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Post Brexit Autumn Statement

How will the autumn statement change Britain? Our panel’s views ... Our writers give their reaction to chancellor Philip Hammond’s first autumn statement

Burgess COMMENTARY

Peter Burgess

How will the autumn statement change Britain? Our panel’s views ... Our writers give their reaction to chancellor Philip Hammond’s first autumn statement Play VideoPlay Current Time 0:00 / Duration Time 7:25 Loaded: 0% Progress: 0% FullscreenMute Philip Hammond’s autumn statement - video highlights

Matthew d’Ancona: Grim forecasts against bleak Brexit backdrop Matthew d’Ancona.

Two forces bore down implacably upon Philip Hammond’s first autumn statement: the legacy of George Osborne and the prospect of Brexit. There will be no end to the austerity that defined the last chancellor’s tenure, no doctrinal rejection of fiscal conservatism. Having ditched their pledge to restore the public finances to surplus by 2020, the Tories have simply shifted the target date to 2025.

Yet the grim forecasts presented to Hammond by the Office for Budget Responsibility amount to a bleak backdrop for the EU negotiations: growth down by 2.4%; borrowing up by £122bn (according to the Resolution Foundation’s instant sums); and national debt climbing to 90.2% of GDP in 2017-18. Small wonder that the chancellor has awarded himself “fiscal headroom” to cope with the unknowable pressures that will attend and follow Britain’s departure from the EU. His head is already grazing the ceiling.

Live Autumn statement: OBR says Brexit impact could be even worse than feared - live

Rolling coverage and analysis as chancellor Philip Hammond presents his first autumn statement Read more

There were a handful of measures aimed foursquare at those “just about managing” – the so-called Jams: the increase in the National Living Wage, the continued freezing of fuel duty, a renewed commitment to raise the personal tax allowance to £12,500, the promise of more affordable housing, the amendment of the universal credit taper. But Hammond’s passion is productivity, which he believes holds the key to economic prosperity, equitably spread, in the decades ahead.

Whether he will have the fiscal scope to realise this supply-side vision depends in large measure upon the transformative impact of Brexit. But one thing the chancellor does not have to worry about – at least for now – is Labour. John McDonnell’s response was no more than a litany of aggressive soundbites (“six failed years”, “no answers”, “no vision”). It underscored the core reality at the heart of contemporary politics: that the government faces supremely testing times, and that the government will continue to be Conservative.

Martin Kettle: It’s complicated – and it’s bad news Martin Kettle.

Philip Hammond is absolutely right to abolish the autumn statement. It has always been a superfluous event in the parliamentary calendar. And it has always been much more of a political event than an economic one, unlike the budget, which is both. In 2013 I set out the history and the detailed reasons for getting rid of it. Now it’s going. Good riddance.

Paradoxically, however, today was just about the one day when something like a budgetary statement was in order from the chancellor. That’s because of one thing alone: Brexit. Hammond’s statement was a chance to make a first big assessment of the impact of Brexit on the UK economy. The verdict is, without question, bleak. Growth is down, borrowing has to rise, and the dream of a surplus has been deferred to “as soon as practicable”, ie never.

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Philip Hammond: I will abolish autumn statement – video

Hammond’s other big problem is that the tax take is falling. All those references in his speech to sustaining the tax base are Treasury code for the fact that Britain has continued to become a low wage, tax avoiding and increasingly unequal economy since 2010, in which there’s not enough public money to pay for public spending. That demands either more taxes or less spending, or both. Hammond has allowed himself to be boxed in on both options. But he gave a very important signal that pensions – and, less importantly in budgetary terms, the aid budget – will be cut after 2020, and the pension triple lock will be broken.

But this was an autumn statement all about Britain’s uncertain future after the dreadful decision to leave the EU. Hammond doesn’t know where this will end up, and nor does anyone else. He is sailing in the dark. The immediately apparent price tag is perhaps £122bn, but that’s just for starters. At one stage in his speech, Hammond made the light-hearted remark that what he was saying was “complicated, but it’s good news”. In terms of Brexit, the situation is the exact reverse: it’s complicated, but it’s bad news.

Gaby Hinsliff: Nothing for those barely managing Gaby Hinsliff.

Philip Hammond has never been about the showbiz. If chancellors traditionally aim for the reassuring qualities of an old-fashioned bank manager, his manner is more management consultant brought in to shut their old-fashioned branches down and move everything to a call centre.

But boring, he is not. He’s already proved too exciting by half for many Tory Brexiters, infuriated by his refusal to pretend that life outside Europe will be the breeze they claimed. (You could feel them tensing even as he told the Commons that Brexit had changed the course of history; these days they take every downbeat economic forecast as a personal insult bordering on treason). If his speech glossed tactfully over the worst of it, the bald figures don’t lie – and they were enough to make you long for good old boredom, for the days when nothing much happened in politics.

