2018-11-03 The Spectator

(Jacob Rumans) #1

POLITICS | JAMES FORSYTH


new personal tax rises — that there won’t,
as many expected, be an extra penny on
National Insurance to pay for the increased
NHS spending. As one of them says: ‘Six
months ago, we were talking about which
taxes we should raise. Now, we’re talking
about how we should do tax cuts.’ The fact
that even John McDonnell has felt obliged
to embrace the increase in the higher rate
tax threshold shows just how politically
potent tax cuts still are.
The new Tory approach to spending is
even more political than just an attempt to
deny a future Corbyn government money.
Influential Tories believe that an important
moment in the next election campaign will
be when the markets start seriously exam-

ining the implications of Labour’s spending
commitments. One well placed government
source recently told me that if the Tories had
balanced the books, the markets might be
more relaxed about the sheer size of Cor-
byn’s spending commitments. But if the
country was still running a deficit, albeit a
mild one, there would be more nervousness
about Labour’s spending splurge.
The big difference between now and
1997 is that Jeremy Corbyn is not Tony
Blair. It is hard to imagine Labour promis-
ing to copy Tory spending plans as Blair and
Gordon Brown did before that election.
But Corbyn also brings out the Tories’ most
tribal instincts. In the 1990s, many Tories
regarded Blair as a kind of compliment,
proof that they had forced Labour to accept
the Thatcher settlement. Margaret Thatcher

herself once called New Labour her great-
est achievement. Back then, some Tories
thought the party would benefit from a
spell in opposition, and the country wouldn’t
come to much harm under Blair.
Corbyn, however, represents a return to a
kind of politics that the Tories thought they
had banished for good in the 1980s. No Tory
can be relaxed about the prospect of five
years of Corbyn as prime minister. Even very
pro-EU Tories don’t regard a Corbyn govern-
ment as a price worth paying to stop Brexit.
Corbyn and the damage he would do
to Britain’s economy and national security
mean that the Tories find it easy to believe
that their party’s interest is the same as the
national interest. At a post-Budget meeting
with Tory MPs, Hammond said that he was a
fiscal conservative but if a bit of extra spend-
ing was what was needed to stop Corbyn, it
was clearly worth it. Equally, when Theresa
May recently addressed Tory backbench-
ers about Brexit, she warned them about
the dangers of a Corbyn government. The
implicit message was that whatever their
doubts about the deal, they risked putting
Corbyn into power if it was rejected.
May’s strategy for getting her Brexit deal
through will rely on MPs’ fears of both Cor-
byn and no deal. It will be hard to portray
the withdrawal agreement as some great
diplomatic triumph; instead, Mrs May will
concentrate on the unpalatable alternatives.
At the same time, she will point to the politi-
cal declaration, which will set out the basis
for future UK/EU relations. I am told that
this declaration contains better than expect-
ed language on both financial services and
data, suggesting that the trade deal will be
more comprehensive on services than antic-
ipated. May will cite this declaration as evi-
dence that the UK and the EU will be able
to negotiate a trade deal and so the back-
stop won’t be needed. Though, as one cabi-
net minister is quick to point out to me, the
political declaration is not — unlike the
withdrawal agreement — legally binding.
May’s approach might succeed. Worries
in government about no deal are growing.
One source tells me: ‘The more we see on
no deal, the worse it gets.’ But if May’s
tactics work in the short term, they might
backfire in the medium term. She might be
able to convince her cabinet and most of her
MPs to support the deal for fear of the alter-
natives — but there will be buyer’s remorse
once it is through.

T


here’s a spectre haunting the Tories
— the spectre of 1997. Tories fear
that history could be about to repeat
itself. That after several years in office, they
spend a parliamentary term arguing about
Europe and plotting against their weak
leader with the result that Labour wins the
next election by a handsome margin.
Back then, the Tories left Labour with a
‘golden inheritance’. John Major’s govern-
ment had done the responsible thing on the
economy. It had pared down the deficit, even
putting VAT on domestic fuel in an attempt
to help balance the books. But the party’s
reward for this was its worst defeat since
universal suffrage was introduced. Even
more galling was Labour’s decision to use
the money saved by the Tories to increase
spending on health and education in the run-
up to the next general election in 2001, which
Labour won by another mammoth margin.
In the weeks straight after the 2017 elec-
tion, Patrick McLoughlin — then the Con-
servative party chairman — began to remind
colleagues what had happened in the 1990s.
He argued that there was little point in the
Tories going through the pain of balancing
the books only to leave Labour with more
money to spend. His arguments resonated
with Tory colleagues, particularly Theresa
May’s new chief of staff, Gavin Barwell.
Monday’s Budget marked the moment
when the Tories adopted this position and
abandoned any serious efforts to balance
the books. They now want to spend before
Labour gets the chance to do so because they
have no intention of making life easy for an
incoming Corbyn government. So virtual-
ly all of the additional money from better
than expected tax receipts was used: a party
which believed that deficit reduction was the
national priority would not have done that.
Despite this, the Tories also avoided
increasing taxes to pay for the extra spend-
ing on the NHS. Philip Hammond appeared
to draw a new dividing line with Labour
when he declared: ‘My idea of ending aus-
terity does not involve increasing people’s
tax bills.’ This was the strongest hint yet that
the Tories will fight the election on a ‘no new
taxes’ pledge. One cabinet minister, who
isn’t afraid to be critical of the Chancellor,
says — approvingly — that this distinction
was ‘Osbornesque’.
For the more fiscally conservative mem-
bers of cabinet, the great achievement of
this Budget was the fact that it included no


Spending Corbyn’s inheritance


Corbyn represents a return to a kind
of politics that the Tories thought they
had banished for good in the 1980s

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