Phillip Hammond (Chancellor) will today have his first opportunity to outline his priorities for taxes and spending in the wake of the Brexit vote.
The Office for Budget Responsibility (OBR), the Government’s fiscal watchdog, will also reveal its latest forecasts for growth, unemployment and inflation, which will help to shape the way policymakers respond to the referendum result.
Welfare
More than £1bn will be diverted into the welfare system in a move designed to ease the impact of cuts introduced by the previous Chancellor, George Osborne.
Philip Hammond will use his inaugural Autumn Statement to increase the amount of benefits that claimants can keep while in work.
It marks a significant departure from the benefit cuts imposed by David Cameron and forms part of Theresa May’s bid to appeal to families who are “just managing” to get by.
JAMs – the ‘just about managing’
Theresa May has been pushing for Mr Hammond to send a strong signal that the Conservative government will take action to help families who are “just about managing”.
The prime minister used her first speech at Downing Street to make it her “mission to make Britain a country that works for everyone”.
She said:
“If you’re from an ordinary working class family, life is much harder than many people in Westminster realise. You have a job but you don’t always have job security. You have your own home, but you worry about paying a mortgage. You can just about manage but you worry about the cost of living and getting your kids into a good school.”
The Autumn Statement is expected to free up some money to help families on modest incomes.
The National Living Wage will rise from £7.20 an hour to £7.50 from April 2017, with stronger enforcement to ensure people are paid the minimum.
Fuel duty will be frozen, while the Government is also considering cuts to air passenger duty and new childcare subsidies.
Policies to reduce the burden of childcare costs are also being considered.
Mr Hammond is also keen to stick to the manifesto pledges set out by the Conservatives. This means he will stick to a plan to increase the tax-free personal allowance to £12,500 from £11,000 and raise the higher-rate threshold to £50,000, from £43,000.
Salary sacrifice
The Chancellor is set to use the Autumn Statement to tighten rules that allow workers to forgo part of their salary in return for certain work benefits.
The taxman quietly launched a consultation to reform salary sacrifice schemes this summer, which let employees swap chunks of their salary for taxable or non-taxable perks.
These range from a £10 Christmas bonus for some pensioners to zero-rated VAT on cycle helmets. Eye tests, company mobile phones and health screenings are among the hundreds of other reliefs.
Ban on cold callers
Cold callers who target pensioners and trick them into giving up their life savings will be banned. This is something we at Morgan Peterson support as we hear more and more distressing stories of pensioners losing their entire savings through these scams.
The Government estimates eight scam calls are made every second to UK residents – or around 250m every year.
While the ban will be enforced with fines of up to £500,000, it will not cover texts and emails.
As always please check the FCA register to see if these companies are Authorised by the FCA and check here – Just a quick tip, if it sounds too good to be true it usually is, anything suggesting guaranteed 8% or more you should be alarmed.
Superfast broadband
More than £1bn will be spend to unlock a “gold standard” of superfast broadband for millions of British homes amid concerns that Britain has fallen behind other countries.
Stamp Duty
The Telegraph has launched a campaign to scrap a stamp duty surcharge that was introduced this April for anyone buying a second home.
It means buyers who already own another property have to pay an extra three percentage points in tax on their purchase.
Recent analysis shows stamp duty reforms have slowed the housing market and raised half as much money as the Treasury predicted,
As well as buy-to-let investors, the surcharge affects parents buying for children, holiday-home buyers, anyone who is struggling to sell their home and even some first-time-buyers.
Letting agents
The Chancellor will also announce a ban on letting agency fees in a bid to reduce the costs for 4.3million people who rent and help ensure that their “money goes further”.
Science and innovation
This Autumn Statement will focus on how to raise living standards over the longer term, and an extra £2bn will be allocated to investment in R&D by the end of this Parliament to “help put post-Brexit Britain at the cutting edge of science and tech”.
UK spending on research and development has fallen behind other G7 nations in recent years, including the US, Germany, France and Japan.
Business groups have called for the Government to prioritise support for innovation.
The International Monetary Fund (IMF) published research earlier this year that showed a 40pc increase in private sector R&D spending could lift long-term economic growth by around 5pc in advanced economies such as Britain.
Borrowing and debt
Mr Hammond has signalled that the Government will adopt new rules on borrowing after the Government abandoned predecessor George Osborne’s pledge to balance the books by the end of this parliament.
This gives him some leeway to borrow more money, although Mr Hammond has signalled that the extra headroom will only be used if the UK suffers an economic shock.
The Institute for Fiscal Studies (IFS), has warned that the Government faces a £25bn black hole in the public finances by the end of the current parliament because of slower growth and higher inflation.
The Chancellor received a boost on the eve of the Autumn Statement, as official figures showed a big drop in borrowing in October, helped by an increase in corporation tax receipts.
However, borrowing this year is still estimated to hit £60.5bn, up from an official projection of £55.5bn in March.
As always we will be publishing a breakdown of the full statement once we have had time to digest all the information, this will be available through our website and sent to all on our mailing list.