Autumn Statement: Austerity hasn't worked, yet Chancellor's response is much smaller than Britain's big problems demand

House building pledge typifies problems with Chancellor Philip Hammond's Autumn Statement - it's too little action to tackle a much bigger problem. Photograph: Regency Houses from Pixabay (License) (Cropped)

John McDonnell, the Labour Shadow Chancellor, described the Autumn Statement as a budget that does not make up for six wasted years. That after all of the sacrifice, over more than half a decade, despite continuous failures, austerity will continue.

That is not an unfair assessment. For this statement, Chancellor Philip Hammond had to juggle the policy inheritance from George Osborne, meeting the promise of Theresa May to help those just getting by, and the economic pressures that are depressing growth, disincentivising investment and pushing up debt.

The result has been a budget statement that sticks close to the status quo, with only some token, already scheduled, easing measures: the personal allowance advancing to £11,500, the 'national' living wage to £7.50, and the welfare withdrawal taper rate down by just two pence in the pound.

The Chancellor's focus remains upon the broader economy, not least with tax cuts continuing for big business as Corporation Tax falls again to 17%. The promise that these subsidies, and policies like the productivity fund, make to people is that if they help the economy, that prosperity will extend to them.

Yet many of the Chancellor's announcements were effectively cancelled out by the facts. He lauded the fact that the UK has its highest employment and lowest unemployment, with a labour market recovery serving everyone. Yet much of the new work has already been reported as being unstable, insecure and precarious.

Despite confirming plans to increase public investment, that comes on the back of years of delayed, stalled or unfunded infrastructure investment plans that have been shifted from announcement to announcement. Meanwhile economic growth is depressed, private investment remains low and debt is still rising.

And on house building, a necessary step to tackling the damaging housing crisis, Hammond has said he will lead a step change in progress on getting them built. Yet his commitment extended to just 40,000 new homes - a long way short of the hundreds of thousands needed, let alone tackle prices and rents escalating beyond what could be credibly referred to as affordable.

While Conservative spokespeople on the cycling news coverage are keen to deflect their failures onto the uncertain circumstances of the times, the reality is that six years of fiscally conservative government has led to a rise in borrowing and a vast increase, even a doubling, of the national debt. Austerity hasn't worked.

Those 'just about managing', as the Tory government labels them, have made huge sacrifices - with less welfare support, with their frontline services embattled, with work that is more precarious for lower pay. But after six years, there is still no pay off. There is no easing. There is still no succour for falling living standards.

If the Government is serious about helping the poorest, the most vulnerable, those most distant from opportunities and living precarious lives, it needs an alternative plan. Fiscal discipline, bringing down debts to reduce the cost of servicing them, is important. But no major economy is working well enough to provide prosperity for the people they're supposed to serve without help from public funds.

Progressives have to construct an alternative plan, that can return more prosperity to the communities that have made big sacrifices to achieve it, but have been alienated from the rewards by austerity. That means getting on with the work that has been put off, like building homes and infrastructure, tackling the cartels that lock communities out of the product of their own resources, with ideas like community energy co-ops, and doing more to support the most vulnerable with healthcare, social care and welfare.

Theresa May in Birmingham to set out her Conservative & Unionist agenda

Theresa May is setting out her agenda at the Conservative Party Conference at The ICC in Birmingham, city where her Unionist hero Joseph Chamberlain made his name. Image: ICC Birmingham by Bob Hall (License) (Cropped)

This weekend's Conservative Party conference in Birmingham became Theresa May's first attempt to set out a distinct policy platform. A chance to define her own approach to being head of the Conservative Party and Prime Minister, separate from that of the Cameron Government that she inherited.

At the conference some major policies positions were announcement, including setting of a date for the triggering of Article 50, that begins the two-year long process of the UK exiting the EU - for which the government's negotiating position was leaked - and the prioritising, by the Chancellor Phillip Hammond, of spending on housing over the budget deficit.

These policies together produce an image of Britain as the new Prime Minister wishes to see it. But before the larger picture can be assembled, let's look at the pieces themselves.

First, there is the Government's position on Article 50 negotiations. The main thrust of the official announcement was only to establish that the two-year Brexit process will be triggered by the end of March 2017 and that the government was set upon the course to make the UK no longer be part of a supranational institution (BBC, 2016).

