Does Britain have a new government—or not?

Five months ago, Britain’s government got a facelift. Out went old Etonian David Cameron and showman George Osborne; in came sometime grammar-school girl Theresa May and “Spreadsheet Phil” Hammond.

The rhetoric changed with the personnel, but in a rather baffling manner—“hard-working families” fell from fashion, and the “just about managing” or “JAMs” emerged as priority number one. You’d need a very good dictionary to distinguish those two phrases, but November’s Autumn Statement provided a first chance to establish whether we’ve got a new government in terms of decisions, rather than spin.

Fiscal events unfold in two acts. In the first, the chancellor delivers new economic forecasts, usually peppered with favourable comparisons to other countries (better than awful is better than nothing). In the second, he reveals how he will shape the public finances in this changing economy. Since March, we’ve had the Brexit vote and further lacklustre productivity growth, which led to a £26bn drop in the guesstimated size of the UK economy in 2020-21. Under the Osborne regime, with its tight borrowing targets, this grim news would probably have translated into an extra dollop of austerity.

Hammond did try to differentiate himself. In a performance worthy of someone nicknamed after an accounting tool, he embraced boring. He neither doubled down on austerity, nor went for a stimulus. He kicked Osborne’s habit of tabloid-friendly handouts, joking that he was less adept at pulling rabbits from hats. This left him with less need than Osborne to bury nasty surprises in the smallprint: fewer rabbits mean less need to stump up for rabbit feed.

On the surface, the new government’s priorities looked different too. In 1870 Robert Lowe, a liberal politician, defined the chancellor’s duties as those “more or less of a taxing machine. He is entrusted with a certain amount of misery which it is his duty to distribute as fairly as he can.”

But the fairness factor was not much in evidence after the May 2015 election: the Treasury quietly stopped producing its analysis of how rich and poor households fared under its policies, presumably because the answer was politically awkward. Under Hammond the analysis was reinstated, and it showed that his tweaks were faintly progressive, largely because of a £0.6bn easement of universal credit, offsetting some but not all of a cut that Osborne had legislated for. Here, it seemed, was a little JAM today, a real sweetener from the new government.

But it took no time for the Resolution Foundation to establish the continuing weight of the Osborne legacy. Over the last parliament, the idea that we were “all in it together” was not entirely rubbish. Between 2010-11 and 2014-15 the poorest and richest households experienced similar real income growth—albeit an anaemic annual rate of around 0.5 per cent. Indeed, if anything the poorest households actually fared slightly better on this score.

But the current parliament will be very different. Back in March, the Foundation expected that by 2020-21, the richest 40 per cent of households would have enjoyed real income rises of 1 per cent plus annually, whereas the poorest quarter would see real incomes fall. And now that the outlook has worsened, it is more like the bottom third that will be getting poorer. That’s a lot of people who could be tipped from “just about managing” to something worse.

The big squeeze is largely driven by higher inflation produced by a lower pound. There may not be much Hammond can do about that, but several policies he has inherited—and is choosing to keep—are important too. Particularly a freeze on working-age benefits, which will bite harder as prices rise. This freeze was already reckoned to cost a working parent with one child £365, but now—with higher inflation—that loss rises to £470. Hammond can vaunt the progressive slant of the things he expressly announced, but his tinkering undid a mere 7 per cent of the hit to lower incomes that will flow from the government’s overall benefit cuts.

So was there anything more for those who are just about managing at best? Hammond is planning extra public investment, which may gradually create some jobs, and boost productivity in places. He also plans to raise income tax allowances and thresholds, a form of relief but one which principally benefits higher earners. At the same time, the universal credit will be phased in and worth less than the benefits it replaces.

Hammond and May, then, have blown their first chance to differentiate themselves from the old regime. Still less have they mapped out a distinct economic vision. Perhaps they don’t really have one. Or perhaps, given the uncertainty hanging over the Brexit economy, they prefer to wait and see. They’d need a good excuse to depart from regressive 2015 manifesto pledges to cut taxes and slash the benefits bill. But as this parliament progresses, they may get one.