Brian Monteith: Hammond has chosen infidelity over Prudence

Thanks to what Chancellor Philip Hammond said in his Autumn Statement, and by implication what he did not say, we now know a great deal more about Theresa May's government that few, including the Prime Minister herself, expected to be in power.

Chancellor Philip Hammond leaves Downing St to make his Autumn Statement

There has been much commentary on the detail of what and where Philip Hammond is spending or not spending and what and who he is taxing or not taxing. This detail is not my concern here, however, for it misses the point: namely that the great conceit of central planning by governments has failed us and that repeating the same mistakes will not bring us economic or social redemption.

By abandoning his predecessor’s most recent revised target of reaching surplus in 2019-20 and actually seeking to borrow far more than originally planned, Hammond has confirmed he prefers economic infidelity to prudence. Worse still, from the lack of any philosophical or moral compass outlined in his speech, we can conclude that the Chancellor does not have a clue about how he will reduce it in future.

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Hammond is crossing his fingers in the hope that our sheer hard work will be enough to see us through. This is a lamentable state of affairs. For too many the pain that some have undoubtedly endured since 2010 will be seen to have been for very little.

It is a well understood axiom of democratic politics that if an administration faces unpopular decisions in its term of office it should make those as early as possible, preferably in the first year, so that the pain may be forgotten by the arrival of hoped-for improvements. The improving climate can then be used to distribute targeted benefits that keep an electorate ­happy and optimistic so that they may renew their support to the government.

When Cameron, Clegg and Osborne came to power in 2010 they followed this approach, but only up to a point. For all the wailing and gnashing of teeth from their critics – which drones on to this day – the consensus has been for British “austerity” to be softer and longer rather than sharper and shorter. It can be argued that the reduction in the deficit by a third and the subsequent re-election of a Conservative government showed the coalition’s plan worked – but it has not – it has been an economic and political failure.

In political terms it delivered the annihilation of the Liberal Democrats while the recent referendum on European Union membership confirmed that David Cameron and George Osborne were not viewed as our political saviours whose word was trusted unquestionably by a grateful electorate. Instead, their fudged reform of EU membership was seen as inadequate against the global forces of change that have been worrying the electorate for more than a decade.

In economic terms the reduction of the deficit has stalled (due to the lack of a supply-side strategy to generate tax receipts) so that the return to surplus has been postponed repeatedly and is now seen as an embarrassment that is best forgotten. The prospect of paying down the national debt looks as elusive as a unicorn winning the Grand National.

Like all political parties the Conservatives are an amalgam of different forces, best described by Rhodes Boyson as the three legs of a stool, where each leg was required for the stool to be stable or it would fall over. Those legs are the interventionist patricians, who tend to be interested in social reform and economic tinkering either to maintain their position in society or because they know what is best for us all.

Then there are the authoritarian hawks, who wrap themselves in the Union Flag and are prone to “hang ’em, flog ’em” policies in justice and defence. Finally, there are the Whiggish economic liberals who are the most philosophical of the three and believe in the moral case for maximising individual freedom within the nation state.

In the post-war period the many Conservative premiers have been drawn from all three of those different legs. Since Thatcher, who economically was a true liberal but on justice and defence was an authoritarian hawk, the Conservative Party has become more and more patrician, accepting greater state intervention with each subsequent administration under Major and then Cameron.

Philip Hammond’s approach to our economy suggests that, for all the clichés and platitudes about low taxes and regulations, May’s Conservative administration is firmly of the interventionist mindset. One only has to look at the growth in state spending and the borrowing required to fund it, to recognise that there remains little difference between the parties of the centre ground – except for their pet hobby-horses and the relative competence of individual politicians.

Our ruling political elite and the broadcast media who report them have not yet fathomed that if central planning cannot work in a totalitarian society – where all the economic levers are at a government’s disposal – then it is certainly not going to work in social democracies where there are fewer levers to pull.

May and Hammond’s brand of politics no more represents capitalism (or neo-liberalism) than Corbyn and MacDonnell’s represents communism (or social justice). Both advocate massive state intervention and the bribing of the electorate through attractive-sounding schemes funded by the taxes of our children and their children.

When their schemes fail to deliver, be it in promised outcomes in healthcare, living standards, productivity or reducing the deficit, the rhetoric is repeated because we are addicted to the belief in the omnipotence of state intervention. More levers must be pulled and ever more levers introduced, resulting in more bills being popped in the post for our children to pay.

That it was the lowest-paid, least-educated and unskilled that voted in greatest numbers for Brexit in the UK and Donald Trump in the US tells us that many people no longer believe politicians like Cameron, Clegg and Osborne or Obama and Clinton – nor their Treasury experts, the Office of Budget Responsibility or the State Department.

Until a chancellor or other political leaders stand up and tell us they will intervene less so we must do more to help ourselves and each other – and thus gain respect for at least being honest – the disenchantment and disaffection with our political system will continue to grow.

- Brian Monteith is editor of