The Chancellor has
today delivered his autumn statement to Parliament, alongside the
publication of the Office for Budget Responsibility's
updated forecasts for growth and borrowing. He announced permanent
reductions in spending to ensure that the UK meets its fiscal
targets, using some of those savings in the short term to fund
infrastructure investment to generate long-term growth. Alongside
this, he announced measures to help households and businesses cope
with higher inflation and to ensure that deficit reduction is
implemented fairly.
Protecting the economy
As result of the ongoing impact of the financial crisis, the
euro area crisis, and commodity shock, the OBR expect slower
growth and higher borrowing in each year of their forecast.
In order to ensure it continues to meet its fiscal targets,
the Government will:
* set plans for public spending in 2015-16 and 2016-17 in
line with spending reductions over the Spending Review 2010
period
* set public sector pay awards at an average of 1 per
cent for each of the two years after the current pay freeze comes
to an end - Departmental budgets will be adjusted in line with the
policy, with the exception of the Health and schools budgets,
where savings will be recycled
* adjust the allocation of
Official Development Assistance in line with the OBR's
revised growth forecast, meeting the 0.7% of GNI target in
2013
* raise the State Pension age to 67 between April 2026
and April 2028
* not increase the child element of the Child
Tax Credit by more than inflation, and not up-rate the couple and
lone parent elements of the Working Tax Credit by inflation next year
To complement the Bank of England's active monetary
policy, the Government will launch a package of up to £21 billion
to ease the flow of credit to smaller and mid-sized businesses,
including:
* up to £20 billion through the National Loan Guarantee
Scheme to lower the cost of bank loans for smaller businesses
* an initial £1 billion Business Finance Partnership, which
will lend to mid-sized businesses and SMEs in the UK through
non-bank channels
Building a stronger economy for the future
Building on the first phase of the Growth Review, the
Government is taking action to accelerate its supply side reforms
to invest in infrastructure, support enterprise and lay the
foundations for strong, balanced growth, including:
* £6.3 billion of additional infrastructure spending over the
Spending Review period, of which £1.3 billion was announced
earlier in the autumn.
This includes:
* investing over £1 billion to tackle
areas of congestion and improve the national road network
*
committing £170 million of extra funding to allow more local
transport projects to go ahead
* investing £100 million to
create "super-connected" cities across the UK,
with 80-100 megabits per second broadband and city-wide high-speed
mobile connectivity
* increasing the Regional Growth Fund by
£1 billion
* £600 million of funding for an estimated 100
additional Free Schools, alongside an extra £600 million for Local
Authorities with the greatest pressure on school places in
England
* around £1 billion of new private sector investment
in regulated industries supported by government guarantee
*
commitments to £5 billion of capital projects in the next Spending
Review as part of the National Infrastructure Plan
* targeting
up to £20 billion of private sector investment in infrastructure
through a memorandum of understanding with two groups of UK
pension funds and establishing the Infrastructure Investors Forum
with the Association of British Insurers
* a new Seed
Enterprise Investment Scheme (SEIS) from April 2012
* 100 per
cent capital allowances in Sheffield, the Black Country,
Liverpool, Tees Valley, North Eastern and Humber Enterprise
Zones
* a new build indemnity scheme for builders and lenders
to the stimulate the construction of new homes
Fairness
Fairness underpins the Government's plan to protect,
rebalance and strengthen the economy. To ensure that the deficit
reduction is implemented fairly, provide further support for
families and businesses with high inflation, and support young
people in the labour market, the Government will:
* defer the 3.02ppl fuel duty increase due to take effect on
1 January 2012 to 1 August 2012; the second increase planned for 1
August 2012 will be cancelled
* increase the bank levy to
0.088 per cent from 1 January 2012, consistent with the
Government's intention that it raises at least £21/2
billion each year, as set out at Budget 2011
* ensure
employers making asset-backed pension contributions do not receive
unintended excess tax relief
* proceed with the extension of
Air Passenger Duty (APD) to flights aboard business jets,
effective from April 2013 - details will be set out in the
Government's response to the APD consultation on 6
December 2011
* introduce a Youth Contract worth a total of
£940 million over the Spending Review period to provide wage
incentives for small firms to take on young apprentices and
employees
* provide extra support for 18-24 year olds through
Jobcentre Plus, and an offer of Work Experience or a Sector Based
Work Academy for those on Jobseeker's allowance for over
three months
* fund a new £50 million a year programme to
support some of our most disadvantaged 16-17 year olds into
education, an Apprenticeship or a job with training
* invest a
further £380 million a year by 2014-15 extending to 130,000 more
disadvantaged two year olds the offer of 15 hours free education
and care a week
PN 134/11
Notes for Editors
1. The autumn statement document, containing full details of
all measures, can be downloaded from: http://www.hm-treasury.gov.uk/as2011_index.htm
2. The Office for Budget Responsibility have published
updated forecasts for the economy and the public finances in their
Economic and Fiscal Outlook, which can be downloaded from: http://budgetresponsibility.independent.gov.uk/publications/economic-and-fiscal-outlook/
3. Other documents published alongside the Autumn Statement
document include:
* Autumn Statement data sources
* Autumn Statement policy
costings
* Autumn Statement distributional analysis
* The
National Infrastructure Plan 2011
* Audited Whole Government
Accounts for 2009-10
* Review of the UK's regulatory
framework for covered bonds: a summary of consultation responses
4. Further information and published documents relating to
the Autumn Statement may be found on the HM Treasury website:
http://www.hm-treasury.gov.uk/as2011_documents.htm
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