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Spring statement: Hammond accused of 'astounding complacency' after seeing light at end of the tunnel - live updates Spring statement: Hammond accused of 'astounding complacency' after seeing light at end of the tunnel - live updates
(35 minutes later)
More detail of the OBR’s Brexit bill estimate:
The most detailed breakdown of the Brexit divorce bill so far. Brussels pension liabilities will last to 2064, when we’ll still owe £500m. pic.twitter.com/qjhCcVrE5R
Economics professor Jonathan Portes has dug into the OBR’s ‘Brexit bill’ work:
The Brexit dividend at last? OBR says Brexit will free up £3 billion a year by 2021-22, more thereafter, after taking account of "divorce bill"... https://t.co/RUh9cBo8V7 pic.twitter.com/cXDRAs7ToO
..but goes on to point out that it expect this to be more than offset by the negative impacts of lower immigration, productivity, etc, so the overall impact on public finances will be negative. pic.twitter.com/RWxRaQB6uC
The Office for Budget Responsibility has estimated that Britain’s financial settlement with the EU will cost £37.1bn.
This figure is based on the ‘phase 1’ agreement which the UK agreed with member states last December, and is contained in an appendix to the OBR’s latest forecasts.
Almost half this bill relates to Britain’s commitments under the current EU budget (the multiannual financial framework or MFF) that ends in December 2020.
Around half is due to meeting Britain’s share of outstanding payments at the end of the current MFF (known as the “reste à liquider” or RAL). The remaining small fraction reflects pension liabilities less assets returned to the UK, the OBR says.
Most of the bill falls in the next few years, but the final cost drags on until the 2060s ...
This falls smack in the middle of the Treasury’s own forecasts, which put the divorce bill at between £35bn and £39bn.
The OBR also warns that it is “impossible” to quantify the full effect of Brexit on the public finances today:
One of the more direct and readily quantifiable ways that Brexit will affect the public finances is by reducing or stopping the UK’s contributions to the EU budget. But, soon after the referendum, the chancellor guaranteed funding for certain EU projects after the UK leaves the EU (eg in agriculture, science and structural fund projects), subject to various conditions.
And the prime minister has subsequently stated that the UK may continue to make contributions where it wishes to participate in some European programmes.
The government has not yet fully articulated its intentions in this area and, even if it had, the precise post-Brexit outcome remains subject to negotiation.
The Treasury has published its spring statement documents on its website.The Treasury has published its spring statement documents on its website.
It has published 13 consultation documents - all available here.It has published 13 consultation documents - all available here.
Here is the Treasury’s own summary of what is in the autumn statement.Here is the Treasury’s own summary of what is in the autumn statement.
Here is the Treasury paper on corporate tax and the digital economy (pdf).Here is the Treasury paper on corporate tax and the digital economy (pdf).
And here are are the preliminary findings of the Oliver Letwin review into planning and housing (pdf).And here are are the preliminary findings of the Oliver Letwin review into planning and housing (pdf).
The Treasury has not published a red book, but the Office for Budget Responsibility has published its latest economic and fiscal outlook report. It runs to 243 pages and it is here (pdf).The Treasury has not published a red book, but the Office for Budget Responsibility has published its latest economic and fiscal outlook report. It runs to 243 pages and it is here (pdf).
The Office for Budget Responsibility has released its verdict on the UK economy.The Office for Budget Responsibility has released its verdict on the UK economy.
And it points out that Britain’s economy isn’t in a much better place than four months ago, when the last budget was released.And it points out that Britain’s economy isn’t in a much better place than four months ago, when the last budget was released.
The OBR says:The OBR says:
The economy has slightly more momentum in the near term, thanks to the unexpected strength of the world economy, but there seems little reason to change our view of its medium-term growth potential. And while the budget deficit looks likely to come in almost £5bn lower this year than we expected in November, the explanations for this imply smaller downward revisions for future years. As a result, the government’s headroom against its fiscal targets is virtually unchanged.The economy has slightly more momentum in the near term, thanks to the unexpected strength of the world economy, but there seems little reason to change our view of its medium-term growth potential. And while the budget deficit looks likely to come in almost £5bn lower this year than we expected in November, the explanations for this imply smaller downward revisions for future years. As a result, the government’s headroom against its fiscal targets is virtually unchanged.
On Brexit, the fiscal watchdog says there’s been less damage than feared:On Brexit, the fiscal watchdog says there’s been less damage than feared:
The vote to leave the European Union appears to have slowed the economy, but by less than we expected immediately after the referendum – thanks in part to the willingness of consumers to maintain spending by reducing their saving. But it is important not to put too much weight on early estimates of economic activity either side of the referendum, not least because the bottom-up measures of GDP growth in the national accounts differ as to whether growth slowed down, speeded up or remained stable between 2016 and 2017.The vote to leave the European Union appears to have slowed the economy, but by less than we expected immediately after the referendum – thanks in part to the willingness of consumers to maintain spending by reducing their saving. But it is important not to put too much weight on early estimates of economic activity either side of the referendum, not least because the bottom-up measures of GDP growth in the national accounts differ as to whether growth slowed down, speeded up or remained stable between 2016 and 2017.
And on productivity, the OBR warns that recent improvements may not last.And on productivity, the OBR warns that recent improvements may not last.
The biggest surprise in the economic data released since November is that productivity growth – measured as output per hour – has been much stronger than expected. But that reflects a much weaker path for average hours worked, rather than stronger output or weaker employment growth.The biggest surprise in the economic data released since November is that productivity growth – measured as output per hour – has been much stronger than expected. But that reflects a much weaker path for average hours worked, rather than stronger output or weaker employment growth.
