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Chancellor avoids Budget disaster by pledging Brexit cash

PUBLISHED: 00:00 24 November 2017

(From the left) Economic Secretary to the Treasury Stephen Barclay, Chief Secretary to the Treasury Liz Truss, Chancellor Philip Hammond holding his red ministerial box, Financial Secretary to the Treasury Mel Stride and Exchequer Secretary to the Treasury Andrew Jones outside 11 Downing Street

(From the left) Economic Secretary to the Treasury Stephen Barclay, Chief Secretary to the Treasury Liz Truss, Chancellor Philip Hammond holding his red ministerial box, Financial Secretary to the Treasury Mel Stride and Exchequer Secretary to the Treasury Andrew Jones outside 11 Downing Street

PA Wire/PA Images

He survived - just about. The whispers coming out of government after Philip Hammond's gaffe-laden appearance on Andrew Marr's Sunday sofa sounded grim for the chancellor.

Some sources suggested he was floundering and Number 10 had even nudged him out of the driving seat in a bid to steer the Budget back on course.

But perhaps that was hyperbole or even scaremongering by those within the cabinet who would have preferred Mr Hammond to be on the backbenches by now.

As the dust settles on the Budget the truth is the chancellor managed to avoid what could have been a disaster.

He was possibly helped by the fact that just three minutes into his address he was delivering the bleak news of sharp cuts to growth forecasts. The Office of Budget Responsibility’s new prediction of just 1.5% growth this year – down from the 2% forecast made as recently as March – was a shock.

Amid the relaxing of stamp duty rules for first-time buyers (a clear and clever grab at those younger voters so tempted by Labour) and money for the NHS, we should pause to reflect on those growth figures. The global economy is experiencing the most synchronised recovery since prior to the financial crash and our biggest single trading partner – the European Union – boasts the best growth in a decade. Britain is starting to stand out for all the wrong reasons.

But getting the bad stuff out of the way early – the forecasts are always up top – meant that anything Mr Hammond said afterwards would appear to be a bonus. It felt like being out played for 90 minutes and grabbing a thoroughly undeserved equaliser in the dying seconds.

But most of the newspaper headlines focussed on that stamp duty cut – anything under £500,000 will be lowered and there will be no charge under £300,000. There was also cash for investment loans which will hopefully go someway to sparking a house-building boom across the country.

But the announcement that silenced even the most aggressive of Mr Hammond’s critics was the £3 billion put aside to help pay for Brexit preparations. Make no mistake, it is Mr Hammond’s stance on Brexit that has driven a wedge between Number 11 and the Eurosceptics in the Conservative Party.

The Leavers – cabinet colleagues Boris Johnson and Michael Gove among them – did not support the way Mr Hammond had been funding Brexit planning. Until this point he had been drip feeding cash into departments where required.

The Brexiteers’ argument was that without a designated, ring-fenced cash pot the ‘no deal’ negotiating tactic would not be taken seriously by the EU. And others – who are perhaps more nervous about a cliff-edge Brexit – also wanted some reassurance that if there was no agreement Britain was at least prepared.

But the irony of the amount of cash pledged to Brexit being lower than that for the NHS was not lost. Labour’s Chris Bryant said: “So, £3bn for Brexit preparations and £2.8bn for the NHS over the next two years. Couldn’t they fit that on the side of a bus?” Touché.

On top of his Brexit concessions there was also an air of positivity about Mr Hammond that many have claimed he has lacked in the past. He has been accused of being too gloomy about Brexit but he even managed a reference to Britain’s prosperity outside the EU post-March 2019.

And the jokes? Spreadsheet Phil had them rolling in the aisles... well, perhaps not but there was at least some light relief.

For now at least, Mr Hammond has kept the wolves from the door. He can probably relax until the new year.

But there will inevitably come a moment when the anti-Hammond wing re-tool and start demanding even more from the chancellor. They should however be careful – the public appear to quite like the caution this chancellor has shown. He might be hated in cabinet, but outside Westminster he is seen as one of the few grown ups in government.

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