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Capitalism is failing “ordinary people” who believe “the system isn’t working for them”, Philip Hammond has warned the Tory faithful. In a landmark speech for a Tory chancellor, Mr Hammond said supporters of free-market economics had to acknowledge it no longer matched “the reality” for many British people.

“Too many people feel that they have lost control, that they are working for the system – but the system isn’t working for them,” he admitted, in language normally heard from Labour politicians.

Mr Hammond added: “Too many people have experienced years of slow wage growth, too many struggle to make ends meet.

“They feel less secure in their jobs – and have seen the housing market spiral beyond their reach.

“And as they look around them, they feel a growing concern that they are falling behind. And that when they voice those concerns, the political system doesn’t seem to hear them.”

Mr Hammond told the conference that “our challenge is to ensure that 21st century capitalism delivers for them”.

Nevertheless, the speech appeared to reflect Conservative fears that Labour, under Jeremy Corbyn and John McDonnell, have struck a chord with their calls for radical change.

Mr Hammond also won applause from the conference when he urged Tories to stand “foursquare behind the prime minister” to rescue her Chequers plan for Brexit.

The Chancellor rejected claims from both pro and anti-EU Tories that the proposals were dead, after their mauling by the EU – insisting they could still deliver an agreement.

“Mr Tusk [the European Council president] says it won’t work – but that’s what people said about the lightbulb in 1878,” he told the Conservative conference. “Our job is to prove him wrong.”

The run-up to the Birmingham conference was dominated by pressure on Theresa May from both Tory left and right to accept the Chequers blueprint is doomed. Read more

Related news: Jeremy Corbyn meets with feared Brussels official Martin Selmayr. Read more