When Theresa May stood on the steps of Downing Street she pledged to make Britain a “country that works for everyone”. Today, Chancellor Philip Hammond attempted to use the levers of public spending and borrowing to match that political ambition.
He talked of addressing the nation’s productivity gap, improving our physical and digital infrastructure, and investing in roads, railways and broadband. Whilst he maintained the Government’s commitment to balance the books, the Chancellor said Britain must prepare to be resilient as we exit the EU and allow for “fiscal headroom” to address the forthcoming challenges.
However, it was the political vision of the Prime Minister that loomed over today’s Autumn Statement. When she spoke on the steps of Downing Street and at the Conservative Party Conference, she opened her arms to working families and savers across the country. She made a land-grab for Brexit voters in rural communities and Labour heartlands and many of today’s spending commitments, including an increase in tax-free personal allowance to £12,500, target the concerns of the disillusioned voters that voted to leave in June. Cutting letting agents’ fees is a politically smart move that will cost the exchequer nothing but send a political signal to the ‘just about managing’ or JAMs that the government is on their side . The energy industry will look on nervously: the Prime Minister has indicated the government will intervene in markets that are deemed to not be working for ordinary people, and they might be next.
As well as seeking to meet the Prime Minister’s political objectives, it was important for the Chancellor to attempt to assuage the concerns of business in the lead up to the triggering of Article 50 in March 2017.
It is worth remembering with the Budget due around the same time as the triggering of Article 50, the Chancellor may well be calculating that this will be the point to announce bigger measures for the maximum political and economic impact.In addition to creating a National Productivity Investment Fund, the Chancellor reaffirmed his commitment to slash corporation tax to 17% and pledged £400mn in venture capitalist funding to the British Business Bank. Mr Hammond did not pull any rabbits out of the hat or announce anything to surprise business: rather, he spoke of balancing the economy in the long term and addressed his final political and economic challenge: ensuring the Government has the flexibility to steer the country to a successful Brexit.
Finally, the Chancellor told the House of Commons this Autumn Statement would be the last; Mr Hammond is following Norman Lamont’s model by holding one Autumn Budget and a written statement in the spring in response to the half-year Office for Budget Responsibility (OBR) financial forecast.
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February 21, 2024