This lunchtime the Chancellor, Philip Hammond, delivers his first Autumn Statement. It’s a crucial moment politically and economically.
Firstly, let’s deal with the economics.
In October, Hammond announced that he was abandoning George Osborne’s target of achieving a surplus by 2020. Instead he will pursue a policy of “targeted high-value investment in economic infrastructure”. Which, to translate, means more spending or in the Chancellor’s own words, taking the approach of “a Conservative pragmatist”.
With uncertainty following the vote of Brexit in June, the private sector is investing less and, to avoid an economic downturn, someone must step into the breach. Hammond decided that that someone would be the government.
Today we will find out how large a breach that turns out to be. While the truth of the situation will only be revealed by the figures presented from the Office for Budget Responsibility (OBR), the policies leaked so far suggest not too big.
We’ve already learnt that Hammond’s Statement will include a £1.3bn investment in roads. This sounds like a big number but in terms of general spending on our roads, it is small fry. We’ve also been told that the Chancellor will announce investment in broadband infrastructure to the tune of £400m. But that particular policy was actually trailed a year ago, by George Osborne.
Of course, Mr Hammond may surprise us with some big spending projects, but at least in terms of the policies that have already been leaked, he’s hardly putting his wallet where his “Conservative pragmatist” mouth is. We wait to be surprised.
Stood on the steps of Downing Street in July, Theresa May placed those ‘just about managing’, or JAMS at the centre of her government. The Autumn Statement is the first set piece opportunity for her government to pursue this vision. But it won’t be easy.
Ultimately there isn’t suddenly a whole new pot of money to lavish on improving life for JAMs. While Hammond may want to loosen the fiscal targets previously set by George Osborne, he still intends to eliminate the deficit, which means cuts in spending. But who should pay and who should benefit?
And here comes the problem. Define JAMs.
A cursory glance across any news website reveals dozens of articles trying to pin down exactly what this new term means. Many of those who appear to fit the bracket are the same people who have had in work benefits slashed over the last six years. But those cuts have been key in cutting the deficit. Can Hammond walk the delicate tightrope of helping those who have had their hopes raised by the Prime Minister while maintaining fiscal frugality? This morning we hear that cuts for those on Universal Credit will be reduced by 2p in the pound. Helpful, of course, but when one considers that this is simply a reduction in a substantial cut already announced, will it be enough?
With experts warning that the Chancellor has little wriggle room and Hammond himself describing UK debt as ‘eye wateringly large’, JAMs, whoever the term describes, should probably not hold their breath.