Autumn Statement 2016.

If you were caught up in the news today which saw President-Elect Donald Trump tweet his desire to see Nigel Farage (the ex-ex-UKIP leader) become the UK’s ambassador to the US, you might be forgiven for thinking this year of political topsy-turvy refuses to go out nicely. (Mr Farage spoke of his being ‘flattered’ when asked about the tweet. Needless to say, ‘flattered’ probably wasn’t how Ms May felt.)

However, after all the tension and excitement of the past number of months, UK politics actually does seem to be slowly but surely returning to normal. We have had ministerial announcements, the battle cry of ‘Brexit means Brexit’, policy u-turns, Jeremy Corbyn staying as Labour leader, and UKIP resignations. Even in my part of the world, politics seems to be returning to normal. We have had ‘Brexit means Brexit’ from the DUP, calls for a border poll from Sinn Féin, Charter NI funding rumbling on, calls to resolve the legacy funding stalemate, and the promise that academic selection is staying put.

A sign of a return to normalcy might be evidenced by the annual Autumn Statement due to be delivered tomorrow, Wednesday 23rd November. Chancellor Philip Hammond will establish the state of the economy, and provide an annual update of government plans for the economy. It will be the first test for Mr Hammond since being appointed as Chancellor, and the first test for the UK economy post-European Union referendum.

This time last year, then-Chancellor George Osborne delivered an Autumn Statement was was widely hailed as the first step towards winding down austerity policies. What merry days they were, before Brexit and the disorganised chaos that is the Cabinet’s response to Brexit.

Last year, Mr Osborne announced that the planned £4.4bn cuts to tax credits would be watered down, with changes to income thresholds due in April 2016 to be abandoned. The Office for Budget Responsibility said public finances were set to be £27bn better off by 2020 than previously forecast. Moreover, it was anticipated the UK Goverment would borrow £8bn less than forecast, as it aimed to secure Mr Osborne’s cherished £10.1bn budget surplus by 2020.

Alas, those days are gone. (So to is Mr Osborne, from the Cabinet.)

Doing the interview rounds over the past weekend, the Chancellor took to warning that an unprecedented level of uncertainty surrounding Brexit has led to forecasts which predict slower growth for the UK and an “eye-wateringly” large debt. Speaking to the BBC, Mr Hammond admitted that the UK Government will not have any clarity on the UK’s future trading arrangements after it triggers Article 50 to begin the Brexit process.

Campaigners have called on the Chancellor to reverse cuts to Universal Credit made by George Osborne, which critics have said will leave working families up to £1,300 worse off by 2020. Mr Hammond said the priority for the UK Government would be to help so-called Just About Managing Families (charmingly known as JAMS). He accepted there were “people who work hard and by and large do not feel that they’re sharing in the prosperity that economic growth is bringing to the country”. As such, he was keen to stress the Government wanted to ensure prosperity is shared across the country, and across income distribution.

Mr Hammond spoke of slowing growth and a sharp challenge to public finances, seemingly keen to manage expectations:

“We have to maintain our credibility – we have eye-wateringly large debt, we still have a significant deficit in this country and we have to prepare the economy for the period that lies ahead.

“I want to make sure that the economy is watertight, that we have enough headroom to deal with any unexpected challenges over the next couple of years and most importantly, that we’re ready to seize the opportunities of leaving the European Union.”

Rolling around to ITV on Sunday morning, Mr Hammond added:

“We have to wait and see what inflation figures look like when we get the OBR’s (Office of Budget Responsibility) report on Wednesday, but I think looking at the consensus of forecasts, it’s clear that inflation is back.”

Generally though, despite gloomy prose worthy of Poe, Mr Hammond refused to be drawn on his plans.

Mr Hammond has already revealed the Autumn Statement will contain a £1.3 billion improvement package for UK roads. That will include £1.1bn to reduce congestion and upgrade local roads and transport networks, and £220m to tackle ‘pinch points”‘ on motorways and major A roads in England.

The icing on the cake comes as the FT suggested the UK might face a £100bn black hole in public finances over  its withdrawal from the European Union.

When pressed about continued calls for the government to say more about its aims in Brexit negotiations, Mr Hammond noted the “commendable discipline” from other European leaders in not discussing their opening positions. He submitted that Prime Minister Theresa May must be given the same “flexibility”. He added that he was “surprised” by how much the Cabinet was coming together around a “view of the opportunities and the challenges ahead”.

The general message is that Mr Hammond is not a Mr Osborne. He will not launch shiny new spending packages – so families hoping for a boost might be disappointed. He will not use the dispatch box for jokes, or as a stage for his own political career.

Interestingly enough, Mr Hammond will be delivering his statement against a foundation laid by the Prime Minister. Theresa May delivered a speech before the CBI yesterday, hoping to win over disaffected business leaders. She pledged to slash corporation tax , recommiting the Government to the target of making British corporation tax to the lowest in the G20. (This would not have been music to the ears to the NI Executive, let me tell you). She made clear that she would not be revealing any details of her plans for negotiations during leaving the EU. The irony was that she declared this to be so after the CBI President, speaking previously, made equally clear the CBI was adamant there should be more information provided.

The speech however came amid potential signs of disagreement over extra spending between the Prime Minister and her Chancellor. After all, he had said at the weekend that all spare additional spending should go towards boosting growth and productivity.

All in all, tomorrow will make for interesting viewing. Despite the unexpected positive news today that Government borrowing fell by more than expected to £4.8bn in October, thanks to a record amount of tax income for that month, there will be gloomy news on the horizon.


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