thing: memory– how she made a splash when she told her party they were seen as “the nasty party”, and that was the root of their electoral woes. She hasn’t forgotten this, despite running stunts like her universally-panned racist van. And neither have other smart lieutenants like Robert Halfon, one of the few Tories who tries to understand his opponents in their own terms. Having seen public opinion swing away from the Tories on tax credits and disability cuts, and a sense that politics is no longer “normal”, Hammond’s economics must work toward the political centre. And as that is more to the left than in the times of Blair, Brown, and Dave, failure to do so would give Labour an opportunity to define the debate. Don’t forget, we’ve already had some success here despite a year of damaging in-fighting.

A country that works for everyone is the Tory conference slogan, but a paternalist concern for those at the sharp end of crisis and Brexit is entirely absent from the rollercoater ride we’re about to embark upon. The bottom line is the bottom line: the preservation of British capital, and the Tory party’s place as its chosen political vehicle.

*Only largely, because local government can still look forward to a difficult time.

One Comment

  1. Tony says:

    Hammond mentioned, and I can hardly blame him, the note that Liam Byrne left behind for his successor.

    It said: “Dear chief secretary, I’m afraid there is no money. Kind regards – and good luck! Liam.”

    And, of course, David Cameron pulled it out of his pocket and waved it in front of the audience during one of the election debates. It also featured on many Conservative leaflets during that campaign.

    What abysmal judgement Byrne showed on that occasion.

    Interestingly enough, the absence of money did not stop Byrne from voting for the replacement of the Trident nuclear status symbol in July of this year. Money can always be found for nonsense like that.

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