Autumn Statement 2011
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29 November 2011
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 �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
Notes
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
About the Author
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Article Published/Sorted/Amended on Scopulus 2011-11-29 17:04:05 in Economic Articles
