>>The Chancellor of the Exchequer (Mr Philip Hammond): It is a privilege to report today
on an economy that the International Monetary Fund predicts will be the fastest-growing
major advanced economy in the world this year.
It is an economy with employment at a record high and unemployment at an 11-year low; and
an economy that, through the hard work of the British people, has bounced back from
the depths of Labour’s recession.
It is an economy that has confounded commentators at home and abroad with its strength and resilience
since the British people decided, exactly five months ago today, to leave the European
Union and chart a new future for our country.
That decision will change the course of Britain’s history.
It has thrown into sharp relief the fundamental strengths of the British economy that will
ensure our future success: the global reach of our services industries; the strength of
our science and high-tech manufacturing base; and the cutting-edge British businesses that
are leading the world in disruptive technologies.
But it is a decision that also makes more urgent than ever the need to tackle our economy’s
long-term weaknesses such as the productivity gap, the housing challenge, and the damaging
imbalance in economic growth and prosperity across our country.
We resolve today to confront those challenges head on, to prepare our country to seize the
opportunities ahead, and, in doing so, to build an economy that works for everyone—an
economy where every corner of this United Kingdom is part of our national success.
I want to pay tribute to my predecessor, my right hon.
Friend the Member for Tatton (Mr Osborne).
My style will, of course, be different from his.
I suspect that I will prove no more adept at pulling rabbits from hats than my successor
as Foreign Secretary has been at retrieving balls from the back of scrums, but my focus
on building Britain’s long-term future will be the same.
My right hon.
Friend the Member for Tatton took over an economy on the brink of collapse, with the
highest budget deficit in our post-war history, and brought that down by two thirds.
That is a record of which he can be proud.
But times have moved on, and our task now is to prepare our economy to be resilient
as we exit the EU and to be match-fit for the transition that will follow.
So we will maintain our commitment to fiscal discipline while recognising the need for
investment to drive productivity, and for fiscal headroom to support the economy through
the transition.
Let me turn now to the forecasts.
Since 2010, the Office for Budget Responsibility has provided an independent economic and fiscal
forecast to which the Government must respond—gone are the days when the Chancellor could mark
his own homework—and I thank Robert Chote and his team for their hard work.
Today’s OBR forecast is for growth to be 2.1% in 2016—higher than forecast in March.
In 2017, the OBR forecasts growth to slow to 1.4%, which it attributes to lower investment
and weaker consumer demand driven, respectively, by greater uncertainty and by higher inflation
resulting from sterling depreciation.
That is slower, of course, than we would wish, but still equivalent to the IMF’s forecast
for Germany, and higher than the forecast for growth in many of our European neighbours,
including France and Italy.
That fact will, no doubt, be a source of very considerable irritation to some.
As the effects of uncertainty diminish, the OBR forecasts growth recovering to 1.7% in
2018, 2.1% in 2019 and 2020, and 2% in 2021.
While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its
current view is that the referendum decision means that potential growth over the forecast
period is likely to be 2.4 percentage points lower than would otherwise have been the case.
The OBR acknowledges that there is a higher degree of uncertainty around these figures
than usual.
Despite slower growth, the UK labour market is forecast to remain robust.
We have delivered over 2.7 million new jobs since 2010, and this forecast shows that number
growing in every year—another 500,000 jobs created over the OBR forecast, providing security
for working people across the length and breadth of Britain.
For those who claim that the recovery is just a south-east phenomenon, I have some news:
over the past year employment grew fastest in the north-east, the claimant count fell
fastest in Northern Ireland, pay grew most strongly in the west midlands, and every UK
nation and region saw a record number of people in work.
That is a labour market recovery that is working for everyone.
Monetary policy has played an important role in supporting growth since the referendum
decision, but a credible fiscal policy remains essential for maintaining market confidence
and restoring the economy to long-term health.
In view of the uncertainty facing the economy, and in the face of slower growth forecasts,
we no longer seek to deliver a surplus in 2019-20, but the Prime Minister and I remain
firmly committed to seeing the public finances return to balance as soon as practicable,
while leaving enough flexibility to support the economy
in the near term.
Today I am publishing a new draft charter for budget responsibility with three fiscal
rules: first, that the public finances should be returned to balance as early as possible
in the next Parliament and, in the interim, cyclically adjusted borrowing should be below
2% by the end of this Parliament; secondly, that public sector net debt as a share of
GDP must be falling by the end of this Parliament; and, thirdly, that welfare spending must be
within a cap set by the Government and monitored by the OBR.
In the absence of an effective framework, the welfare bill in our country spiralled
out of control, with spending on working-age benefits trebling in real terms between 1980
and 2010.
As a result of the action that we have taken since 2010, that spending has now stabilised.
The cap I am announcing today takes into account the policy changes made since the last Budget,
setting a realistic baseline reflecting all announced welfare policies.
I confirm again today that the Government have no plans to introduce further welfare
savings measures in this Parliament beyond those already announced.
I now turn to the OBR’s fiscal forecasts, but first I will set out the key drivers of
changes since the Budget: the post-Budget changes that were made to welfare and housing
policies cost the Exchequer £8.6 billion over the forecast period; expected Office
for National Statistics classification changes have added £12 billion since the Budget;
and tax receipts have been lower than expected this year, causing the OBR to revise down
projected revenues in the future.
