Rarely has a Budget unravelled so quickly. Not even George Osborne’s so-called omnishambles package in 2012 saw its central tax-raising feature dropped within a week. The decision to abandon plans to increase National Insurance Contributions (NICs) paid by the self-employed is an abject humiliation for Philip Hammond, the Chancellor of the Exchequer, and an acute embarrassment for the Government as a whole.
Moreover, at this critical moment in the country’s history it raises serious questions over the political acumen of the administration’s key decision-makers. This episode does not bode well for the forthcoming negotiations over Brexit. It betrays either naivete or incompetence or both and neither can be in evidence in the talks that are about to begin and on which this nation’s future prosperity depends. Indeed, one of the more startling omissions from Mr Hammond’s ill-judged Budget was any mention of Brexit or any obvious planning for its ramifications.
But it is what it did contain that has caused the trouble. It is, frankly, hard to understand how a Budget, with all its attendant planning, its discussions, official papers, committee meetings and the rest could have passed through to completion without anyone pointing out that it breached a commitment in the manifesto on which the party campaigned less than two years ago.
In any case, this was not just about breaching an election pledge, however bad that was in undermining public trust in politics and government. As was immediately apparent, the announcement on NICs was a profoundly un-Tory thing to do, whether or not it had been enshrined in the manifesto. The simple fact that this was a tax-increasing measure should have set off alarm bells long before the Chancellor got to his feet last Wednesday.
Indeed, such is the immediacy of modern communications that even before Mr Hammond sat down many Tory MPs had been contacted by angry self-employed constituents. The willingness of dozens of normally loyal backbenchers to criticise the Budget before the ink was even dry was a harbinger of things to come.
When a mistake has been made it is best to acknowledge it quickly and shut down the source of disaffection. But what is odd here is that he had already done that by putting off the NIC increase until his next Budget in November, at which time a review into the tax treatment of the self-employed headed by Matthew Taylor, a former head of Tony Blair’s policy unit, would have reported.
At that point, the Chancellor could have made his dispositions clear. This delay seemed to have drawn the sting from the issue and the whole political agenda had moved on from the Budget to Brexit and the Union following Nicola Sturgeon’s referendum threat on Monday.
So why drag it back into the public gaze? Perhaps No 10 feared that the matter would fester unless it was killed off entirely. But in so doing they have subjected Mr Hammond to an experience from which his credibility is unlikely to recover.
To her credit, Theresa May shared the responsibility for breaching the spirit of the manifesto commitment while maintaining that its letter had been observed by the “legislative lock” against increasing Class 1 NICs. In addition, the announcement was made in the knowledge that Mrs May would need to explain the U-turn at question time in the Commons just a few hours later. However, what might have been a distinctly uncomfortable half an hour was made more palatable by the performance of Jeremy Corbyn, pitiful even by his low standards.
Labour’s answer to a fiscal shortfall, which is to borrow more on top of the £1.7 trillion national debt already accumulated, gave Mrs May an unlikely Commons victory in difficult circumstances. But her Government has been damaged by what can only be seen as a self-inflicted wound. Over the next critical two years leading to Brexit, we need a Cabinet playing at the top of its game, not scoring own goals.