The Chancellor’s Budget began to unravel at lightning speed as soon as he had sat down from delivering his speech. Howls of protest from the Tory press about the planned increase in National Insurance for the self-employed, combined with a growing Tory rebellion in Parliament, quickly forced “spreadsheet Phil” into a humiliating U-turn.
“When this policy was announced on Budget day the temperature dropped on our side of the chamber by about 10 degrees”, said one senior Tory backbenchers.
Sheepishly, the Chancellor, with a vexed Prime Minister sitting next to him, told the Commons that they had got it all wrong and were no longer going to break a Tory manifesto promise. The tax increase would be dropped.
Beneath the surface
This humiliating climb down clearly demonstrates that the Tory government is in a complete shambles as it hurtles towards the cliff edge of Brexit. It has exposed the cracks within the Tory Party and highlighted the fragility of the government that exists beneath the surface of apparent calm and strength.
Far from being in control of the situation, Prime Minister May is increasingly being exposed as a prisoner to her own Little-Englander party. “The U-turn on NICs tells us where power lies in Mrs May’s party,” The Guardian comments. “It makes clear that power does not, after all, lie with her to the degree some have assumed.”
“The climbdown reveals that this is a government imprisoned by a minority of its backbenchers and by the Daily Mail, just like the last one was under David Cameron. Mr Hammond has exposed just how far a Conservative government lacks the strength to impose its will on its own party.”
And added to the economic woes, there is the ever growing tension between Westminster and the assemblies in Edinburgh and Belfast, with the dual questions of Scottish independence and the North of Ireland threatening to break the “United” Kingdom apart. Having initially been seen by the ruling class as a unifying and calming leader, Theresa May could soon go down in the history books as the Tory Prime Minister who crash landed Britain out of the EU and tore the country apart. Either that, or make concessions that risk splitting her own party.
Philip Hammond had been seen by serious bourgeois commentators as a “reliable pair of hands”; a trusted representative of the Establishment, in contrast to the swivel-eyed loons amongst the Brexiteer backbenchers (not to mention other senior cabinet ministers). But now, in the wake of his “omnishambles” Budget, the Chancellor’s authority and reputation lie in tatters. As the Financial Times, a trustworthy mouthpiece of the capitalist class, noted: “The episode undermines Mr Hammond’s reputation for solid competence and his position as the principal cabinet cheerleader for business and the City of London in opposing a ‘hard Brexit’.”
The Tory-supporting Spectator magazine drove home the brutal conclusion from this almighty blunder: “This fiasco will be watched with amazement in European capitals. If Theresa May caves in under pressure, then her opponents in Brexit talks will apply pressure.” Europe’s negotiators, in other words, will be rubbing their hands with glee.
Hammond has said that he will now plug the hole in the Budget finances – some £2bn – through new measures in the autumn. This can only mean one thing: further cuts and austerity. Such attacks, alongside the train-crash Brexit negotiations and the possibility of an IndyRef2, will only further dent the Tory government’s support.
Fight for a socialist alternative!
In the final analysis, the incompetence and vacillation displayed by May and Hammond over the past week are a reflection of the insoluble contradictions facing the capitalist Establishment. At the end of the day, the profit system that they defend cannot be reconciled with the needs and interests of the majority. As we have highlighted before, every attempt they make to restore the economic equilibrium only serves to disturb – and potentially shatter – the political balance, and vice-versa.
The situation is ripe for the leaders of the labour movement to go on the offensive by offering a bold socialist programme. This is what the Corbyn-led Labour Party should be fighting for. There is no alternative.
We publish here a letter from a formely self-employed Socialist Appeal supporter about the government's latest U-turn.
Having been self-employed for a number of years in the 1970s, I found myself wondering about the impact of Philip Hammond's Budget, which was set to increase National Insurance contributions for the self-employed.
Working for myself, I found life extremely hard. As well as pressure from the state, there is also an enormous economic pressure – on the one side, from my monopoly suppliers, and on the other side, from my customers’ ability to pay (to say nothing of withdrawal pains at the bank). It was a constant nightmare adjusting prices by mere pennies in order to find the price at which my customers could or would buy. I was forced to work long hours, perhaps 12 or 14 daily, just to keep the business going. The job always came home with me.
The self-employed get very little in return for their National Insurance contributions (NICs). They do not get state benefits, e.g. for sickness or loss of earnings, and cannot claim unemployment benefit for many weeks after their business folds. Thousands of small businesses go to the wall each week, and a hike in NICs could easily be the final straw for many.
The Tories always counter-pose the self-employed - the "risk takers" and much lauded "entrepreneurs" - against the lowly working class. Well now they have taken a bold step towards uniting all workers: employed and self-employed.
Philip Hammond's Budget was a potential nightmare for the self-employed: a worked example of the Tories looking for whom next to attack, having successfully fleeced everyone else in their constant and mindless drive towards austerity.
That Hammond and May were forced to perform this comic U-Turn, demonstrates that this government is far weaker and more fragile than the polls indicate and the Tories would have us believe.
Hammond and May have been reported as looking quite relaxed during Prime Minister’s Questions this week in the aftermath of the Chancellor announcing the withdrawal of the proposed increase in NICs. This relief is likely due to the receding threat of being lynched by their own side, more than anything. If Hammond’s NIC rise had gone ahead as originally planned, Tories in marginal seats could have seen their support amongst the archetypal “white van man” quickly drain away at election time – and with it their political careers.
The issue has not gone away for the Tories, however, and the government is still considering how to make the self-employed pay more. Few amongst the self-employed will be fooled by this recent and sudden change of heart. They may now be even more alert to the sustained Tory attacks being carried out elsewhere: on essential services, such as the NHS; on social services; and on the safety net of welfare and benefits, which they will need if they go bust.
For many self-employed workers, this latest abrupt U-turn will have opened their eyes to the savage cuts being carried out by the Tories. The conclusion that must be drawn is that only a socialist Labour government can offer a genuine alternative to the Tories and their austerity and attacks.
By Vic Dale, Isle of Wight