This is an Autumn Statement that provides a stable economic platform as the UK leaves the EU, setting out how we will support our economy as we begin writing this new chapter in our country’s history.
It provides confidence and certainty, as this Government sets out our clear plans for investment, public spending and the tax system, continuing the task of bringing down the deficit and getting the country back to living within its means.
It tackles the long-term challenges facing the country, such as low productivity, by investing in infrastructure and innovation to boost long-term economic growth as part of a modern Industrial Strategy.
And it gives support to millions of ordinary working families, providing targeted help with the cost of living.
Key OBR forecasts:
- The UK economy will grow by 2.1 per cent in 2016 – predicted to be the fastest growing major advanced economy in the world.
- The deficit will fall to 3.5 per cent of GDP this year and to 0.7 per cent in 2020-21 – the lowest in two decades.
- Debt as a proportion of national income will begin falling in 2018-19 – the first fall since 2001-02.
Bringing down the deficit – getting the country back to living within its means
Continuing to get public spending under control. We’ve demonstrated beyond doubt that controlling public spending is compatible with world-class public services and social improvement. There is more work to do to eliminate the deficit, so departmental spending plans set out in the Spending Review last autumn remain in place.
Making sure future generations are not burdened with our debt. We have published a new draft Charter for Fiscal Responsibility with three rules: the public finances should be returned to balance as early as possible in the next Parliament, with cyclically-adjusted borrowing below 2 per cent of GDP by the end of this Parliament; public sector net debt as a share of GDP must be falling by the end of this Parliament; and welfare spending must be within 3 per cent of a cap, set by the Government and monitored by the Office of Budget Responsibility, by the end of the forecast period.
Making sure that taxes are paid in full by those who owe them. This government has done more than any other to tackle tax evasion, avoidance and aggressive tax planning. This has resulted in the gap between taxes owed and paid at one of the lowest levels in the world, but clearly there is still more to do. We will crack down on corporate tax avoidance schemes and introduce a new penalty for those who enable the use of tax avoidance schemes that HMRC later challenges and defeats. These measures, alongside others announced in the Autumn Statement, will raise around £2 billion over the forecast period.
Key political point: Labour left Britain with the biggest budget deficit in peacetime history. They opposed every decision we’ve taken to fix the economy and want to raise taxes and spend hundreds of billions we don’t have. It just shows they can’t control the public finances and would crash the economy like they did last time.
Tackling the long-term challenges – making Britain more productive
Investing £23 billion in our productive economy. As a result of the decisions we have taken, public investment is higher over this decade than it was over the whole of the last Labour government. Today we go further, with a National Productivity Investment Fund worth £23 billion that provides the financial backbone for the Government’s Industrial Strategy. Every penny will be earmarked for high value-generating infrastructure and research, including an extra £2 billion a year by 2020-21 for additional investment in R&D. Our hard-won credibility on public spending means 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.
Delivering a housing market that works for everyone. For too many, the goal of home ownership remains out of reach. We will invest to unlock land for housing where it is needed most, with a new £2 billion Housing Infrastructure Fund to support 100,000 new homes, and an additional £1.4 billion to deliver 40,000 more affordable homes. That means that over the course of the Parliament, the Government expects to more than double annual capital spending on housing in real terms.
Securing reliable transport networks for the whole of the UK. Excellent transport networks are essential for growth and productivity, so we are committing significant additional funding to help keep Britain moving now, and to invest in the transport networks and vehicles of the future. We have reconfirmed our commitment to the Roads Fund, funded by Vehicle Excise Duty, and will invest £1.1 billion more in local transport networks, and £220 million to address pinch points on strategic roads.
Supporting world-class digital infrastructure. We want the UK to be a world leader in 5G technology, with a full fibre-optic network; a step-change in speed, security and reliability. So we will invest a further £1 billion in our digital infrastructure and give 100 per cent business rates relief for five years on new fibre infrastructure, supporting further roll out to homes and businesses.
Backing British business. We will double UK export finance capacity to make it easier for British businesses to export, fund Charlie Mayfield’s business-led initiative to boost management skills across British businesses, and inject £400 million through the British Business Bank to tackle the problem of our fastest growing technology firms being snapped up by bigger companies.
Making Britain one of the most attractive countries to do business. Since 2010 this Government has put a business-led recovery at the heart of our plan, cutting Corporation Tax from 28 per cent to 20 per cent. We know how much businesses value certainty and stability, so we will stick to the business tax roadmap set out in March, meaning Corporation Tax will fall to 17 per cent, by far the lowest in the G20. We will implement the business rates reduction package worth £6.7 billion and increase Rural Rate Relief to 100 per cent, giving small businesses in rural areas additional rate savings of up to £2,900 per year.
