Hammond praises Osborne’s economic legacy… then tears up Tory manifesto

Chancellor Philip Hammond sang the praises of his predecessor George Osborne at the Conservative Party conference on Monday, only to then tear up almost every single economic policy in his party’s manifesto.

Speaking in Birmingham on Monday morning, Hammond confirmed the government would not slash the deficit until after 2020, as Osborne had once pledged. He also said the Tories would now be openly borrowing to invest due to “the new circumstances Britain faces.”

“The British people elected us on a promise to restore fiscal discipline - but we will do it in a pragmatic way that reflects the new circumstances we face,” Hammond told the party faithful.

“The fiscal policies that George Osborne set out were the right ones for that time, but when times change, we must change with them. So we will no longer target a surplus at the end of this Parliament.”

Adding to Osborne’s embarrassment, Hammond said although the ex-chancellor’s Northern Powerhouse initiative was “visionary,” investment in industries outside of London and the southeast must be made in other regions too.

“We want to create the conditions for success in the North, the South, and everywhere in between,” said Hammond before announcing his own investment scheme - the Midlands Engine.

Following Prime Minister Theresa May’s pledge to trigger Article 50 of the Lisbon Treaty in March/April 2017, allowing Britain to leave the EU by early 2019, the chancellor vowed to steer the economy through the “turbulence” ahead.

Corporation tax will fall from 20 to 17 percent to encourage “more private investment in British businesses.”

While Brexit may put free movement for EU citizens to an end, Hammond insisted the country would “go on attracting the brightest and the best - from around the world.”

“We are going to leave the European Union to repatriate our laws, to assert the supremacy of our courts, to control our borders, but we are not going to turn our backs on the nations of Europe,” he added.

Commentators across the board found the former foreign secretary’s speech “dull.” They even suggested it was a carbon-copy of the fiscal policies championed by former Labour Shadow Chancellor Ed Balls, particularly Hammond’s plan to invest £5 billion (US$6.42 billion) in house building.

Hammond himself used his speech as an opportunity to rubbish Balls’ time as shadow chancellor.

“I think his Charleston is probably better than his economic analysis,” he joked, alluding to the former MP’s appearance on the BBC’s ‘Strictly Come Dancing’ program.

Budget announcements:

  • £5 billion total for housebuilding: £3 billion for a Home Builders’ Fund and another £2 billion for construction

  • £220 million for tech innovation

  • Midlands Engine scheme to power businesses in the region

  • Continued support for Osborne’s Northern Powerhouse policy focusing in the area surrounding Manchester

  • Cutting corporate tax from 20 to 17 percent

Current Shadow Chancellor John McDonnell said he “welcomes the chancellor abandoning George Osborne’s fiscal approach,” but that real solutions to Britain’s shrinking economy were still missing.

“The chancellor should apologize today for the failed Tory approach that has meant he has had to abandon the failed economic agenda of the last six years, an approach which has seen them dragging their heels on tax avoidance, an increase in child poverty, and house-building falling to its lowest peacetime rate since the 1920s,” he said.

“The dangerous divide in society the chancellor mentioned has come about as a direct result of the policies he has voted for since 2010.”

Commenting on the similarities between Balls and Hammond, McDonnell added: “It’s clear that Philip Hammond is now borrowing from Labour to invest in his own speech. As well as abandoning their own fiscal charter this was full of the same empty promises George Osborne made, only with worse gags.”

The Conservative’s usual allies were also not best pleased, with TaxPayers’ Alliance Chief Executive John O’Connell arguing that “abandoning the plan to reach a budget surplus by the end of the parliament bodes ill.

“Moving away from balancing the books as a matter of priority means burdening future generations’ taxpayers to pay for today’s overspending, which is immoral.”

Public and Commercial Services union (PCS) General-Secretary Mark Serwotka echoed the sentiment.

“The Tories are still wedded to billions of pounds of cuts from central and local government that will cause more damage to our public services and our communities,” said Serwotka.

“If Philip Hammond was serious about addressing Osborne’s obvious failures, he would reverse these cuts and promise real investment.”