At a glance: autumn statement – 26 key pointsThe Guardian 24 November 2016 Back to results
- 2.1% in 2016 – higher than forecast in March.
- In 2017, the Office for Budget Responsibility is forecasting growth of 1.4%.
- Hammond said growth would be 2.4 percentage points lower than would have been the case during the forecast period. Growth is forecast to be 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021.
- Previous forecasts were 2.2% for 2017 and 2.1% for each of 2018, 2019 and 2020.
Rowena Mason, deputy political editor: The chancellor blames the lower growth forecasts for next year on higher predicted inflation and economic uncertainty, mostly attributable to the vote to leave the EU. That will annoy the Brexiters who dismiss the economic impact of the referendum, but it is still not forecasting a recession predicted by remain campaigners before 23 June.
- New draft charter for budget responsibility.
- Forecasts for borrowing: £59bn next year, £46.5bn in 2018-19 and £21.9bn in 2020, to reach £17.2bn in 2021-22. No longer a surplus by the end of the decade. Previously the government was aiming for surplus by the end of the decade. The forecast was for £56bn of borrowing in 2016-17, £39bn in 2017-18 and £21bn in 2018-19.
RM: Philip Hammond said the government was committed to maintaining fiscal discipline, prompting scornful laughter from the opposition. The lack of a firm date for returning to a surplus ditches the last of George Osborne’s old budgetary targets, which he repeatedly broke and delayed.
No plans for further welfare savings measures in this parliament beyond those already announced.
RM: Hammond is keeping Osborne’s idea of a welfare cap but does not resist a dig at his predecessor as he raises it to a more ‘realistic level’. He commits to no further welfare cuts than those already announced but the retention of a cap will dash the hopes of those MPs, including some Tories, who want him to reverse cuts to universal credit.
- £23bn national productivity investment fund over five years.
RM: The chancellor is channelling Gordon Brown and Ed Balls as he focuses heavily on solving the productivity problem that means UK output lags behind those of other developed nations. There are few details yet on how this will be distributed but Hammond says the aim is a ‘high-wage, high-skill economy that will deliver higher living standards’.
- White paper to be published.
- Unlock land for housing.
- £2.3bn housing infrastructure fund to create 100,000 new homes in areas of high demand.
- £1.4bn to construct 40,000 affordable homes.
- Pilot of right to buy for housing association tenants.
RM: Successive chancellors have tried to give a boost to housebuilding but Hammond has had a very positive reception from the Royal Institution of Chartered Surveyors, who say this plan means he has listened to calls for more housing for rent and affordable homes to buy.
Transport: road and rail
- £1.1bn in English local networks.
- £200m for traffic pinch-points.
- £450m for digital signalling on trains.
- £390m for low-emissions vehicles.
RM: This appears to be part of the way Hammond is aiming to address productivity problems, as workers and businesses are hampered by poor transport links.
- 100% business rate relief on new fibre infrastructure.
- £1bn for broadband.
RM: Again, Hammond is prioritising infrastructure aimed at improving business output. Money is going towards ‘hyper-fast’ broadband, although some may be frustrated that millions of rural households still do not have good connectivity.
Exports and small firms
- Double export finance capacity. £400m for the British business bank to invest in fintech (financial innovation) firms.
RM: Innovation is another big theme of this autumn statement, with Hammond stressing the need for long-term investment in industries for the future.
- £1.8bn from the local growth fund to go to regions.
- New borrowing powers for local authorities.
RM: Local authorities will welcome more money for infrastructure. Councils are also getting more devolved powers, including control over the adult education budget. However, with this control comes greater responsibility for carrying out cuts.
Rest of UK
- More than £250m to the Northern Ireland executive.
- £400m to the Welsh government.
- £800m to the Scottish government.
Gets £7.6m grant.
RM: This is a naked piece of political mudslinging as Hammond spends several minutes extolling the greatness of the mansion that inspired Jane Austen’s Pemberley in Pride and Prejudice, which he claims was threatened by opencast mining nearby that was authorised by a previous Labour government. However desperate the need for repairs, there may be eyebrows raised at the sum going to the house and prominence given to one residence during Hammond’s short speech.
£10bn of additional funding a year by the end of 2020-21.
RM: This is simply meeting a pledge made under David Cameron but there is a lot of analysis suggesting it will not be enough, especially given the pressure that social care cuts are putting on the NHS.