Driving up productivity in our regional cities. For too long, economic growth in our country has been too concentrated in London and the South East – we need to drive up the performance of our regional cities. We will give the go ahead to a programme of major road schemes in the North, provide funding for the evaluation study for the Midlands Rail Hub, and allocate £1.8 billion from the Local Growth Fund to English regions. We will recommit to our existing City Deals and grant new mayoral combined authorities in England new borrowing powers. The major increase in infrastructure spending announced today will represent a significant increase in funding of over £250 million to Northern Ireland, £400 million to Wales and £800 million to Scotland.
Key political point: In government, Labour stifled business with unnecessary red tape and high taxes, and our infrastructure ranking fell from 7th in the world to 33rd. Now they want to do it all again – they want to raise taxes on businesses, and would threaten vital infrastructure investment by crashing the economy just like they did last time.
Helping ordinary working families who are struggling to get by
Helping people keep more of what they earn. Raising the tax-free personal allowance has done more to help ordinary working people than almost anything else. As a result of our changes, someone with a salary of £15,000 pays just £800 a year in tax now compared to £1,705 in 2010. That’s a massive boost to the incomes of low and middle earners, cutting tax for 28 million people since 2010 and taking 4 million people out of income tax altogether. We will deliver on our commitment to raising the personal allowance even further to £12,500, and the higher rate threshold to £50,000 by the end of the Parliament.
Boosting incomes to help families make ends meet. As well as taking millions of people out of tax, this is the Government that introduced the National Living Wage, giving a pay rise to over a million people. We will increase the National Living Wage from £7.20 to £7.50 in April 2017 – a further pay rise for 1.3 million people worth over £500 a year to a full-time worker. In addition, a package of additional enforcement measures will make sure everyone entitled to the National Living Wage receives it.
Making sure work always pays. Universal Credit is an important reform to our benefits system designed to make sure work always pays. To reinforce that, from April we will reduce the Universal Credit taper rate from 65 per cent to 63 per cent - a tax cut for those in work on low incomes. This will increase the incentive to work and encourage progression for 3 million households across our country.
Putting an end to unfair tenants’ fees. In the private rental market, letting agents are currently able to charge unregulated fees to tenants, often running to hundreds of pounds. This is wrong. Landlords appoint letting agents and should meet their fees. So we will ban fees to tenants as soon as possible, so people will no longer be hit by extra charges that can be difficult to afford.
Helping those who depend on their savings. Low interest rates have helped our economy recover from Labour’s Great Recession, but reduced the interest people can earn on their cash savings. So we will launch a new, market-leading savings bond which will allow people to deposit up to £3,000 and benefit around 2 million savers.
Cutting fuel duty for millions of hardworking people. Fuel costs can make up a big part of a family budget and there has been significant pressure on prices at the pump. So we will cancel the fuel duty rise that is scheduled for April – keeping it frozen for the seventh consecutive year, saving the average car driver £130 a year and the average van driver £350 since 2010.
Key political point: Labour let welfare spending get out of control. They doubled income tax for the poorest by abolishing the 10p rate and raised fuel duty 12 times. Now they want to hike income tax and reverse all our welfare savings, holding people back instead of helping them get on. They cannot deliver a society and an economy that works for everyone.
The Labour Party
We have invested in our economy whilst taking the tough decisions to maintain control of spending, but every step of the way, the Labour Party have been sniping from the side-lines, opposing every decision we’ve taken to fix the economy.
They want to raise taxes, reverse savings and spend hundreds of billions of pounds we don’t have. It just shows they can’t control the public finances and would crash the economy like they did last time. They are not a credible alternative government and they have nothing to offer as we work to build an economy and a country that works for everyone.
Building an economy and a country that works for everyone
Six years ago, we took over an economy on the brink of collapse, with the highest budget deficit in our peacetime history. We took the tough decisions to tackle that deficit, painstakingly rebuilding Britain’s shattered fiscal credibility.
During those six years, our deficit came down by two thirds. We’ve seen crime fall by more than a quarter, the highest proportion ever of good or outstanding schools, satisfaction with local public services remaining high, pensioner poverty at its lowest level ever and the lowest number of children in workless households ever.
Today we resolve to leave no stone unturned in preparing Britain to seize the opportunities ahead, and to do so in a way that builds an economy where everybody has a chance, and where every part of this United Kingdom contributes to, and benefits from, our future success.