Added to this is a structural effect of rapidly rising incorporation and self-employment,
which further erodes revenues.
Combining those pressures with the impact of forecast weaker growth, and taking account
of the measures I shall announce today, the OBR now forecasts that, in cash terms, borrowing
is set to be £68.2 billion this year, falling to £59 billion next year and £46.5 billion
in 2018-19, and then £21.9 billion, £20.7 billion, and finally £17.2 billion in 2021-22.
Overall, public sector net borrowing as a percentage of GDP will fall from 4% last year
to 3.5% this year, and it will continue to fall over the Parliament, reaching 0.7% in
2021-22.
This will be the lowest deficit as a share of GDP in two decades.
The OBR expects cyclically adjusted public sector net borrowing to be 0.8% of GDP in
2020-21, comfortably meeting our target to reduce it to less than 2% and, importantly,
leaving significant flexibility to respond to any headwinds that the economy may encounter.
The OBR’s forecast of higher borrowing and slower asset sales, together with the temporary
effect of the Bank of England’s action to stimulate growth, translates into an increased
forecast for debt in the near term.
The OBR forecasts that debt will rise from 84.2% of GDP last year to 87.3% this year,
peaking at 90.2% in 2017-18 as the Bank of England’s monetary policy interventions
approach their full effect.
In 2018-19, debt is projected to fall to 89.7% of national income—the first fall in the
national debt as a share of GDP since 2001-02—and it is forecast to continue falling thereafter.
Members might be interested to know that after stripping out the effects of the Bank of England
interventions, underlying debt peaks this year at 82.4% of GDP and falls thereafter
to 77.7% by 2021-22.
It is customary in the run-up to the autumn statement to hear representations from the
shadow Chancellor of the day, usually for untenable levels of spending and borrowing.
Conservative Members used to think that Ed Balls’ demands were an extreme example,
but I have to say that the current shadow Chancellor has outperformed him in the fiscal
incontinence sweepstake.
What we do not know, of course, is whether the shadow Chancellor can also dance—[Interruption.]
He can.
Good; a second career awaits him.
I have received some more measured representations from a range of external bodies.
Some have called for fiscal expansion, while others have suggested that there is no need
at all to respond to a changed economic outlook.
That reflects, to be fair, the challenge that we face of resolving how best to protect the
recovery and build on the economy’s manifest strengths, yet at the same time respond appropriately
to the warnings of a more difficult period ahead.
But with our debt forecast to peak at over 90% next year, and a deficit this year of
3.5%, I have reached my own judgment.
It is a judgment based on a sober analysis of our fiscal position, and also on a realistic
appraisal of the weakness of UK productivity and the urgent need to address our fiscal
challenge from both ends—continuing to control public expenditure, but also growing the potential
of the economy and protecting the tax base.
So we choose in this autumn statement to prioritise additional high-value investment, specifically
in infrastructure and innovation, that will directly contribute to raising Britain’s
productivity.
The key judgment we make today is that our hard-won credibility on public spending means
that we can fund this commitment in the short term from additional borrowing, while funding
all other new policies announced in this autumn statement through additional tax and spending
measures.
That is the responsible way to secure our economy for the long term.
The productivity gap is well known to hon. and right hon.
Members, but shocking none the less—it bears repeating.
We lag the US and Germany by some 30 percentage points in productivity, but we also lag France
by over 20 points and Italy by 8 points, which means, in the real world, that it takes a
German worker four days to produce what we make in five.
That means, in turn, that too many British workers work longer hours for lower pay than
their counterparts, and that has to change if we are to build an economy that works for
everyone.
Raising productivity is essential for the high-wage, high-skill economy that will deliver
higher living standards for working people across this country.
As a result of decisions taken by my predecessor, public investment is higher over this decade
than it was over the whole of the period of the last Labour Government, but today I can
go further.
I can announce that we are forming a new national productivity investment fund of £23 billion
to be spent on innovation and infrastructure over the next five years—investing today
for the economy of the future.
Let me set out for the House how this money will be used.
We do not invest enough in research, development and innovation.
As the pace of technology advances and competition from the rest of the world increases, we must
build on our strengths in science and tech innovation to ensure that the next generation
of discoveries is not only made here, but developed and produced in Britain.
So today I can confirm the additional investment in R and D, rising to an extra £2 billion
per year by 2020-21, that was announced by my right hon.
Friend the Prime Minister on Monday.
Economically productive infrastructure directly benefits businesses, but families, too, rely
on roads, rail, telecoms and, especially, housing.
We have made good progress, with the number of new homes being built last year hitting
an eight-year high, but for too many, the goal of home ownership remains out of reach.
In October, my right hon.
Friend the Communities and Local Government Secretary launched the £3 billion home building
fund to unlock over 200,000 homes and up to £2 billion to accelerate construction on
public sector land, but we must go further still.
The challenge of delivering the housing we so desperately need in the places where it
is currently least affordable is not, of course, a new one, but the effect of unaffordable
housing on our nation’s productivity makes it an urgent one.
My right hon.
Friend will bring forward a housing White Paper in due course to address these long-term
challenges but, in the meantime, we can take further steps.
One of the biggest objections to housing development, as hon. and right hon.
