Chancellor also says UK may soon have to tax internet firms such as Amazon and Google
Philip Hammond has warned the Treasury’s austerity programme will come under attack from what he called “populists and demagogues” among Jeremy Corbyn’s supporters, but claimed it would retain the backing of the British people.
The chancellor said he would withhold funds to protect the economy should the government fail to secure a Brexit deal. But he conceded that his plan to be fiscally responsible would be controversial and the Conservative party needed to hold its nerve over the coming months as pleas for extra spending grew louder.
Speaking at the Tory conference in Birmingham, Hammond also said the time was approaching when the government would need to tax internetcompanies such as Amazon and Google, saying: “The global internet giants must contribute fairly to funding our public services.”
Hammond said the best way to tax international companies was through global agreements, but added: “The time for talking is coming to an end and the stalling has to stop. If we cannot reach agreement, the UK will go it alone with a digital services tax of its own.”
With four weeks to go until the autumn budget, Hammond hinted he would take a cautious approach due to the possibility of Britain crashing out of the EU without a deal.
Backing Theresa May’s Chequers plan for a comprehensive exit deal, Hammond said Europe would remain Britain’s largest trading partner and there was a need for friction-free access to the EU to continue.
“That’s why I share the prime minister’s determination to get the Chequers plan agreed,” he said.
Nevertheless, Hammond said the government was preparing for the possibility of a no-deal outcome, saying: “And be in no doubt that I will maintain enough fiscal firepower to support our economy if that happens.”
The chancellor said he was confident a deal would be agreed and predicted this would lead to stronger growth and a “deal dividend”.
He ramped up the rhetoric against Labour’s spending plans by accusing Corbyn and the shadow chancellor, John McDonnell, of promising an “illusory utopia”.
He said while Labour’s answers would solve nothing, its questions deserved a response, “and we must answer their challenges with our own, Conservative solutions based on realism, not populism; delivery, not rhetoric”.
McDonnell hit back after the speech and accused the Tories of lacking any fresh ideas. “The chancellor’s speech confirmed the bankrupt state of the Tory party, increasingly irrelevant and cut off from the real day-to-day life most people experience,” he said.
“The Tories are bereft of any fresh ideas, forced to resort to a half-hearted filching of policies from others and desperately trying to revive long-outdated slogans. As the Tories sink into a pit of bitter infighting, we mustn’t allow them to take the country down with it.”