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Chancellor George Osborne will deliver his fifth Autumn Statement on Wednesday 3 December.
Despite recent improvements in economic growth, commentators are speculating that the
Government will continue to focus on deficit reduction. Our Editorial team gives its predictions on
the content and themes of Mr Osborne's final Autumn Statement before the 2015 General Election.
The Prime Minister has been quoted by the Telegraph declaring that, on 3 December, his
Government will deliver “an Autumn Statement where we choose the future again”.
He highlighted the central role of roads investment in the Statement, and argued that this was a
vindication of the Coalition’s efforts to reduce spending elsewhere. “We’re the only ones who can
afford to do this”, he claimed. Meanwhile, the Chancellor has been quoted as saying that he will use the Statement to outline how the UK
will “stay on the course to prosperity”. He has also made reference to the future beyond May 2015, hinting
that welfare spending could face further constraints in order to pay for his future plans, which include some £7bn worth of tax cuts.
Some have suggested that the Prime Minister has engaged in attempts to manage expectations for
the Statement. Political Editor Nick Robinson, for instance, argued in a blog post that the Prime Minister’s recent article in the Guardian warning of a potential global downturn was a case of Mr
Cameron “getting his excuses in early”.
Among the global risks Mr Cameron discussed in the article were the potential for recession in the
Eurozone, lower rates of growth in emerging economies, and global conflict.
However, he noted that Britain had continued to grow in spite of these hostile conditions. As Mr
Robinson put it, these warnings of potential future risks came with the suggestion that despite the
worsening deficit the best way to avoid economic calamity was “to stick to [the Prime Minister’s]
plan”. “You won’t see any overall giveaway”, James Forsyth quoted sources as confiding in a Daily Mail article
which predicted a “surprisingly downbeat tone” from the Chancellor. According to the testimony of insiders,
the speech is expected to emphasise overseas risks, in order to bring home the message that “we’re doing well,
while others are doing badly”.
Asked about the contents of the Autumn Statement by the Guardian, Deputy Prime Minister Nick
Clegg offered an overview of important issues to be anticipated in the statement when he responded that “one thing you can take from me is my emphasis on properly financing the NHS,
delivering tax cuts where we can, delivering tax cuts for those in lower to middle incomes, and continuing to fill the back hole in the public finances and clear the decks for the next generation”.
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Discussing the Statement with the Western Morning News, the Chancellor stated that it would be
followed by economic plans for each region that would “offset the dominance of [the] London
economy”.
The Financial Times has predicted that the Autumn Statement will see the Chancellor announcing “yet more bad news on the public finances” given that tax revenues look to be falling short of
Budget forecasts.
The paper suggests that the Office for Budget Responsibility (OBR) could give Mr Osborne a “nasty surprise” by increasing its estimate of the value of the deficit above the £77.5bn predicted in
March.
Shifts in the calculations underpinning the financial figures must be taken into account, including
falling levels of spare capacity, weaknesses in tax revenues and lower costs associated with servicing debt. The paper quotes commentary from analysts concerning the increasingly slight
economic impact of individuals moving into work.
This notwithstanding, the Chancellor appeared in ebullient mood on 10 November during the
debate that followed an Urgent Question on the European Union budget surcharge.
Confronted by Shadow Chancellor Ed Balls that the deficit was going up, he replied: “Let us get it
on the record that the shadow Chancellor says that the budget deficit is going up. We will wait for
the forecasts at the beginning of December and see who is right”.
His bullish outlook was not shared to the same extent by his Coalition partner, Deputy Prime Minister Nick
Clegg, who admitted on the Today programme on 1 December that disappointing tax receipts were a
potential “blip” that could impact what the Government would be able to achieve. However, he insisted that
he and his colleagues had shown “pragmatism and consistency” in their approach.
“The Government will have to borrow as much as £75bn more than it intended over the next five years,
delivering a damaging blow to Chancellor George Osborne’s hopes of claiming that the Government has the
country’s deficit under control”, said the Independent on 30 November. The paper predicted that the
Autumn Statement would be “overshadowed” by “new, bleak fiscal forecasts” from the OBR.