Members will know from their constituencies, is often the impact on local infrastructure,
so we will focus Government infrastructure investment to unlock land for housing with
a new £2.3 billion housing infrastructure fund to deliver infrastructure for up to 100,000
new homes in areas of high demand.
To provide affordable housing that supports a wide range of need, we will invest a further
£1.4 billion to deliver 40,000 additional affordable homes.
I will also relax restrictions on Government grant to allow providers to deliver a wider
range of housing types.
I can also announce a large-scale regional pilot of right to buy for housing association
tenants, and continued support for home ownership through the Help to Buy equity loan scheme
and the Help to Buy ISA.
This package means that over the course of this Parliament, the Government expect to
more than double, in real terms, annual capital spending on housing.
Coupled with our resolve to tackle the long-term challenges of land supply, this commitment
to housing delivery represents a step change in our ambition to increase the supply of
homes for sale and for rent to deliver a housing market that works for everyone.
Reliable transport networks are essential to growth and productivity, so this autumn
statement commits significant additional funding to help to keep Britain moving now, and to
invest in the transport networks and vehicles of the future.
I will commit: an additional £1.1 billion of investment in English local transport networks,
where small investments can often offer big wins; £220 million additionally to address
traffic pinch points on strategic roads; £450 million to trial digital signalling on our
railways to achieve a step change in reliability and to squeeze more capacity out of our existing
rail infrastructure—that is something I know the Leader of the Opposition will welcome—and,
finally, £390 million to build on our competitive advantage in low-emission vehicles and the
development of connected autonomous vehicles, plus a 100% first year capital allowance for
the installation of electric vehicle charging infrastructure.
The Department for Transport will continue to work with Transport for the North to develop
detailed options for northern powerhouse rail.
My right hon.
Friend the Transport Secretary will set out more details of specific projects and priorities
over the coming weeks.
Our future transport, business and lifestyle needs will require world-class digital infrastructure
to underpin them, so my ambition—
>>Kevin Brennan (Cardiff West) (Lab): It says here.
>>Mr Hammond: Yes—it says here because I wrote it here.
My ambition is for the UK to be a world leader in 5G.
That means a full-fibre network; a step change in speed, security and reliability.
So we will invest over £1 billion in our digital infrastructure to catalyse private
investment in fibre networks and to support 5G trials.
From April, we will introduce 100% business rates relief for a five-year period on new
fibre infrastructure, supporting further roll-out of fibre to homes and businesses.
We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment,
but we must sustain this effort over the long term if we are to make a lasting difference
to the UK’s productivity performance, so today I have written to the National Infrastructure
Commission to ask it to make its recommendations on the future infrastructure needs of the
country, using the assumption that the Government will invest between 1% and 1.2% of GDP every
year from 2020 in economic infrastructure covered by the commission.
To put that in context, we will spend around 0.8% of GDP on the same definition this year.
I am also backing the commission’s interim recommendations on the Oxford-Cambridge growth
corridor, published last week, with £110 million of funding for east-west rail and
a commitment to deliver the new Oxford-Cambridge expressway.
That project can be more than just a transport link.
It can become a transformational tech corridor, drawing on the world-class research strengths
of our two best-known universities.
I welcome the commission’s continuing work on delivery model options.
We will carefully consider its final recommendations in due course.
The major increase in infrastructure spending I have announced today will represent a significant
increase in funding through the Barnett formula, of more than £250 million to the Northern
Ireland Executive, £400 million to the Welsh Government and £800 million to the Scottish
Government.
Public investment is only part of the picture, however.
About half of our economic infrastructure is financed by the private sector, and we
will continue to support that investment through the UK guarantee scheme, which I am today
extending until at least 2026.
The new capital investment I have announced will provide the financial backbone for the
Government’s industrial strategy that the Prime Minister spoke about on Monday, a firm
foundation upon which my right hon.
Friend the Secretary of State for Business, Energy and Industrial Strategy will work with
industry to build our ambition of an economy that works for all.
I can announce four further measures to back business.
I am doubling the UK export finance capacity to make it easier for British businesses to
export.
I am funding Charlie Mayfield’s business-led initiative to boost management skills across
British businesses.
I am taking a first step to tackle the long-standing problem of our fastest growing start-up tech
firms being snapped up by bigger companies, rather than growing to scale, by injecting
an additional £400 million into venture capital funds through the British Business Bank, unlocking
£1 billion of new finance for growing firms.
I am also launching today a Treasury-led review of the barriers to accessing patient capital
in the UK, so that we can take further action to address them.
This Government recognise that, for too long, economic growth in our country has been too
concentrated in London and the south-east.
That is not just a social problem but an economic problem.
London is one of the highest-productivity cities in the world and we should celebrate
that fact.
But no other major developed economy has such a gap between the productivity of its capital
city and its second and third cities, so we must drive up the performance of our regional
cities.
Today we publish our strategy for addressing productivity barriers in the northern powerhouse,
and give the go ahead to a programme of major roads schemes in the north.
Our midlands engine strategy will follow shortly, but I am today providing funding so that the
evaluation study for the midlands rail hub can go ahead.
In addition, we are investing in local infrastructure in every region of England.
