The Tory tax bombshell

The single most important domestic policy decision that the Conservatives must take is what to do about public spending. After the snap election went so wrong last year, many Tories rushed to blame ‘austerity’. Gavin Barwell, now Theresa May’s chief of staff, said this was one of the principal reasons he had lost his Croydon Central seat. Even the Chancellor, Philip Hammond, admitted that the public was weary of the long slog to balance the books.

This belief — that the public has had enough of austerity — explains why the Tories aren’t behaving as governments traditionally do. Normally, they make tough fiscal choices in the early years of a parliament in the hope of being able to increase spending or cut taxes, preferably both, as election day approaches. Instead, the Conservatives are already loosening the purse strings. On Tuesday, in his low-key spring statement, Philip Hammond said that if the economy continued to outperform expectations, then there would be even more money available for public services.