From the Prime Minister's own statements, it was clear that she intended to pursue particular priorities, getting UK out of European Court of Justice jurisdiction and establishing new migration controls, that made Britain's continued membership of the Single Market no longer a red line in negotiations (Kuenssberg, 2016) - a huge deviation from the position of the Cameron Ministry and the Conservative Manifesto.

Second, but by no means of less importance, is the decision by the Chancellor to give priority to infrastructure spending over paying down the deficit (BBC, 2016{2}). Few shifts could more dramatically demonstrate that the Cameron-Osborne era is over than to decrease the priority of tackling the deficit, which has been held over all government spending decisions for six years.

Compared to the leanness of Chancellor Osborne's approach, the dropping of the 2019-2020 target for eliminating the deficit and now a plan to invest in the UK's housing and transport, and even new borrowing to do so, is a big leap. Chancellor Hammond has called the shift a pragmatic response to new circumstances (BBC, 2016{3}) - part of the more mundane, pragmatic attitude that has replaced the 'flash' of the Cameron-Osborne era (Kuenssberg, 2016).

Yet despite what the Chancellor says, expert opinion has for years now (Elliott, 2016) called on Osborne to change tack and reject austerity as damaging to economic prospects in the UK. For Labour, who have spent six years being crucified for its pro-spending attitude its hard to say whether they will feel vindicated or bitter at the change of direction in the Conservative Party.

So what kind of picture do these pieces make when assembled? What do these key policies add up to?

Earlier speeches from Theresa May's leadership mentioned her admiration for Joseph Chamberlain and expressed an intention to restore the place of Unionism in the Conservative & Unionist Party. Chamberlain's two most famous projects were to lead, as Mayor, the rebuilding and reordering of Birmingham and, as an MP, to lead the opposition to free trade and champion trade tariffs between the British Empire and the rest of the world.

Chamberlain's attitude made an us and them of the English-speaking British Empire and the rest of the world, putting 'British' priorities first. While the barriers he put up around Britain served to subsidise and protect domestic business, they did so mainly by hurting the poorest - as the Liberals of the day pointed out with cold facts (Marr, 2009). In its day Chamberlain's aggressively nationalist & imperial vision was ultimately defeated by the Liberal Party of Asquith, Lloyd George and Churchill.

That sense of national unity, in distinction between a British way and everyone else, seems present in May's vision - less individual and competitive than Cameron's, more social and corporate. So inspired by Chamberlain does Theresa May's own platform seem, that announcing her positions at a party conference in Birmingham seems not to be a coincidence but rather a purposeful statement. A symbol of the increased prominence of Unionism within the Conservative brand.

In her pursuing her independently British path, some sort of Chamberlain-esque increase in the will to use the proceeds to fund pragmatic interventions that improve the state in which workers live would be appreciated - especially compared to the austere whittling of front line services and civic spaces of her predecessors.

Yet May's own scepticism of 'supranational' institutions risks putting Britain behind a new set of barriers, with many of the same problems as those erected by her hero. Whatever her Government's slogan proclaims - "A Country That Works For Everyone" - Unionism, by its very nature, buys into the idea of exclusivity. The new Prime Minister will have to go a long way to convince progressives that those outside of the highest echelons will ultimately benefit from, and share in, the spoils of this British corporation.

Cameron Premiership in Review: In the end, there was no one left to hide behind

After six years as Prime Minister, David Cameron leaves office having lost the EU referendum argument not just in the country but within his own party. Photograph: Prime Minister David Cameron - official photograph by Number 10 (License) (Cropped)

David Cameron came into office at the head of Britain's first coalition government since the wartime National Government. The message, as he stood in the Rose Garden to begin his double act with Nick Clegg, was a promise of a different form of government (BBC, 2010). More open. Less overbearing.

Yet the laughs and relaxed atmosphere of the Rose Garden came to stand for other things over the course of Cameron's six years in office: a tendency to let others take the hits and an appearance of detachment from the painful realities of the recession and austerity programme that followed.

Cameron certainly rebuilt the Conservative Party as an electoral force and he made a stern effort to try and modernise it, often against much resistance (Hennessy, 2010; Grice, 2014). As PM, he clearly wanted to be remembered as a reformer (Hoskin, 2016).

But that ambition is likely to be overridden by the gap that has opened between Scotland and the rest of the UK - which with another referendum may result in a full division - and of course the EU referendum, that Cameron lost, and will have a long lasting and drastic impact on the future of the UK.

