While Theresa May is away, Philip Hammond is making a play for No 10

What is remarkable about Hammond’s confidence is that he faced the sack two months ago and even a fortnight ago he was written off as tin-eared and useless at politics for his comments about public sector workers and female train drivers

The Chacellor has positioned himself favourably on Brexit (AFP/Getty)

The mystery about Philip Hammond is why it was ever assumed that he didn’t want to be prime minister. This week he put an end to that misconception. Formally nominated by Theresa May to deputise for her while she is away, he has seized the chance to set out with some clarity a position on a transitional period after Britain leaves the EU in 2019.

It is a position with two striking features: one, it is entirely sensible, keeping most of the features of EU membership for up to three years while the new relationship with the EU is negotiated; and, two, it has united the Government. This unity has broken out at cabinet level, with Amber Rudd, the Home Secretary, accepting that new rules on immigration will not start in 2019. But it has also spread to the Eurosceptic backbenches, with Jacob Rees-Mogg saying he is “not worried, but cautious”, although he added: “We will be watching like hawks.”

Rees-Mogg is significant not just because he is a Brexiteer but because this week one bookmaker named him the second favourite – after David Davis, the Brexit Secretary – to succeed May as Conservative leader.

This was an early touch of sillyseasonitis, because at the time of writing he is fourth behind Davis, Boris Johnson and Hammond. Rees-Mogg, who is almost posh enough to be one of Jeremy Corbyn’s advisers, would be the novelty-celebrity candidate on the model of Corbyn himself, unthinkable but authentic. It would be unwise to rule out the possibility of him as leader, but the main significance of the story is that it draws attention to the thinness of the field for a Conservative leadership election that everyone thinks will be held in the next few years.

That is the context for Hammond’s assertiveness this week. I am not saying it is a leadership bid, but I think the Chancellor takes the view that good policy is the best way to promote oneself. A transition deal was always the best way to approach Brexit, but Theresa May would have held back from spelling it out, partly as a negotiating tactic but mostly out of a political hoarding instinct.

What is most remarkable about Hammond’s confidence is that he faced the sack two months ago and even a fortnight ago he was written off as tin-eared and useless at politics for his comments in Cabinet about “overpaid” public-sector workers.

His partnership with May is the latest chapter in a long-running series of fraught relationships between prime ministers and chancellors in contemporary history. Only David Cameron and George Osborne managed to avoid being locked in a power struggle – Osborne even disagreed with Cameron about promising an EU referendum and they kept it private.

Hammond, on the other hand, got on badly with Fiona Hill and Nick Timothy, the Prime Minister’s pre-election chiefs of staff. I am told that his personal relations with May herself were always better, and that this is how they have rebuilt things since the election.

That said, May was always suspicious of the Treasury when she was Home Secretary, and cannot be comfortable with the way it has become “more muscular across Whitehall”, as one insider put it, as a result of Hammond’s self-promotion. She would obviously rather rely on Damian Green, who has called himself the “almost-but-not-quite-deputy-prime-minister” since the election, when he was made First Secretary of State and second in the Cabinet ranking. She trusts Green, whose ambition is even better concealed than Hammond’s, and the First Secretary will be duty manager of the Government later on in May’s holiday, but she feels she has to share power with her Chancellor too.

His next challenge is the Budget, which he has moved to the autumn – I say autumn, but the Treasury operates on a strange calendar: Hammond has said that it will be in November, although the precise date has not been announced yet. His first Budget went badly, in April, as he had to cancel the main revenue-raising measure, putting up National Insurance contributions on the self-employed, within days.

This time he has to accommodate vast spending pressures, starting with the £1.5bn over two years for Northern Ireland secured by the DUP as the price of its support for the Government. All the savings planned in the Tory manifesto – social care, school lunches, winter fuel payments, state pensions – have been abandoned, and more money needs to be found for the NHS and public-sector staff generally, whether they are “overpaid” or not.

Which brings us to Hammond’s weaknesses. One of his colleagues says: “He has such a tin ear, he’ll probably overplay his hand somewhere.” His problem is not just that he is tactless, but that he was naive enough to think he could say such colourful things in Cabinet and expect them not to be reported (as for “driving a train is so easy even a woman could do it”, he says he didn’t say it: he was criticising the unions for male-biased recruitment as an aside from saying train drivers were overpaid because their jobs were so easy).

But if he avoids insulting public servants and manages to balance the nation’s books while keeping the economy going through Brexit, he could be well placed to succeed Theresa May.

It is worth noting that the transitional deal in effect pushes back all the difficult decisions a further three years. The Prime Minister called the early election partly because she was worried about the date of Brexit falling too close to the election in 2020. Now, thanks to Hammond, it is clear that the important date is going to be the end of the transitional period, just before the current date for the next election of 2022. Could it be he who fights that election?