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| Autumn statement: Hammond to give boost to 'just managing families' | |
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| Philip Hammond is preparing to offer modest giveaways to families that are “just about managing” in next week’s autumn statement, as the cash-strapped government struggles to make good on Theresa May’s promise to improve the lives of ordinary workers. | Philip Hammond is preparing to offer modest giveaways to families that are “just about managing” in next week’s autumn statement, as the cash-strapped government struggles to make good on Theresa May’s promise to improve the lives of ordinary workers. |
| The chancellor will be forced to reveal a grim set of economic forecasts in his first set-piece House of Commons statement, as the independent Office for Budget Responsibility makes its first projections of the impact of Brexit on growth and the public finances. | The chancellor will be forced to reveal a grim set of economic forecasts in his first set-piece House of Commons statement, as the independent Office for Budget Responsibility makes its first projections of the impact of Brexit on growth and the public finances. |
| But the prime minister has asked Hammond to send a strong signal that the government will take action to help families who are, “working around the clock” to make ends meet, and the Treasury has been under pressure to make resources available to a group of people who have been dubbed as “just about managing” – or Jams. | But the prime minister has asked Hammond to send a strong signal that the government will take action to help families who are, “working around the clock” to make ends meet, and the Treasury has been under pressure to make resources available to a group of people who have been dubbed as “just about managing” – or Jams. |
| Policies under consideration including freezing fuel duty for motorists, boosting support for childcare and helping low-income families to save – and Hammond will also confirm that he will meet several Conservative manifesto pledges, including increasing the tax-free personal allowance. | Policies under consideration including freezing fuel duty for motorists, boosting support for childcare and helping low-income families to save – and Hammond will also confirm that he will meet several Conservative manifesto pledges, including increasing the tax-free personal allowance. |
| Whitehall insiders stressed that any giveaways announced on the 23 November would be modest. The Treasury’s dire downbeat forecasts for the impact of Brexit on the health of the economy, published during the referendum campaign, have not yet been realised – but chancellor is keen to reserve more radical measures to be used only in case a serious downturn materialises. | Whitehall insiders stressed that any giveaways announced on the 23 November would be modest. The Treasury’s dire downbeat forecasts for the impact of Brexit on the health of the economy, published during the referendum campaign, have not yet been realised – but chancellor is keen to reserve more radical measures to be used only in case a serious downturn materialises. |
| Thinktank the Resolution Foundation has calculated that there are almost six million working households who could be described as the “just managing” – with a net income of between £12,000 and £34,000 – and that their living standards have barely risen in a decade. | Thinktank the Resolution Foundation has calculated that there are almost six million working households who could be described as the “just managing” – with a net income of between £12,000 and £34,000 – and that their living standards have barely risen in a decade. |
| Resolution’s chief economist Matthew Whittaker suggests the best way of targeting these households would be to undo planned cuts to universal credit set in motion by Hammond’s predecessor George Osborne; and to suspend the four year cash freeze in working age benefits. | Resolution’s chief economist Matthew Whittaker suggests the best way of targeting these households would be to undo planned cuts to universal credit set in motion by Hammond’s predecessor George Osborne; and to suspend the four year cash freeze in working age benefits. |
| Hammond is under pressure from his own backbenchers to unpick some of the planned welfare cuts, with Conservative MPs using a debate in the House of Commons on Thursday to urge the government to take action to reverse some of Osborne’s proposed welfare cuts. | Hammond is under pressure from his own backbenchers to unpick some of the planned welfare cuts, with Conservative MPs using a debate in the House of Commons on Thursday to urge the government to take action to reverse some of Osborne’s proposed welfare cuts. |
| No MPs voted against the SNP’s backbench motion to stop the planned cuts to employment support allowance and universal credit, with 127 MPs voting in favour, though the motion is purely symbolic. | No MPs voted against the SNP’s backbench motion to stop the planned cuts to employment support allowance and universal credit, with 127 MPs voting in favour, though the motion is purely symbolic. |
