Written by Jack Johnson

Yesterday saw the much-anticipated Autumn Statement announced in the House of Commons by the Chancellor of the Exchequer, Jeremy Hunt MP.

The Statement is a key date in the parliamentary calendar where the Government provides an update to the Commons on the state of the economy and (usually) update various tax and spending decisions.

The Autumn Statement is slightly smaller in impact than the more substantial Spring Budget but acts as a good barometer on the Government’s fiscal priorities over the coming months and the overall health of the economy.

Economic context behind the Autumn Budget

In the lead up to a general election, the Conservative Government is (sensibly) looking at doing all it can to shore up its finances in an attempt to present itself as the party of traditional fiscal responsibility. This follows a tumultuous few years which has seen the Conservative Party make difficult economic decisions in the face of Brexit and COVID-19 which (along with other unprecedented global events) has inadvertently resulted in the cost-of-living crisis.

After significant work from the Bank of England the UK saw inflation drop to 4.6% in October (down from 6.7% in September) which, although still above the BoE target of 2%, has given the Treasury more money to play with going forward.

The Government’s vision

At the despatch box, the Chancellor announced that this statement will not be about big government, high spending and high tax but instead plans aimed to reduce debt, cut taxes, and reward work. 110 growth measures are included in the financial package which cover everything from removing planning red tape, to reforming the welfare system.  

For support with the cost of living, the Exchequer will provide a 6.7% increase in Universal Credit, will freeze alcohol duties until August 1st 2024 (because alcohol is clearly a household necessity…), and maintain the triple lock on pensions with an increase state pension by 8.5%.

Harking back to former Conservative Chancellor, the late Nigel Lawson, who famously said ‘borrowing is a deferred tax on future generations’, Mr Hunt confirmed that he would reduce borrowing, reduce debt, and stimulate economic growth through increased investment in the private sector. As part of this commitment, he confirmed that business investment would increase by £20bn per year and a further £4.5bn would also be given over five years to attract investment into the manufacturing sector.

Planning reform

A significant part of the Chancellor’s speech then shifted to planning reform. Specifically measures designed to help cut the delay in approval of infrastructure projects and business planning applications.

His plans seek to reform the system allowing local authorities to recover the full costs of major business planning applications in return for meeting guaranteed faster timelines of approval. If authorities fail, fees will be refunded automatically with the application being processed free of charge. ‘Prompt service or your money back’.

While on first glance this sounds promising, and acknowledging there is more detail to come, it does raise a variety of questions:

  • What impact will this have on already stretched local authority budgets?
  • How will authorities resource this?
  • Won’t this just give big developers special treatment over local developers?
  • Will London boroughs who currently charge a lower rate suddenly up their rate to enable more cash back from the Government?

If councils are being told to do more with the same resourcing, then something is going to have to give.

Only time will tell what exactly that will be, but there will no doubt be a significant impact on the planning sector in London and across the country.

House building

House building was also mentioned with £110m committed to high quality nutrient mitigation, £32m to ‘bust’ the planning backlog, and Cambridge, London, and Leeds designated as new housing quarters for investment.

Other issues that were then touched on included SME support, support for the self-employed, and a £500m investment over the next two years to fun AI innovation centres and helping to secure the UKs place as playing host to the largest life sciences industry in Europe.

Some commentators have criticised the Chancellor for not including changes to Lifetime ISA, to allow first home buyers to use their savings to help purchase a house worth more than £450,000. Which as we know, is not a particularly high amount for a house these days, especially in London where the average house price is £528,000. A missed opportunity and easy win for the Chancellor perhaps?

Cuts, savings, and spending

Welfare and benefits were the final thing that was featured in the speech. The Chancellor highlighted that post-pandemic there are still over seven million adults of working age, who are not working despite nearly one million vacancies in the economy.

£1.3 billion will also be found over the next five years to help nearly 700,000 people with health conditions find jobs. A further £1.3 billion will also be found to help a further 300,000 people who have been unemployed for over a year without having sickness or a disability.

After this initial support covering 18 months (and if jobseekers still don’t have a job) they will be required to take part in mandatory work placement to help improve their employability.

Finally, the Living Wage will also be increased by 9.8% to £11.44 an hour and employee National Insurance contributions will be cut from 12% to 10% saving an estimated 27 million people money in the year ahead.

This was a speech littered with cuts, increased spending, some easy wins, and some missed opportunities.

But the Chancellor’s tone lended itself to predicting a boom. There is little headroom for the Spring Budget – could this newfound ‘compassionate conservatism’ instead be to do with an upcoming election?

Only time will tell, but the Government is running out of that.

Photo credit: UK Parliament / Jessica Taylor

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