While it might still be early days for Philip Hammond in his role as Chancellor, the post-Brexit climate has made sure he hasn’t had the smoothest of starts. Having endured criticisms from his own side that he is “arguing like an accountant seeing the risk of everything rather than the opportunity” and tensions with Number 10 about the Government’s Brexit strategy, the Autumn Statement was Hammond’s moment in the spotlight. He may not have the flair and showmanship of Osborne but this was a chance for him to show that the Government has a confident and competent hand on the wheel, as it prepares to steer through the uncertainty of Brexit negotiations.
With so many of the policy announcements leaked ahead of the Statement there were few surprises on the big day. Trailed as a budget for infrastructure and those people who are ‘Just About Managing’, measures included an increase in the minimum wage to £7.50, allowing workers on state benefits to keep more of their benefits whilst working, raising the tax-free personal allowance to £12,500 and a new ‘market leading’ savings account from NS&I.
Hammond retains the pensions triple lock guarantee, for now, though there has been growing pressure to look at arrangements around pensions. The amount that people can save into a pension for those who have already started to draw down their savings has been reduced from £10,000 to £4,000. With the Cridland Review into the State Pension Age expected to submit its report in the New Year, there is growing anticipation that the Government will need to announce a further increase in the state pension age together with reform of the current tax relief regime.
A projected slowdown in economic growth had been expected, while the country continues to deal with the uncertainty surrounding Brexit negotiations. Hammond had already ruled out eliminating the deficit by 2020, but the projected borrowing figures between now and 2021 were eye watering statistics about what the Government will need to do to support the economy as it transitions to a post-Brexit world. High profile supporters of Brexit, such as Jacob Rees-Mogg MP, a member of the Treasury Select Committee, heavily criticised economic projections from the independent Office for Budget Responsibility (OBR) as being “overly gloomy”. The reality is that the OBR has very little to go on without further direction from the Government as to its terms for negotiation and, just as importantly, how the EU will reciprocate.
I must confess a sharp intake of breath when, towards the end, Hammond announced that this would be his last Autumn Statement. Given the reported tensions with May, and other cabinet colleagues, surely he wasn’t about to walk away now? No. The rather dry Mr. Hammond had us there, announcing that going forward there would be a single Budget in the autumn with an update on the state of the economy in the spring. It makes perfect sense and could lead to better policy-making, encouraging the Chancellor to think more carefully about what measures to introduce and when, rather than dithering knowing that they have a second shot at in the autumn should they feel the need to delay.