News | Published October 01 2018

Hammond stresses the need to "harness the power of the market"

During his speech to the Conservative Party Conference this morning, the Chancellor of the Exchequer, Philip Hammond, stressed the need to “harness the power of the market economy” to help to navigate what he described as an impending technological revolution. In a speech which focussed on the need for constant adaptation, Hammond sought to outline the Conservative party as a party of change, focussing specifically on placing Britain at the forefront of digital innovation.

Largely eschewing detailed discussion of Brexit negotiations, he promised early that “this is not going to be a speech all about Brexit.” He limited this discussion to two key points. The first of these centred on geography, with Hammond asserting that our natural proximity will ensure that “we will be neighbours and we will have to carry on living with them.” Similarly, on a more economic note, he stressed that Europe remains the UK’s biggest market and the national economy is shaped around this fact.

Key Facts
  • Hammond calls for support for Chequers plan
  • Predicts a "Deal Dividend"
  • Announces £30 million initiative for bigger businesses to mentor smaller ones
  • Introduces a possible Digital Services Tax to tackle tax avoidance by tech giants

He used his speech to pledge support for Theresa May’s Chequers plan and called for unity within the party. Describing the ongoing negotiations, as “one of the most complex tasks” ever undertaken by a peacetime government, he called for party members to rally in support of the prime minister and her Chequers plan. He did, however, stress that the Treasury was prepared for a no-deal scenario and stated that “I will maintain enough fiscal firepower in my locker to support our economy if that [a no-deal scenario] happens.”

Going further, the chancellor predicted an immediate boost to economic growth “when” a deal is agreed, which he termed a “Deal Dividend.”  

He did, however, stress that the Treasury was prepared for a no-deal scenario and stated that “I will maintain enough fiscal firepower in my locker to support our economy if that [a no-deal scenario] happens.”

Addressing wider splits within the Conservative Party, Hammond called for unity, stressing that “All of us are on the same side when it comes to our national interest.” He further stated the importance of the party coming together to ease the situation post-Brexit, arguing that only a “united Conservative party” could deliver the leadership necessary.

Hammond also addressed what he perceived to be the root cause of the Brexit vote. Describing the gap between the experience of normal people and the general increase in prosperity, Hammond outlined how many people felt they had lost control over their lives and that they system they were working for was not working for them. This was coupled, in his view, with a belief that the political system was not hearing their concerns. To remedy this, Hammond argued that the Conservative party must make sure that “21st century capitalism delivers for these people.”

The main body of Hammond’s speech concerned technological change. Charting a near future in which driverless cars will become the norm and 3-D printing will revolutionise the way people buy and receive products, he sought to place Britain at the forefront of these new developments. He argued that it will be the nation’s ability to adapt to these societal changes which will be viewed as the most crucial thing when looked back upon in twenty years. As to his own position, he described himself as an “optimist”, and stated that “I am an enthusiast for the change that is coming.”

He stressed that it will be essential that we “take our people with us”: ensuring that this change benefits wider society. By “harnessing the power of the market economy”, he sought to reassure people about the benefits they will receive from this technological change. Seeking to embrace this change, he underlined the importance of discarding the view of the Conservatives as a “no change” party and argued that embracing these new developments is essential to avoid the “dangerous populism” of their political opponents.

Attacking his Labour counterparts, Hammond outlined a choice between the “pragmatism” of the Conservatives and the “seductive simplicity” of Labour proposals. Describing John McDonnell, who’s life goal he claimed was overthrowing capitalism, as a “disgrace”, he set out an opposition between capitalism, “the model that has delivered 200 years of economic growth”, and the “failed and faded ideologies of socialism.” Continuing this, he claimed that Corbyn and McDonnell don’t care about “economic growth” and care more about the redistribution of wealth than its creation. Further attacking socialism, he called it a “discredited ideology that will never solve real-world problems.”

The chancellor went on to identify the Conservative party as “the party of business” and announced changes to the apprenticeship levy scheme. Hammond launched a series of measures to allow firms more flexibility in how this levy is spent and pledged to do more, engaging with businesses to draw up long term plans for the operation of the levy. He also announced £30 million for an initiative in which larger businesses will mentor smaller ones, describing this proposal as “strengthening the backbone of our economy from the ground up.”

Highlighting the recent economic record of Conservative governments, he celebrated the reduction of “Labour’s deficit” from ten per cent to only two per cent of GDP. He introduced this economic achievement as “eight years of economic growth since 2010” and emphasised that unemployment is as low as it has been for 43 years.

Addressing the increasing power of international technology giants, Hammond announced a new expert panel, led by former advisor to Barack Obama, Jason Furman, which will review the UK’s competition regime to ensure it is fit for the digital era. Questioning whether such companies constitute monopolies, Hammond called for an international debate about reforming tax systems, ensuring that these companies contribute fairly to public services. He stressed that the best way to achieve this was through international agreements, but announced that if these cannot be reached, the UK will go it alone with a Digital Services Tax.

Returning to his central theme of the regeneration of capitalism for a new era, Hammond lighted on a quote from Margaret Thatcher: “We are in the business of planting trees, for our children and grandchildren, or we have no business to be in politics at all.” Setting out opposing plans for the country going forward, Hammond made a distinction between a “measured message of evolution” or populism and vowed that a Conservative government will be able to tell their children “We built a better Britain for you.”