Quote of the Day:
“I’m sure I’ll take you with pleasure!’ the Queen said. ‘Twopence a week, and jam every other
Alice couldn’t help laughing, as she said, ‘I don’t want you to hire ME – and I don’t care for jam.’
‘It’s very good jam,’ said the Queen.
‘Well, I don’t want any TO-DAY, at any rate.’
‘You couldn’t have it if you DID want it,’ the Queen said. ‘The rule is, jam to-morrow and jam
yesterday – but never jam to-day.’ ‘It MUST come sometimes to “jam to-day,”‘ Alice objected.
‘No, it can’t,’ said the Queen. ‘It’s jam every OTHER day: to-day isn’t any OTHER day, you
know.”I don’t understand you,’ said Alice. ‘It’s dreadfully confusing!’”
Alice In Wonderland, Lewis Carroll
So, after we have all waited on tenterhooks, finally May and Hammond took to the floor. Disappointingly, it turned out that we were not in for a special screening of the new (don’t call it Top Gear) Grand Tour, but rather in for half an hour of Theresa May obfuscating about a number of subjects including the NHS and BREXIT followed by Philip Hammond taking the floor for his Autumn Statement.
Having got off to a strong start in her Premiership, particularly amongst those largely ageing and male sections of the Tory party and Tory activists who have longed for the return of a Thatcher-eqsue person, Theresa May has somewhat dissembled in recent weeks. She now appears incapable of making a policy herself, much less of allowing her Ministers to dare to make or announce one. From Brexit to health to the judiciary and to the ongoing debacle over the abuse enquiry, it would appear that the government is unable to make or communicate any decision.
Allegedly the Chief Whip has a pet tarantula called Cronus (named after the youngest of the Titans, who fathered Hestia, Demeter, Hera, Hades, Poseidon, and Zeus – good to see that the Civil Service is no longer confined to those who insist on writing in Latin and using Greek Mythology as a metaphor…) This is apparently used to scare any over-excited ministers back into their place, a tactic seemingly so successful we are currently approaching complete inertia. Perhaps Cronus could be sent to the White House to see if it can scare Trump enough to never enter…
So, here we have it, this Autumn Statement (don’t call it a Mini-Budget) was all about jam. We have had the ‘deserving poor’, the ‘hard-working poor’, the ‘striving families’ and now we have the ‘just about managing’s’ – a slow but steady improvement perhaps? On personal taxes, lots of announcements about increasing the minimum wage, increasing tax thresholds etc – all by the end of the Parliament though. #jamtomorrow. This is probably due to the eye-watering levels of debt the Chancellor repeatedly mentioned – before going on to say how much money he was going to spend and how brilliantly strong the economy actually is.
Presentationally at least, Hammond is far better than Osborne ever was, the lack of an innate sneer no doubt helps to this effect. But he has a generally easier manner and gives the impression that he might have once at least had cause to use public services rather than just visit them in a high vis vest.
Obviously Hammond had to start with the obligatory self-congratulatory review of the state of the economy, which no one believes any more as figures are clearly cherry picked. So much so that I can’t actually be bothered to recite the figures, I am sure the FT will dissect it more effectively than I will. In a well-trailed departure from previous policy, Hammond announced that the government is no longer seeking to have balanced books by 2020 but will be balanced in the next Parliament – convenient that…
Hammond has a more natural sense of humour than George Osborne at least and his commentary on the fiscal incompetence of Shadow Chancellor John McDonnell as evidenced by his representations to the Treasury and a question over his dancing skills raised a genuine laugh. Although not from John McDonnell who looked deeply offended – of course he can dance.
Interestingly he also talked about how well the economy has bounced back after Brexit, seemingly missing the fact that this is probably because we haven’t actually left yet and the cold dark shock of post-EU life has not even begun to surface. Ignoring the fact that business investment has started to decrease in the face of uncertainty and that the productivity gap in the UK remains concerning, if not staggering, the Chancellor remained upbeat. After all, there is no point in letting the facts get in the way of a good story about how marvellous the government is in achieving fiscal discipline.
The Chancellor did announce a doubling of UK export finance capacity – which will be completely pointless depending on the outcome of Brexit. At the same time, government will be injecting £400m into Venture Capital funds to allow UK tech companies to grow to scale rather than being bought up by international companies. Again, this might not be a problem if Brexit means people can’t employ people with the right skills or export their services so he may not need to use that fund after all.
Housing and Infrastructure
We already knew that housing and infrastructure would feature strongly, the question was always whether any monies announced were actually new funds and how that would be administered. There will be a new £23bn National Productivity Investment Fund (NPIF) focusing on research, development and innovation in housing, transport, digital communications and R&D – investing today for the economy tomorrow, #jamtomorrow…
Of course, to paraphrase Tony Benn, we may find that the jam we had for tomorrow we have already had – the extent to which this is new money will be uncovered by analysts more expert and focused on the detail than me.
