THE BLOG

Autumn Statement: Something Borrowed, Something Blue

25/11/2016 13:19

As Autumn Statements go, this latest one went leaving none of us much clearer about the future course for the UK economy.

Still, at least we should all be able to get about a big quicker thanks to all that money being spent on road infrastructure. But apart from promising a variation on that old politician's trope about 'sunny uplands awaiting' there was no structural Big Idea for a post-Brexit life.

To misquote Churchill: never before has so much been said about so little. Aside from the absence of a real heft to realign our economy for a rather more exposed trading life outside the EU, there was little enough on the purely domestic agenda from the Chancellor, Philip Hammond.

For example, no more money to fund social care, which is a pressing issue and was widely expected, and nothing to add to education, without which the Government's hopes to turn the country into a creative industries powerhouse seems an improbable ambition, however much cash is put into 5G broadband speeds.

Not that the £23 billion on innovation and infrastructure isn't welcome. It is. But spread over five years this is unlikely to create structural economic change. The extra £2 billion for research and development is also helpful, but is still only 20 per cent more than previously budgeted.

Obviously nobody was expecting a gasp-inducing magic trick. Times are hard and the public debt is getting worse. But the modest realities of what Mr Hammond announced compared to the rhetoric with which it was surrounded tell the more downbeat truth, albeit delivered with the passion of a droll undertaker: This is a Government waiting to see, and in a financial hole. The rest was just window dressing.

There was, of course, the usual gaudy display of giveaways, this time frozen fuel duty, higher personal allowances, and the U-turn on benefits cuts originally intended by his predecessor, George Osborne.

But lurking under the glitter are changes to National Insurance payments that will hit small businesses, and right on the surface changes to the way incorporated companies are taxed. This was billed as levelling the playing field between the way the employed and self-employed are treated, but seems designed to hit the many people who have felt encouraged - or driven by job loss - in recent years to turn their often modest self-employment corporate.

This move in particular seems a spiteful squeeze on owner managed businesses, who are still adjusting to the punishing Business Rates increases they face next year following the latest revaluation. Still no sign of proper reform there despite some parts of the country facing increases of 45 per cent.

What he may have done is provide a small cushion for some of the most vulnerable and further squeezed middle income earners by chipping away at perks and allowances, notably salary sacrifice schemes. Nothing to move abroad for, perhaps, but all a rather disappointing first stab at the nation's finances at one of the most critical economic periods in its history.

The only certainty, it seems, is that we will have an unprecedented national debt at the end of it all. The road we are being sent on as Brexit unfolds is highly uncertain, and certainly nowhere near as smooth as the roads being improved with the infrastructure spending.

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