I can announce the allocation of £1.8 billion from the local growth fund to the English
regions: £556 million to local enterprise partnerships in the north of England, £542
million to the midlands and east of England, and £683 million to LEPs in the south-west,
south-east and London.
We will announce the detailed breakdown of allocations to individual LEPs shortly.
Devolution remains at the heart of this Government’s approach to supporting local growth, and we
recommit today to our city deals with Swansea, Edinburgh, north Wales and Tay cities.
I can also announce today we are beginning negotiations on a city deal for Stirling so
that every single city in Scotland will be on course to have a city deal.
To support new mayoral combined authorities in England, I can announce that we will grant
them new borrowing powers to reflect their new responsibilities.
While we continue discussions with London and the west midlands on possible devolution
of further powers I can announce today that London will receive £3.15 billion as its
share of national affordable housing funding, to deliver a commitment of more than 90,000
affordable homes.
I can also announce that we are devolving to London the adult education budget, and
giving London greater control over the delivery of employment support services for the hardest
to help.
I have deliberately avoided making this statement into a long list of individual projects being
supported, but I am going to make one exception.
I will act today, with just seven days to spare, to save one of the UK’s most important
historic houses, Wentworth Woodhouse near Rotherham.
It is said to be the inspiration for Pemberley in Jane Austen’s “Pride and Prejudice”.
But in 1946, in an extraordinary act of cultural vandalism, the then Labour Government authorised
extensive opencast coal mining virtually up to the front door of this precious property.
Perhaps that is Labour’s idea of a northern powerhouse.
Wentworth Woodhouse is now—[Interruption.]
>>Mr Speaker: Order.
I want to hear about this house.
It sounds very interesting indeed.
>>Mr Hammond: Wentworth Woodhouse is now at critical risk of being lost to future generations.
A local effort has been hugely successful in securing millions in funding from various
foundations and charities, subject to the balance required being found by 30 November.
We will today provide a £7.6 million grant towards urgent repairs to safeguard this key
piece of northern heritage—all but destroyed by a Labour Government, and saved by a Conservative
one.
I can also confirm distribution of a further £102 million of LIBOR bank fines to armed
forces and emergency services charities, including, my hon.
Friends will be pleased to hear, £20 million to support the Defence and National Rehabilitation
Centre at Stanford Hall in Nottinghamshire, as well as £3 million from the tampon tax
fund for Comic Relief to distribute to a range of women’s charities.
We choose to invest in our economic infrastructure because it can transform the growth potential
of our economy, as well as improving the quality of people’s lives.
That investment is possible only because the Government are prepared to take the tough
decisions—every one of them opposed by the Labour party—to maintain control of current
spending.
When we took office in 2010, public spending was 45% of GDP; this year, it is set to be
40%.
During those six years, we have seen crime fall by more than a quarter, the highest proportion
ever of good or outstanding schools, the number of doctors in our NHS increasing by 10,000,
pensioner poverty at its lowest level ever, the lowest ever number of children being raised
in workless households and the highest ever number of young people going on to study full
time at university.
We have demonstrated beyond doubt that controlling public spending is compatible with world-class
public services and social improvement.
But, as the OBR’s debt projections demonstrate, we have more work to do to eliminate the deficit.
Departmental spending plans set out in the spending review last autumn will therefore
remain in place, and departmental expenditure in 2021-22 will grow in line with inflation.
The £3.5 billion of savings to be delivered through the efficiency review, announced at
the Budget and led by my right hon.
Friend the Chief Secretary to the Treasury, must be delivered in full.
I have, however, exceptionally agreed to provide additional funding to the Ministry of Justice
to tackle urgent prison safety issues by increasing the number of prison officers by 2,500.
Having run two large spending Departments in previous roles, I came to this job with
some very clear views about the relationship between the Treasury and spending Departments.
I want Departments to be incentivised to drive efficiencies, and I want the Treasury to be
an enabler for good, effective spending across government.
To kick-start this new approach, I will allow up to £1 billion of the savings found by
the efficiency review to be reinvested in 2019-20 in priority areas and I have budgeted
today accordingly.
We manage public spending so that we can invest in the public’s priorities.
The Government have underlined those priorities with a series of commitments and protections
for the duration of this Parliament.
I can confirm today that, despite the fiscal pressures, we will meet our commitments to
protect the budgets of key public services and defence; keep our promise to the world’s
poorest through our overseas aid budget; and meet our pledge to our country’s pensioners
through the triple lock.
But as we look ahead to the next Parliament, we will need to ensure that we tackle the
challenges of rising longevity and fiscal sustainability, so the Government will review
public spending priorities and other commitments for the next Parliament in light of the evolving
fiscal position at the next spending review.
I now turn to taxation.
Since 2010, the Government have put a business-led recovery at the heart of our plan.
We have cut corporation tax from 28% to 20%, sending the message that Britain is open for
business.
The additional investment in productivity and infrastructure that I have announced today
underscores that message, and the raft of investments in the UK announced since the
referendum—by SoftBank, Glaxo, Nissan, Google and Apple among others—confirms it.
My priority as Chancellor is to ensure that Britain remains the No. 1 destination for
business, creating the investment, the jobs and the prosperity to protect our long-term
future.
I know how much business values certainty and stability, so I confirm today that we
will stick to the business tax road map we set out in March.
