Telegraph Autumn Statement 2016 summary: Everything you need to know – What the Autumn Statement means for you

Telegraph Autumn Statement 2016 summary: Everything you need to know – What the Autumn Statement means for you

Chancellor Philip Hammond has said his first Autumn Statement “is focused on  preparing and supporting the economy as we begin writing a new chapter in our  country’s history”.

He announced this afternoon that he has scrapped the Autumn Statement, so this will be the last one. The Budget will now be in the autumn, with a Spring Statement, much to the amusement of MPs in the House of Commons this afternoon.

It’s a move recommended by the IMF, and Mr Hammond said: “This change will allow for greater Parliamentary scrutiny of budget measures ahead of their implementation.”

Here’s a summary of the main points:

Opening statements

    • Britain will be the fastest growing major economy this year, Mr Hammond said, quoting the IMF. It has “confounded commentators at home and abroad with its strength and resilience” since the Brexit vote.
    • Tackling the UK economy’s “long term weaknesses” is more urgent than ever, Mr Hammond said, and he promised to build an “economy for everyone”
    • Mr Hammond praised his predecessor George Osborne’s record, and said the UK needs to be “match fit” with a resiliant economy for the challenges of leaving the European Union

Forecasts

    • The Office for Budget Responsibility said growth will be 2.1pc in 2016, higher than forecast in March. However, it will slow to 1.4pc in 2017 because of lower investment and weaker consumer demand
    • Growth is expected to be 1.7pc in 2018, 2.1pc in 2019 and 2020, and 2pc in 2021
    • The OBR said the effect of the UK leaving the European Union will knock 2.4 percentage points from UK growth
    • The Government will now no longer seek to deliver a surplus in 2019/20, but Mr Hammond said he remains committed to seeing the UK’s finances return to balance “as soon as practicable” in the next Parliament, “while leaving enough flexibility to support the economy in the near-term”. Mr Osborne had planned it for this Parliamentary term

Borrowing and debt

    • Three new fiscal rules in a new draft Charter for Budget Responsibility: 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 2pc by the end of this Parliament; public sector net debt as a share of GDP must be falling by the end of this Parliament; welfare spending must be within a cap, set by the government and monitored by the OBR
    • OBR forecasts for borrowing: 2016/17: £68.2bn; 2017/18: £59bn; 2018/19: £46.5bn, 2019/20: £21.9bn, 2020/21: £20.7bn, 2021/22: £17.2bn
    • Public borrowing will drop from 4pc last year to 3.5pc this year and will continue to fall over Parliament reaching 0.7pc in 2021/22 – the lowest in two decades
    • The OBR expects cyclically adjusted public sector net borrowing to be 0.8pc of GDP in 2020/21, against the Government’s target of reducing it to less than 2pc
    • The OBR forecasts that debt will rise from 84.2pc of GDP last year to 87.3pc this year, peaking at 90.2pc in 2017/18 before falling to 89.7pc in 2018/19

Productivity

    • Mr Hammond said raising productivity is essential: he will to prioritise “high value investment” to raise productivity, funding in the short term by additional borrowing
    • There will be a new national productivity investment fund of £23bn for “innovation and infrastructure” over the next five years, aimed at science and tech research and development

Housing

    • The goal of home ownership remains out of reach for “too many”, Hammond said. A Housing White Paper will be published “in due course” which will address some of the problems in the market
    • £2.3bn housing infrastructure fund to open up sites for up to 100,000 homes
    • £1.4bn for 40,000 affordable homes, as well as a relaxation of restrictions on Government grants to help building
    • Right-to-buy pilot for housing association tenants
    • The Government will double capital spending on housing in real terms over the course of the Parliament, Mr Hammond said
    • Fees for tenants in rented accommodation will be banned

Infrastructure and transport

    • £1.1bn in English local transport networks, £220m for “pinch points” on national roads, £450m to trial digital signalling on railways and £390m for development of low emission vehicles
    • The Northern Powerhouse rail – more details from the Transport Secretary in the coming weeks
    • Mr Hammond said his ambition is for the UK to “be a world leader in 5G” and so will invest £1bn in the country’s digital infrastructure
    • There will be 100pc business rates relief for five years on new fibre infrastructure
    • £110m of funding for East West Rail, and a commitment to deliver the new Oxford to Cambridge Expressway
    • More money for the Northern Ireland Executive (£250m), the Welsh Government (£400m) and the Scottish Government (£800m) to fund infrastructure, made through the Barnet formula

Business

    • Mr Hammond said the Government’s Industrial Strategy will be a “firm foundation” on which to “build our ambition of an economy that works for all”
    • Doubling UK export finance capacity
    • Funding initiative to boost management skills
    • £400m for venture capital funds to unlock £1bn of finance for start-ups, to stop them being swallowed up by the big firms
    • Treasury-led review into accessing capital in the UK
    • Regional cities
    • Major road schemes in the north confirmed
    • £1.8bn from Local Growth Fund for English regions: £556m to Local Enterprise Partnerships in the North of England, £542m to the Midlands and East of England, and £683m to LEPs in the South West, South East and London
    • “Devolution remains at the heart of this Government’s approach to supporting local growth,” Mr Hammond said, confirming a new City Deal for Stirling, as well as deals with Swansea, Edinburgh, North Wales and Tay Cities
    • More devolution for London: the capital will receive £3.15bn as its share of national affordable housing funding to deliver more than 90,000 homes, as well as control over its adult education budget

Deficit and spending

    • We have more work to do, Mr Hammond said – departmental spending plans will remain in place, although there will be extra funding for the Ministry of Justice to tackle problems in prisons
    • “The £3.5bn of savings to be delivered through the Efficiency Review announced at the Budget… must be delivered in full,” Hammond said
    • “I want the Treasury to be an enabler for good, effective spending across Government,” Mr Hammond said, and added that he would allow up to £1bn of the savings found by the efficiency review in 2019/20 to be reinvested in “priority areas”
    • Despite the fiscal pressure we will meet our commitments to meet the budgets of defense, overseas aid and keep the triple lock for pensioners, Mr Hammond said

Tax

    • My priority as chancellor is to ensure Britain remains the number one destination for business, Mr Hammond said
    • Corporation tax will fall to 17pc, the lowest rate of corporation tax in the G20
    • Carbon Price Support will continue to be capped out to 2020
    • Business rates reduction package confirmed – transitional relief cap lowered, which Mr Hammond said “is complicated but good news”. He adds that he will increase of rural rate relief to 100pc giving small businesses in rural areas a tax break
    • Insurance premium tax to go up from 10 to 12pc next June to raise revenue
    • Ultra low emission cars, childcare and cycle to work scheme will be excluded from new plans to scrap employee tax breaks
    • Tax advantages linked to Employee Shareholder Status will be abolished
    • The Chancellor promises to crack down on tax avoidance. “We must constantly be alert to new threats to our tax base,” he said
    • New tax measures will raise around £2bn over the forecast period
    • The Government will raise point at which people start to pay tax to £12,500 and the point at which they pay the higher rate to £50k by 2020

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