As I See It
Osborne to deliver some tweaks and twists
The combined Autumn Statement and Comprehensive Spending Review, to give its proper name, is delivered on Wednesday with the Chancellor under more pressure than he anticipated when he presented his two Budgets this year.
Mr Osborne, however, has developed into a wily character who will not allow others to knock him off track. With big business backing his austerity strategy he will feel assured that he can push through his reform agenda at little cost to his standing.
His opponent on the Labour benches John McDonnell has also suffered a few stumbles. His “embarrassing” speech in the Commons was, well, embarrassing even if Mr McDonnell did try to prove that humility has a place in politics. Sadly, he showed himself to be lacking in conviction and certainty.
Mr Osborne will be more concerned that economic prospects have weakened in recent months, largely because of geo-political issues. His statement, therefore, will be delivered against this more subdued backdrop.
The Office for Budget Responsibility’s economic forecasts are expected to be little changed from July, though the July forecast for public sector net borrowing for FY2015 is expected to be revised up from £69.5bn to about £78bn reflecting poor borrowing data.
Given the ‘ring-fencing’ of certain budgets, including the NHS and overseas aid, the ‘unprotected’ departments will face further cuts in real terms.
When and where does it take place?
Wednesday, 25 November, starting at 12.30pm and probably lasting for an hour.
What will be in it?
An outcry over tax credit cuts, which has turned to an uneasy tension on the Tory backbenches, will overshadow whatever George Osborne says. Critics expect nothing less than a u-turn. Some tweaking of his plans is a more likely outcome.
In fact, he may also use the statement to start hitting the higher earners, defending his actions once again on the grounds that “we are all in this together”.
Apart from some softening of the tax credit blow, Mr Osborne will confirm that he has already reached agreement on spending plans with several key departments on what cuts they are expected to make.
Don’t be surprised if there is a last minute review of cuts in policing and security in the light of the heightened terror alert.
He may also have more to say on devolving power to the regions, though the focus will be more on the English regions.
Housing could also grab some attention as shortage of homes and rising prices continues to be a key concern. He may say something about releasing land – such as prison land – for development of new homes.
The Help to Buy Isa comes into effect on 1 December amid criticism that it does not far enough to really get first time buyers on the first run of the housing ladder, but it seems too close to its introduction for him to be making any adjustment.
The pensions industry will be looking out for any amendments to the freedoms that were introduced in April, eliminating the need for an annuity and allowing retirees early access to their entire pension pot.
While few have blown their savings in the way that was feared, there is criticism that the advisory system is weak and is leaving retirees exposed. Mr Osborne could therefore re-introduce some restrictions to provide greater protection.
The low oil price has been a problem for suppliers, but others have benefited from lower prices at the pumps. With talk of it falling to £1 a litre, the Chancellor may see it as an opportune time to increase fuel duty to recover some of the income lost by recent freezes.
>> Daily Business will be providing comprehensive coverage of the Autumn Statement all this week