Corporation tax will fall to 17%, by far the lowest overall rate of corporate tax in the
G20.
We will deliver the commitments we have made to the oil and gas sector.
The carbon price support will continue to be capped out to 2020, and we will implement
the business rates reduction package worth £6.7 billion.
I can also confirm today that, having consulted further, my right hon.
Friend the Communities Secretary will lower the transitional relief cap from 45% next
year to 43%, and from 50% to 32% the year after.
That’s complicated, but it’s good news—just in case anybody wasn’t sure, Mr Speaker.
I will also increase the rural rate relief to 100%, giving small businesses in rural
areas a tax break worth up to £2,900 a year.
In return for these highly competitive tax rates, the tax base must be sustainable.
From April 2017, we will align the employee and employer national insurance thresholds
at £157 a week.
There will be no cost to employees, and the maximum cost to business will be an annual
£7.18 per employee.
Insurance premium tax in this country is lower than in many other European countries, and
half the rate of VAT.
In order to raise revenue, which is required to fund the spending commitments I am making
today, it will rise from 10% currently, to 12% from next June.
At the same time, I can confirm the Government’s commitment to legislate next year to end the
compensation culture surrounding whiplash claims, a major area of insurance fraud.
That will save drivers an average of £40 on their annual premiums.
Technological progress is changing the way people live and work, and the tax system needs
to keep pace.
For example, the OBR has today highlighted the growing cost to the Exchequer of incorporation.
So the Government will consider how we can ensure that the taxation of different ways
of working is fair between different individuals doing essentially the same work, and sustains
the tax base as the economy undergoes rapid change.
We will consult in due course on any proposed changes.
In the meantime, the Government will take action now to reduce the difference between
the treatment of cash earnings and benefits.
The majority of employees pay tax on a cash salary, but some are able to sacrifice salary
by agreement with their employer and pay much lower tax on benefits in kind.
That is unfair, so from April 2017 employers and employees who use these schemes will pay
the same taxes as everyone else.
Following consultation with stakeholders, ultra-low emission cars, pension savings,
childcare and the cycle-to-work scheme will be excluded from this change, and certain
long-term arrangements will be protected until April 2021.
For pensions that have been drawn down, I will also reduce to £4,000 the money purchase
annual allowance, to prevent inappropriate double tax relief being gained.
This Government have done more than any other to tackle tax evasion, avoidance and aggressive
tax planning.
The UK tax gap, it may surprise some Opposition Members to hear, is now one of the lowest
in the world.
But we must constantly be alert to new threats to our tax base and be willing to move swiftly
to counter them.
At the Budget, we committed to removing the tax benefits of disguised earnings for employees,
and I am now going to do the same for the self-employed and employers, raising a further
£630 million over the forecast period.
We will shut down inappropriate use of the VAT flat rate scheme that was put in place
to help small businesses.
We will abolish the tax advantages linked to employee shareholder status, in response
to growing evidence that it is primarily being used for tax-planning purposes by high-earning
individuals.
We will introduce a new penalty for those who enable the use of a tax avoidance scheme
that HMRC later challenges and defeats.
These measures, and others set out in the autumn statement document, raise about £2
billion over the forecast period.
There is understandable public concern that the pitch is tilted in favour of large multinational
groups, which are able to use cross-border structures to manage their tax liabilities.
Following detailed consultation, I can confirm that we will implement our new restriction
on tax relief for corporate interest expenses and reform the way that relief is provided
for historic losses.
These measures, scored at Budget 2016, will help to ensure that large businesses will
always pay tax in years where they make substantial profits.
They will also mean that businesses cannot avoid tax by borrowing excessively in the
UK to fund their overseas activities.
They take effect in April, and will raise over £5 billion from the largest businesses
in the UK.
I said that the tax system must be fair and that means rewarding those who work hard by
helping them to keep more of what they earn.
There is one tax reform the Government have pursued since 2010 that has done more than
any other to improve the lot of working people: raising the tax-free personal allowance.
When we entered Government in 2010, it was £6,475.
After six years, it is now £11,000, and will rise to £11,500 in April.
As a result, we have more than halved the tax bill of someone with a salary of £15,000
to just £800.
That is a massive boost to the incomes of low and middle earners.
Since 2010, we have cut income tax for 28 million people and taken 4 million people
out of income tax altogether.
I can confirm today that, despite the challenging fiscal forecasts, we will deliver on our commitment
to raise the allowance to £12,500, and the higher rate threshold to £50,000, by the
end of this Parliament.
Once that £12,500 has been reached, the personal allowance will rise automatically during the
2020s in line with inflation, rather than the national minimum wage, as currently planned.
It will be for the Chancellor to decide from year to year whether more is affordable.
As well as taking millions of ordinary people out of tax, we are the Government who introduced
the national living wage and gave a pay rise to over 1 million workers.
[Interruption.]
Labour Members don’t like it—a Tory Government gave a pay rise to over 1 million of the lowest-paid
workers.
We are the Government who introduced 15 hours a week of free childcare for all three and
four-year-olds, and we will double that for working families from September.
We are the Government whose education reforms have raised standards and expanded opportunity,
with 1.4 million more children now in “good” or “outstanding” schools, while the new
capital funding I have provided today for grammar schools will help to continue that
trend.
