Chancellor George Osborne today unveiled his Autumn Statement 2013. He called for a “responsible recovery”, reporting on the current state of growth and outlining a number of measures such as commitment to infrastructure spending and a rise in the state pension age.
He also took the opportunity to speak on smaller sound bite issues such as the abolition of car tax discs and petrol tax.
Dr Nick Collett, senior lecturer in accounting and finance at Manchester Business School, commented: “A Chancellor’s Autumn statement is not meant to deal with small issues like petrol tax freezes. These historically came in the Spring Budgets. What matters in an Autumn Statement is the macroeconomic picture on growth, spending and unemployment. The picture on unemployment is generally encouraging, but the picture on growth and spending is not. Growth is not expected to recover to the long term average of 2.5% until 2016. Spending is expected to come down but at a slow rate and we will still be in deficit in five years’ time. On these projections the Chancellor has signalled that substantial tax cuts before the election are not practicable.”
Whilst the general picture was cautiously optimistic, one area which is clearly on the government’s agenda for growth is infrastructure. The update to the National Infrastructure Plan was in the news yesterday, and yet more was revealed in today’s Statement. More will be spent more on capital as a proportion of national income as a decade average, than the entire period of the last government.
With the latest survey showing residential construction growing at fastest rates in ten years, he pledged £1bn of loans to unblock housing developments on sites in Manchester, Leeds and other sites across the country. He added the side note that Aldermore and Virgin, two challenger banks, are joining the Help to Buy scheme this month.
Graham Winch, professor of project management at Manchester Business School, said: “The Chancellor’s statements about infrastructure absolutely make the right noises, but there is still a question of delivery. There is no new public money, so much of the success depends on the private sector coming forward with funds, which it has not been very energetic in doing so far.
“Having said that, the £1bn of loans for housing is excellent news for the industry and wider economy. Again, the devil is in the detail and only time will tell how this is actually going to work.”
The Autumn Statement has certainly given some general indications about what is to come – or not to come, as the case may be – in the run up to the 2015 election. Time will tell if today’s cautious optimism is warranted.