UK Politics

A Brave New World

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Theresa May danced her way on to the stage at the Conservative Party Conference last month and made a historical announcement; austerity is over. In a speech which was rather low on policy this was a momentous declaration. But as jubilant as the Prime Minister may have been to deliver such a statement, it is likely that such feelings were not matched by those in the Treasury. With Philip Hammond at the head, it must now turn this rather abstract notion into reality, albeit with a sense of unease.

Yet, even a fiscal hawk like Hammond could somewhat understand the ambition behind May’s statement. The Tory party has been battered by Brexit. This is especially the case for May herself, although, ironically, she remains where she is exactly because of it. She is the true embodiment of #DespiteBrexit. As such, while she retains her position as leader, the Prime Minister took the opportunity in Birmingham to show the nation that her party is a viable alternative to Labour in the post-Brexit political scene. Part of that pitch was an attempt to showcase to the electorate that better times are ahead, that the ‘hard work has paid off’.

However, the concern for those still committed to their fiscal conservatism, like Hammond, is the way in which such an ambition has been expounded. Two major worries arise. Firstly, there is the adoption of the word ‘austerity’ itself. At no point did Cameron or Osborne label their project of getting Britain back into the black in such a way. On the contrary, it was a project connoting to a more responsible aim, that of ‘the long-term economic plan’. Thus, the idea of cutting the deficit dominated the political debate for years, and the Tories did well in utilising it to show off its fiscal responsibility in stark contrast to spending-hungry Labour.

But by now conforming to the same denigrating language pushed by the opposition, the Tories risk associating themselves with more downsides to its previous policies than the party was ever willing to admit. From crippling local councils to the deep cuts to welfare, the fiscal policies of the last eight years have not been without their hardships. Now the Tory Party must face up to these in a midst of a credibility-gap unintentionally caused by its leader. Ultimately, there is a risk that May’s proclamation amounts to affirming that the only way is up for public spending. Yet while the £84 billion boost for the NHS may evidence this, other departments are yet to have their fiscal fates confirmed.

This then leads to the second major concern. Many government departments will now be lining up at the doors of the Treasury in an attempt to secure more money for their agendas. While Osborne was more stubborn when it came to deficit-reduction, May’s insistence on a looser approach will now invite ministers to be more ambitious in their requests. A few billion here, a few billion there, and soon fiscal responsibility may look all but a distant mania. It is a balancing act that Hammond will have to contend with for the foreseeable future.

Yet, note the small print. In same speech in which the end of austerity was proclaimed, it was qualified by May being able to succeed in negotiations with the EU on Britain’s withdrawal from the bloc. Such a warning was also repeated by Hammond in his Budget speech, declaring that a ‘Deal Divided’ would be possible only if ‘negotiations deliver a deal’. Thus, by attaching the new fiscal vision to Brexit, No. 10 have not only added conditions to the sweeteners in the Budget, but have also made the idea of voting down the deal that May brings back to the Commons even more daring.

Even so, the significance of Hammond’s budget goes further than Brexit. It is an overall attempt to unite the Tory party around a policy area which earned it success in past; the economy. Hammond was able to temper May’s ambition by clarifying that ‘austerity is coming to end’ rather than ending abruptly. This autumn budget was thus more about laying the groundwork, but not just for future public spending, but also for the party. The Tories need to show an optimistic vision for the country to make it politically competitive. This will be especially important for when Brexit eventually takes a step back from the spotlight, possibly making room for another general election.

Navigating these new waters will not be easy, but at least the Tories now have something to aim for. The crucial question however is who will lead the party onto this new route. After all, the fate of this latest budget, and the party at large, depends on the answer.

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