The Tories are hoping to reap a political reward from their new language on austerity – they may be disappointed

Since the financial crisis of 2008, the Conservatives have argued that austerity was an economic necessity. Now they seem to accept it is a political choice, as Jeremy Corbyn and John McDonnell have long claimed. Labour did not win last month’s election, but it has won this big political argument.

Theresa May’s unseemly deal with the Democratic Unionist Party, which will support the Tories in key Commons votes in return for an extra £1bn for Northern Ireland, has undermined the Government’s ability to say no to other demands for spending. The “magic money tree” soundbite used to attack Labour’s plans during the election is no longer on Tory lips. Indeed, Cabinet ministers queue up to demand more spending, notably by lifting the 1 per cent cap on public sector pay rises.

It appears that May agrees as she tries to learn lessons from her catastrophic election. So do many Tory backbenchers. A lonely Philip Hammond, the Chancellor, is trying to hold the line as he contemplates a mounting pile of post-election bills. Projected savings from changes to the state pension and the winter fuel allowance for pensioners will not materialise as the cuts have been abandoned. A shake-up of social care funding is in the long grass. More money must be found for schools, and the NHS remains close to the edge. A hit to the public finances from Brexit looms.

Hammond will probably squash Tory calls, led by Damian Green, the First Secretary of State, for a debate about university tuition fees. (Green's move is another backhanded compliment to Labour after its pledge to abolish them). But the Chancellor should and surely will give way on public sector pay. A two-year freeze, followed by five years of 1 per cent rises, has taken its toll on seven million workers.

The policy may soon be counterproductive for the Treasury; the NHS pay review body has warned that filling gaps from growing staff shortages could cost more than the cap saves. Ministers are likely to honour the recommendations of the eight pay review bodies. It is impossible to justify a pay squeeze when the budget deficit has been brought down from an admittedly unsustainable 9.9 per cent in 2009-10 to 2.4 per cent.

The Tories’ expected U-turn is welcome but their warm words about public servants are probably a cold political calculation. Would they be ending the pay cap if May had won the big majority she expected? No. We should also judge the Tories’ new rhetoric on austerity against whether they maintain their four-year freeze on working age benefits, which is hurting many of the “just about managing” people May set out to champion a year ago on becoming prime minister.

There is also a strong case for relaxing the purse strings for local authorities, who have seen their budgets cut by 40 per cent since 2010, more than any Whitehall department, as the Government passed the cuts parcel. Councils will have some big bills as the lessons of the Grenfell Tower tragedy are learned and the Government should meet them in full.

If the Tories are hoping to reap a political reward from their new language on austerity, they may be disappointed. They are a party of sound money or they are nothing. They have a difficult balancing act to perform and could end up falling between two stools.

Some of the Tories’ natural supporters may not be impressed that the annual budget deficit, which was supposed to be cleared by 2015, is still running at £58bn and not due to be eliminated until 2025, a target that could now easily slip. At the same time, many people might be rather sceptical about the Tories’ sudden conversion and, if they want an anti-austerity party, will vote for the real thing.