It highlighted the expectation of an upward revision in borrowing figures, and pointed to the impact of falling
oil prices, a slowing housing market and an over-concentration of new employment in the lower-paid end of
the market.
Labour Leader Ed Miliband took up this theme directly on 1 December in a speech that referenced a “joyless
and payless recovery”, and claimed that the Government’s “failure” to boost wages had cost some £116.5bn
in lost revenues.
Unveiling its “Autumn Statement wishlist”, The Confederation of British Industry (CBI) called for a focus on infrastructure investment including a tunnel to relieve congestion on the A303,
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momentum on upgrading the A14, and a final decision on the guarantee for the new nuclear plant
to be built at Hinkley Point.
It also sought business rate reform and asked the Government to “supercharge” the R&D tax credit, as well as ensuring that further devolution “passes the business growth test” and freezing Air
Passenger Duty for long-haul flights.
“We know firms are concerned about the state of our roads and energy supply and affordability, so
the arrowhead of business recommendations is a major push on improving the country’s infrastructure. Businesses want to see the Government set out clear project plans, with start dates
and timescales”, said CBI Director-General John Cridland.
The CBI was one of a range of groups making pleas to the Chancellor for attention in the Autumn Statement to issues of particular interest. The Financial Times has collated these calls to provide an
overview of the priorities of each organisation.
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Engineering Employers
Federation (EEF) Develop programmes for 40 priority projects in the 2011 National
Infrastructure Plan; increase resources for Innovate UK; link annual business rate rises to the CPI
Confederation of British
Industry (CBI) Link annual business rates rises to the CPI; increase annual
investment allowance for small businesses; expand the R&D tax
credit; increase infrastructure spending; improve access to energy
markets; raise NI contribution threshold; boost the role of technology in delivering public services.
British Chambers of Commerce (BCC)
Commit £5.3bn to road and infrastructure improvements; increase compensation for Compulsory Purchase Orders; incentivise large
housing developments via offering funding from the New Homes
Bonus to councils; boost compensation for communities hosting
fracking. British Retail
Consortium (BRC) Extend business rates relief and retail property discounts; restrict
interchange rates by a pence-per-transaction cap.
Trades Union Congress
(TUC) End austerity; encourage wage growth; boost infrastructure
investment to create jobs.
Local Government
Association (LGA) Allow local retention of business rates; greater council control over
Council Tax; devolve funding for local growth, regeneration, skills
and employment; reform tax distribution across the nations; permit
councils to access revenues from other taxes.
Chartered Institute of Housing (CIH)
Boost supply at the lower end of the housing market; incentivise private landlords to rent to the vulnerable.
Federation of Small
Businesses (FSB) Extend business rates relief and re-evaluate annually.
Scottish Council for
Development and Industry
Focus on productivity and infrastructure in transport and North Sea
exploration; reduce the supplementary charge on oil and gas mining; build high speed rail between northern England and Scotland.
National Housing
Federation (NHF) Allow housing associations to value their own properties; create a
Housing and Infrastructure Bank to provide finance to the housing
market.
Forum of Private
Business (FPB) Extend business rates relief; digitise payments of rates; extend the
Fuel Duty freeze; create an export tax credit; stop bank branch
closures. Centre for Cities Extend devolution to more provincial cities.
R3 Association of
Business Recovery
Professionals
Exempt insolvency litigation from the Legal Aid, Sentencing and
Punishment of Offenders Act 2012; raise the creditor bankruptcy
threshold and review the wider personal insolvency regime.
National Insulation
Association Provide “emergency funding” for insulation to prevent cold-related
winter deaths.
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During the Liberal Democrat Conference in early October, Business Secretary Vince Cable
appeared to let slip the news that the Government was planning an announcement on rates for
small businesses, which he called “a real problem area”. Speaking to party members, he was
reported by ITV as saying that he believed there would be “something positive in the pipeline in
the Autumn Statement”.
