Brian Monteith: Autumn Statement could define UK and Brexit

Philip Hammond will deliver his first Autumn Statement as chancellor. Picture: Christopher Furlong/Getty Images

Philip Hammond will deliver his first Autumn Statement as chancellor. Picture: Christopher Furlong/Getty Images

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The Autumn Statement could be a defining moment for the Tories, the UK and Brexit, writes Brian Monteith

There are moments in politics that define a person, a party or a period that then becomes the accepted narrative, the perceived reality for at least a generation until the spell might broken by a reassessment of what really happened.

This week’s Autumn Statement could be one of those defining moments be it for the Chancellor, the Conservative Party or the process of leaving the European Union.

By example there are two obvious instances where such defining mythology was established and then persisted, both involving Margaret Thatcher and public finances.

The first budget of Edward Heath’s government included changes to the provision of free school milk in state schools resulting in protests that branded the new education secretary as “Margaret Thatcher, milk snatcher”!

The catchy insult stuck and was never quite forgotten, and yet was undeserved.

READ MORE: Scotland faces fresh austerity drive as more cuts planned

Few knew that she had strenuously opposed the change in Cabinet but had it forced upon her by the Chancellor Anthony Barber with the support of the prime minister and his colleagues.

Indeed it was only her fierce defence of the benefit in kind that ensured it continued to be provided free to children of parents receiving other welfare support.

Later, Thatcher was accused of using Scotland as a guinea pig to test the Community Charge – commonly branded the Poll Tax – when she had in fact resisted the tax being introduced at separate times across the country.

She had been insistent that the new scheme should commence in 1988 but the then secretary of state for Scotland George Younger and Scottish party chairman Jim Goold harried her persistently to let Scotland start earlier such was the public outcry following the rates revaluation Younger had allowed.

Again, a false public perception was built that stuck, this time that Thatcher and her party had no care for Scottish feelings when it was the fact that she was willing to take advice against her own better judgment in what she was told was Scotland’s interests.

Now, when Chancellor Philip Hammond steps up to the Dispatch Box there are such big issues at stake that for good or ill he can shape the public perception of not just himself but Theresa May, her government and the Brexit negotiations in one act of brilliance or naivety.

One factor greatly in his favour is that he is not George Osborne. When it came to fiscal or financial gaffes the past Chancellor became worthy of the epithet “Boy George” such was the regularity of his “omnishambles” budgets unravelling within days.

That there has been a relative economic recovery in Britain since 2010 is beyond dispute, how much of it has been due to Osborne’s decisions or despite them is more open to debate.

Over time Osborne had managed to salvage some of the self-inflicted damage to his reputation and the 2015 Conservative general election victory owed something to the perception that he was a safer pair of hands than shadow chancellor Ed Balls. Within a year that influence has evaporated more or less completely, for his behaviour in the EU referendum changed everything.

His fantastic scaremongering, borne from repeated interventions forecasting great economic catastrophes were believed by few voters if any at all, and when so much of it failed to materialise his fate was sealed.

If Hammond is savvy he will have learned from Osborne’s misfortune and recognise he has many audiences to please on the way to winning the respect a Chancellor requires to gain credibility with the markets. He needs to win over the many doubters he has within his own party due to his membership of the campaign to remain in the European Union.

To do this he needs to play up his willingness to see the UK become a world leader in Free Trade by committing to as many deals as possible. He could also help his government’s case by giving further reassurance to EU citizens that are already in the UK and wish to stay and build the country’s success.

He has also made it clear that the Osborne style of austerity economics is over and that an expansion of investment in infrastructure is imminent.

This week we can expect far more detail about how he intends to achieve this without dropping the intention of moving the public finances into surplus so that the £1.5 trillion of public debt can finally begin to be paid off.

Like the Budget, the Autumn Statement can also shape the perception of opposition parties depending on how they react to the announcements.

It is for this reason that yesterday John McDonnell, the Labour shadow chancellor told Andrew Marr that Labour would not object to thresholds being raised for the 40p tax rate, if that is indeed announced.

This has presented its own particular fallout, with Scottish Tory spokesman Murdo Fraser quick to point out that because First Minister Nicola Sturgeon and Scottish Labour leader Kezia Dugdale oppose such a tax cut they are both more left wing than Jeremy Corbyn.

This suits the Tories who argue that the SNP’s willingness to raise taxes or at the very least allow them to drift upwards illustrates what an independent Scotland would look like while emphasising that the only party providing genuine opposition to Sturgeon is the Conservatives.

Hammond is seen as a cautious man, and expected to be a safe pair of hands but we should not be surprised if he still has a few surprises to announce.

There is a great deal of room for tax reform that makes our system simpler, and while we should not expect any radical announcements he could begin the process by initiating reviews of corporate and capital taxes as well as looking to lower the burden on personal incomes. When Hammond sits down after his speech we should expect to have a better sense of what he and Theresa May are about.

If he does not achieve that then the Conservative government will not be far from crisis as confidence begins to seep from the government benches.

With such a slim majority and the travails of the Brexit negotiations still to come the government is more precarious than is generally realised. Having a weak opposition helps build the perception of a strong government, but perceptions are often based upon false myths and it is for Hammond to ensure he does not foster any like those that afflicted Margaret Thatcher unjustly in the 70s and 80s.

l Brian Monteith is Editor of ThinkScotland.org

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