With Party Conference now behind them, the Tories now turn their attention to the serious business of horse-trading in advance of 22nd November, when Chancellor Philip Hammond will present his first Autumn Budget. Assuming he hasn’t been sacked by then, of course. Or will that be Boris? Brexit continues to be the defining fault line in the Cabinet, as in the UK at large.
The forthcoming Budget is our chance to see which policy priorities are real, and which are spin. Right now, Hammond is being pressed by the hard Brexiteers to fund emergency contingency planning that might enable the UK to walk away from Brexit negotiations with the EU. Hammond has indicated that he would prefer to dole out the extremely limited cash on offer to fund May’s policy priorities; including further loosening of public sector pay restraint, particularly in the NHS, and cutting student fees.
Given parliamentary maths, and the threat of public sector strikes, it seems most likely Hammond will get his way. But the choices he faces are unenviable given the anaemic state of the UK economy. We should expect the gap to be filled by additional borrowing and those few stealth taxes which are deliverable without rousing the ire of the Tory press. Extending IR35 to the private sector, for example, may well land – which would ease the financial pressures for heavy public sector users of IT contract labour.
Contingency planning or no, Brexit is already the cause of ballooning government staff spending with 1,500 additional recruits since June 2016 and another 2,000 planned. This week the Government also published white papers on customs and trade which affirmed the Brexit policy, looking more established by the day, that the UK will leave the EU customs union and single market following a transition period.
Leaving the customs union continues to be the single most operationally tricky part of the Brexit policy, since it requires the UK to create a standalone customs regime including comprehensive border control which would have serious consequences for the (currently virtual) Northern Irish border. New customs legislation will be introduced later this year which may provide more clues as to what sort of solution will be required.