POLITICS

Analysis: Winners And Losers From Philip Hammond's Budget Fiasco On Tory 'Black Wednesday'

It wasn't a red letter day for Jeremy Corbyn either.

15/03/2017 21:33 GMT | Updated 16/03/2017 06:53 GMT
BEN STANSALL via Getty Images

When Theresa May summoned Philip Hammond to No.10 Downing Street just after 8am, it was clear that his ‘White Van Man’ tax rise was on the menu. And the Prime Minister was going to eat it for breakfast.

The timing was uncanny. Almost exactly to the minute, one long week ago, the Chancellor had been lauded by the Prime Minister as he presented his Spring Budget to the entire Cabinet.

Colleagues had banged their desks in approval, while May congratulated Hammond for keeping “a strong hand on the fiscal tiller”.

Fast-forward seven days and after a right royal kicking from Tory MPs and newspapers, ‘the safest pair of hands in Government’ now looks like a butterfingered football goalkeeper.

Around 11.30am, the hot news of the breakfast decision pinged into the smartphones of Tory MPs. A letter from the Chancellor, among the dense Treasuryspeak, revealed that there would be no National Insurance rises for the self-employed. In fact there would be no increases in NI for the rest of the Parliament.

“It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit, of the commitments that were made.” The U-turn had arrived.

As the news broke, Jeremy Corbyn’s own team felt vindicated that they had already decided at their weekly Wednesday morning meeting to go in on the National Insurance hike. All six of the Labour leader’s six PMQs were primed for the topic, HuffPost has been told.

But No10 have long felt that Corbyn is ineffective in his weekly sessions with the PM. So confident were they that he wouldn’t score any points, that they felt that announcing the U-turn in prime political time would be bad, but not disastrous.

The PM herself, in what some MPs saw as sign that she wanted to ‘own’ the announcement but also to show who was boss, told the Commons chamber the news first.

But when he got up to speak, Corbyn lived down to the expectations of May and her team. His understated opening gambit – “It seems to me that the Government are in a bit of chaos here…” was swiftly interrupted by Tory laughter.

Things didn’t get better when he said “...the Prime Minister should thank the Federation of Small Businesses and all those who have pointed out both how unfair the increase would be…”

Cue more jeers from Tories who felt Corbyn himself was not one of “all those” who had pointed out the unfairness. The pressure came more from an eagle-eyed media, who spotted the manifesto breach within seconds of Hammond’s NI rise in the Budget, and Tory backbenchers.

Corbyn continued, but when he said “We have a Government U-turn, no apology..” one Tory MP yelled out “and no Opposition!”  The Labour leader asked what was meant to be his fourth question, but it turned into a statement.

And a bemused Prime Minister replied that Corbyn hadn’t “got the hang of this…he is supposed to ask me a question when he stands up!” The grim faces on the Labour backbenches told their own story.

Corbyn’s final flourish was on schools policy, and was another non-question. Of his six PMQs, only two demanded answers.

Football analogies can be overused in PMQs, but they were unavoidable for his own backbenchers, many of whom have been remarkably disciplined in not directly attacking their leader for fear of being blamed for his flat-lining poll ratings.

Labour MP Tom Blenkinsop retweeted animations of a robot missing an open goal, as well as a Liverpool footballer doing the same.

But in forgetting to actually ask questions, it seemed much worse. Corbyn appeared to have turned up on the Commons pitch without even a ball under his arm.

It took Yvette Cooper, in a classic ‘here’s what you could have won’ moment, to then showed Corbyn how to do it.

Clutching the Budget in her hand as a prop, she pointed out that the PM had made a £2 billion Budget U-turn in the space of a week – a year after George Osborne had made a £4 billion U-turn in the space of five days over disability benefits. “Is that why they want to abolish Spring Budgets, because they just keep ripping them up?”

Shadow Chancellor John McDonnell famously once chucked Mao’s Little Red Book across the Despatch Box at Osborne, but here was Cooper deploying the Big Red Book to greater effect. Fellow MPs around her cheered louder than for anything Corbyn had said.

