For somebody supposedly known as ‘Spreadsheet Phil’, the Chancellor managed to show a rare glimpse of humour during his first major set piece event. Jokes at the expense of the Foreign Secretary and the former Chancellor exposed a personal style that many didn’t expect. But while Hammond’s style was light-hearted, the economic news he had to deliver was no laughing matter.
The Chancellor’s first – and now we know also his last – Autumn Statement gives us insights on a number of levels: firstly, what Hammond’s economic and fiscal approach will be; secondly, the political priorities the government is looking to push; and finally, more about the style and nature of government under May.
The economic approach
Economically, it is clear that the new Chancellor is a pragmatist. Where he needs to deviate from – or reset – strict fiscal rules he is willing to do so. But the danger is that for a party who put such much emphasis on fiscal responsibility over the last 8 years, their willingness to rip up these rules so quickly when the context changes has lasting detrimental impact on their credibility.
More specifically, there is an evident jarring between the government’s rhetoric that it is doing everything possible for those ‘Just about managing’ (the ‘JAMs’) and the IFS’ prognosis that the outlook for wages is ‘dreadful’, and that the squeeze on pay will have lasted for more than a decade. Headline measures such as abolishing letting fees and once again freezing fuel duty are welcome for this demographic, but on balance will look pitiful compared to continued pressure on wages.
The political priorities
This has political as well as economic consequences. May has used key moments during her premiership – standing on the steps of Downing Street, her Party Conference speech, her speech to the CBI – to argue that politics has changed and that the government will act radically to help those who are just managing in life.
However, the IFS’s conclusion was that the Chancellor had focussed additional spending on infrastructure and innovation rather than public services or the JAMs. Where the government had a clear choice as to who to prioritise, they arguably opted for business over those on lower incomes.
This – taken with developments such as the perceived u-turn on workers on boards – has led to a line of criticism developing that May is merely ‘Continuity Cameron’ and has lost the radical zeal which she promised when entering Downing Street. This perception that May will talk tough but fail to follow through on her rhetoric of change has the potential for long term negative implications.
It also shows that if JAMs are Downing Street’s priority and ensuring long term business confidence is Hammond’s, then on this occasion it was a narrow victory for the Chancellor.
The style of governing
Hammond’s statement also reaffirmed that the style of government has changed from the Cameron era. If there was any doubt that the age of pre-briefing the majority of announcements was over, then this removed it. Although a few announcements were trailed, there were plenty of rabbits left for the Chancellor to pull out of his hat, including the big one on the abolition of the Autumn Statement.
The accusation that this is a government without a plan and with little clear direction is easy to make, but this Autumn Statement revealed more about the Chancellor’s economic and political priorities, and how it intends to operate. But inevitably it also raised more questions about how the government’s competing priorities will be delivered, and whether the talk of delivering for ‘blue collar’ workers is just that – talk.