Jeremy Hunt was impressive in his Autumn Statement - but there was too much jam tomorrow and the die is cast
22 November 2023, 15:58 | Updated: 22 November 2023, 17:11
Many of you won’t remember the ‘Ken & Eddie Show.’
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In the mid-nineties, before Gordon Brown gave independence to the Bank of England in 1997, Lord Kenneth Clarke, as he is now, was Chancellor in John Major’s withering Government and Eddie George was Governor of the Bank of England.
Together they had an open conversation on how they were putting the country back on a firm economic footing. It was the time when leaks in policy started to be a regular occurrence and briefing became the order of the day.
Prior to Ken Clarke’s stewardship, it was easier to get into the vaults of the Bank of England than to get information on any forthcoming Budget. In fairness to this duo, where mutual respect was very apparent, they put the UK economy back into good shape.
That did not impress the electorate in the 1997 General Election. The Conservatives were summarily thrown out of office by the exuberant Tony Blair’s New Labour with a massive majority of 179!
I wonder if history might repeat itself this year. The situation is not that different, though the cast in this drama is very different.
This Tory administration has been hammered by Covid, dogged by geopolitical issues, rumbled for indecisive leadership from Boris Jonson, who in 2019 won a landslide victory against all the odds.
Then followed some erratic financial decision foisted on the country by Liz Truss that frightened the living daylights out of international bond markets.
Messrs Sunak and Hunt have steadied the ship and restored fiscal discipline. Nonetheless, taxation is at its highest level in living memory – under a supposed tax cutting Conservative government.
Consequently, this Government remains very unpopular. Today’s ‘Autumn Statement’ was either the penultimate or last ‘throw of the dice’ ahead of next General Election. Jeremy Hunt hit the despatch box with all guns blazing.
There was no holding back. He announced 110 initiatives, mainly for growth, with business to the fore, though he spared us the pain of verbally listing them! Notwithstanding that, Mr Hunt spoke for an hour.
The Chancellor reminded us that inflation had been halved, with government borrowing down, resulting in a percentage fall of GDP from 101% to 94% this year. It was hoped that borrowing would continue to be cut in the next five years.
GDP would also be higher than expectation this year at 1.8%, though the Bank of England maintains it will be flat. Jeremy Hunt was determined to spread his glitter around like confetti at a wedding.
He started by reiterating that the UK produced the second highest growth rate of the G7 countries since 2010.
The content of his statement, as expected, was focused largely on business. As has been the case in recent years, the leaks and briefings made the use of a sieve redundant.
It had already been announced that there would be an increase in the minimum wage from £10.42 an hour to £11.44p from April 2024.
National Insurance, which affects 27 million was cut by 2% to 10%. The Chancellor also confirmed that 1.7 million had been taken out of poverty since 2010. Class 2 National Insurance on taxation of the self-employed was abolished.
The essence of this statement was to stimulate business and the economy, whilst keeping the lid on inflation. The gargantuan sum of £4.5 billion of tax relief would be provided for strategic manufacturing over 5 years to include £2 billion on clean energy requirements (car battery plants as an example).
West/East Midlands, Manchester, Wrexham and Flintshire were to become new investment zones and freeports would have their tax relief grants extended from 5 years to 10-years.
Money was also being allocated to help nurture the development of AI, especially in Bristol and Edinburgh, plus grants for vaccines and health care and the furtherance of the TV and film sector.
It was felt that all these pieces of legislation would attract £20 billion of overseas investment. At last, some more help for small businesses in terms of business rates. They would benefit from freezing some of their rate multipliers, with leisure and hospitality receiving cuts in taxation totalling £3.5 billion a year.
Mr Hunt was not going to leave the despatch box without telling members that if we want a decent welfare system and respected civil/public services they need to be reformed with the numbers employed cut.
At the same time Universal Credit is in need to be overhauled, encouraging those that can work to do so. Seven million people are out of work. Many of them are sick or disabled. They are not being targeted. However, it is felt that 200,000 of these people could be in work with encouragement over the next few years.
So, what of these measures? They are seen as positive for business and the self-employed with plenty of jam promised tomorrow.
Yes, the NI cut and minimum wage increases are welcome. However, apart from continuing to help with energy costs, if necessary, there is little of immediate help to deal with the cost of living today!
Business folk will be pleased with this statement. It is aggressive and sensible. Also, Mr Hunt must leave the odd rabbit in the hat for the Spring Budget. Notwithstanding all these initiatives, thousands of people are struggling with cost-of-living issues. Their patience has probably run out.
This autumn statement had another glowing error - the Heaven sent chance to cut the tourist tax! It raises so little but so important for our luxury sales. This business now goes to Paris and Rome instead of London.
Unfortunately for the Government, I believe the dye is cast. Labour is likely to win the next election whether in May, October, or December.
PM Sunak ticks most of the boxes - clever, industrious, and passionate in his beliefs. Sadly, for the Prime Minister he does not seem to tick the public's popularity and charisma boxes. Jeremy Hunt is a very decent Chancellor.
However, the public want more jam today and because of this current cost of living crisis and is not that interested in ‘following that rainbow, way up high!’
Churchill and Thatcher/Major know what it’s like to be dismissed by the electorate; so, Rishi Sunak must just continue to put the country at the forefront of his plans and hope that Labour’s majority won’t be a landslide, which is generally thought to be unhealthy for democracy.
If the polls are right, most of the public think Sir Keir deserves a chance. Certainly, shadow chancellor Rachel Reeves has schmoozed her way around the portals of business and the City of London and Labour’s visions and goals left no obvious waves of fear.
However, with the fiscal restraints and the need for discipline, scope for their expansive plans will be very limited.
Labour will have a huge mountain to climb with an inexperienced front bench.
They will need more than energy windfall taxes and the hammering of public schools with a 20% VAT loss, for fresh revenue for their ambitious plans.
The challenge looks daunting.
