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Autumn statement: A lot of noise, but little detail

29th Nov 2011
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The Chancellor's autumn statement was fun while it lasted. Afterwards were were left with a haze of growth-stimulting spending commitments and, with a few exceptions, a dearth of detailed tax announcements. John Stokdyk looks back.

Following last year’s switch from the paperwork-heavy New Labour Pre-Budget report tradition, George Osborne’s autumn statement lived up to expectations that it would mainly be about political point-scoring and headline management.

The accountants who took part in today’s live panel debate were of the same mind. Jonathan Russell from UK200 Group firm Rees Russell noted how many of the measures have been previously announced or were heavily trailed by the press before Osborne’s lunchtime speech. The suspense was somewhat undermined, for example, when BBC economics editor Stephanie Flanders pre-empted the drama that was to follow a few minutes later by noting all of the expected announcements.

  • A £5bn national infrastructure plan (which optimistically hopes will pump-prime a further £20bn of private sector investment)
  • A £20-40bn credit easing plan
  • A £1bn youth contract
  • A £400m mortgage equity scheme to stimulate both home ownership and the construction industry
  • Rail fare restrictions
  • A freeze on January’s fuel duty increase and a reduction in the summer increase to 3p.

It’s almost as if she had a copy of the Chancellor’s speech in her hands before he even started…

Nonetheless, it still made for good theatre, with the Speaker at one point turning on a Labour MP and suggesting, “One member has shouted enough for today.” There were some good comments and analysis in our live panel debate from Jonathan Russell, Smith & Williamson’s Richard Mannion and other panellists including Charlie Mullins, the Pimlico plumber. An ardent fan of the Chancellor, he labelled the statement as one dedicated to “planes, trains and automobiles”.

There was a degree of scepticism from the accountants about the credit easing scheme. “Unless the Government finds a new way of delivering loan schemes outside of the discredited banks money will never reach small business,” commented Jonathan Russell of Rees Russell.

The rest of us totted up the spending commitments and wondered how the Chancellor would achieve the unlikely balancing act of meeting his undertaking to eliminate the government debt mountain by the end of the parliament as growth slowed and his various infrastructure and business support projects rang up new spending commitments.

But if you use or advise companies that used asset-backed pension contributions, then look out - this was one tax area where the did act decisively, introducing “ABC” relief restrictions from 29 November. Apart from that, Richard Mannion commented, “It looks like my prediction was spot on for once - not much tax at all.”

Russell shot back: “Yes Richard, but to have tax you need to have some income.”

However, watch out for next Tuesday - that’s when we’re likely to see a PBR’s worth of documentation and draft clauses for the Finance Bill 2012. The banter will be a lot less light-hearted when that’s all published.

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FT
By FirstTab
30th Nov 2011 07:28

John

Thanks. I am ashamed to say I do not take at the macro picture. I need to. This gave me a good summary.

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