Hammond shows his vision for post-Brexit Britain – The Autumn Statement
This blog post was written by our Public Affairs team at Brands2Life.
No-one quite knew what to expect from today’s Autumn Statement following the political surprises of recent months.
What we got from the new Chancellor Philip Hammond was a substantially stripped-back Statement which shunned the expansive approach of his predecessors Osborne and Brown.
Instead Hammond sought to portray himself as an almost apolitical figure, focussed on putting the key building blocks of investment, infrastructure and innovation in place to create an economy fit for the future.
But in truth the politics was never far away. In the same breath as he praised George Osborne’s achievement of bringing down the deficit by two-thirds, Hammond axed his commitment to deliver a surplus by 2019-20. The Government’s new fiscal framework actually will see the national debt reaching a modern record of 90.2% of GDP in 2017/18, putting the UK around the same level as France.
These additional funds will help pay for new, targeted investments to boost Britain’s productivity – a policy espoused by Labour under Ed Miliband. Nearly £5 billion will be spent on supporting innovation, R&D, and helping high growth firms scale up, while a further £1 billion was pledged for next generation fibre and 5G networks. Around £5 billion of new money will also go on supporting the housebuilding sector and another £2.5 billion will go on local transport schemes.
This spending will all go on supporting the new Prime Minister’s priorities of creating ‘clusters’ outside of London, and a new more interventionist Industrial Strategy. A tangible example of this was the announcement of investment to create a new tech hub in the ‘Oxford-Cambridge corridor’.
As the spending announcements unfolded, there were inevitably going to be spending cuts and tax rises to compensate. On the cuts side, Hammond said £3.5 billion savings would be needed across Whitehall by 2019/20. However of this £1 billion would be reinvested in ‘departmental priorities’, to incentivise public sector innovation.
As for the tax rises, the Chancellor announced a series of changes to corporate and personal taxes, including limiting the ability for multinational firms to offset losses and interest charges. Employers’ national insurance contributions will rise, and certain reliefs for workers and the self-employed will be phased out.
Acknowledging the concerns of many in the business community over Brexit, the Chancellor emphasised he knows “how much business values certainty and stability”. So he confirmed the Government’s intention to cut corporation tax to 17% by 2020, as announced at the last Budget. He also confirmed the planned rises in the personal tax allowance and higher rate tax threshold, but gave a strong hint that further rises after the next election, and expensive policies like the pensions ‘triple lock’ would only continue if they were affordable.
Prior to today’s Statement, the Government had sought to position the new Chancellor as “Mr Spreadsheet” – a dry-as-dust figure focussed on the long-term health of the economy, and the detail of tax and spend. While we did in large part see this figure today before us today, we also saw enough of Philip Hammond’s personality and priorities to understand his, and his Government’s intention, to put post-Brexit Britain on a healthy footing for the future.
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