In his Autumn Statement, Chancellor Philip Hammond has announced major investment in infrastructure and housing as he promises to deliver a ‘resilient’ UK economy in preparation for Brexit despite fears of higher borrowing and slower growth.

 

He also ditched predecessor George Osborne’s pledge to clear the UK’s deficit by 2020 – replacing it with a target instead of ‘as early as possible’ and rolled out a series of measures intended to make things a little easier for Mrs May’s Just About Managing families.

In his first major Commons event as chancellor Mr Hammond told MPs that the Brexit vote exactly five months earlier ‘will change the course of Britain’s history’, making it ‘more urgent than ever’ to tackle long term economic weaknesses.

According to forecasts by the Office for Budget Responsibility (OBR) borrowing will hit £68.2bn this year and £59bn, a significant increase compared with the March forecast of £55.5bn and £38.8bn.

On message, and faithful to the Tory PR machine, Mr Hammond has pledged to deliver an ‘economy that works for everyone’ in support of Mrs May’s pledge to deliver a ‘country that works for everyone’, but debts running at over 90% of GDP would rarely be considered just cause to get out the bunting.

Mr Hammond said that OBR figures indicate that the referendum result meant potential growth in the current Parliament would be 2.4% lower than forecast in March; government finances are forecast to be £122bn worse off.

Among the chancellor’s announcements were:

  • Reducing the rate at which benefits are withdrawn from people when they start work
  • Banning upfront fees imposed by lettings agents in England
  • Increasing the National Living Wage to £7.50 an hour from April 2017
  • £1.4bn aimed at delivering 40,000 new affordable homes in England
  • Cancelling the fuel duty increase for the seventh year running
  • The personal allowance to increase to £12,500 by 2020 after which it would increase with inflation
  • The higher tax band will rise to £50,000 by the end of the Parliament
  • An increase in the National Living Wage up to £7.50 in April from £7.20

Mr Hammond said the government would prioritise ‘additional high-value investment’ on infrastructure funded by additional borrowing.

A new £23bn ‘national productivity investment fund’ is to be established to tackle the UK’s ‘shocking’ productivity gap with other countries, he said.

Elsewhere, £2bn a year is to be ploughed into science by 2020 and £1.3bn is to be made to improve the condition of Britain’s roads.

In paying tribute to Mr Osborne, Mr Hammond said that his three fiscal imperatives would be to balance the books ‘as early as possible in the next Parliament’, for public sector net debt to be falling as a share of GDP by the end of Parliament and for welfare spending to be within a cap.

Mr Hammond signalled the end of the Autumn Statement in favour of a ‘Spring Statement’ made in response to OBR forecasts and the Budget shifting to the autumn.

The government said about three million households would benefit from changes to Universal Credit which sees the ‘taper rate’ from 65% move from to 63%, meaning that benefits on the flagship single payment will be withdrawn at a rate of 63p for every pound of net earnings.

The government said it would relax rules on how affordable housing funding could be used and has banned letting agents’ fees to help 4.3 million private rental tenants.

 





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