The aftermath of Philip Hammond‘s statement reveals a divided government, hamstrung by squabbles over Brexit

It wasn’t supposed to be like this. In the build-up to yesterday’s Autumn Statement the Chancellor, Philip Hammond, was supposed to herald a departure with a Tory government committed to putting in place a new industrial strategy, charting a new course for the UK economy, and to offer help for the struggling “Jams”, those Just About Managing.

In reality there was little substance to this, and the whole discussion on the Autumn Statement has been dominated by cries of outrage from aggrieved pro-Brexit Tory MPs over his echoing of the Office for Budget Responsibility that Brexit will create a £58 billion black hole at the heart of government finances, and that Britain would need to borrow a further £122 billion over the coming five years. The OBR’s also warned that Brexit will leave the economy 2.4 per cent smaller than if the vote had been to Remain. That flew in the face of the Hard Brexiteers‘ vision of a Britain prospering when it is unshackled from the EU.

In response to their wrath Hammond had to appear on BBC Radio 4’s Today programme to say this was just a forecast and such things are often wrong. Not quite what he was saying yesterday.

All of this underscores the deep divisions at the heart of the Tories over what sort of Brexit, hard or soft. There is quite a lot of muttering at Westminster that Theresa May is not fully in control of her cabinet, reinforced by her rather lacklustre performance at Prime Minister‘s Question Time. That doesn’t mean much outside Westminster, but it is the highlight of the parliamentary week, and how May, Corbyn et al perform is monitored.

But returning to the substance of yesterday’s Statement, far from bringing cheer to those famous Jams or kickstarting a revival of British industry, it left a cloud of gloom over the Tory benches. Hammond has gone back on his predecessor George Osborne’s pledge to eliminate the deficit by 2020. Instead that’s been put back to 2025. In reality that means austerity will be extended until then. If that is the case, and this target is not put back again, the economic pain suffered by working people will have lasted the best part of two decades. With inflation expected to rise last year that will hit the earnings of the majority of the population who can expect low or zero pay rises.

It might well get even worse, with Hammond hinting that he will go back on the Triple Lock pledge, made by David Cameron and Osborne back in 2012, committing this government to increase the state pension by whichever of price inflation, average earnings growth or 2.5 per cent is highest. Treasury officials have also said that promises to protect health and education spending could be scrapped in the next government spending review.

Speculation before Hammond got up to deliver his Statement was that he was going to inject a heavy dose of spending into investment to kickstart the economy. Hammond did promise £23 billion more would be invested in transport, the digital economy, science and, particularly welcome to younger, poorer renters, in housing. He admitted the UK spends 30 per cent less on such capital projects than Germany. He pledged to get government spending on infrastructure above 1 per cent of national income by 2020. This has hardly set the heather alight!

He did announce a £2.3 billion extra for housing developments, which will go to private builders. It sounds like a lot but falls way short of addressing a growing housing problem, plus that an “expressway” would be built linking Oxford and Cambridge thus creating a “high tech corridor.”

In fact, much of the extra spending was inherited from projects put in place by George Osborne.

We had been told that Hammond’s obsession is increasing Britain’s woeful productivity level, which lags way behind that of the USA, France and Germany. He has not. Low productivity reflects low levels of investment, a historic problem in the UK, and the fact that Britain is a low wage, low skill economy.

The truth that Hammond cannot reveal is that it is only the state that could deliver the sort of investment which could forge a new industrial base creating skilled jobs. I listened to the CEO of a construction firm bemoaning that Britain had poorer railways, roads and broadband access than its European rivals. He was arguing that with interest rates at record lows and with cash slopping around looking for a return on investments, because of negative or zero interest rates, it was a great time for the Chancellor to borrow to address all that.

It is a great time for those who are pointing out that austerity is not just not working but is strangling economic growth, and for an investment programme to rebuild the economy.

Instead Hammond’s Autumn statement left a bitter sense of gloom over Westminster.

The current government has now long since left its honeymoon period and there is a sense its struggling, hamstrung by splits over Brexit.

Since his appointment back in June, post-Brexit, Hammond had one thing going for him among Tory MPs – he wasn’t George Osborne. The former Chancellor was a hate figure among the Brexiteers because of his threat during the referendum that a Leave vote would trigger an emergency budget. There was wider disapproval about his failure to cut the budget deficit, which grew on his watch, and over his habit of making headline grabbing announcements of new projects which actually meant very little.

Hammond has quickly used up that capital. He and the Treasury are engaged in a turf war over who controls Brexit, at daggers drawn with Cabinet colleagues, David Davis and Liam Fox.

Meanwhile the clouds on the horizon darken. Leaving aside Brexit and Trump, the signs that the global economy may enter another down turn grow.

There may be trouble ahead!