What you need to know about the Autumn Budget
PUBLISHED: 08:39 22 November 2017 | UPDATED: 08:39 22 November 2017
©UK Parliament/Mark Duffy
Ahead of the chancellor’s Autumn Budget, here are the answers to some key questions.
Chancellor Philip Hammond is preparing to deliver his first Autumn Budget on Wednesday.
As with every budget, he must balance the competing concerns and demands from all sectors of the economy.
So what are the key questions facing the chancellor as he finalises his speech?
• Why does it matter?
Apart from being the major set-piece event where the chancellor sets out how the government will spend the nation’s money, this Budget arrives at a time of acute political sensitivity.
Since losing the Tories’ parliamentary majority, and some of her authority, at the general election, Theresa May has suffered a series of setbacks including cabinet resignations and a botched coup attempt after a mishap-strewn party conference speech.
There is also a lot on the line for Mr Hammond, who will have Brexiteers who want him sacked over his perceived support for a “soft” Brexit ready to pounce on any mistakes.
• What are the immediate pressures on the Chancellor?
Many Tory MPs are said to want a bold change in direction after Labour’s unexpected gains in the election on an anti-austerity ticket and with an apparent surge in youth support.
Mr Hammond has already announced plans to get 300,000 homes built a year, which should help millennials, but has rejected suggestions from communities secretary Sajid Javid to borrow tens of billions of pounds to embark on a massive housebuilding programme.
There have been suggestions the chancellor will also move to cut the waiting time for universal credit welfare payments from six weeks amid Tory and opposition concerns it is pushing people into debt.
Mr Hammond is facing calls to give public sector workers a pay rise but could face a backlash if he does not provide new money and asks, for example, the NHS to find extra wages for nurses from already stretched budgets.
What do businesses in East Anglia want?
Norfolk Chamber laid out its Budget demands last month, putting at the top of its list a halt to further hikes in business rates.
It says the expected 3.9% increase in rate valuations expected next year should be put on ice, as well as pausing changes to corporation tax by freezing the rate at 19% until after Brexit.
On local issues, it advised the chancellor to eschew a “sugar hit” measure to grab headlines, and instead focus on increasing investment in Norfolk’s infrastructure and digital connectivity. In particular it drew attention to long-planned projects such as further improvements to the A47, the Great Yarmouth Third River Crossing and the “missing link” between the new Norwich Northern Distributor Road and the A47 as being vital to the region.
Suffolk Chamber’s priorities include action to encourage investment, particularly in the light of increasing uncertainty surrounding Brexit negotiations and the stability of the Government, such as a temporary increase in the Annual Investment Allowance (AIA) from £200,000 to up to £1,000,000 for three years.
It is also calling for an end to the automatic uprating of business rates for the next two years and bringing forward the business rates multiplier from RPI to the lower CPI, together with the removal of all plant and machinery from business rates valuation
The chamber also wants the delivery of major infrastructure projects of benefit to Suffolk to be accelerated, including improvements to the A14.
John Dugmore, chief executive of Suffolk Chamber, said: “According to our survey data, the Suffolk business community remains resilient and keen to take advantage of each and every opportunity that the future offers.
“However, to ensure that the business community has the confidence that the Government understands its need for some measure of certainty, we are looking to the Chancellor to be bold and back improved investment incentives, dilute the damaging up-front costs that business is saddled with and put the foot on the accelerator in starting key infrastructure projects sooner rather than later.”
Meanwhile, the Federation of Small Businesses wants the chancellor to commit to matching EU funding allocations post-Brexit while protecting investment reliefs. Its Budget submission calls on the chancellor to rule out any new business tax increases and maintain investment incentives, including Entrepreneurs’ Relief, the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
• Is the tone important?
The chancellor used a Sunday newspaper interview to reject comparisons to Eeyore, insisting he is an optimist in a bid to soothe Brexiteers who see his gloomy outlook as a potential obstacle to Britain leaving the EU with a good deal.
He will have to prove that in the House of Commons under difficult circumstances, in a long speech that will be littered with dry facts and figures and with some Leave-backing MPs on the benches behind him perhaps less ready to offer vocal support.
• What about the economy more generally?
The fact that prices are rising faster than wages, giving people a real-terms cut in earnings, frames the Budget.
Mr Hammond has predicted rising inflation, widely blamed on Brexit, will turn around in the New Year, but has already announced a string of measures to boost productivity and create higher-skilled, higher wage jobs.
These include a relaxation in regulations for the testing of driverless cars, a £1.7bn boost for transport within cities, and high-tech investment in artificial intelligence and 5G mobile networks.
• Will Mr Hammond and Mrs May come out unscathed?
Budgets can unravel as the detail is unpicked in the days after the set-piece speech, which is often precision-engineered to deliver positive headlines.
The stakes are too high for Mr Hammond to make any mistakes this time.
Any slip-ups like his quickly abandoned Spring Budget plans to hike national insurance contributions for the self-employed could spell the end of his chancellorship.
That in turn could further weaken Mrs May going into a crucial phase of Brexit negotiations.
While it may not be possible to please everyone, Mr Hammond must at least do enough to avoid a row with his own party.
He will hope his prediction that the Budget marks a “turning point” comes to fruition.