| Heidi Allen, the Conservative MP who has led the charge for a rethink, said she could think of no other issue “so regretted by colleagues on my side of the House.”“I have a guiding principle in life,” she added. “Always listen to the loudest voice in your head. I think we all know what that voice is saying. Let’s just pause these cuts. The risk of damage is high. The financial cost to pause is low. What kind of a government do we want to be?” | Heidi Allen, the Conservative MP who has led the charge for a rethink, said she could think of no other issue “so regretted by colleagues on my side of the House.”“I have a guiding principle in life,” she added. “Always listen to the loudest voice in your head. I think we all know what that voice is saying. Let’s just pause these cuts. The risk of damage is high. The financial cost to pause is low. What kind of a government do we want to be?” |
| Labour is also seeking to increase the pressure on Hammond to reverse the cuts, and take wider measures to help low income families. Frontbenchers, including Jeremy Corbyn, attended screenings of the campaigning Ken Loach film I, Daniel Blake to draw attention to the challenges of life on benefits. | Labour is also seeking to increase the pressure on Hammond to reverse the cuts, and take wider measures to help low income families. Frontbenchers, including Jeremy Corbyn, attended screenings of the campaigning Ken Loach film I, Daniel Blake to draw attention to the challenges of life on benefits. |
| Hammond will also formally abandon George Osborne’s tax and spending rules, which now look impossible to meet; and announce a new fiscal framework, which will allow infrastructure projects that boost economic growth to be excluded from future deficit targets. | Hammond will also formally abandon George Osborne’s tax and spending rules, which now look impossible to meet; and announce a new fiscal framework, which will allow infrastructure projects that boost economic growth to be excluded from future deficit targets. |
| Analysis by the Institute for Fiscal Studies recently suggested the £10.4bn surplus pencilled in for 2019/20 by the OBR was now on course to be a £14.9bn deficit, leaving a £25bn gap to fill in the government’s last year in office. The official forecasts are expected to show that the UK faces an extra deficit bill of between £50bn and £114bn over the next four years, the biggest deterioration in the public finances since 2011. | Analysis by the Institute for Fiscal Studies recently suggested the £10.4bn surplus pencilled in for 2019/20 by the OBR was now on course to be a £14.9bn deficit, leaving a £25bn gap to fill in the government’s last year in office. The official forecasts are expected to show that the UK faces an extra deficit bill of between £50bn and £114bn over the next four years, the biggest deterioration in the public finances since 2011. |
| The chancellor will also seek to deflect attention from the economic costs of leaving the EU, by focusing on his longer-term aspiration to make Britain the home of a hi-tech “fourth industrial revolution”. | The chancellor will also seek to deflect attention from the economic costs of leaving the EU, by focusing on his longer-term aspiration to make Britain the home of a hi-tech “fourth industrial revolution”. |
| He will promise to boost spending on hi-tech research, in a bid to equip Britain’s economy for the world after Brexit. Business group the CBI, which will host a speech from May on Monday, has been urging the Treasury to boost research spending, including by doubling funding for the taxpayer-backed research agency, Innovate UK. | He will promise to boost spending on hi-tech research, in a bid to equip Britain’s economy for the world after Brexit. Business group the CBI, which will host a speech from May on Monday, has been urging the Treasury to boost research spending, including by doubling funding for the taxpayer-backed research agency, Innovate UK. |
| Tom Thackray, CBI Director for Innovation, said: “This is a critical juncture for the economy, and getting behind innovation will be central to the UK’s success in the years ahead, with overall R&D spending still too low.” | Tom Thackray, CBI Director for Innovation, said: “This is a critical juncture for the economy, and getting behind innovation will be central to the UK’s success in the years ahead, with overall R&D spending still too low.” |
| Hammond has repeatedly expressed concern about Britain’s poor productivity performance – the key to delivering future economic growth - and plans a battery of policies to tackle it, which also include improving infrastructure and skills. | Hammond has repeatedly expressed concern about Britain’s poor productivity performance – the key to delivering future economic growth - and plans a battery of policies to tackle it, which also include improving infrastructure and skills. |
| The prime minister, meanwhile, is keen to focus on the wider electorate. Last month, the prime minister told the Conservative party conference: “Our society should work for everyone, but if you can’t afford to get onto the property ladder, or your child is stuck in a bad school, it doesn’t feel like it’s working for you. Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you.” | The prime minister, meanwhile, is keen to focus on the wider electorate. Last month, the prime minister told the Conservative party conference: “Our society should work for everyone, but if you can’t afford to get onto the property ladder, or your child is stuck in a bad school, it doesn’t feel like it’s working for you. Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you.” |