Why The Chancellor's First (And Last) Autumn Statement Is A Poisonous Damp Squib

Yesterday was Philip Hammond's first big moment as Chancellor, the opportunity, before a country and indeed a world buffeted by shockwaves of change and uncertainty, to set out a compelling, reassuring and above all confidence building vision of our economic future.Well we didn't get that did we?
STEFAN ROUSSEAU via Getty Images

Yesterday was Philip Hammond's first big moment as Chancellor, the opportunity, before a country and indeed a world buffeted by shockwaves of change and uncertainty, to set out a compelling, reassuring and above all confidence building vision of our economic future.

Well we didn't get that did we?

The Chancellor began by declaring he would not be very adept at pulling "rabbits out of the hat". This was entirely unnecessary but no doubt enjoyable as a dig at the previous Chancellor seated just behind him. Certainly the Hammond is not a magician. But he is a bit of a chemist, producing a poisonous damp squib of a Statement which disappointed and yet will diffuse its venom through our society for years to come.

I have been a constant critic of the economic incompetence which was Osbornomics , that vampire ideology which, in the pursuit of a perpetually receding budgetary surplus, drained our public and private sectors of the energy they needed to bring growth and recovery to the economy. So I was pleased to see May and Hammond deliberately turn their back politically and physically on Mr Osborne.

But in Mr Hammond chose to abandon Osbornomics whilst keeping austerity. He has effectively recognised that as a country we cannot cut ourselves to growth but decided to retain the cuts nevertheless. It is almost as if he were afraid to strike out on his own and, to quote Hilaire Belloc, 'to always keep a hold of nurse for fear of finding something worse'.

It is a poisonous betrayal of ordinary people who have already suffered so much in six wasted years of Tory-led economic policy. Average incomes are still not where they were before the Financial Crisis, and as many are better off, we know it is the low and no income earners who have paid the price. The ten year benefits freeze is an effective cut in the incomes of the poorest. Cutting the tax credits portion of universal credit hits those who are just a little better off. Underfunded public services sap the ability of so many to improve their incomes through better health, cheaper housing, improved skills or better childcare. Abandoning the ideology behind austerity but retaining the implementation of it will not deliver the active, entrepreneurial state which can work with the best of the private sector to drive innovation-led shared, sustainable growth. Mrs May's big speech on industrial strategy was a damp squib but the poison in Mr Hammond's Autumn Statement is the toxic combination of continual austerity with rising debt.

The Chancellor did make certain nods of course to reflect the shift in political consensus following the failure of Osbornomics.

He introduced a National Productivity Investment Fund of £23Billion but refused to say whether that was incremental to or simply a substitute for the European Funding we will be losing. Similarly he confirmed the £2Billion per year for R&D by 2020 but not where it would come from or whether it included private sector spend. Even assuming it represents a net increase it will still leave UK R&D spend way below the OECD average of 2.4% of GDP whilst Labour has committed to meeting the OECD target of 3%.

But what was most indicative of the lack of vision was what was missing. The National Productivity Investment Fund does not mention skills which is stunningly short sighted. The NHS did not get a mention. Industrial Strategy, whilst mentioned, appears to be for some far off time in the future.

And Climate Change: clearly it's neither an opportunity nor a challenge as it was not deemed worthy of even a short aside. Yet our economy is in desperate need of smart, sustainable, directed growth. That is why when Clive Lewis launched our challenge-led, mission-oriented values-driven industrial strategy last week the first mission announced was to decarbonise UK energy production by 60% by 2030.

The Chancellor skated over all the big, negative economic indicators, the predicted fall in business investment, the rising debt, the cost of Brexit. He set out fiscal rules so vague and woolly he hopes the world will not be able to tell when he does not meet them. But the failure is there for all to see. He may have abandoned his predecessor's toxic vision for our economy, but his own plans are just as poisonous.

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