Autumn Statement 2016: All the reaction

Political stakeholders

Responding to Chancellor Philip Hammond’s first Autumn Statement, Labour’s Shadow Chancellor John McDonnell said that the “long-term economic plan had failed”, claiming that the Chancellor’s statement meant “more taxes, more debt and more borrowing”. Attacking the record of the Conservatives in the period since 2010, McDonnell bemoaned “six wasted years” of austerity, claiming that the new leadership in place since Theresa May took over as Prime Minister in July had “no vision [and] no leadership”.

Referencing internal cabinet battles on the issue, he implored the Chancellor to “stand up to the Prime Minister and the extreme Brexiteers in the cabinet” and ensure full access to the European Single Market - thus ensuring the best deal for British jobs and prosperity. 

The Shadow Chancellor claimed that those who are “just about managing” would get no relief from the statement. He criticised a smaller-than-expected increase in the living wage, cuts to in-work benefits at a time of rising prices and continued cuts to public services. He also referenced the fact that the Health Select Committee had called the Chancellor’s claim of a £10billion increase in NHS funding “misleading and incorrect”, with the real figure less than half-claimed.

Mirroring McDonnell’s criticism, SNP Spokesperson on the Economy Stewart Hosie bemoaned the levels of investment announced by Philip Hammond stating that there was an “almost complete absence of fiscal stimulus” to match the monetary stimulus carried out by the Bank of England in the period since the financial crisis.

He also criticised the “glib references” and “deflection” by the Chancellor to the “elephant in the room – a hard Brexit”, like McDonnell calling for a plan to ensure access to the Single Market. On Scottish issues specifically, he called for action on Scottish Limited Partnerships which are reportedly being used by criminals for tax evasion and money laundering purposes.

Liberal Democrat leader Tim Farron claimed, in light of the “£220bn Brexit black hole”, that it was the government that was “just about managing”. Meanwhile, joint leader of the Green Party Caroline Lucas criticised the government for “failing to mention climate change even just once” in the hottest year on record.

Business and unions

Carolyn Fairbairn, CBI Director-General called the statement “a pragmatic down payment on future productivity growth”, stating that “emphasis on R&D, housing and local infrastructure will help businesses in all corners of the UK to invest with greater confidence for the long-term, during turbulent times”. However, Fairbairn did urge action from the government on infrastructure by calling for “clear, deliverable timetables” for “tarmac, tracks and telecoms”.

The FSB was cautious in its response calling the statement “modest and medium-term”. Mike Cherry, National Chairman at the FSB, welcomed the Chancellor’s announcements around rates relief for small businesses and increases investment in spending, but warned more would have to be done to boost the economy next year in the face of Brexit, stating that “small firms want to grow, export, innovate, recruit and be more productive - and they need to know as soon as possible the framework they will operate in.”

The IOD called the statement “sensible and sober”, while noting the high levels of borrowing outlined by the Chancellor. It also called for more “investment boosting measures”.

However, Frances O’Grady General Secretary of the TUC was critical of the statement, pointing to OBR forecasts that, by 2020, the average wage would be £1,000 lower than predicted in this year’s budget. She also criticised public sector pay freezes and the partial restoration of cuts to universal credit, while cautiously welcoming the increase to the national minimum wage. O’Grady stated: “These are political choices. The Chancellor has chosen tax cuts for corporations and the better-off, rather than putting money in the pockets of ordinary working people.”

Third parties

Director of the Institute for the Fiscal Studies Paul Johnson called the stagnation in growth of real earnings “terrible in historical terms” and stated that “we have already had seven or eight years essentially with no growth in real earnings…we may well end up by the end of this decade with earnings no higher than they were at the beginning of this decade. We have frankly never seen that before certainly not since the end of the last war."

Meanwhile, Office for Budget Responsibility Chairman claimed that, with CPI inflation projected to peak at 2.6% in Spring 2018 and productivity and wages projected to fall, that consumers will be 3% poorer and will therefore “feel the squeeze”.

Neil Thomas

H+K Admin

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