One of the most frequently repeated anecdotes about Philip Hammond is wrong. It is correct to say that in 2013, the then defence secretary provoked nervous laughter in a cabinet meeting by suggesting that the United Kingdom should join the Schengen Agreement, the EU’s passport-free travel area. But the usual interpretation is incorrect. The story is often used to illustrate Hammond’s unerring commitment to the European project, with support for Schengen considered to be a mark of Europhilia that is outstripped only by advocating joining the eurozone.
Yet Hammond was not expressing a particular devotion to the EU; instead, he was making an ill-advised foray into the enduring dispute between George Osborne, the then chancellor, and Vince Cable, the then business secretary, and the anti-immigration stance of Theresa May at the Home Office. Back in 2013, May’s tough rules on visas were making the UK less attractive to business investors – particularly in comparison to Schengen countries, where a visa obtained in one allowed access to them all. Why, thought Hammond, should Britain compete with the Schengen countries when it could join them? This would give Osborne something to offer business leaders, while abiding by May’s visa limits. Therefore, his suggestion to join Schengen was not an ideological “tell”, but an attempt to resolve an internal dispute.
The true story is more interesting because it reveals Philip Hammond’s fundamental weakness: he has no real political sense. Taking the United Kingdom into Schengen would have resolved that specific cabinet argument on that specific day. But it would have aggravated the Conservatives’ long-running divisions over Europe and upset those voters – often Tory supporters – who prize border control above all else.
This week’s Spring Statement was another example of that tendency. Hammond decided last year to replace the Spring Budget and Autumn Statement – two big “fiscal events”, in the language of the Treasury – in favour of a single Budget in the autumn. The decision makes sense from an economic standpoint, discouraging stunts and allowing for better planning. (The UK was unique among major economies in having two fiscal events each year.) But it means the Chancellor has given up an opportunity to set the terms of political debate earlier in the year.
This is not to say that he doesn’t “do” politics: he understands the need to engage in combat, which is why he attempted to bolster his internal standing by enlisting Kwasi Kwarteng – considered to be one of the brightest operators on the pro-Brexit right of the party – as his parliamentary private secretary. He is also alert to the internal manoeuvring of Jacob Rees-Mogg, the right’s new darling. It’s just that Hammond does politics badly and has no natural instinct for it, unlike his predecessor, George Osborne, who this week unveiled his redesigned London Evening Standard.
One Tory minister in a safe seat told me that when she used to ask Osborne for something, he would first ask her how big her majority was – and then reply, with a smile, that it was too large for her enquiry to be worth considering. Hammond takes pride in judging a policy on its merits rather than its implications for Tory marginals.
To an outsider, that’s admirable. But most Conservative MPs believe that the blunt question of how the party might regain its majority needs to be addressed sooner rather than later. Why miss a chance to spread around a few giveaways, and broadcast any good news the Treasury can find?
All Hammond was willing to say on 13 March was that, “if in the autumn the public finances continue to reflect the improvements that today’s report hints at… I would have capacity to enable further increases in public spending”. To translate: hold on until the Budget in the autumn.
Backbenchers feel that is a lot to ask. The collapse of the outsourcing company Carillion and the inability of Britain’s water network to cope with the cold snap both gave credence to Jeremy Corbyn’s big argument: that privatisation and Britain’s economic model simply aren’t working. Hammond’s statement could have been used to regain control of the terms of the economic debate and return the conversation at Westminster to more comfortable Conservative
territory. For good and ill, every Budget Osborne gave was, at least partly, about setting up the terms of the confrontation between the man he used to call “the boss”, David Cameron, and Ed Miliband in the 2015 general election.
But Hammond’s “boss”, Theresa May, is unlikely to be in Downing Street at the time of the next election, which is scheduled for 2022. Indeed, she continues on the tacit understanding that she’s merely minding the shop until a Brexit agreement is reached. When she goes, the Chancellor is likely to follow her into the political wilderness: his politics are out of fashion across the party. He is not Eurosceptic enough for the right and his fiscal conservatism is disliked by the red Tories. Neither he nor May are in a position to set out a long-term plan, even if they had any interest or aptitude for it.
That leaves the Conservative Party with little option but to revert to what seems to be its default setting in this parliament: attacking Jeremy Corbyn. At the next election, Corbyn will be treated as a prime minister-in-waiting – with all the extra scrutiny that brings. However, the public’s fear of Corbyn’s past wasn’t enough to give the Tories a majority in 2017, and it may not be enough to retain their grip on power next time. There is currently little love for George Osborne – now reborn as a trenchant critic of the current leadership – at the top of the party. But when voters next go to the polls, the Tories may grow nostalgic for their “political Chancellor”.
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This article appears in the 14 Mar 2018 issue of the New Statesman, Putin’s spy game