Hammond’s humiliation

After Philip Hammond delivered his Budget last week, he went to speak to a meeting of Conservative backbench MPs. Several were deeply alarmed about his tearing up of their manifesto pledge not to raise National Insurance. One asked him how sure he was about all this. Would they find themselves going out to defend this tax rise to their constituents, only to find him abandoning the policy later? No, the Chancellor replied, he would not change his mind. This tax rise was the centrepiece of his Budget, and it could not be scrapped. He was not for turning.

For a Chancellor to abandon his main Budget policy within a week is nothing less than extraordinary. It suggests a staggering lack of communication, forethought and basic political competence. Mr Hammond spent days claiming — bizarrely — that he had not broken the manifesto pledge. He sought to hide behind a law, passed after the election, that pledged not to raise Class 1 National Insurance contributions but said nothing about Class 4 contributions, which he raised from 9 per cent to 11 per cent. As we argued last week, it was a dishonest argument and would be viewed as such by voters. It would make many wonder if they could ever again trust a Tory tax promise.

Now, it seems, Mr Hammond agrees. His letter, released to colleagues, accepts that he had an obligation to be compliant ‘not just with the letter but also the spirit’ of the manifesto. That this appears not to have occurred to him sooner shows a startling lack of judgment and it will further damage his personal authority. His Budget was followed by a briefing war between No. 10 and No. 11, as allies of Theresa May and Mr Hammond blamed each other for the mess. In the end, the Prime Minister won and the Chancellor was ordered into a climbdown as humiliating as any in postwar political history.