In his Autumn Statement, the Chancellor, George Osborne, has said the country is growing faster than any other major economy thanks to his policies. Britain, he claimed, would be back in the black within five years but the job of recovery was “not yet done” and money was still tight. As expected, millions would have to wait longer before they got a state pension, all to “keep track with life expectancy” something that would save future taxpayers £500bn.
In his 50-minute speech, Mr Osborne stressed that he wanted a “responsible recovery” and warned of “more difficult decisions” to come on spending. He acknowledged that the effects of the economic crash on family budgets were still being felt, but he insisted that the hard work of the British people was paying off and “we will not squander their efforts.” He insisted that “the plan is working – it is a long-term plan for a grown-up country. The job is not yet done but Britain is moving again – let’s keep going.”
The Chancellor had good economic news – the economy is expected to grow 1.4% this year – double the 0.6% predicted at the Budget in March. The Office for Budget Responsibility now predicts 2.4% growth next year up from its previous estimate of 1.8%. The level of borrowing has fallen more than forecast and forecasts for employment have been revised up. However, Government Departments in Whitehall can expect to face a further series of cuts over the next three years – £1bn in total.
As expected, Mr Osborne announced that offshore wind farms would receive Government support instead of onshore ones and he also announced plans to invest £375bn in energy, transport, communications, and water projects. He also announced that next year’s planned rise of 2p a litre for fuel would be scrapped
For Scotland, the Chancellor said that the government’s budget here would increase by £308m over the next two years. Unlike departments South of the Border, those run by Holyrood would face cuts of less than 0.2%. However, the Scottish Finance Secretary, John Swinney, argued the increase failed to make up for earlier cuts and said that the Autumn Statement showed the “damaging economic consequences” of remaining within the UK.
The reaction of business was positive. Andy Willox, the Federation of Small Businesses’ (FSB) Scottish policy convenor, said that Scotland’s small businesses would welcome many of the measures outlined this morning by the Chancellor. “By refusing to increase fuel duty,” he said, “he has recognised the big impact the price at the pumps has on independent enterprise and the economies of remote communities. “By abolishing employers’ National Insurance Contributions for employees under the age of 21, the UK government will give both firms and young people’s job prospects a boost. To have the maximum impact in Scotland, we must see our education system producing more young people with the right skills for the modern workplace. We must also ensure that we tackle the other barriers to small businesses recruiting.”
By contrast, Grahame Smith, Scottish Trades Union Congress (STUC) General Secretary said there was “nothing today’s statement to help embed the recovery and create decent jobs. While recent growth is largely attributable to consumer spending, real wages continue to fall at rate unprecedented in modern times. Yet the Chancellor brazenly adopted a triumphalist tone just as the Office for Budget Responsibility (OBR) revised down its forecast for wages growth. He continues to ignore the glaring disconnect between growth and living standards.
“Business investment,” he added, “is contributing very little to growth and remains well below pre-recession levels. Net trade made a negative contribution to growth over the last quarter. This is not the ‘rebalancing’ promised by the Chancellor in 2010. Additional departmental cuts were announced although the Institute for Fiscal Studies (IFS) and others have questioned whether it will even be possible to implement previously announced cuts.”
Philip Hogg, Chief Executive of industry body Homes for Scotland, acknowledged that the Chancellor had drawn attention “to the weakness of housing supply and measures being implemented to address supply-side constraints such as the issuing of £1bn in loans to unblock large house developments. Builders face the same difficulties throughout the UK so we look forward to learning whether this loan facility applies in Scotland or, if not, what consequential funding is to be received north of the border. With yesterday’s Scottish housing statistics showing continuing falls in output and demonstrating the fragility of any market recovery, we hope that councils will look to take every opportunity to support the delivery of new homes in their areas.”
And in his first thoughts on the Autumn Statement, Graeme Brown, Director of Shelter Scotland, warned that the Chancellor’s optimism about the recovery “won’t be shared by the families struggling to pay their rent or mortgage, or the 4,574 children who’ll face homelessness this Christmas in Scotland. Beyond Westminster, thousands of people will be wondering if today’s announcements mean that their family faces yet another cut to the money they have to live on.”