We are the Government who pledged to invest in our NHS, and we are delivering on that
promise by backing the NHS’s five year forward view plan for the future with £10 billion
of additional funding by the end of 2020-21.
But we recognise that more needs to be done to help families make ends meet and to ensure
that every household has opportunities to prosper.
So today I can announce that the national living wage will increase from £7.20 to £7.50
next April.
That is a pay rise worth over £500 a year to a full-time worker.
Creating jobs, lowering taxes and raising wages address directly the concerns of ordinary
families, and the revenue-raising measures that I have announced today enable me to go
further to help families on low wages.
Universal credit is an important reform to our benefits system and is designed to make
sure that work always pays.
We want to reinforce that position.
I have considered very carefully the arguments made by my right hon.
Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), my hon.
Friend the Member for Enfield, Southgate (Mr Burrowes) and others, and weighed them carefully
against the fiscal constraints, and I have concluded that from April we can reduce the
universal credit taper rate from 65% to 63%.
This is effectively a targeted tax cut that will be worth £700 million a year by 2021-22
for those in work on low incomes.
It will increase the incentive to work and encourage progression in work, and it will
help 3 million households across our country.
We believe that a market economy is the best way of delivering sustained prosperity for
the British people.
We will always support a market-led approach, but we will not be afraid to intervene where
there is evidence of market failure.
We will look carefully over the coming months at the functioning of key markets, including
the retail energy market, to make sure they are functioning fairly for all consumers.
In the private rental market, letting agents are currently able to charge unregulated fees
to tenants.
We have seen these fees spiral, despite attempts to regulate them, often to hundreds of pounds.
This is wrong.
Landlords appoint letting agents and landlords should meet their fees.
So I can announce today that we will ban fees to tenants as soon as possible.
We will also consult on how best to ban pension cold calling and a wider range of pension
scams.
We can also help today those who rely on the income from modest savings to get by.
Low interest rates have helped our economy to recover, but they have significantly reduced
the interest people can earn on their cash savings, so we will launch a new, market-leading
savings bond through NS&I.
The detail will be announced at the Budget, but we expect our new investment bond will
have an interest rate of around 2.2% gross and a term of three years.
Savers will be able to deposit up to £3,000, and we expect around 2 million people to benefit.
The announcements I have made today lower taxes on working people, boost wages, back
savers and bear down on bills.
In early 2017, we will begin the roll-out of tax-free childcare across Britain, providing
a saving of up to £2,000 per child.
Once it is rolled out, we pledge to keep it under review to ensure that it is indeed delivering
the support that working families need.
There is one further area of household expenditure where the Government can help.
The oil price has risen by over 60% since January, and sterling has declined by 15%
against the dollar.
That means, of course, significant pressure on prices at the pump here in Britain, so
today we stand on the side of millions of hard-working people in our country by cancelling
the fuel duty rise for the seventh successive year.
In total, this saves the average car driver £130 a year and the average van driver £350
a year.
This is a tax cut worth £850 million next year and means that the current fuel duty
freeze is the longest for 40 years.
I have one further announcement to make.
This is my first autumn statement as Chancellor.
After careful consideration and detailed discussion with the Prime Minister, I have decided that
it will also be my last.
I am abolishing the autumn statement.
[Hon.
Members: “Hear, hear.”]
No other major economy makes hundreds of tax changes twice a year, and neither should we,
so the spring Budget in a few months will be the final spring Budget.
Starting in autumn 2017, Britain will have an autumn Budget announcing tax changes well
in advance of the start of the tax year.
From 2018, there will be a spring statement responding to the forecast—[Laughter.]
>>Mr Speaker: Order.
The House is in a great state of emotion.
Some people are very easily humoured.
I am glad they are so humoured, but we must hear the Chancellor.
>>Mr Hammond: Perhaps they should have read their briefing, Mr Speaker, because they might
then have remembered that Parliament has mandated the OBR to produce a report to Parliament
twice a year and has mandated the Government to reply.
From 2018, therefore, there will be a spring statement responding to the forecast from
the OBR but no major fiscal event.
If unexpected changes in the economy require it, I will of course reserve the right to
announce actions at the spring statement, but I will not make significant changes twice
a year just for the sake of it.
This change will allow for greater parliamentary scrutiny of Budget measures ahead of their
implementation.
It is a long-overdue reform to our tax policy-making process and brings the UK into line with best
practice recommended by the IMF, the Institute for Fiscal Studies, the Institute for Government
and many others.
The OBR report today confirms the underlying strength and resilience of the British economy.
This autumn statement responds to the challenge of building on that strength, while also heeding
the warnings in the OBR’s figures, as we begin writing this new chapter in our country’s
history.
It re-states our commitment to living within our means and sets out our choice to invest
in our future.
It sends a clear message to the world that Britain is open for business and it provides
help to those who need it now.
We have made our choices and set our course.
We are a great nation, bold in our vision, confident in our strengths and determined
in our ambition to build a country that works for everyone.
I commend this statement to the House.
>>John McDonnell (Hayes and Harlington) (Lab): This morning, we heard the verdict from the
trial, following the tragic murder of Jo Cox.
That murder robbed this House of a fierce advocate for social justice and a passionate
campaigner.
Her killing was an attack on democracy itself.