There have been positive reforms. The introduction of gay marriage is a stand out achievement, as Jeremy Corbyn stressed in David Cameron's last appearance at Prime Minister's Questions. The Conservative-Liberal Democrat Coalition was itself also a landmark moment for UK politics that until that point had been majoritarian and adversarial to a fault.

And yet even as the PM told the public that 'we're all in this together', part of a big society that government would support rather than direct from the centre, the twin impact of recession and austerity saw poverty deepen. The spread of food banks to help the homeless or those unable to afford food (Williams, 2015), the rise of welfare sanctions (Ashmore, 2015), and the continued rise in the cost of housing have made that promise seem hollow.

That attitude has been reinforced by policies like corporation tax being regularly slashed even as the welfare bill has been squeezed. It was also reinforced by his approach: 'flashman' as he was nicknamed, quick to dish out the put downs and ad hominem insults that made him appear arrogant and dismissive.

Cameron's time as PM was not short of scandals, from the appointment of Andy Coulson to his family being caught up in the Panama Papers revelations. But nothing ever seemed to stick to the now former Conservative leader. Not even NHS doctor's going out on dramatic strikes.

That is perhaps most starkly demonstrated by the way in which the Tories where the ones who benefited at the polls from all of the positives of the Coalition while their Liberal Democrat partners where electorally crushed, seemingly with blame for all of the negatives.

And there were always excuses. The previous Labour government received the main brunt of the Prime Minister's criticism, with economic problems usually prefaced with the work Conservatives were doing to make up for the 'mess' that Labour left (Watt, 2010).

Ultimately, Cameron's premiership comes to an end because he picked a fight on the EU referendum that he couldn't win and it is perhaps significant that it was a fight with the right-wing of his own party. As PM, Cameron's biggest challenge has always been wrestling with his own party rather than fending off the leaders of the other parties.

Even with the pain of austerity, the opposition has always been so divided that it is almost unsurprising that Cameron, with the help of his own party, had to be the orchestrator of his own downfall. Progressives will not to be too sad to see the end of his tenure. But the future after Cameron is uncertain.

Trying to moderate his party's position, Cameron rebuilt them as a political force. Without him at the helm, with the opposition divided, a question now hangs over what the new Tory leader will use that platform to pursue next.

Contests & Mergers: Is talk of a Labour-Tory merger just an effort to force party members to accept status quo candidates?

Manifesto tag lines from the Labour and Conservative parties at 2015 general election.

With two leadership elections under way for Britain's two biggest political parties, David Cameron's call for a new captain to steer the ship seems to have cast the country adrift. In such messy times, its not unusual to hear odd or interesting ideas for how to get back on course.

But in British politics it is certainly far from usual to hear talk of Conservative and Labour MPs possibly being willing to put aside their tribalism and merged with each other. The proposal seems to be that the so-called moderate members of each party will withdraw and together form a new Centre party should the more extreme nominee for each party's leadership emerge the victor.

Against the background of that threat, the memberships of both parties are being pressured to put aside their extreme candidates to maintain the status quo. For the Conservatives that meant pressure to reject Andrea Leadsom in favour of Theresa May, and for Labour the pressure is to back Angela Eagle's challenge to Jeremy Corbyn's leadership.

Tory Leadership

On the Conservative side, Brexit was the big divide between the nominees. Of the two, Andrea Leadsom was clearly the outsider, the challenger to Theresa May (Kuenssberg, 2016) - who is very much the candidate representing the present Cameroonian direction. May is also most clearly the one likely to be able to continue without a new election, by representing continuity with the manifesto and policies of the Cameron Ministry.

Leadsom garnered some attention during the referendum campaign as she stood alongside Boris Johnson and Gisella Stuart on the stage for the ITV and BBC debates, arguing for Britain to exit the European Union. So much so that, with Boris Johnson's withdrawal, she was easily able to beat the other Brexit nominees - including Michael Gove, who seems to have only hurt himself with his cloak & dagger antics.

In contrast, May remained largely aloof from the EU referendum campaign. However she nonetheless courted controversy when, despite offering some support for Cameron's pro-EU stance, she suggested that the British commitment to the European Convention of Human Rights should be dropped as an inconvenience (Asthana & Mason, 2016) - a stance many have felt is consistent with her hardline positions as Home Secretary.

