There is a palpable sense that the vultures are circling over the Conservative Chancellor, Philip Hammond. A committed remainer before the Brexit vote, Hammond holds the coveted role of Chancellor of the Exchequer in a Government tasked with enacting the public’s vote to leave the EU. The Brexit wing of the party have never forgiven the Treasury for publishing analysis predicting that the average household would be £4,300 worse off a year after Brexit and have since described the Chancellor’s actions as being tantamount to trying to ‘sabotage’ Brexit. Next month’s budget therefore will see Hammond under intense scrutiny from enemies in his own party as much as from the media and the opposition.
To make matters worse for the embattled Chancellor, the Office for Budget Responsibility has recently indicated that it anticipates downgrading its forecast for productivity growth in the UK, meaning that it will have to further downgrade its growth forecast as well. This leaves Hammond less money to work with and crucially means that the Chancellor is falling well behind on his deficit reduction target. For a party which has staked its reputation on economic competence, this is a troubling situation.
At the same time, many of the UK’s public services are struggling to cope with the cumulative effects of austerity under the former Chancellor, George Osborne – schools have seen their budgets fall in real terms, the UK’s eight highest security prisons have lost one quarter of their officers since the Conservatives have been in Government, and the NHS is struggling to cope with increasing demand.
Hammond now faces a choice: he either has to commit to further, deepening austerity measures or relax his fiscal targets to prop up the UK’s ailing public services. Neither option is going to be politically appealing for a Chancellor with enemies on both sides of the House.
As the Chancellor fights for his political life, there is certainly no shortage of ambitious Conservative MPs with their eye on Number 11 Downing Street – one insider described a Cabinet discussion on the budget as ‘14 different job applications to be chancellor’ (although a more on-message participant said it ‘wasn’t about members of the cabinet dividing into doves and hawks, it was about everyone sympathising with the chancellor’s difficult predicament and trying to come up with their own ideas’).
The one detail remaining in Hammond’s favour is May’s unwillingness sack cabinet members. Hammond must take solace from the fact that May was unable to fire Boris Johnson despite his being in almost open rebellion against Number 10. May is keen to avoid any further upheaval during the Brexit negotiating process and the loss of her long-time political ally, Philip Hammond, would be a serious blow.
Nevertheless, after the ‘dementia tax’ manifesto debacle, alienating his Brexit colleagues, and presiding over an economic situation which sees Labour ‘winning on the economy’ at PMQs, Hammond must only be one more failure away from his position becoming untenable.