The broadcaster juxtaposed this plan with Labour’s rhetoric about becoming “the party of small
business” and suggested that “the Conservatives might be planning to shoot that fox”.
The Financial Times reported on 24 November that business rates reform was one of the highest
priorities for the CBI and the Federation of Small Businesses (FSB). Representatives referred to the
current system as “outdated” and said that it required reform in order to foster company growth.
The FSB has called for an extension of the temporary doubling of small business rates relief.
During a meeting of the Liaison Committee on 20 November, the Prime Minister faced questioning
from Committee chairs about proposals for the devolution of Corporation Tax to Northern Ireland,
during which he stated that plans on this matter would be set out in the Autumn Statement.
He said that it was “absolutely right for the Government to consider this”, though he noted the “very serious consequences for the devolved authorities” and argued that “responsible
government” was required.
He offered similar comments in response to a parliamentary question from the DUP’s Westminster Leader Nigel Dodds on 19 November.
The Daily Mail reported on 25 November that TV production companies are expected to be offered
tax breaks to produce children’s TV programmes in the UK.
The Chancellor previously introduced breaks for British drama in the 2012 Budget and looks likely to extend provisions to children’s programming.
The Chancellor is “considering” proposals for an “iconic” new “landmark arts complex” at the former
Granada Studios site in Manchester, the Manchester Evening News reported on 27 November.
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According to the paper, council and cultural leaders are hopeful of persuading the Government to include the
deal, worth £100m, in the Autumn Statement as a means of rebalancing the spread of arts provision across
the company, as well as creating new training opportunities.
The Guardian reported on 12 November that the Government was intending to use a “£1.1bn
windfall” derived from Financial Conduct Authority (FCA) fines imposed on five major banks for
rigging the foreign currency markets “for the wider public good”.
The paper suggested that comments from the Chancellor pointed to the use of these monies for
“eye-catching initiatives” that could provide “leeway” in an otherwise-constrained Autumn Statement.
Speaking on the Today Programme, his colleague Conservative Economic Secretary to the Treasury
Andrea Leadsom said that the Government would “absolutely be using them for the public good”,
and that the Chancellor would be making announcements “in due course” about the fate of the monies.
Rouse Partners, the Chartered Accountants, believe the statement could bring further information
regarding the future treatment of pension death benefits and the potential abolition of the contribution ceiling at age 75, as well as on the reform of discretionary trust taxation.
They also suggest changes could be made to the Venture Capital Trust and Enterprise Investment
schemes, and to national insurance contributions to reflect the arrival of the single tier state pension
in 2016. Revisions to rules on personal allowances for non-residents and the introduction of a new criminal offence relating to offshore tax evasion are also mentioned.
On 23 November, the Telegraph reported that the Chancellor’s Autumn Statement will set out
measures designed to pave the way for the introduction of a national loans scheme for
postgraduate courses.
Under the proposal, which is intended to meet employers’ demands for better-qualified graduate
recruits, those undertaking postgraduate courses will be eligible for Government-funded loans.
According to the paper, the plan has the backing of senior Conservatives and the Liberal Democrats.
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Early in November, the Daily Mail reported that the Government was planning a “sovereign wealth
fund” with the potential to transform the North, made up of revenues brought in through fracking for shale gas.
Making a speech to the Goldman Sachs Natural Resources Conference, Mr Hancock said that the
plans would “make sure the revenues are well spent on behalf of the nation”, and argued that there
was “a very good case for it to focus on where the shale flows from, which would make at least part of it a northern fund”.
He predicted that at least £3.5bn per annum in net benefits could be achieved through shale
extraction.
Speaking during a Westminster Hall debate on 25 November, Mr Hancock that said that proposals
for establishing a sovereign wealth fund was “an attractive one” and that he looked forward to
working on the details and design of the fund and to ensure that resource allocation was fair.
Industry group Oil and Gas UK has urged the Chancellor to present measures in the Autumn Statement to encourage more investment in the North Sea, warning that without support, “swaths
of the UK continental shelf will be pushed into terminal decline”.