Our thoughts are with Jo’s family.
Today’s statement places on record the abject failure of the last six wasted years, and
offers no hope for the future.
The figures speak for themselves.
Growth is down; wage growth, down; business investment, down.
[Hon.
Members: “Sit down.”]
The Government’s own deficit targets are failed; the debt target, failed; the welfare
cap, failed.
>>Mr Speaker: Order.
Let me say now that if Members from either side want to shout out, they should not bother
to stand, because they will not be called.
I say that to Members on both sides—stop it.
It is juvenile, low grade and hugely deprecated by the public, whose support we should be
seeking and whom we should try to impress, not to repel.
>>John McDonnell: Thank you, Mr Speaker.
We have heard today that there will be more taxes, more debt and more borrowing.
The verdict could not be clearer.
The so-called long-term economic plan has failed.
As the Treasury’s own leaked paper reveals, the Government knew it had failed before the
referendum result was announced.
We now face Brexit—the greatest economic challenge of a generation, and we face it
unprepared and ill equipped.
The new Chancellor acknowledged the failure of the economic strategy in October when he
promised a reset of economic policy.
Today, we expected a change of direction after those six wasted years.
Instead, we have seen further cuts to earnings for those in work through cuts to universal
credit, and a living wage increase that is lower than expected under the previous Chancellor.
This is a new Conservative leadership with no answers to the challenges facing our country
following Brexit, and no vision to secure our future prosperity.
Labour respects the decision of the British people to leave the European Union, but the
chaotic Tory handling of Brexit threatens the future prosperity of this country.
The Chancellor must now do the right thing for British workers and businesses.
He must insist on full tariff-free access to the single market.
He and the Treasury know that that is what will get the best deal for jobs and prosperity
here.
It may not be in the Chancellor’s nature, but in the national interest, I urge him to
stand up to the Prime Minister and the extreme Brexit fanatics in her Cabinet.
If he stands up for British businesses and jobs by fighting for single market access,
he will have our full support.
After six wasted years, wages are still lower than they were in 2008.
Self-employed people are, on average, paid less than they were a generation ago.
Six million people are earning less than the living wage.
Too many people are having to worry about buying school uniforms, affording a family
holiday or even just paying the rent or mortgage.
We have had a month of briefing from the Conservative party on those people who are called “just
about managing”—the JAMs.
To the Conservative party, these people are just an electoral demographic.
To us, they are our friends, our neighbours and the people we represent.
Let me tell the House why those people are just managing.
It is the result of Tories imposing austerity on an economy that could not bear the strain.
We have seen productivity stagnate, but there is nothing in the autumn statement on the
scale needed to overturn those six wasted years.
If the Chancellor really wants to make a fairer tax system as well, he could start by bringing
back the 50p tax rate for the richest in our country.
We have heard familiar hollow rhetoric from the Tories on tax avoidance, when they have
cut the resources of Her Majesty’s Revenue and Customs—the very people who collect
these taxes.
The resources available to HMRC today are 40% less than they were in 2000.
The Chancellor has frozen in-work benefits at a time when food prices are rising and
wages cannot be expected to keep up.
We need an economy that is fundamentally more prosperous and where prosperity is, yes, shared
by all.
The increases in the national living wage announced today are lower than expected and
leave the poorest-paid workers still earning less than they need to live on.
So I ask the Chancellor to adopt a real living wage level, as Labour has pledged to do, and
abandon his predecessor’s empty rhetoric.
Regrettably, the Chancellor is still going ahead with some of the cuts to universal credit.
Thanks to pressure—I pay tribute to Members of all parties who have campaigned on this
issue—he is offering to soften the blow.
We do not want the blow softened; we want it lifted altogether.
Today’s changes will leave a single parent on average at least £2,300 worse off.
These are the very people who are working hard to deliver for their families, and the
Government are betraying them.
As for people with disabilities, who have been put through the ordeal of the discredited
work capability assessment and are trying to get themselves ready to return to work—they
are “just about managing”—they still remain in the Chancellor’s firing line.
He cutting £30 a week from the support that these disabled people receive.
In our society, that is scandalous.
Those who are “just about managing” also rely on our public services.
They send their children to local schools; they depend on their local hospital; they
rely on local council services to clean their streets, tend to their parks and playgrounds
and open their libraries.
The reality, however, after six wasted years is that our public services are just not managing.
Today, the childcare that parents rely on remains underfunded, as the Public Accounts
Committee has reported—and it will remain underfunded, even after today’s announcements.
I want to pay tribute to my hon.
Friends the Members for Swansea East (Carolyn Harris) and for Erith and Thamesmead (Teresa
Pearce) for the important work they did in bringing the issue of child burial fees to
public attention.
I ask the Government to do the right thing on child burial fees and reconsider making
funding available for families in these desperate circumstances.
Councillors from all political parties are reporting that they are at a tipping point
in the provision of social care.
The previous Chancellor cut nearly £5 billion from social care, meaning that over 1 million
people who need care are not getting it.
They are not even “just about managing”, and they got little help today.
We have called for additional support for social care, because the funding being provided
today is only a stop-gap measure.
Our social care system will not be secure without long-term funding.