But it was SNP Commons leader Angus Robertson, who most wanted to show who was The Real Opposition. He proceeded to quote Margaret Thatcher’s “The lady’s not for turning” line. “The Prime Minister has today admitted that she is for turning, with her screeching, embarrassing U-turn on national insurance contributions?”

It was simple but nonetheless effective. And May, who likes to change her voice to drop a few octaves with a Thatcher-like growl to end PMQs, was wounded. So wounded that she began to literally wag her finger at Robertson, gifting him the line that the Scots would “have our say” one day soon with an independence referendum. Six PMQs were asked by SNP MPs today, and all were pointed.

Handout . / Reuters
Jeremy Corbyn

Minutes before PMQs, as the news broke, I bumped into Ed Miliband and asked him how he’d tackle May on the NI change.

He quoted one of his funniest PMQs moments against Cameron, when he asked: “In the light of his u-turn on alcohol pricing can the prime minister tell us if there is anything he could organise in a brewery?”

For many Tory and Labour MPs alike today, it seemed that Corbyn was the one with the brewery problem. The Labour leader went off piste while the ranks of MPs on the green benches behind him looked peed off.

In an interview with HuffPost on Tuesday, Lib Dem leader Tim Farron had claimed that Corbyn was so bad as the Leader of the Opposition that he “makes IDS look like JFK”. For many observers today, the quiet man hadn’t even turned up the volume.

After PMQs, we journalists huddled around the party spokesmen to get the usual debrief. Many wanted to know just why Corbyn had failed to ask the basic, often unanswerable questions of PMQs. Did the PM have full confidence in her Chancellor? Did he offer to resign? Shouldn’t he resign? When did they change their mind? All of those would have worked.

And it’s not as if Corbyn was short of ammunition. Soon after 9.30am, Brexit Secretary David Davis had admitted to the Brexit Select Committee that he had not done an economic assessment of what the impact would be of ‘no deal’ with Brussels.  

In her grand Lancaster House speech, the PM had confidently declared that “no deal for Britain is better than a bad deal for Britain”, yet here was her key minister admitting there was no evidence for her to make the key claim.

Asked whether Corbyn had intended to mention the DD issue and had forgotten to, Labour sources said: “He mentioned what he mentioned. He said what he said.”

Pressed on the Farron IDS/JFK comparison, the source was asked which kind of leader Corbyn would compare himself to. “Jeremy is his own kind of leader,” he replied. “And he’s demonstrated a new kind of political leadership”

Did Jeremy think that PMQs didn’t matter? “PMQs matters. He’s tried to do it in a different way than  other political leaders. It’s a well-known fact that for millions of people across the country they don’t like the way PMQs is conducted. In the end it’s about holding the Government to account on behalf of the British people, not just on behalf of the people inside this building.”

If that sounded like a barb at Labour MPs, as well as political journalists, it was meant to. Other sources said later that the leadership had considered calling for Hammond’s resignation but decided “given his record, we want him to stay”.

In the end, the PM’s official spokesman answered the questions. Did May have full confidence in her Chancellor? “Yes” Had he offered to quit? “No.” Was the U-turn discussed at Cabinet on Tuesday? “No.”  Treasury aides looked on nervously.  Was the Prime Minister sorry? “The PM and the Chancellor have listened to the concerns.”

Leon Neal via Getty Images
International Trade Secretary Liam Fox

A couple of hours later and Hammond himself faced the embarrassment of making his announcement to the Commons. All the jokes of the previous week had curdled like lukewarm milk. His U-turn was “how Parliament should work”, he said.

Most damaging of all, Hammond revealed that the first he knew this was a manifesto problem came when the BBC’s Laura Kuenssberg had tweeted in the Budget about it. It sounded very much as though the Treasury had only checked the Budget against the ‘tax lock’ legislation, not against the manifesto.

John McDonnell talked about the PM laughing “like a feeding seal”. But it was again the SNP who looked more measured and more poised. Stewart Hosie, who was the first to hammer Hammond on the NI rise last week, said: “I’m delighted the SNP went into bat for the squeezed middle against this Chancellor”.

