In his autumn statement, Philip Hammond said:
“In view of the uncertainty facing the economy, and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019-20.
But the Prime Minister and I remain firmly committed to seeing the public finances return to balance as soon as practicable.
While leaving enough flexibility to support the economy in the near-term.
Today I am publishing a new draft Charter for Budget Responsibility, with three fiscal rules:
First, the public finances should be returned to balance as early as possible in the next Parliament, and, in the interim, cyclically-adjusted borrowing should be below two per cent by the end of this Parliament.”
Or, in other words, the uncertainties of Brexit require more fiscal flexibility than was built into George Osborne’s plans. The Chancellor’s predecessor aimed to deliver a surplus by the end of this Parliament.
This might well not have been delivered: Osborne’s original proposal, set out in the Conservative Manifesto of 2010 was “a credible plan to eliminate the bulk of the structural deficit over a Parliament”. The Coalition Agreement promised to “significantly accelerate the reduction of the structural deficit over the course of a Parliament”.
As it turned out, Osborne cut the deficit by half as a proportion of GDP – Alistair Darling’s aim in 2010. (The deficit is of course not the same as the structural deficit, just as balancing the Budget is not quite the same as running a surplus).
If our survey’s findings are representative, over half of Party members either agree with Hammond or are in unity mode or both. But even so, almost a third want a policy more like the one that Osborne proclaimed. So a significant proportion of them are deficit hawks.
Meanwhile, a small minority – about one in ten – apparently believe that elimating the deficit isn’t all that important, and two in a hundred are either tweaking the tail of the survey or think it isn’t important at all. Or else a handful of respondents are having a laugh.
My take is that the Party is more unified than it has been since roughly Margaret Thatcher’s Bruges speech – since a decision about Britain’s EU membership has been taken and, however they voted, most members now want the Government to get on and implement it.
None the less, the next election is over three years distant (and most of our survey respondents, unlike William Hague this morning, want to keep it that way), so there’s plenty of time for things to change.