Autumn Statement – the devil is in the detail
So the Autumn Statement comes and goes with the usual media hype and the typical lack of detail. If you wanted an even briefer summary than the following article it would be: poor economic performance, fudged borrowing targets, mostly ineffective headline-grabbing policies and a lack of demand stimulation.
If you fancy the smallest increase in information then do read on.
Considering Osborne started off by blaming the eurozone and how that affects our exports, there was very little on stimulating demand from this statement. The vast majority of the policies are either cuts to spending pots, real term decreases in expenditure or supply side tinkering.
As a result of the Government missing targets, the cuts will continue for a longer time period and departmental budgets will be reduced further. There is a further raid of the benefits pot for everything except for disability and elderly budgets – a 1% increase over the coming years showing a real term decrease. There is also a reduction in corporation tax rates – the effectiveness of this policy is questionable – an increased capital allowance for plant and machinery expenditure.
Are we ready for the economy to roar back to growth now?
If I am to park my cynicism and frustration at the lack of detail (of the statement, and not this article!) then there are some interesting things to pull out which aren’t that mainstream.
It was announced there will be a combined pot for local expenditure on transport, housing, skills and welfare which the Local Enterprise Partnerships – the public-private body set up to boost local economic growth in the wake of Regional Development Agencies – can bid for. This is important because it will certainly emphasise the spatial nature required within policy for areas to prioritise the needs of their community.
The (only) key demand side policy would be around the emphasis on infrastructure expenditure to increase as a result of efficiency savings and cuts to Whitehall. This is very much necessary but how many of these projects go ahead remains to be seen. The Government will also continue to pursue using pension funds as part of this investment but we’ll have to wait to see how this will look – private pension funds aren’t too keen so far. Moreover, current ten year UK bond yields are at around 1.8% (because of a lack of investment and growth and not because we are a safe haven) – surely plenty enough scope to borrow to invest, Mr. Osborne?
For me, this Statement, along with previous Statements post-2008 is missing the fundamental issue of underinvestment into people, firms, housing and infrastructure. If there is an acknowledgement for local decision making then we need to give the local areas greater powers and responsibilities to invest.
The Statement was always going to lack the kick I wanted. But from now on I want to see greater decentralisation of local authority budgets as well as a dedicated regional institution which would pool funds and take advantage of Government’s borrowing power to invest in their local area as they see fit.