This Monday (29th October) Philip Hammond delivered his 2018...
On Wednesday the Chancellor delivered his last Autumn Statement before next May’s general election. The purpose of the Statement is to report on the state of the economy and outline the government’s economic strategy, with detailed changes being announced in the Budget. Next year’s Budget day is too close to the prorogation of Parliament for its impact to be felt in time to influence the voters so Mr Osborne announced measures on Wednesday that might ordinarily have come in the Budget.
The key aim of his economic policy set in 2010 was eliminating the deficit by next year. That is only half done and more cuts in public expenditure are needed to achieve that goal in the next Parliament. However much the public recognises the need for this, five years of austerity have left most of us feeling worse off. The Chancellor had no scope for big hand-outs but had to offer something to sweeten the public mood and persuade us to return him to office to finish the job.
He began by listing what his policies had achieved. The economy is growing by 3% this year, faster than any other developed economy. Business investment has grown 27% since 2010 and manufacturing is growing faster than other sectors. More people are in work than ever and 80% of the new jobs are full time. Average wages have increased 4% over the last year and the gender pay gap is at an all-time low. We may not feel the benefit yet so what could he do to cheer us up?
A focus on housing was one response. A cut in Stamp duty for 98% of homebuyers, paid for by increasing the duty on the most expensive homes will be welcome. So will the sale of £1 billion worth of government-owned land to make possible the building of 100,000 affordable homes.
Other measures include an extra £2 billion for the NHS, and £1.2billion for GP services, to be paid for from fines on foreign exchange dealing in the City. The freeze on fuel duty will continue and air passenger duty for children under 12 will be abolished. Pension law will be changed to enable the pensions of deceased persons to be passed to their loved ones free of tax. There is also help for churches needing major repairs.
The Chancellor observed gloomy prospects for other economies, especially those in Europe which are our major market for goods and services. A £45 million package will help British firms to connect with the faster growing developing economies. Multinational companies that avoid tax by transferring their profits overseas now face a 25% tax. The business rate relief on small businesses has been doubled.
The Shadow Chancellor was predictably unimpressed. Osborne’s pledge to balance the books by 2015 had been broken, working people are worse off and tax revenues are down. Productivity is not increasing and our exports record is poor. Bank lending to small firms has been inadequate.
Has the Chancellor done his best? The voters will decide on 7th May.