The fall in average hours over the second half of 2017 is the largest since mid-2011 and second largest since the financial crisis. But in 2011 the fall in hours and associated pick-up in productivity growth proved to be erratic and were soon reversed. We assume for now that the same will be true on this occasion.The fall in average hours over the second half of 2017 is the largest since mid-2011 and second largest since the financial crisis. But in 2011 the fall in hours and associated pick-up in productivity growth proved to be erratic and were soon reversed. We assume for now that the same will be true on this occasion.
More from the IFS’s Paul Johnson:More from the IFS’s Paul Johnson:
Crucial OBR judgment: they believe the economy is running 0.3% above potential - despite years of poor growth economy in danger of over heating. One reason why better borrowing figures this year don't translate into better figures in medium term.Crucial OBR judgment: they believe the economy is running 0.3% above potential - despite years of poor growth economy in danger of over heating. One reason why better borrowing figures this year don't translate into better figures in medium term.
McDonnell says today’s statement could have been a turning point. But it is a missed opportunity.McDonnell says today’s statement could have been a turning point. But it is a missed opportunity.
The Conservatives chose to cut budgets for the super-rich, he says.The Conservatives chose to cut budgets for the super-rich, he says.
He says we were never all in this together.He says we were never all in this together.
He says today we have had the “indefensible spectacle” of the chancellor congratulating himself on marginally improved forecasts, while refusing to help councils.He says today we have had the “indefensible spectacle” of the chancellor congratulating himself on marginally improved forecasts, while refusing to help councils.
McDonnell says asking NHS workers to give up a day’s holiday (reportedly a government proposals as part of the pay negotiations) is mean-spirited.McDonnell says asking NHS workers to give up a day’s holiday (reportedly a government proposals as part of the pay negotiations) is mean-spirited.
And he says the government is today trying to get MPs to vote to take away free school meals from 1 million pupils.And he says the government is today trying to get MPs to vote to take away free school meals from 1 million pupils.
(That’s a reference to one of the votes coming up this afternoon on statutory instruments. The government contests McDonnell’s interpretation. There is a briefing on the issue here.)(That’s a reference to one of the votes coming up this afternoon on statutory instruments. The government contests McDonnell’s interpretation. There is a briefing on the issue here.)
John McDonnell, the shadow chancellor, is responding to Hammond.John McDonnell, the shadow chancellor, is responding to Hammond.
He says Hammond’s complacency is “astounding”. Public service workers like doctors and nurses need Hammond to act now.He says Hammond’s complacency is “astounding”. Public service workers like doctors and nurses need Hammond to act now.
Hammond says there is light at the end of the tunnel. That shows how cut off he is, McDonnell says.Hammond says there is light at the end of the tunnel. That shows how cut off he is, McDonnell says.
He says this is a government that single-handedly destroyed the solar panel industry.He says this is a government that single-handedly destroyed the solar panel industry.
Hammond talks about the fourth industrial revolution, but Britain has the lowest rate of industrial robot use in the OED.Hammond talks about the fourth industrial revolution, but Britain has the lowest rate of industrial robot use in the OED.
He says Tory MPs can shout all they want, but people out there know the crisis in our communities.He says Tory MPs can shout all they want, but people out there know the crisis in our communities.
Hammond makes great play of reducing debt. But he has put £700m on the national debt, he says.Hammond makes great play of reducing debt. But he has put £700m on the national debt, he says.
He says the Tories said the deficit would be eliminated by 2015.He says the Tories said the deficit would be eliminated by 2015.
George Osborne has been tweeting about achieving three years late a deficit target Osborne actually abandoned.George Osborne has been tweeting about achieving three years late a deficit target Osborne actually abandoned.
More details of the plastic waste consultation:More details of the plastic waste consultation:
On environmental issues Philip Hammond says the Government is making a call for evidence on single use plastics, the supply chain, alternatives and recycling opportunities #SpringStatementOn environmental issues Philip Hammond says the Government is making a call for evidence on single use plastics, the supply chain, alternatives and recycling opportunities #SpringStatement
Chancellor @PhilipHammondUK calls for evidence to tackle single-use #plastic waste. #SpringStatement pic.twitter.com/J9nDSr1uzfChancellor @PhilipHammondUK calls for evidence to tackle single-use #plastic waste. #SpringStatement pic.twitter.com/J9nDSr1uzf
Hammond says Treasury launching a “call for evidence” to look at options on reducing single use plastics - including taxes. Shout from Labour benches of “get on with it!”Hammond says Treasury launching a “call for evidence” to look at options on reducing single use plastics - including taxes. Shout from Labour benches of “get on with it!”
Hammond is now winding up, saying he wants the UK to be a force for good, and a country everyone can be proud of.Hammond is now winding up, saying he wants the UK to be a force for good, and a country everyone can be proud of.
Hammond says he will publish a call for evidence on whether the tax relief for agricultural diesel contributes to air pollution.Hammond says he will publish a call for evidence on whether the tax relief for agricultural diesel contributes to air pollution.
And he will consult on tax cuts for low-emission vans.And he will consult on tax cuts for low-emission vans.
And he will consult on what can be done to reduce the use of plastics.And he will consult on what can be done to reduce the use of plastics.
This is not intended to raise revenue; it is about changing behaviour.This is not intended to raise revenue; it is about changing behaviour.
Revenue raised will be invested in remedies.Revenue raised will be invested in remedies.
And he is committing £20m now to help universities deliver solutions.And he is committing £20m now to help universities deliver solutions.
Hammond announces consultation on using tax increases to reduce plastic use, with £20m set aside now to help universities develop solutions.Hammond announces consultation on using tax increases to reduce plastic use, with £20m set aside now to help universities develop solutions.