1. The forecast. This is made by the Office for Budget Responsibility and will be wrong, but it is the best independent guess at what will happen and it will set the tone for the whole Statement.
The big figure is the predicted rate of growth of the UK economy for next year, which was 2.2 per cent in the Budget in March. It could go down to about 1.3 per cent. The Treasury’s own prediction of the effect on the economy of the referendum vote, simply by denting confidence in economic prospects, turned out to be embarrassingly pessimistic, but the devaluation of the pound is bound to start to have effects next year, first on inflation but then on growth.
What will be particularly interesting is what the OBR thinks the effect of actually leaving the EU in 2019 will be, as its forecast will go up to 2021.
2. Government borrowing. One of the first things Theresa May did, even before she became Prime Minister, was to abandon George Osborne’s target of balancing the Government’s books by 2020. Tomorrow Philip Hammond will set out new plans for how much he intends to borrow each year over that period.
The Chancellor has suggested that he still wants to restore the public finances to surplus – when tax revenues exceed public spending – in the more distant future, but now he might say when.
Look out for Hammond excluding a limited amount of capital spending – such as on roads and other infrastructure – from this target, thus covertly accepting the policy advocated by Ed Balls before he became a dance sensation.
3. Tax credit cuts. The most important story for working people on low incomes. David Cameron and George Osborne abandoned the first wave of these cuts when they were defeated in the House of Lords a year ago, but further cuts are still planned.
If Theresa May’s promise to devote her Government to the interests of those who are “just about managing” is not to become a joke, Hammond must act. I’m not convinced that tinkering with tapers will be enough and will be looking for hints of a bigger overhaul of the Universal Credit reform, now six years old and still hardly started.
4. Gizmos and geegaws. Hammond has tried to lower expectations of tomorrow’s statement. His office said at the weekend: “He believes the Treasury should be focused on its core job of economic policy, managing the public finances, and not doing spending departments’ jobs for them.” In other words, he renounces the showy style of Osborne and Gordon Brown who used to steal other ministers’ newsworthy announcements and make them themselves.
All the same, there will be announcements of an American-language “expressway” from Oxford to Cambridge via Milton Keynes; some stuff about broadband; a ritual freeze on petrol duty; probably some things to do with childcare; and a ban on selling pensions by cold calling. All of which have been spun in advance by the new no-spin Chancellor in the no-spin Government.
5. Can you stay awake for the whole thing? Hammond is one of the least exciting Commons speakers in recent times. Not since Geoffrey “Dead Sheep” Howe has a Chancellor of the Exchequer been so dull, although Alistair Darling ran him close. The dullness is, however, part of Hammond’s great strength, which is that he appears to be a serious person.
6. An eye on Labour. John McDonnell, shadow chancellor, will reply. The opposition leader replies to the Budget but the shadow chancellor takes the Autumn Statement, which used to be a technical announcement of spending plans for the next year but which became virtually a second Budget under Gordon Brown.Reuse content