The Financial Times highlights its calls for tax cuts and reform to allowances for development and
exploration, but also points to record investment in UK waters over the past two years.
In November, Liberal Democrat Care and Support Minister Norman Lamb issued an urgent call for “up to £1.5bn of extra funding” per annum for the NHS in England. The BBC reported Mr Lamb as
warning that a delay to decision-making risked “betraying patients” by creating a “crash” in the
health service.
The report also pointed to comments from Health Secretary Jeremy Hunt about the possibility of an expansion in funding should the economy continue to strengthen.
Indeed, the Guardian indicates there is agreement between both governing parties that £1.5bn of
NHS funding per year is needed to meet the demands of the winter of 2015-16 and signal a longer-
term “step-change” in the funding of the National Health Service. This would be on top of the £700m set aside for this winter and would broadly equate to an extra £8bn over the next the five
years.
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Speaking on the Andrew Marr Show on Sunday 30 November, Chancellor George Osborne pledged to deliver
an extra £2bn in funding for the NHS. He described the money as a “down payment” on plans drawn up by
NHS England, which call for an extra £8bn above inflation by 2020.
However, the move has been criticised by Labour, which has dismissed the proposal as “spin” after it was
revealed that £750m of the extra funding is being re-allocated from within the Department of Health. The
party also promised to match the funding, in addition to its £2.5bn Time to Care fund.
The Health Service Journal reports that the £2bn will be introduced as recurrent spending, meaning it will be built into the baseline funding for the NHS from 2015-16 onwards.
Of the extra funding, it is understood that £1.5bn will be spent on frontline services, whilst £200m will be
spent on health economies in need of reform. Some of this funding could also be used to bolster investment in
more healthy areas already beginning to adopt the new care models detailed in NHS England’s Five Year Forward View.
The remainder will go towards the expansion and enhancement of primary and community care. Paid for by
bank fines following the foreign exchange rigging scandal, a new fund of £300m a year will be made available, totalling £1.2bn over four years.
Speaking on the Today programme on 1 December, Deputy Prime Minister Nick Clegg revealed that his
colleague Liberal Democrat Chief Secretary to the Treasury Danny Alexander would be making an
announcement on investment in housing the following day.
Inside Housing has speculated that this might concern possible plans for the Treasury to directly order the building of private and affordable homes if the economy fails to deliver. The trade publication reported on
these proposals, said to be under consideration by the department, in early October.
The Prime Minister told a meeting of the Liaison Committee on 20 November that the Government
would use the Autumn Statement to set out a long-term infrastructure plan.
He explained that transport spending contained within this plan would be focused outside of
London.
On 13 November, the Chancellor tweeted: “At Autumn Statement I’ll announce 1st 5 year road plan. So I’m visiting some of nation’s most congested routes to see what needs to be done”.
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PlacemakingResource reported on 20 November that Department for Communities and Local
Government (DCLG) Chief Planner Steve Quartermain had suggested during a talk at the Institute
of Economic Development (IED)’s annual conference that new planning measures were likely to be
announced in the Autumn Statement.
Noting that every previous Autumn Statement and Budget had contained such announcements, he
commented: “I don’t think we are going to be disappointed this time”.
Mr Quartermain also indicated that the Government would not be encouraging the creation of city-
region spatial plans.
Making a speech to the Conservative Party Conference in late September, Mr Osborne stated that he would use the Autumn Statement to prevent large multinational companies from avoiding Corporation Tax, with a senior Tory source reported in the Financial Times as confiding that: “This
is a warning of an impending hit”.
The Chancellor attacked technology companies which went “to extraordinary lengths to pay little or no tax here”, and declared: “If you abuse our tax system, you abuse the trust of the British
people”.
He spoke of his intention to raise “hundreds of millions” from tech giants via the proposal, which
was immediately dubbed a “Google tax”.
The Government has pledged to outline details of its £15bn road investment commitment in the Autumn Statement.
In November, the Telegraph reported comments from the Prime Minister concerning the prospect of
a “roads revolution” involving 100 major projects. He referred to the Government’s plans as the “biggest, boldest and most far-reaching road improvement programme” for four decades.
