AUTUMN STATEMENT PREVIEW
Chancellor considering dropping the Autumn Statement – but not this year.
The FT has this week reported that the UK chancellor is considering ditching the annual Autumn Statement, as he seeks to rein back the role of the Treasury and focus its tax and spending decisions on the spring Budget.
Philip Hammond has told colleagues he wants to move away from “gimmicks” and micromanagement, and is looking at the possibility that the Autumn Statement would — in future years — return to its original function of fiscal forecasting and not represent what is, in effect, just another Budget rammed full of taxation provisions.
But fear not ……this year’s autumn statement will go ahead as planned on November 23 and most expect it to be a pretty big occasion. It is Mr Hammond’s first chance to map out the government’s new economic and fiscal policy following June’s Brexit vote.
Among issues relatively widely expected to be covered is tax relief on pensions. There have been no official statements on this but the cost of tax relief is high (over £30bn) and the government are avowedly “inclusive”. Shifting to a flat rate of relief that gives more to basic rate taxpayers and less to higher rate taxpayers would be aligned with this “mantra” – albeit not saving much, if anything, in the long term.
The FT published what, in effect, amounted to a useful “history of the Autumn Statement”.
It seems that the Treasury has been a slave to “two fiscal events” since the 1975 Industry Act compelled the government to publish at least two economic forecasts “with the aid of [an economic model]” which is “maintained on a computer”.
In the Callaghan and Thatcher governments, a spring Budget that focused on taxation was augmented by an Autumn Statement setting out the government’s spending plans for the next year.
Ken Clarke overturned that system in 1993 with a unified tax-and-spending statement in an Autumn Budget, with a short summer economic forecast to update the figures.
But this single event lasted only until Gordon Brown reintroduced the spring Budget and added an autumn or winter pre-Budget Report in 1998.
Initially the PBR was billed as a short consultative document in the autumn without any tax measures, to improve the discussion of tax proposals, but it soon morphed into a second annual Budget.
Although Mr Osborne returned to the name of the Autumn Statement, the format was identical to Labour’s second Budget and it often contained more tax measures than that of the spring.
Most commentators, it seems, support the return to one Budget to deal with taxation with a possible Autumn Statement focussed entirely on forecasting.