Theresa May’s recent remarks to the Conservative conference about “the good that government can do” upended 25 years of Thatcherite consensus within the Party about harm that government actually does. Indeed, there is a case for claiming that the latter view has been a Tory fundamental since at least the war. In principle, the Prime Minister was right to make what you could call a market correction. The Conservatives are not simply a party of economic liberals. But in practice, the timing was risky. We have already pointed out that a large slice of the activist base didn’t like it, and that this has consquences – namely, to make May even more reliant on delivering a hard form of Brexit to keep it happy. Furthermore, this section of her conference speech has caused a wider problem.
To understand it, one has to look ahead to post-Brexit Britain. It could turn out to be what this site calls a Closed Britain – protectionist, averse to big infrastructure decisions, suspicious of foreign investment, and featuring unreformed public services and rigid social protection. Or it could become what we call Open Britain – free-trading, enterprise-friendly, eager to attract investment from abroad, reforming at home, and resolute in agreeing major infrastructure projects. The country must either choose the second or, ultimately, see it imposed by necessity: the way the world works doesn’t give us a choice. But the effect of the Prime Minister’s speech, combined with her belief in a “real industrial strategy”, has made some business people nervous.
It would be an error to confuse bigger businesses with all of them. However, it is plainly not just the usual suspects who feel that they were assailed as a bunch of tax-dodging, pension fund-raiding, bonus-grabbing shysters. That this is not May’s view at all is beside the point. Business people are not usually political sophisticates. They weren’t tuned into the Prime Minister’s wavelength as she made her pitch to Erdington Man. What many of them heard instead was a prospectus for a Closed Britain. This would have been unfortunate at any time. But with Britain poised to embark on its post-Brexit journey, for which business confidence is important, the timing was star-crossed indeed. The Article 50 process involves uncertainties that are unavoidable. Creating avoidable ones should be, well, avoided.
What is required to help reassure business is a Chancellor of the Exchequer who ideally is a businessman himself – and one, furthermore, of a reassuringly uncomplicated Conservative kind. He should have a history of support for a smaller state, free markets, lower taxes, less regulation, and the rest of the market verities. Like his predecessor, George Osborne, he should be a political heavyweight. But unlike him, he should stick to his day job in Number 11, concentrate on economic policy, and not co-run the Government’s campaigning strategy from Number 10. Indeed, it would be no disadvantage for him to be thought of as rather boring since, with so much post-referendum excitement around, a dash of boredom is required to help steady the ship.
Philip Hammond might almost have been laboratory-designed to meet these requirements. In private, for all this site knows, he may come on all Harry Hill. In public, he has the animation of driftwood. It is hard to believe that he was ever anything as dramatic as a Goth. The jokes in the text of his own conference speech were strangely punctuated with exclamation marks. Like this! His team presumably believed that drastic measures were needed in order to ensure that his audience got them. This site mulled referring to him from then on as Philip Hammond! but thought the better of it in the end. All this sounds like criticism of the Chancellor, but it really isn’t meant to be so. It is a plus to have a man in charge at the Treasury who is reassuringly dull.
It gets better. Hammond is a proper businessman – indeed, a millionaire, for those moved by these things. He is a free market Conservative. You know he will be for Open Britain without even having to ask. His critics claim that he is a Remainer, that he is making heavy weather of Brexit and that he can’t work with the Prime Minister. It is true that the negative briefing from the Treasury about Brexit is a bad portent. But so is the negative briefing about Hammond from some pro-Brexit Ministers. And in making the internal case for the maximum degree of Single Market access and the minimum reduction in EU immigration the Chancellor is doing his job. Brexit will bring long-term growth if the right decisions come with it. But the Treasury is tasked with guarding the short-term too.
It is even a plus that Hammond was a Remainer (like the Prime Minister herself). Many business people were for Remain and most exporters want as much continuity as possible. That a Chancellor is in place who understands how they tick is a positive. The deal within the Government should be as follows. Hammond is going to have to accept a cut in EU migration and, therefore, that we cannot continue as a member of the single market – or ship out. Nor can he take the departmental lead on Brexit. He must take that on the chin. But he has to help steer an economy reliant on financial services and cheap imported labour. He must persuade investors that Britain will stay open for business. And he will shortly deliver an Autumn Statement drawn up in the aftermath of a political and policy earthquake.
So the Chancellor’s critics should cut him a bit of slack. But both he and the Prime Minister need to march closer in step – and not get ahead (or behind each other) on, say, Mark Carney’s record at the Bank of England. And there is a fine line between disagreement and division. Restored Cabinet Government, with Ministers debating policy in committees, is a good thing. Leaks and counter-leaks are not – grist to our journalistic mill as they may be. Resignation chatter is part and parcel of these febrile times. And, in the last resort, the Chancellor is not irreplacable: no Minister ever is. But he is a symbol of Open Britain, and will work for it too. Hammond is unlikely ever to burst into a chorus of “Show me love“. Such a demand would be a bit on high side. But he deserves a bit of understanding.