After eight Budgets, six Autumn Statements and two Spending Reviews, we’d become very accustomed to George Osborne’s big turns at the Despatch Box.
We knew what to expect: the boasts about deficit reduction; the political devices calculated to wrong-foot the Opposition; the contrived jokes at the expense of a political rival; the magical ability to find some extra money for a flashy giveaway.
But the Osborne era’s over. We now have a very different kind of Chancellor. Philip Hammond’s reputation is more sober accountant than political showman – and so we should expect a different kind of Autumn Statement.
Hammond’s more downbeat style seems appropriate, given the news he’ll have to deliver. This is the first economic set-piece – accompanied by the first official forecasts – since the EU referendum. That means Hammond will probably have to announce that the Office for Budget Responsibility now expects lower growth over the next few years than it did back in March.
Lower growth will result in less money for the Exchequer. That means the Conservative Government will almost certainly break one of its key manifesto pledges from the last election: to eliminate the deficit by 2020. The Government is set to borrow around £70 billion this year, and the Conservatives had promised to get that down to zero by 2019-20, going so far as to enshrine that commitment in law last year. Hammond has already admitted that he won’t be able to keep that pledge, and his first Autumn Statement will provide official confirmation of that. Instead, the Government is now expected to still be borrowing around £40 billion in 2019-20.
Despite this, Hammond will no doubt continue to employ the language of ‘fiscal discipline’ and ‘long-term fiscal sustainability’, as he did in his Conservative Party conference speech last month. He’ll just attempt to define those terms differently than Osborne did. The new rules Hammond sets himself – if any – will tell us not only what he considers ‘sustainable’, but also what he considers achievable in light of the Brexit vote.
Ditching his party’s deficit pledge is not the only way Hammond will adapt to the prospect of Brexit. He’s also indicated that he will step up the Government’s infrastructure plans, in the hopes that extra investment will give the economy a boost. Those of us in the world of motoring will have a particularly close eye on which areas are set to benefit from new or improved roads.
We’re also looking for indications of the May Government’s approach to the automotive industry, and we’ll get a major one when Hammond reveals his changes to Salary Sacrifice schemes. We’ve been working closely with the BVRLA to emphasise the economic, social and environmental benefits of Car Salary Sacrifice schemes. We therefore hope that the Chancellor will exclude cars from any changes that tax employee benefits taken through Salary Sacrifice more heavily.
That’s one of the ‘known unknowns’ of this Autumn Statement. As always, there are ‘unknown unknowns’ too: Will Hammond set out his plans for Fuel Duty? Will he announce the results of the Government’s review of Company Car Tax, and set out the rates beyond 2019-20? Will he commit to the future of the Plug-in Car Grant for those buying electric cars, which is only confirmed until March 2017?
Fortunately, we don’t have to wait long for the answers to these and other questions. We’ll have extensive coverage of the Autumn Statement on this very site: a live blog as the Chancellor delivers his statement, articles on our expert blog afterwards, and a briefing document to follow – all packed with insights from our Consultancy team. Join us on Wednesday.