£3.5bn of cuts as previously announced but Ministry of Justice to get funding for more prison officers.
RM: May’s government has clearly anticipated a problem in prisons that could quickly spiral further out of control, and acted to put more money into prison safety.
Libor fines and tampon tax
- £102m from Libor fines to be given to army charities.
- £3m from the tampon tax for Comic Relief to go to women’s charities.
Fall to 17% as planned by 2020.
RM: Some had interpreted Theresa May’s comments that she wanted the UK to have the lowest corporation tax rate in the G20 as a sign that she could slash it as low as 15% – the rate promised by the US president-elect, Donald Trump. However, Hammond has held off for now.
Insurance premium tax
- Rise to 12% in June from 10%.
- Crackdown on fraudulent whiplash claims to save £40 on car insurance.
RM: The crackdown on fraudulent whiplash claims was a widely trailed measure aimed at helping ‘just about managing’ families. But it looks like this could be offset at least partially by the higher consumer tax on insurance premiums.
Salary sacrifice schemes to be scaled back, with some exceptions such as cycling schemes.
RM: This is a revenue raiser for the Treasury as employers will have to pay national insurance on benefits like mobile phone contracts and gym membership. Experts suggest the incentive for businesses to offer work perks will plummet.
Raise £2bn over the forecast period, £630m from targeting schemes such as the flat rate VAT scheme and use of employee shareholder status. There will also be a new penalty for repeated use of tax avoidance schemes.
RM: Another year, another crackdown on tax avoidance. The measure is a good one though. It is specifically aimed at closing down the scheme the Guardian exposed last week where employment agencies make windfalls by exploiting the flat rate scheme.
From April 2017 align the employee and employer NI thresholds at £157 per week.
RM: This will raise a significant amount for the Treasury and cost employers on average £7.18 per worker. This is because the earnings threshold above which a business has to pay NI contributions will not rise with inflation but a modest £1 next year, bringing it into line with the threshold for employees.
- Plan remains to raise the tax-free allowance from £11,000 to £11,500 in April and £12,500 by 2020.
- Hammond reiterates commitment to raise the top threshold to £50,000.
RM: Hammond built this passage up so much that it sounded like he was about to announce another big rise in the personal allowance. However, he is simply confirming Osborne’s previous pledges.
National living wage
- Rise from £7.20 to £7.50 an hour in April.
RM: This was another widely trailed policy. It will be good news for workers on minimum wage jobs but the rise is not big enough to keep pace with Osborne’s promise that the rate will reach £9 by 2020.
The taper rate at which universal credit is withdrawn as earnings rise to be reduced from 65p to 63p at a cost of £1bn from April.
RM: This is designed to incentivise people on part-time jobs to increase their hours, as it will slow the rate at which in-work benefits are withdrawn for those on universal credit. It has been welcomed by campaigners as a first step, but Iain Duncan Smith, the former work and pensions secretary, has said it does not go far enough.
- Ban letting agency fees.
- Keep close watch on retail energy market.
- Ban pensions cold-calling.
RM: This is an agenda to help the ‘squeezed middle’ that could have been outlined by the former Labour leader Ed Miliband. In fact, when Miliband proposed the ban on letting agency fees, the Conservatives claimed it would lead to higher rents and less choice for tenants.
New NS&I bond offering 2.2% interest rate on three-year product, to be announced in the budget.
RM: This may be the help for savers that Theresa May hinted at in her Conservative conference speech when she claimed savings were being eroded by monetary policy. That appeared to be an unprecedented intervention in the activities of the Bank of England. However, she might simply have had this retail offering from the government in mind.
Cancelled for the seventh consecutive year.
RM: It is becoming quite politically impossible for a chancellor to raise fuel duty, given the annual pressure against any more rises from Tory backbenchers and the rightwing press.
Abolishing the autumn statement (sort of)
- Budget to be moved to the autumn from March.
- There will be a spring statement.
RM: Hammond has a reputation for being dull but this seemed to be an attempt at a dry joke. He announced dramatically that he was about to abolish the autumn statement, giving the impression he was about to resign, before simply switching to an autumn budget and spring statement. The spring statement will no longer be a major fiscal event but a response to economic forecasts produced twice a year by the OBR.
This article was written by Jill Treanor and Rowena Mason from The Guardian and was legally licensed through the NewsCred publisher network.