Tonight, many elderly people will remain trapped in their homes, isolated and lonely, lacking
the care they need because of continuing cuts to social care—and social care cannot be
cut without also hitting the NHS.
The supposed £10 billion funding allocated to the NHS is a restatement of an earlier
commitment, but the Health Committee described this £10 billion claim as “misleading and
incorrect”.
The real amount is less than half what is claimed.
As a result, we now have 3.9 million people on NHS waiting lists—more than ever—and
many of those 3.9 million people are waiting in pain, and they got no relief today.
Across the country, hospitals face losing their A&E units, their maternity units
and their specialist units.
This Tory Government are failing patients, as well as failing the dedicated NHS staff
who serve us so well.
This is the first time that healthcare spending per head has declined since the NHS was created,
and I fear there will be a crisis in funding and care over this Christmas.
The NHS cares for us, and we should care for the NHS.
Members of this Government have also overseen the biggest real-terms cuts in education for
four decades.
One pound in every seven has been cut from further education college budgets, and Conservative
policy has saddled a generation of students with a lifetime of debt.
How can a Government seriously talk about supporting a 21st-century economy when they
are planning to pour tens of millions into the failed 20th-century policy of grammar
schools, segregating our children at an early age?
As for housing, the Chancellor announced today that he was scrapping “pay to stay” proposals
and letting agents’ fees—a U-turn that is a victory for Labour’s campaigns against
both the “tenant tax” and the letting fees.
The Chancellor has spoken before about the dream of home ownership for the young.
Nothing that he has announced today is of the scale that is needed to suggest that that
will remain anything other than a dream.
The hard facts are these.
The Government of which the Chancellor was a member built fewer homes than had been built
at any point since the 1920s, and there are now a third of a million fewer home owners
under the age of 35.
Today the Chancellor could have delivered the scale of investment that is required to
build the homes that we need and to create a new generation of home ownership.
He significantly failed to do so.
Thanks to campaigning by my right hon.
Friend the Member for Wentworth and Dearne (John Healey), the Wentworth Woodhouse building
will be saved.
I am grateful for that.
The accusation was that a Labour Government had sited an opencast mine near the building
and threatened it.
That, I believe, was in 1947.
I only wish that some of the policies pursued by Tory Governments since the 1950s could
be reversed so easily.
The Government’s biggest investment failure is this: the Chancellor has failed to address
properly the Government’s most consistent shortcoming.
His predecessor cut public investment to the lowest that it had been since the 1990s.
Rather than delivering the ambitious investment that our economy needs throughout the country,
the Chancellor has failed to recognise the scale of the challenge.
He also risks repeating the mistakes from last year, with the national flood resilience
plan failing to provide the protection that our communities need.
Just one in five of the projects in the investment pipeline is under construction, and shovel-ready
projects worth £82 billion are still being delayed.
The infrastructure gap between London and the rest of the country remains unbridged.
London was scheduled to receive 12 times as much public investment per head as the north-east
of England.
The announcement of a £1.1 billion investment in transport is, in fact, a reannouncement.
The Oxford-Cambridge rail link is significantly delayed against Network Rail’s original
planned completion date of March 2019.
There are no new ideas here, just a promise to deliver what the Government have previously
failed to deliver.
This is press-release policy-making, not provision.
All that we need now is the return of the high-vis jacket.
The “fourth industrial revolution” will not be delivered on delays, old news and reannouncements.
The Government have, at last, realised their mistake, and now talk about an industrial
strategy—words that Ministers refused even to refer to in the past—but it is not enough
to change a few ministerial titles.
The Government and the Chancellor need to deliver.
We have yet to see the proposed Green Paper on industrial strategy that was promised over
the summer.
The same Government who now talk up high-tech investment oversaw a real-terms cut of £1
billion in science funding during the last Parliament.
The OECD recommends that developed countries should be spending 3% of GDP on science.
On the basis of what we have heard today, the new spending will lift our expenditure
from 1.7% of GDP to a mere 1.8%.
It is the same familiar story for business.
The Chancellor is continuing the race to the bottom on corporation tax, and, while continuing
the cuts in public services, he is cutting taxes for big business.
We know that it is not headline tax rates that encourage long-term investment by businesses.
Business investment has been revised down every year under this Government.
What encourages businesses to invest is the knowledge that they have access to skilled
workers, world-class infrastructure and major markets.
Today’s grim economic forecasts reveal the challenge that lies ahead.
The Chancellor admitted over the summer that it was time for a change of course.
He has now had to abandon the Government’s fiscal charter, with its failed hard surplus
target.
Labour warned that a hard surplus target lacked the flexibility to adapt to economic circumstances
and the capacity to allow investment.
The Chancellor’s U-turn today demonstrates just how right we have been over
the past year.
Only weeks ago, the Prime Minister offered the hope of change and the Chancellor offered
to “reset” economic policy.
Today, we have seen the very people whom the Prime Minister promised to champion betrayed.
The Chancellor has failed to break with the economic strategy of austerity.
The country remains unprepared and ill-equipped to meet the challenges of Brexit and secure
Britain’s future as a world-leading economy.
I fear that, after all the sacrifices that people have made over the last six years,
today’s statement has laid the foundations for more wasted years.
Only a Labour Government will deliver on the ambition and vision to rebuild and transform
our economy so that no one and no community is left behind.