Labour’s Mike Gapes had his own zinger that perhaps his Shadow Chancellor should have deployed. He pointed out that Hammond had joked a week ago that predecessor Norman Lamont had been sacked just 10 weeks after his own Spring Budget of 1993. “Does he, in retrospect, agree with Lord Lamont that this was a rookie mistake? [Lamont had twisted the knife on the NI rise four days ago]” Hammond didn’t see the funny side.

David Levenson via Getty Images
Norman Lamont

But the Lamont reference had more resonance today. His own political death warrant had been signed on Black Wednesday, when market turmoil had forced the UK to drop out of the European Exchange Rate mechanism. Those massive interest rate rises – jacked up several times in one day  - sowed the seeds of Blair’s landslide in 1997.

In the Spring of 1993, Lamont slapped VAT on domestic fuel. The late John Smith said on the day that it was “a shameful budget from a cynical government that has broken its election promises”. Plus ca change.

In fact, there was a danger that the Ides of March – the 15th -  was turning from a ‘Wobbly Wednesday’ into Hammond’s very own ‘Grey Wednesday’.  

David Davis’s remarks called into question the entire rationale for the PM’s threat to quit the EU with no deal. Just half an hour before PMQs (and again missed by Labour), Liam Fox had cheekily revealed he and others had argued with Amber Rudd that students should not be included in the net migration target.  No wonder No.10 slapped him down quite firmly later.

There was also the simmering row over the schools funding formula, a hint of which came from Tory MP Jeremy Quin At PMQs. At a meeting of the backbench 1922 Committee, Education Secretary Justine Greening faced a grilling over it from John Redwood and Michael Fabricant.

Karwai Tang via Getty Images
Justine Greening

Add on top of all the news that police have passed files to the Crown Prosecution Service on possible election expense irregularities involving 12 Tory MPs – May has a working majority of just 17 – and this was indeed a ‘Black Wednesday’ in many ways for the Conservatives.

Rebel Tory MPs had been on the warpath and were strengthened by the fact that Remainers and Leavers alike were furious at the manifesto breach and loss of trust it threatened among core voters. Sir Desmond Swayne spoke for many loyalists when he pointed out he had sent off an article to his local paper backing the tax rise, only for him to now need to ‘recant’.

Leading rebel Stephen McPartland said he was delighted by the U-turn. He told ITV News that “I have to say he’s a very strong Chancellor”, his smile suggesting he had been ordered to use that description. Ridicule, not contempt, is a very dangerous development for any Chancellor. Especially when it comes from both loyalists and rebels asked to defend the indefensible.

The word among Tory MPs is that what really did for Hammond was not so much a backbench revolt but warnings that the Lords would block the NI rise. As it was not in the manifesto, and was separate from the Budget, the so-called Salisbury Convention would not apply. Just as Osborne had faced a deadly delaying motion on tax credits, so too would the White Van Man Tax. Yvette Cooper had actually underplayed her own hand: today was the third Budget in a row that was followed by a big U-turn.

JUSTIN TALLIS via Getty Images
Hammond just a week earlier

After every Budget, the Treasury does what’s called a ‘distributional analysis’ on those affected. Newspapers and broadcasters do a list of ‘winners’ and ‘losers’. Today, a week on from Hammond’s first and last Spring Budget, the results are clearer.

The winners were Tory backbenchers (who know the power of a small majority), the media, Labour backbenchers like Cooper and, crucially, the SNP (showing off its muscles ahead of an independence referendum).

The losers undoubtedly include Jeremy Corbyn. He talked at length today about ‘bogus self-employment’, but MPs – who feel that today shows the Tories are eminently beatable - are muttering that he’s a ‘bogus Leader of the Opposition’.

Special advisers in Downing Street and the Treasury, who are meant to spot all these problems early on, are also licking their wounds. Theresa May herself is damaged, and as Brexit talks loom, the rest of the EU must be thinking just how easy it is to get her to back down.

Yet the biggest loser of all was Philip Hammond’s own credibility, and credibility is the currency on which Chancellors depend. Just like Norman Lamont all those years ago, the knives are now out for Hammond. There’s even fevered talk among Brexiteers of him not being in post by the summer.

After the breakfast humiliation, is he on Theresa’s menu next? You don’t need to be the leader of Her Majesty’s official Opposition to ask that particular PMQ.