Hammond admits to black hole caused by Brexit vote
He said he would continue to impose ‘fiscal discipline’ on the country.
Even so, he said Britain had the fastest growing advanced company in the world.
In his Autumn Statement, he said borrowing will rise by £122 billion with almost £60bn of that a result of higher inflation, caused by the slump in sterling and growth caused by the vote to leave the European Union.
Mr Hammond, delivering his first Autumn Statement, said devolution “remains at the heart of this government’s approach to growth”.
He confirmed the City Deals for Aberdeen, Inverness and Edinburgh and announced that work would begin on a deal for Stirling. The Government is prepared to consider proposals from other locations, he said.
In a statement with few surprises, he confirmed speculation that this would be his first and last Autumn Statement. The Budget will move to the Autumn next year followed by an annual Spring Statement.
Mr Hammond said the UK economy would grow faster than any other and said it had confounded commentators at home and abroad since the EU vote.
Paying tribute to his predecessor George Osborne he said: “My style will be different from his.” But he said the government would remain committed to fiscal discipline.
Growth according to the Office for Budget Responsibility will be 2.1% this year, 1.4% next year, 1.7% in 2018, 2.1% in 2019 and 2020.
However, he said Britain’s productivity was lower than Germany and France. “That has to change. Raising productivity is essential ….if we are to raise living standards,” he said.
He confirmed the launch of a National Productivity Investment Fund backed by £23bn to be spent on innovation and infrastructure over the next five years.
On support for overseas trade he doubled export finance capacity. He also announced that he would be taking the first step in “tackling the problem of our fastest growing technology companies being snapped up” by injecting £400m to unlock £1bn of new finance through the British Business Bank.
He pledged more than £1bn for broadband and 5G technology.
“My ambition is for the UK to be a world leader in 5G. That means a full-fibre network; a step-change in speed, security and reliability,” he said.
The government will also offer business rates relief on new fibre infrastructure from April.
He said the government gave a pay rise to a million of the lowest paid workers through the minimum wage.
“We recognise more needs to be done to help families to make ends meet,” he said, confirming that the National Living Wage will rise from £7.20 to £7.50 an hour.
He said the government has no plans to make further welfare savings. “The government has no plans to introduce further welfare savings measures in this parliament beyond those already announced,” he said.
He said £800m will go to the Scottish government through the Barnett Formula.
It will be for the Scottish government to respond to his announcement of a £6.7 billion package to reduce business rates.
The UK Government’s decision to focus on infrastructure spending means that the Scottish Government’s budget will increase by more than £800m through to 2020-21,
How the increase in capital budget is spent in Scotland is up to the Scottish Government, which has the opportunity to take its own investment decisions as well as using its own tax, borrowing and welfare powers.
The Autumn Statement announces for the first time that the UK Government will open City Deal negotiations with Stirling. This means that the UK government will have agreed, or be in discussions with, each of Scotland’s cities.
Scotland is also benefiting with more than £3.3 million of LIBOR funding raised from fines levied on banks being distributed to good causes.
Mr Hammond said: “The investments I have outlined today will have benefits right across the Union.
“Research and development funding will benefit the United Kingdom as a whole and where responsibility for infrastructure investment rests with the devolved administration in Scotland, they will receive the appropriate funding share.
“The decisions I have announced today mean that Scotland will receive very significant additions of £800 million to its capital budget.
“It is also great news that I can also confirm wider investments for Scotland including the opening of city deal negotiations with Stirling and announcing that we are open to doing so with the Tay Cities.
“This Autumn Statement sets out how we will support our economy as we begin writing a new chapter in our country’s history. It signals our support for millions of hardworking families who are struggling to make ends meet and our determination to ensure every household has opportunity to share in the nation’s prosperity. This is an Autumn Statement which delivers for Scotland.”
“The rise in the National Living Wage means a well deserved pay rise for thousands of Scots, and the freeze in fuel duty will make it about £10 cheaper for drivers every time they fill up their car.
“Most significantly for Scotland is the £800 million of extra capital funding. This is as a result of the Chancellor’s decision to invest in infrastructure, but it is for the Scottish Government to step up now. If it is used properly by the Scottish Government, this will make a real difference to productivity, jobs and growth in Scotland.
“The UK government’s decisions today mean a secure economy based on the broad shoulders of the UK, more funding and more powers for Scotland.”
Scottish Finance Secretary Derek Mackay said the Chancellor’s plans laid bare the real cost of leaving Europe.
“The truth about Brexit – and the UK’s financial and economic future – was laid bare by the Chancellor today. The real cost of Brexit has now been revealed – and it is a cost which will be paid through lower growth, lower tax revenues, higher borrowing, higher debt and higher inflation. That is the future the Autumn Statement revealed the UK faces as a result of leaving the European Union.
“Above all, this was a massive missed opportunity to end austerity. The Chancellor has failed to ease the punitive cuts that are hitting so many Scottish families. Instead he has continued the damaging austerity that is slashing the budget for public services, hammering family finances and failing to revive the economy.”
Corporation tax will fall to 17% as planned.
Insurance premium tax will rise from 10% to 12%.
Fuel duty will not rise, a cut of £850m in tax revenues, and a saving of £130 a year for the average car driver and £350 for the average van driver.
Salary sacrifice benefits will be scaled back.
Universal Credit taper rate to be cut from 65% to 63% from April at a cost of £700m.
For the oil and gas sector, the Carbon Price Support capped until 2020.
Business rates reductions worth £6.7bn.
Income tax threshold to be raised to £11,500 in April, from £11,000 now (already announced), and higher rate income tax threshold to rise to £50,000 by the end of the Parliament.
A new £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 homes in areas of high demand.
Additionally, the government will meet its manifesto commitment to increase the personal allowance to £12,500. Over the last Parliament, 2.4 million individuals in Scotland saw an average gain of £517, due to an increase to the personal allowance.