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Philip Hammond tells Tories to 'make anew' the case for cutting the deficit

Philip Hammond tells Tories to 'make anew' the case for cutting the deficit
3 min read

Philip Hammond today said the Conservatives need to win over a public “weary” of austerity to the cause of fiscal conservatism. 


In his Mansion House speech this morning, the Chancellor pledged to stick to his existing borrowing framework and said the Government would keep taxes “as low as possible”.

But he warned the Tories had to “make anew” the case for its austerity policy in light of Labour’s gains at the general election on a manifesto promising £50bn of extra spending.  

Shadow Chancellor John McDonnell said Mr Hammond had “learnt nothing” from the election.

The Chancellor also laid out his vision for a Brexit deal that “puts jobs and prosperity first”, with a focus on a transitional deal with Brussels and protecting the City of London.

Several Conservative figures have identified dissatisfaction with the economic policies of the Government, such as cutting public sector workers’ wages in real terms, as one of the causes behind their losses in the election.

Mr Hammond himself said he was “not deaf” to the message of the electorate – but suggested he would attempt to win over the public to the importance of cutting the deficit rather than radically rethinking the policy.

“Stronger growth is the only sustainable way to deliver better public services, higher real wages and increased living standards,” he said.

“I thought we had won that argument. But I learned in the general election campaign that we have not, that we must make anew the case for a market economy and for sound money, the case for growth.

“And we need to explain again how stronger growth must be delivered through rising productivity.”

He acknowledged growing dissatisfaction with the years of sluggish wage growth – but insisted the solution was not to increase taxes or borrowing.

“It’s clear, as many of my colleagues have noted, that Britain is weary after seven years of hard slog repairing the damage of the great recession,” the Chancellor said.

“But we must not lose sight of the unchanging economic facts of life: funding for public services can only be delivered in one of three ways: higher taxes, higher borrowing, or stronger economic growth.

“And only one of those three choices is a long-term sustainable solution for this country in the face of the inexorable pressure of an ageing population.”

Mr McDonnell, however, claimed the Chancellor was failing to heed the message from the electorate in the recent election.

“The Conservatives have no understanding of the depth of suffering, stress and insecurity their long austerity regime has caused,” the Labour MP said.

BREXIT

Mr Hammond’s speech also addressed Brexit and warned the EU that attempting to siphon away finance businesses from London would result in “poorer quality, higher priced” services for all concerned.

He also stressed the importance of the UK remaining open to immigration and of avoiding so-called “cliff edges” when it formally departs the European Union.

For the first time, the Chancellor – who has been seen as one of the leading advocates in the Cabinet of keeping closer ties with the existing European institutions – said that should include keeping the same customs arrangements as currently exist for a transitional period after it leaves the union.

“We’ll almost certainly need an implementation period, outside the customs union itself, but with current customs border arrangements remaining in place, until new long-term arrangements are up and running,” he said. 

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