As Home Secretary, May has been criticised for her stances on a number of contentious issues. From her handling of the subject of Islamist extremism in schools (Adams, 2014), to her continued efforts to push through the Snooper's Charter (Mason, Asthana & Travis, 2016), and of course for her stance on the ECHR, she has been criticised by progressives. She also, and of particular relevance to conservative voters, faced criticism for her management of the border agency when it was found not to conducting proper checks (BBC, 2011).

For her part, Leadsom managed to attract most of the controversy to herself in the course of the contest. She made some ill-judged and troubling comments, from allegedly criticising Theresa May for not being a mother (Pearson, 2016) to saying she opposed equal marriage because it was 'damaging' to Christians (Cowburn, 2016). In fact, the controversies have generated so much heat that this morning Leadsom in fact withdrew from contention - much as Chuka Umunna did from the Labour contest back in 2015.

That left Theresa May to take up the Conservative leadership unopposed. While May is likely to pick up threads from Cameron's ministry, there will likely also be a turn even deeper into social conservatism that will worry progressives.

Labour Leadership

Across the floor, the intrigue that has racked the Labour Party since the referendum has moved on to a new chapter with the breakdown of talks between Deputy Leader Tom Watson, representing the Parliamentary Labour Party, and party Leader Jeremy Corbyn - which were being mediated by trade union leader Len McCluskey (The Guardian, 2016).

This seemingly final inability to close the breach has led to Angela Eagle finally announcing her long touted challenge (BBC, 2016). Pitching herself as a practical socialist, using the long favoured New Labour line that its fine to have principles but you also need to speak to a broad audience, Eagle will stand ostensibly against Corbyn in what has all the making of being the memberships' candidate versus the PLP's candidate.

Complications and potential legal challenges aside, over whether or not Corbyn will be allowed on the ballot without nominations from MPs - his opponents seem very keen to block him - such a contest does not seem to be something likely to unify the already shattered party. Of course on the one hand,  as a gay woman it would certainly be a welcome step forward in representation for the Left to have Eagle in Labour's most senior political position at Westminster.

However, her policy stances have been deeply in line with those of New Labour: she supported the Iraq War and was against an investigation; she supported New Labour's authoritarian domestic policies, like ID cards, 90 day no-charge detentions and stricter terms for asylum; and she also abstained on the Welfare Bill that sought to cut tax credits (Sinclair, 2016).

Corbyn's election was as much, if not more, a rejection of New Labour - its methods, its language and its hybrid of social democracy and neoliberalism - as it was an endorsement of the Labour Left's brand of democratic socialism. If both face the membership, it seems hard to see Eagle winning over Corbyn's supporters, or reconciling them with the mainstream if she wins.

Is a Labour-Tory merger really possible?

In the shadows behind the leadership contests - whether simply a way to galvanise their respective partisan supporters into stopping their extreme wings from taking hold, or as a genuine possibility - a merger of the mainstream of the Conservative and Labour parties has been proposed (Boffey & Helm, 2016).

Historically, such a merger would seem to be impossible. For nearly a century Labour and the Conservatives have been locked in a polemic struggle, government versus opposition - two opposite, though undeniably converging, forces that have defined the British political landscape and formed the basic reference points for any discussion of politics.

However, it wouldn't be entirely without historical precedent. After former Labour leader Ramsay MacDonald was expelled by the party, his new National Labour worked closely with the Tories until being fundamentally consumed by them. During war time, the two parties also showed they were able to work alongside one another amicably.

The referendum has also changed things, even if only temporarily. At no time in recent memory have the mainstream of the two main parties been so closely aligned, with good will so clear between them. May's unopposed run to the Conservative leadership will probably scupper any plans before they could get off the ground, but Labour's crisis makes some sort of realignment seem inevitable.

When a progressive alliance looks closer to being assembled than it ever has, a plan to bring together the so-called centre would be a big setback. If an effort to bring the 'Centrists' together in one large party of Democrats was successful, it would surely suck in Liberal Democrats too. That would leave the UK with a single major political party that is successor to the only three that have governed in more than a century.

The formation of such a party, one massive, pro-establishment, state party would be pretty much the opposite of the pluralism that Britain sorely needs. After the chaos of the referendum, the Conservatives seem to be steadying their ship while the Left remains caught in a storm and likely to run aground.

The next move appears to be in the hands of Labour MPs. The choice ahead of them seems to be between a pluralist progressive alliance, even more pro-establishment centralisation and attempting to simply prop up the shattered husk of the Labour Party - a path favoured by at least one former leader (Aitkenhead, 2016). It would be a brave person who bets on what will happen next.