The backdrop slogan from which letters fell during Theresa May’s Conservative conference speech was “Building a country that works for everyone”. The collapse was symbolic.
It was the old slogan from Nick Timothy’s days as her co-Chief staff. A new one drawn up for the speech was “the British Dream”. Nothing much has been heard of it since. The old has dropped away and the new has not replaced it.
The main task of Philip Hammond’s Budget next week must be to fill this self-created gap. He must aim to help give May’s second government something of the sense of purpose of her first one. She has not recovered from the self-inflicted damage of last summer’s election, and her party is spooked by the advance of Jeremy Corbyn. “Take away this pudding,” Churchill said. “It has no theme.” Tories fear that voters will reach the same verdict on them in 2022, or before.
Some will protest that budgets are all about economics, not politics – or should be. But the Budget is at heart a political event. It serves no economic need that could not be met by a series of announcements throughout the year (which is why papers sometimes run articles, before it takes place, suggesting that it be scrapped). As the Chancellor’s annual brandishing of the Budget Box suggests, the occasion is political theatre.
But the best Chancellors have made it theatre with a purpose. Geoffrey Howe’s 1981 budget was about something bigger than lower borrowing. It came to represent Britain living within its means. Nigel Lawson’s 1988 one was about more than slashing the top rate of tax. Behind it was a deeply-held belief about what creates prosperity.
Hammond doesn’t have a three figure Government majority to back him up, as Lawson did. He doesn’t even have a two figure majority, like Howe. He is thus in no position to do much of what this site would like, and some centre-right commentators blithely urge him to do none the less – namely, to balance significant tax cuts with meaningful public spending reductions (though he could at least use an Affordability Commission to prepare the way, not least to find a way back to improving social care).
However, he can at least ensure that what he does next week tells a coherent story about a core purpose of Conservative government: namely, setting a framework that helps to create prosperity – especially for those who don’t enjoy it, a requirement of social justice. This will be a tall order. Living standards have been under special pressure since the Crash, and from a broader squeeze since the mid-2000s, driven by the emerging Fourth Industrial Revolution that Alan Mak explored recently on this site.
The Chancellor is fascinated and troubled by Britain’s poor productivity – hence the National Productivity Investment Fund that he announced in his Autumn Statement last year. If it is not substantially improved, real wage rises are not sustainable. He will need to flesh out the problem and potential solutions in human terms. If he borrows more for infrastructure spending, as he should, he must explain how better transport for work can boost productivity and pay, especially in the Northern Powerhouse and Midlands Engine zones. If he announces supply-side reform for housing, as we hope he does, he must spell out how people can’t take the jobs they want if they can’t make the move they need. If he builds on the Conservative manifesto plan to switch resources from higher to technical education, he must communicate how a better-trained workforce becomes a better-paid workforce.
That last policy ought to appeal to the two-thirds of young people who aren’t in higher education, and have sometimes been forgotten since the election amidst the Great Conservative Student Panic. Elsewhere, the logic of our own ConservativeHome manifesto still applies – namely, that tax help for poorer workers is likely to benefit the younger voters with whom the Party is now preoccupied, as this site was when we drew up our proposals and has been since. We proposed starting the phasing-out of NIC contributions by eliminating it for the under-25s. Hammond should also ponder easing the withdrawal rates for Universal Credit, as James Kirkup of the Social Market Foundation suggested in his recent piece for our Budget series.
The Chancellor has sources of advice nearer to home. He may be cramped for manoeuvre, but backbench Tories are reaching for the sky. Nick Boles wants more compulsory purchase of land for homes, use-it-or-lose-it provisions for housebuilders, and a Grenfell Housing Commission to build more houses, financed by a new bond. The Centre for Policy Studies has already published Rishi Sunak’s proposals for free ports, and its New Generation project promises a mass of plans from other Conservative MPs. George Freeman conjured an Ideas Festival out of nothing and is drawing up its next phase. Some of our manifesto plans from 2014 look ahead of their time, especially housing proposals for planning reform, garden cities and the building of new homes for sale by councils, housing associations and other social landlords. And if Hammond wants something a bit left-field (right-field?) for his Budget, he could do worse than take Fiona Bruce’s advice about resourcing family hubs.
None the less, he must be constrained by the framework that he has already set out. We do not believe that tearing up the pursuit of a balanced budget would be either politically persuasive or fiscally responsible. This means that any tax cuts will broadly have to be offset by rises elsewhere. That will be a nightmare for him to negotiate, given the tangle in his first Budget over NICs. One way in which he can shore up backbench support, and do the country an urgent service, is to make it clear that Brexit contigency will be properly funded. This is a must. He would also be wise, given the need for business investment as we leave the EU, to go light on the more adventurous Tory ideas about recasting company governance.
What the Chancellor perhaps needs most of all next week, however limited his reach, is what you might call a touch of the Halfons. We don’t agree with all the Harlow MP’s ideas, such as renaming the Conservatives. But he is an enthusiast for telling a story of aspiration, jobs and opportunity – of how a mission of the Party is to help ordinary working people to get on, a narrative that stretches from Disraeli through Chamberlain’s domestic reforms to Thatcher and onwards. Add a dash of science and tech, and it also becomes a tale of how Britain can rise after the turbulence of Brexit calms. It is striking that while Hammond seems uncomfortable with telling stories, this former Essex comprehensive school kid has a good one to tell, if social mobility is a measure. But Spreadsheet Phil must somehow morph into Storyteller Phil next week. Otherwise he might as well not deliver a Budget at all.