Monday 1 October 2018

Chancellor Hammond begins constructing the Tories framing for their budget

Chancellor Philip Hammond took to the stage at the Conservative Party conference to tell his party that they had to make the case of capitalism - and must first and foremost always be the party of business.

On the one hand, this was the latest barrage in a war of words within the Conservative ranks - torn by Brexit and the deep reservations of the business community. On the other, it's also laying the groundwork for the budget.

Hammond told the conference that the party couldn't afford to be seen as the party of the status quo. The Chancellor trailed the possibility of some tax rises to increase spending, but warned against trying to match Labour penny-for-penny.

We've heard this before.

The budget is coming up and the party delivering it are positioning their pitch, delivering up framing devices for the media to use in the coming weeks. For the Tories, they cannot afford to lose control of the message.

In recent months, even senior ministers have been defying the government with a whole barrage of comments to the media. It's making PMQs a whole lot easier for Corbyn and forcing No 10 and No 11 to waste their time running around putting out fires.

For instance, when the Confederation of British Industry (CBI) felt the need to express it's dismay about Brexit - and the danger of leaving the EU without a deal - a former government Brexit minister labelled them a 'grave menace' to the UK's prospects.

That's not a good look for a party that sees itself as the true representative of business. No wonder the Chancellor is calling for the party to get back on message. But there's more.

The Chancellor is also dropping little hints that there might be some tax rises - though these aren't yet more than hints - with an eye to some slight increases in spending.

Hammond finally loosened some of the purse strings this year, with a slight relaxing of public sector pay restrictions. But they were only very slightly relaxed and spending measures in the last budget were far below the kind of intervention for which the UK economy is crying out.

The consensus on the economy - and on Brexit - seems to be moving away from the Conservatives. Conceding the possibility of a spending increase lays the groundwork for framing the measures Hammond will announce on budget day.

In previous budgets, Hammond has talked up restricted spending and paying down the deficit only to deliver up, at times uncosted, spending increases - even if only small ones. The order of the day was austerity, but spending was needed.

Now, the consensus is shifting towards much larger public investment than Conservatives are prepared to meet. And so the Chancellor is preparing the ground to present the next budget as one that will deliver responsible spending.

Yet behind the narrative, there is little reason to expect anything but more of the same from the Treasury. Brexit is a hinderance and while the deficit has been reined in, the debt has ballooned under the Conservatives.

And who is going to be happy with Tories raising taxes? The last time Hammond tried to make a major tax adjustment, he had to withdraw his self-employed National Insurance fix within a week of presenting it.

In politics, the next best thing to delivering policies in line with the consensus is to get every believing that you're doing just that - without having to go to the trouble of spending the money. Expect this narrative to build through October.


References

'Tories must offer change, says Philip Hammond'; on the BBC; 1 October 2018.

'"Are tax rises still on the cards?" "Yes. We will have to find a little more tax. I will say more at the time of the Budget." @MishalHusainBBC interviews @PhilipHammondUK @BBCr4today'; from Kamal Ahmed on Twitter; 1 October 2018.

'Spring Statement: Even with the deficit reduced, the Tories continue to sacrifice the present and future of ordinary people'; in The Alternative; 12 March 2018.

'Budget 2017: Cautious Hammond has salves not solutions, as Budget falls short of action'; in The Alternative; 22 November 2017.

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