Philip Hammond leaves Downing Street to deliver his Autumn Statement. Photo Leon Neal / Getty Images.
Autumn Statement 2016: Chancellor goes a little way to meet his investment challenge
Today the Chancellor has finally recognised that spending on infrastructure strengthens the economy.
Measures the TUC has long called for were announced, including more cash for housing, high speed broadband, rail and roads. Overall the Chancellor’s measures amounted to £23bn, a big sounding number.
But looking at OBR numbers which show public sector net investment a share of GDP gives a different picture.
The new plans take the average investment across the parliament to 2% of GDP, up from 1.7% under the previous plans. But the plans still fall well short of the 2.2% share of spending in the last parliament.
The chart below gives the detail. The red line shows plans as they were at the Budget. The green line shows spending announced today The dotted lines show the new and old averages across the parliament, with the average for the previous parliament the dotted grey line.
(And note I am being generous by including the possibly spurious figure for 2020-21.)
To maintain the level of spending in the last parliament, and up spending to 2.2% of GDP would mean increasing spending by 0.2 percentage points a year. That’s an increase in cash terms across the parliament of roughly £20bn. (NB GDP averages about £2 trillion across the parliament.)
So the Chancellor went a little over half way to meet the infrastructure spending of the last parliament. This isn’t a high bar –George Osborne’s plan A was to hack away at infrastructure spending.
But it’s a start.