According to the government, the goal of home ownership remains out of reach for too many (news to everyone clearly) and the effect of the lack of affordable housing on productivity makes it an urgent one – which begs the question as to why the government keeps eroding social housing stock… The new NPIF will work alongside the National Infrastructure Commission and will implement the biggest affordable housebuilding programme since the 1970s, the largest investment in the railways since Victorian times (those on Southern Rail will be delighted, if they managed to get off a train and to a tv today) and will resurface 80% of the strategic road network (does this also mean that we will see the return of John Major’s ‘Cones Hotline’, or am I just showing my age?)
Whilst the Housing White Paper will be published ‘in due course’ and will contain lots of detail, Hammond did announce a £7.2bn package to support the construction of new homes including spending by Housing Associations and relaxing the grant funding structure to enable providers to deliver more flexible stock specifically focused on affordable rent and low cost ownership. At the same time government will introduce a regional pilot on right to buy for housing association tenants – giving with one hand and taking away with the other…
Of course, nowhere did Hammond go into detail about what was actually meant by ‘affordable’, it may well have nothing to do with social housing. Surely we will see all in the White Paper. It would have been helpful for said White Paper to be published alongside the Autumn Statement but the best we can get is ‘before the end of the year’ for publication.
Government will also invest £1.7bn to speed up building on public sector land. I am tempted to go back through various Budgets and Autumn Statements to count up just how many times speeding up development on public land has been mentioned and then compare it against delivery rates. It is easy to say but seemingly very difficult to achieve, largely because bureaucracy and the public sector tends to get in the way… #jamtomorrow
Infrastructure investment will be focused on schemes which will unlock land for housing with a new £2.3bn infrastructure fund to deliver in areas of high demand. We expect more detail on how this will actually be allocated and structured in the Housing White Paper and through the National Infrastructure Commission.
At the same time, Government will be investing £1.1bn of investment in small local infrastructure schemes particularly focused on improving traffic flow at pinch points – there’s that jam again…
For the avoidance of doubt – and there had been many questions over it – the government remains committed to devolution. This will be positive news for those regions and cities that are pushing ahead with a devolution agenda, although questions remain over funding and eventual powers. Theresa May is certainly not showing any inclination to devolve real power to anyone, so those hoping for full Mayoral and any planning or fiscal powers may find themselves disappointed.
The theme of infrastructure flowed through the whole statement with an announcement that government will be implementing recommendations on the Oxford-Cambridge growth corridor, delivering the expressway and new rail links. Part of this is linked to the focus on investment in the digital economy. Quite rightly, the government is keen to preserve and enhance the position of the UK as a leader in digital innovation.
The Northern Powerhouse lives on as does the Midlands Engine and the Taunton Tank Engine (okay so I made that last bit up. Apparently the government is really really going to address the gap between London and the rest of the UK, unfortunately a lot of the money (£1.8bn) is going to LEPs which, by and large, have demonstrated themselves to be utterly ineffective.
However, in a shift from previous approaches, the government will also consult on new lending powers for local authorities, enabling up to £1bn of borrowing at a new local infrastructure rate of gilts plus 60 points for three years to support infrastructure projects. Ultimately, this could open the door for much greater economic and housing development in local areas where local authorities are keen to push for growth and deliver infrastructure.
Apparently controlling public spending is compatible with world-class services. I suspect no one from the Cabinet has had to use any form of frontline services recently, but then there is nothing like putting a telescope up to your blind eye for real clarity of vision.
The watchword for taxation is a ‘business-led economy’. In leading up to telling us that he was not going to do anything further, he told everyone how much the government had already done. Clearly they have already solved everything so why do more?
Although the Chancellor announced a new £6.7bn package to help business rates it is unclear where that is going. . Rural rate relief has been increased to 100%, and there is to be a rather pathetic reduction in transition thresholds for everyone else and no mention of any other changes to the proposed ridiculous new approach to business rates which will massively disadvantage many small businesses in London and the south east.
As expected, the fuel–duty rise has been cancelled, but duty is not being cut which would have been more to the point. Hammond announced how much it would save drivers in monetary terms rather forgetting that it just means that prices won’t increase #jamyesterday.
And in other Autumn Statement news, Hammond is abolishing the Autumn Statement so we only have one budget a year which will be held in the Autumn, followed by a Spring Statement. Hang on?? Ah but it’s okay, as the Spring Statement won’t contain any major fiscal announcements, unless of course changes in the economy demand it. Glad that’s cleared up then.
Clearly, I can’t do a bulletin without mentioning Trump – in a ‘if we don’t laugh we may cry’ kind of way. Aside from the new President-elect surely giving scriptwriters and satirists an abundance of new material for years to come, our own PM cannot have failed to be at least marginally offended by being ninth on his call list, just after the call to his Scottish relatives who have increasingly tried to disown him.
The impact of Trump on the US economy cannot fail to have an impact on the UK economy as well as the rest of the world. Whilst no government can pre-empt this, we would expect the next Statements or Budgets to reflect the changing world in which we find ourselves – not to mention special legislation to deal with the flow of American refugees into the UK and Europe…
2016 has, perhaps, been reality TV at its worst and unfortunately the new blockbuster series will be set live in the White House. 2017 will be nothing if not interesting.