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| A hard times chancellor with little to give away A hard times chancellor with little to give away | |
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| The chancellor brings the air of an undertaker to the despatch box. His suits are dark, his expression glum and his sense of humour, although unexpectedly sharp, is deployed only sparingly. This is a chancellor for hard times, and in his unshowy way, hard times are what he predicted. | The chancellor brings the air of an undertaker to the despatch box. His suits are dark, his expression glum and his sense of humour, although unexpectedly sharp, is deployed only sparingly. This is a chancellor for hard times, and in his unshowy way, hard times are what he predicted. |
| This chancellor is the antithesis of his predecessor George Osborne and so was his autumn statement. The only rabbit pulled from Philip Hammond’s topper was that the number of opportunities for rabbit pulling – what the Treasury calls fiscal events – is to be cut from two to one. This was Hammond’s first autumn statement, and it is to be his last. | This chancellor is the antithesis of his predecessor George Osborne and so was his autumn statement. The only rabbit pulled from Philip Hammond’s topper was that the number of opportunities for rabbit pulling – what the Treasury calls fiscal events – is to be cut from two to one. This was Hammond’s first autumn statement, and it is to be his last. |
| Hammond is a new chancellor in a new government working in a wholly new context. Leaving the EU, according to the Office for Budget Responsibility (OBR)’s newly released forecasts - which are based on Brexit happening in April 2019 - will mean sharply declining growth and falling revenues. The OBR expects rising inflation and squeezed household incomes as the value of the pound continues to decline in a less trade-intensive economy. | Hammond is a new chancellor in a new government working in a wholly new context. Leaving the EU, according to the Office for Budget Responsibility (OBR)’s newly released forecasts - which are based on Brexit happening in April 2019 - will mean sharply declining growth and falling revenues. The OBR expects rising inflation and squeezed household incomes as the value of the pound continues to decline in a less trade-intensive economy. |
| The slower growth and higher borrowing illustrate one of the most profound ironies of the referendum result. Many of those who voted to leave, the “just about managing” people that Theresa May first described on the steps of Downing Street, are exactly the ones who will bear the brunt of Brexit under the chancellor’s plans. | The slower growth and higher borrowing illustrate one of the most profound ironies of the referendum result. Many of those who voted to leave, the “just about managing” people that Theresa May first described on the steps of Downing Street, are exactly the ones who will bear the brunt of Brexit under the chancellor’s plans. |
| There has been a failure in expectation management this week that would never have happened in the Cameron-Osborne years when the prime minister marched in lockstep with his chancellor, who doubled as political strategist. Stories have been circulating all week that No 10 was pressing the chancellor next door for a handout to the Jams, the brand new acronym for a familiar but freshly defined demographic. | There has been a failure in expectation management this week that would never have happened in the Cameron-Osborne years when the prime minister marched in lockstep with his chancellor, who doubled as political strategist. Stories have been circulating all week that No 10 was pressing the chancellor next door for a handout to the Jams, the brand new acronym for a familiar but freshly defined demographic. |
| The Jams appear to owe their origin to the Resolution Foundation, a thinktank now chaired by the former Tory minister David Willetts, whose director is Torsten Bell, a former aide to Ed Miliband. Resolution published a piece of research to coincide with the Conservative party conference in October that provided the evidence to underpin May’s description of just managing families in July. | The Jams appear to owe their origin to the Resolution Foundation, a thinktank now chaired by the former Tory minister David Willetts, whose director is Torsten Bell, a former aide to Ed Miliband. Resolution published a piece of research to coincide with the Conservative party conference in October that provided the evidence to underpin May’s description of just managing families in July. |
| Resolution estimates that there are about 6 million Jams living in households where at least one member is working, based away from metropolitan centres in smaller towns from Lancashire to Devon, probably not in professional jobs, most likely not college educated and whose life choices are restricted by low pay that has not significantly increased since the crash in 2008, while house prices have soared out of control. | Resolution estimates that there are about 6 million Jams living in households where at least one member is working, based away from metropolitan centres in smaller towns from Lancashire to Devon, probably not in professional jobs, most likely not college educated and whose life choices are restricted by low pay that has not significantly increased since the crash in 2008, while house prices have soared out of control. |
| In the hands of the former chancellor, trails like those of the past week of giveaways – even modest ones – would have been the cue for headline-grabbing initiatives. In Hammond’s autumn statement package the surprise was that there was no surprise. | In the hands of the former chancellor, trails like those of the past week of giveaways – even modest ones – would have been the cue for headline-grabbing initiatives. In Hammond’s autumn statement package the surprise was that there was no surprise. |
| The small concessions that were made were already in the pipeline. Tax thresholds will rise, as Osborne set out, and the national living wage will go up from £7.20 to £7.50 an hour in April next year – slightly less than the rise needed to increase it by regular increments to 60% of median earnings by 2020. Fuel duty is frozen for the seventh year in a row. Insurance premiums are meant to come down through legislation to restrict compensation for whiplash injuries, but insurance premium tax will rise. Agents’ letting fees will be banned. | The small concessions that were made were already in the pipeline. Tax thresholds will rise, as Osborne set out, and the national living wage will go up from £7.20 to £7.50 an hour in April next year – slightly less than the rise needed to increase it by regular increments to 60% of median earnings by 2020. Fuel duty is frozen for the seventh year in a row. Insurance premiums are meant to come down through legislation to restrict compensation for whiplash injuries, but insurance premium tax will rise. Agents’ letting fees will be banned. |
