Politics

Autumn statement: seven promises you might have missed

The debate next week will be dominated by economic forecasts, but here are some crucial other points to look out for

November 21, 2014
George Osborne faces challenges on all sides © Number 10
George Osborne faces challenges on all sides © Number 10
The Chancellor will make his final Autumn Statement before the election on 3 December. The most notable part will be the latest economic forecasts from the Office for Budget Responsibility (OBR) and their implications. Is the deficit finally coming down? What scale of cuts will still be needed in the next Parliament to meet the Government’s target of closing the deficit entirely? This year on top of the usual forecasts the Chancellor has asked the OBR to assess the Government’s performance in keeping to the new welfare cap. He has also promised an updated Charter of Budget Responsibility.

Before policy watchers like me get stuck into the high-level fiscal material next week, this blog is a reminder of the other promises the Chancellor made at the Budget earlier this year of issues he would resolve at the Autumn Statement. I’ve counted seven.

Pay cuts ahead? The Chancellor said when presenting the Budget that the government would provide details of a new efficiency programme at the Autumn Statement. This will cover 2016-17 and beyond. The Government claims that £20bn of its cuts have been achieved through efficiencies such as cutting down on procurement spend and limiting major projects. Identifying more such savings means that right now, departments will be in final discussions with the Cabinet Office on future cuts to things like back office functions. It’s not impossible that the Chancellor might unveil a policy of public sector pay restraint that lasts for all of the next Parliament. Government has been scoring savings on pay as efficiencies and pay is by far the biggest line item for many departments.

Places to call home? At Budget the Chancellor promised that by the time of Autumn Statement he would quantify the “housing and growth ambitions” the Government has for the use of surplus public land. The open data available on this land shows some large packets near urban centres that could very feasibly be used for development. Danny Alexander, the Chief Secretary to the Treasury, gave some hints on this theme at the Liberal Democrats party conference. So the Autumn Statement might identify the number of new homes to be built and allocate some funding to make it happen.

Pensioner's special This year’s Budget was dubbed the “Budget for savers.” One of the measures announced was a new “pensioner bond,” a savings instrument to be made available to people aged over 65 by the Government itself at favourable interest rates. What the Chancellor said at Budget was that, based on the latest market conditions, the interest rates and individual investment limits will be announced at Autumn Statement.

Kicking the can? Oil prices have declined sharply since the Budget, bringing into perspective the promise the Chancellor made back then to announce an updated tax regime for oil and gas development in the North Sea. The stated objective of looking afresh at the tax regime is to “incentivise recovery” from fields that are more expensive to extract from than those tapped in the early days. That hints at lower taxes but even those may not be enough to keep companies drilling when prices have fallen and there are cheaper sources of oil and gas elsewhere in the world. This feels like an issue on which the Chancellor has to make a big move if he wants it to be effective in boosting extraction—or, failing that, he may use the changing context of the oil price to kick the can down the road.

Simpler taxes The other promise on tax is to respond to the Office for Tax Simplification’s recommendations for improving the competitiveness of UK tax administration. Decoded, that means setting out ways in which to simplify the system. There are a range of detailed proposals for Corporation Tax and VAT but the most eye catching recommendation is to “move towards a single income tax and National Insurance Contributions system.” The Chancellor has indicated support for this ambition in the past. It’s possible that he may have more to say on it at the Autumn Statement.

First they giveth... The Budget announced improved support for childcare costs for people receiving Universal Credit. This was widely welcomed by campaign groups. But the other boot is due to drop at the Autumn Statement. The Government said previously that the more generous allowances for childcare will be paid for by cuts elsewhere in entitlement to Universal Credit and those are supposed to be announced now.

Stay in school Finally, the Budget promised that at Autumn Statement the Government would set out its “ideas” for increasing participation in postgraduate study. While fee loans are available to all entrants at undergraduate level, meaning that there is no upfront cost for students, the same is not true for postgraduate courses. This may be about to change. But it’s not often that a Budget document promises “ideas” rather than “proposals” or “plans.” This may suggest that the Government will stop short of a firm policy commitment though expectations in the higher education sector about a significant announcement are now running high.