Edelman Briefing: Autumn Statement 2016 by Edelman

AUTUMN STATEMENT N OV E M B E R 2 016

IT’S HAMMOND TIME The air was thick with anticipation in the Commons as Philip Hammond stood up to deliver his first Autumn Statement as Chancellor of the Exchequer. Government insiders were enthusiastically pre-briefing a ‘reset moment’ in Conservative messaging, while anxious Tory MPs were pondering – not too subtly – whether the new Chancellor could fill his predecessor’s rather big shoes. The stakes were high: the old order had successfully steered the Conservative Party to two General Election victories, while business – which has so far been kept at arm’s length – has been chomping at the bit to finally receive some clear policy direction post-Brexit. They needn’t have worried. Within minutes, thin lips had spread into wry smiles. The Labour benches were stunned into silence by the sound of Tory tanks rolling relentlessly onto their lawn. Hammond clearly delighted in putting some long-awaited flesh on the bones of “a country that works for everyone” as he tactfully sidestepped the OBR’s gloomy forecasting to announce plans to scrap achieving the Budget surplus. Instead he announced a new fiscal charter that would freeze welfare cuts and support those who are just about managing (“JAMs”, apparently). What will business make of it all? A new National Productivity Fund to prioritise infrastructure and innovation, cuts to corporation tax and extra money for research & development will all be seen as a welcome sign of confidence in Great Britain PLC as we gear up for Brexit. The decision to axe the Autumn Statement in favour of one annual fiscal event effectively halves businesses’ annual opportunities to secure policy change, but the loosening of the Exchequer’s purse strings may make engagement more fruitful in the long-term.

Indeed, there was something for more or less everyone as the Chancellor rattled off a list of measures for the NHS and emergency services, savers, small-business owners, first-time buyers, and women’s & military charities. Drivers were given their seventh fuel duty freeze in a row and City Deals were awarded to Scotland and Wales. Meanwhile, a conspicuously diminished George Osborne looked on wistfully from the backbenches. There will be those who argue that the old narrative wasn’t broken enough to deserve fixing. It is certainly true that the Conservative Party secured its first majority in thirty years based on a mandate to carry on with responsible austerity and finish the job of “fixing the roof while the sun is shining”. But we might ask the question of whether the Brexit vote and the perception of the new Tory Government lurching to the right (or perhaps to the past) demands that Ministers present a new, more generous vision. After all, with a Labour Party that seems determined to drive itself to oblivion, what’s the worst that could happen? To all those, myself included, who feared for a Conservative Party moving away from its Long-Term Economic Plan, the message today was clear. Stop, relax: it’s Hammond time.

Emily Poole, Account Director Emily was a Special Adviser in David Cameron’s Government.

WINNERS

LOSERS Tech start-ups

Letting agents & landlords

£400m is going to a Venture Capital Fund, which will support tech start-ups’ growth and prevent them from being snapped up by larger companies before they get a chance to make it big.

No longer will letting agents be able to charge upfront fees to tenants. Instead, the cost is going to be shifted to landlords. But will the cost simply be passed on to tenants in the form of higher rents?

Drivers

Employees who like their perks

A clampdown on fraudulent insurance claims for whiplash is set to save drivers £40 a year on their insurance premiums, while fuel duty is to be frozen for the seventh year running, saving the average driver another £130 a year.

Services which form part of salary sacrifice schemes such as gym membership will be hit. Exemptions will apply for pensions, childcare vouchers, cycle to work schemes and low-carbon company cars.

Transport

Cold callers

Investment in regional transport is going to get a £1.1bn boost as Hammond tries to get the economy moving: £220m for traffic pinch points, £450m to introduce digital signalling to increase capacity on the railways and £390m to support low emission cars.

The Government will look into banning cold calling of pensioners, whom Ministers say are a vulnerable group who can be plagued by requests.

Digital and innovation

The Autumn Statement

Britain not only moving, but better connected: £1bn for digital infrastructure to improve business connectivity and the rollout of 5G; 100% business rate relief to support the expansion of new fibre optic infrastructure for homes and businesses.

Alas, poor Autumn Statement. Hammond abolished it, moving the Budget from the Spring to the Autumn. In future there will be a Spring statement reacting to the OBR’s projections, beginning in 2018.

STAKEHOLDER REACTION Chuka Umunna, Labour MP and Chair of Vote Leave Watch

Robert Peston, ITV Political Editor

Absolutely no sign whatsoever of a path to Boris’ promised £350m extra per week for the NHS in the Autumn Statement.

So to be clear, Brexit impact on public finances is a deterioration of £220 billion by the end of the Parliament. Worse than feared.

Gaby Hinsliff, Guardian columnist

Laura Kuenssberg, BBC Political Editor

The rabbit out of the hat is that there is no longer a hat.

Hammond claims softening of Universal Credit is a ‘targeted tax cut’ – stretching it a bit …

Gary Lineker, Match of the Day host

Faisal Islam, Sky News Political Editor

Philip Hammond: “I’ll increase the supply of affordable homes, by selling off social housing at a discount.”

£350m a week? Post Brexit vote, sterling slide has INCREASED EU payments by £15 million a week, or £800m a year, says OBR.

FOR MORE INFORMATION, PLEASE CONTACT Gurpreet Brar 0203 047 2466, gurpreet.brar@edelman.com