Philip Hammond delivers his Autumn Statement
An Autumn Statement for Everyone? Looks like we’ll have to wait for spring
Last week we set out five tests for the Chancellor to meet for an Autumn Statement that works for everyone. Here’s how we think he’s done.
Test 1: Set out a plan for a Brexit that protects working people’s jobs and rights.
As the OBR make clear, Brexit is the biggest factor affecting the economy right now. Their forecasts show they have:
- revised down actual GDP growth, reaching a trough of 0.2 per cent a quarter in the second quarter of 2017
- revised up CPI inflation as the weaker pound pushes up import prices and therefore consumer prices
- revised up unemployment over the next two years, by around 100,000 people; and
- Revised down average earnings growth (see further below).
The OBR has also been clear that they had no steer on the Government’s negotiating position:
‘… we asked the Government for “a formal statement of Government policy as regards its desired trade regime and system of migration control, as a basis for our projections”. The Government directed us to two public statements by the Prime Minister that it stated were relevant to our request. Perhaps understandably, the Government’s response leaves us little the wiser as regards the choices and trade-offs that the Government might make during the negotiations – which will depend in part of course on the approach taken by those with whom it is negotiating.’ [OBR report pp 37].
So working people are left little clearer about how their jobs and pay will be protected as we leave the EU. The OBR figures show that at the moment they will be left paying the price of that decision.
Test: 2. Invest to keep the economy moving, and to build our future capacity
The Chancellor made a start here, with a welcome £23bn to be invested into a ‘national productivity investment fund’ between 2017/18 and 2021/22. This will bring welcome new money to roads, railways, broadband, housing and science.
But as Geoff Tily shows here the level of public infrastructure spending is still below the level of the last parliament – and nowhere near enough to push us up from our place near the bottom of the league table of OECD countries on overall investment.
Test 3: Make good on the promise of economic reform.
Just before the Autumn Statement in Prime Ministers Questions, Theresa May appeared to reaffirm her commitment to worker representation on company boards. That’s welcome news – Janet Williamson writes here about how this must mean what it says.
We’ve also welcomed the Government’s commitment to Industrial Strategy – though there’s little to see yet. More Research and Development spending is welcome (as Tim Page sets out here), though we need to do more to make sure this is concentrated on jobs across the country – at the moment most spending appears to go to London and the South East. The new Industrial Strategy Challenge Fund might be an opportunity to look at that. – we’re looking forward to engaging with Government.
Test 4: Give working people a pay boost now
The Chancellor’s announcement that the government will increase the national minimum wage for over 25 year olds to £7.50 next year is good news for some low paid workers. That’s enough to keep it on the path to hit 60 per cent of median earnings by 2020 – though not the £9 in 2020 originally announced.
But it’s far from enough to offset the impact of Brexit. As Geoff sets out here– in 2020, earnings will be almost £1,000 a year lower than predicted in March, due to slower wage growth and higher inflation. Today’s announcements – including Government keeping up the pressure on the nurses, doctors, firefighters and care home assistants facing ten years of flat lining pay, were nowhere near enough to offset that impact.
Meanwhile, minimal moves on the Universal Credit will do little to offset the swingeing cuts to the work allowances to come.
Test 5: Make sure that everyone can realise their rights
Credit where it’s due; the £4.3 million extra investment in National Minimum Wage enforcement, while small beer in the context of overall public spending figures, is welcome – a twenty per cent increase on the current budget for 2016/17.
And it’s good to see that the Treasury will be looking at tax structures that incentivise insecure forms of work like bogus self-employment: Any measures which clamp down on abuse of insecure contracts and bogus expenses schemes are welcome (see paragraph 4.13 of the Autumn Statement Document itself).
But it’s hard to believe the Government is serious about supporting working people when they’ve done nothing to tackle employment tribunal fees of up to £1,200 a case. These have seen the number of cases fall by over 9,000 a month.
While millions of workers can’t access justice, it’s hard to see how the economy can work for everyone.
So as Frances O’Grady sets out here despite positive – if limited – moves, today’s Autumn Statement was an underwhelming package that does not do enough to support working people now or prepare for a prosperous future outside the EU. Maybe we’ll have to wait for the ‘spring statement’ for that.