Back in August, it was reported that road schemes aimed at tackling some of the country’s “most
notorious and long-standing hotspots” were likely to be announced.
A statement from the Department for Transport explained that the highways network would gain
an additional 900 miles of capacity as a result of £24bn in investment, including more than £9bn on
maintenance such as resurfacing.
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The Department revealed: “More road schemes are expected to be added to the programme
following the 2014 Autumn Statement, which could include solutions identified as part of 6
feasibility studies that are looking at dealing with some of the most notorious and long-standing hotspots on England’s roads, including the A303 in the south west and the A47 in the east of
England”.
Feasibility studies were commenced as a means of examining the potential of what have been
labelled “the usual suspects” by opponents - long-mooted large-scale projects to improve roads such as the A303 and the A47, as well as the A27, TransPennine routes and the A1 north of
Newcastle.
On 23 October, the Western Morning News reported on comments from the Chancellor to the effect
that A303 improvements were “absolutely at the top of my list”. Mr Osborne told the paper he believed that road and rail links to the South West had experienced neglect in the past.
“There is a compelling case for improving and widening the A303 at a number of points including
Stonehenge, he said, while the paper reported on 20 November that the Chancellor had described plans to upgrade the A303 as “ambitious”.
The Telegraph has pointed to suggestions from ministers that they could lend support to the
construction of a tunnel under Stonehenge.
On 1 December, it was confirmed by several media outlets that the Government did indeed intend to pursue
these road schemes. Deputy Prime Minister Nick Clegg made a remote appearance on the Today programme
from Stonehenge to emphasise the long-sought-after nature of the proposals, while the Financial Times
outlined the details of the plans, claiming that they were aimed at attracting votes in marginal seats.
The Government’s plans have also faced criticism after observers noted that they included schemes
in National Parks, Areas of Outstanding Natural Beauty and the Stonehenge World Heritage Site.
The Campaign for Better Transport has claimed that “better value, greener schemes which would
arguably do more to tackle congestion and provide wider benefits have been quietly dropped”. In early November, the Guardian reported suggestions from the Deputy Prime Minister that road
and rail investments across the North would be “central vote-winning features” of the Autumn
Statement.
Nick Clegg spoke about desired road improvements such as additional “smart” lanes on the M62
and improvements to the Woodhead Pass, and said that while he could not be certain that they
would be included in the Autumn Statement, he was “very confident we can make an
announcement that will cover a significant number of these projects”.
The same Guardian article indicates that Mr Clegg is in favour of a fully upgraded and electrified
network between Manchester, Leeds and Sheffield. He is quoted as saying that services need to be
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upgraded “right across the north” and that the Government would be looking at “an expanded
programme of electrification and a firm timetable for getting rid of all the ageing Pacer trains.”
Groups, including the Campaign for Better Transport, have been lobbying for greater investment in the North of England’s railways to form part of the Autumn Statement.
A cross-party group of MPs have reportedly been lobbying the Government to abolish Air Passenger Duty for children under 12, the Spectator reported on 18 November.
The campaign was formally launched with support from the Taxpayers’ Alliance, a number of consumer groups, airlines, airports and MPs.
During Cabinet Office Questions on 19 November, Conservative Civil Society Minister Rob Wilson
hinted that the Autumn Statement might contain something to help smaller charities to set
themselves up with the Gift Aid system. He was responding to a question from Labour MP Susan
Elan Jones on the subject.
Leaders from 11 voluntary and social sector bodies, including the NCVO, Navca, the Small
Charities Coalition and Social Enterprise UK, wrote to Chancellor George Osborne in October
calling on him to improve both the funding capacity of small charities and the social-investment
readiness of voluntary organisations.
Their wishlist included: reforms to the Gift Aid Small Donations System; a campaign to promote
Gift Aid to a broader range of charities; and an expansion of the endowment match challenge
scheme.
The Charity Tax Group has urged the Government to improve the VAT system for charities and
extend VAT rebate schemes for emergency services and hospices.