Philip Hammond has delivered his first Autumn Statement as chancellor. These are the key points.
- Growth will be 2.4% lower than it would have been, thanks to the Brexit vote.
- GDP is expected to increase by 2.1% this year – up from an earlier forecast of 2%.
- But growth will be sharply lower, at 1.4%, in 2017, than the previous outlook of 2.2%.
- Growth will also be down in 2018, but will recover in the following years.
- £23bn fund for innovation and infrastructure over the next five years “investing today for the economy of the future”.
- £1.1bn for English local transport networks, £220m for traffic pinch points on strategic roads, £450m for railways and £390m for low emission and connected autonomous vehicle development.
- £1bn for digital infrastructure, plus tax breaks for fibre network roll-out.
- A £2.3bn housing infrastructure fund to deliver infrastructure for up to 100,000 new homes in areas of high demand.
- A further £1.4bn for 40,000 additional homes.
- £1.8bn for English regions from local growth fund.
- Borrowing will be higher every year thanks to lower growth, pressure on tax revenues and spending measures announced in the statement. The total for the next five years is more than £100bn higher than in the previous forecast.
- The Government is no longer seeking to deliver a Budget surplus by 2019/20 “in view of the uncertainty facing the economy, and in the face of slower growth forecasts”.
- Three new fiscal rules: returning public finances to balance as soon as possible in the next Parliament; debt as a proportion of GDP to be falling by the end of this Parliament; a cap on welfare spending.
- Additional borrowing to fund investment in infrastructure and innovation and tax and spending measures to fund other new policies.
- No change to previously-announced spending cuts to Government departments and £3.5bn efficiency drive still in place – but £1bn in savings found can be reinvested in priority areas.
- Exception made for prisons, which will receive extra funds for 2,500 additional officers.
- Commitments to key public services and defence, overseas aid budget, and “triple lock” for pensioners will remain.
- Welfare spending previously “spiralled out of control” but has now stabilised and there will be no further savings in this Parliament beyond those previously announced.
- Universal Credit taper falls from 65% to 63% – effectively a targeted tax cut worth £700m in 2021/22 to those on low incomes. It’s designed to increase incentives to work and help three million households. The rate affects how much is clawed back from some workers on in-work benefits.
- National Living Wage to rise from £7.20 to £7.50 from April, a pay rise worth more than £500 to a full-time worker.
- A new market-leading savings bond through National Savings and Investments, with an interest rate of 2.2% and a term of three years. Savers will deposit up to £3,000 and two million expected to benefit.
- Government to “look carefully” at energy markets to make sure they are fair.
- Ban on letting agent fees.
- Tax-free personal allowance to rise to £11,500 in April and will still go up to £12,500 by the end of the Parliament “despite the challenging fiscal forecasts”.
- Measures to clamp down on tax avoidance – including those announced in March’s Budget – to raise around £2bn over the five-year period.
- From April 2017, employers and employees using “salary sacrifice” schemes will pay the same tax as anyone else.
- Insurance premium tax to rise from 10% to 12%.
- Government will stick to plans to cut corporation tax from 20% to 17%.
- Fuel duty rise will be frozen for the seventh year in succession, saving the average car driver £130 a year and the average van driver £350.
- Legislation next year to end compensation culture around whiplash motor insurance claims, saving drivers £40 a year in premiums.
- No more autumn statement from next year – instead there will be an autumn Budget from 2017 and a spring statement from 2018, though this will be a response to latest OBR forecasts and not a major fiscal event.