Philip Hammond admits Brexit vote means £122bn extra borrowing Read more

Borrowing up, growth down, public spending shrunken and a “Brexit black hole” of £122bn. That’s a lot of things, but boring ain’t one of them. Hammond dutifully did his bit for the “just about managing” average earners Theresa May promised to help – softening Osborne’s cuts to universal credit, freezing fuel duty, raising the minimum wage and hammering middle-class workplace perks to help fund it – but there was nothing for those barely managing at all thanks to a threadbare social care system and creaking NHS. Austerity may have been ditched, with the increasingly mythical goal of a budget surplus booted into the distant future, but the pain associated with it may simply be moving elsewhere.

In response, John McDonnell started confidently enough; his line that the so-called Jams are just an electoral demographic to vote-grubbing Tories but are Labour’s “friends, our neighbours, the people we represent” had real sting. But before long, MPs’ attention was wandering. These may once have been Labour’s people, but it remains unclear what Labour can offer them now besides an anguished critique.

Aditya Chakrabortty: 2017 will be particularly painful Aditya Chakrabortty.

Two big things have been revealed this afternoon that will shape all of our lives for years to come. The first is the cost of Brexit. The second is how economically different Theresa May will be from David Cameron and George Osborne. The short take is that Brexit Britain is going to be a poorer, more heavily indebted country than even the experts believed even a few weeks ago. Yet faced with that horrible prospect May and Philip Hammond will carry on with nearly all of the spending cuts planned by Osborne.

Austerity was originally meant to be over within a single parliament of five years. It will now last for up to 15 years. It will certainly carry on into a third parliament. I will come on to figures in a second, but the big political question I have to ask after watching Hammond’s speech is how long he will stick it out as austerity chancellor. Either the austerity will go, or he will.

Some of the numbers you’ll know: a Brexit black hole of £122bn. That will not be because of Whitehall profligacy but because our national income will simply not be growing as fast as predicted before 23 June. Taxes will drop. However you voted in that referendum, Brexit constitutes the second major economic shock that Britain has suffered within a decade. It will not be as dramatic as the banking crash of 2008 – but then look at how that played out economically and politically and imagine what the consequences of this slowdown are likely to be.

One thing is clear: 2017 will be particularly painful. Growth sharply down, employment and wage increases tailing off, the price of food and fuel shooting up. Put all that next to the fractious politics: the arguments over Brexit (led by none other than Nigel Farage, for heaven’s sake) and the abuse already being heaped on ethnic minorities, people with disabilities, anyone judged to be “different”.

The puzzle here is how Hammond and May have chosen to respond. Because what they’ve given us is Continuity Osborne. All right, so the fiscal rules have been dropped. No surprise there, since Osborne had already ditched or missed all three of the fiscal rules he set himself in 2015. But Hammond’s replacements do head in the direction. He will aim to balance the books, even if by some unspecified date. As we saw today, any giveaways will be tiny. And the vast majority of the cuts will carry on just as Osborne intended.

Even before Osborne got the boot, it was clear that austerity had not worked – delivering a low wage, low-productivity workforce and an economy almost starved of investment, debt levels remaining high and a recovery reliant on house prices. Yet Hammond is sticking to it. Is that what the 17 million people who voted for Brexit really wanted? Is that what May promised with her repeated pitch of “I get it”? And why will it work this time against an economic backdrop even more uncertain than the one Osborne inherited? My bet is, it won’t.

Project Fear was project truth. There it is, in that £122bn black hole suddenly opened beneath our feet, with grim news in the autumn statement of slower growth, higher inflation, weaker tax take and soaring borrowing. That’s what Brexit really means, before it’s even begun.

The chancellor’s tombstone aspect is well suited to warning the country of the path we have set out on. This is the day history books will mark Britain’s self-inflicted downward trajectory, as the Office for Budget Responsibility says the referendum decision is causing 2.4% lower growth.

But within that wretched prognosis, within the fiscal straitjacket the government has chosen, politics continues as usual. Never forget the multitude of tax-and-spend choices a government can make, whatever the circumstances. The choices of the last six years are unchanged, the brunt borne by the bottom half, while the top half – more likely to consist of Tory voters – is protected.

Expect to hear less about the Jams from Theresa May, who promised: “When it comes to tax, we’ll prioritise not the wealthy but you.” Who? The £4.5bn income tax thresholds go almost entirely to higher earners. Cuts in universal credit have been only slightly eased. The size of the state continues to shrink.

Despite his sombre demeanour, the chancellor is either a fantasist or a faker on spending. No more for the NHS or social care? He will get a rude awakening as both services implode for lack of beds and staff as units and homes close. Ill-timed new NHS re-disorganisations around the country will see outbreaks of protest, not least from Tory MPs. Imagine what some of Hammond’s £12bn cut in corporation tax might have done to ease the pressure.

The great political question is whether this financial squeeze and eruptions within health and social care remind people of the big red bus lie of £350m a week for the NHS? There may be a wave of indignation against the Brexiters, who lied about what the impact might be.

Polly Toynbee: The chancellor is a fantasist or a faker on spending Polly Toynbee.