| There are also some large and consequential decisions that will make the next four years hard indeed. Weeks of Tory backbench pressure on Hammond to soften Osborne’s cuts to universal credit have been rebuffed. Instead the work allowance, beyond which it starts to be withdrawn, was left unchanged. Though the rate at which it tapers off as earnings increase is very slightly slowed from 65p to 63p in the pound, according to House of Commons figures, that means a working family with two children could be £800 instead of £1,100 a year worse off,. A lone parent in work with two children could be £2,300 a year instead of £2,500 worse off. | There are also some large and consequential decisions that will make the next four years hard indeed. Weeks of Tory backbench pressure on Hammond to soften Osborne’s cuts to universal credit have been rebuffed. Instead the work allowance, beyond which it starts to be withdrawn, was left unchanged. Though the rate at which it tapers off as earnings increase is very slightly slowed from 65p to 63p in the pound, according to House of Commons figures, that means a working family with two children could be £800 instead of £1,100 a year worse off,. A lone parent in work with two children could be £2,300 a year instead of £2,500 worse off. |
| Childcare for three and four year-olds is being extended from 15 to 30 hours a week from next September, but Osborne’s decision to limit universal credit to two children from next April still stands. The Child Poverty Action Group predicts that working families will be worse off, and more children will grow up in poverty. | Childcare for three and four year-olds is being extended from 15 to 30 hours a week from next September, but Osborne’s decision to limit universal credit to two children from next April still stands. The Child Poverty Action Group predicts that working families will be worse off, and more children will grow up in poverty. |
| This is scant comfort for May’s Jams. Hammond has put his ambition of a “match-fit” economy ahead of their needs. The match in question is the world after Brexit. So the best hope for the Jams is in the wider and longer-term plans to try to ease the metropolitan-market town split that was revealed by the result of June’s referendum. | This is scant comfort for May’s Jams. Hammond has put his ambition of a “match-fit” economy ahead of their needs. The match in question is the world after Brexit. So the best hope for the Jams is in the wider and longer-term plans to try to ease the metropolitan-market town split that was revealed by the result of June’s referendum. |
| The chancellor promised a further attempt to rebalance the economy away from London through measures such as the allocation of £1.8bn from the Local Growth Fund to local enterprise partnerships in the English regions. There is to be an extra £1bn for local transport networks, and £2.3bn will be invested in infrastructure that new housing developments need. | The chancellor promised a further attempt to rebalance the economy away from London through measures such as the allocation of £1.8bn from the Local Growth Fund to local enterprise partnerships in the English regions. There is to be an extra £1bn for local transport networks, and £2.3bn will be invested in infrastructure that new housing developments need. |
| But this is slow-burn stuff. Meanwhile there was nothing to divert the looming catastrophe in social care that has left a million elderly people without adequate support in their homes, and hospitals struggling with patients stuck in hospital because there is no safe place for them to go. Councils had pinned their hopes on more from the Better Care Fund, the pot of money that is supposed to be joining up hospital and social care, but they were not even given permission for a further increase in the precept they can levy to meet the cost of the paying the national living wage. | But this is slow-burn stuff. Meanwhile there was nothing to divert the looming catastrophe in social care that has left a million elderly people without adequate support in their homes, and hospitals struggling with patients stuck in hospital because there is no safe place for them to go. Councils had pinned their hopes on more from the Better Care Fund, the pot of money that is supposed to be joining up hospital and social care, but they were not even given permission for a further increase in the precept they can levy to meet the cost of the paying the national living wage. |
| Instead the chancellor was adamant that the NHS had had the extra money it asked for, a view disputed by the Tory chair of the Commons health committee, the King’s Fund and every expert on health spending. He dismissed projections of a deficit in NHS England trusts of £680m as a mere drop in the context of a budget of more than £100bn a year. He spoke sharply about the size of the NHS’s contingency fund. | Instead the chancellor was adamant that the NHS had had the extra money it asked for, a view disputed by the Tory chair of the Commons health committee, the King’s Fund and every expert on health spending. He dismissed projections of a deficit in NHS England trusts of £680m as a mere drop in the context of a budget of more than £100bn a year. He spoke sharply about the size of the NHS’s contingency fund. |
| This was a continuity autumn statement. Hammond is even more concerned about borrowing and fiscal rebalancing than Osborne was. His anxieties have outweighed May’s pledges to the Jams. | This was a continuity autumn statement. Hammond is even more concerned about borrowing and fiscal rebalancing than Osborne was. His anxieties have outweighed May’s pledges to the Jams. |
| This is the first guess at tailoring Conservative economic consequences to the prospect of of Brexit from a chancellor operating even more in the dark than his predecessors. The pace of leaving, the impact on trade, investment, growth and borrowing are all even more uncertain than when an earlier chancellor, Denis Healey, denounced the autumn forecast – which he introduced – as “an extrapolation from a partially known past through an unknown present to an unknowable future, according to theories about the causal relationships between certain economic variables which are hotly disputed by academic economists”. | This is the first guess at tailoring Conservative economic consequences to the prospect of of Brexit from a chancellor operating even more in the dark than his predecessors. The pace of leaving, the impact on trade, investment, growth and borrowing are all even more uncertain than when an earlier chancellor, Denis Healey, denounced the autumn forecast – which he introduced – as “an extrapolation from a partially known past through an unknown present to an unknowable future, according to theories about the causal relationships between certain economic variables which are hotly disputed by academic economists”. |