Autumn Statement: Chancellor’s challenge is to juggle business with ‘just about managing’ families
- Credit: PA
Chancellor Philip Hammond is facing twin pressures to help so-called 'just about managing' families and reassure business over concerns around Brexit and the Government's agenda in his Autumn Statement.
Mr Hammond has indicated there will be no substantial giveaways in Wednesday's mini-Budget, stressing the economy is facing a 'sharp challenge' and calling for 'headroom' to deal with a black hole in the public finances reportedly as high as £100 billion.
Prime Minister Theresa May is set to use a speech to business leaders at the CBI annual conference on Monday to reassure them that she is on their side as long as they work with her to ensure growth is shared by everyone.
Mrs May will suggest she may cut corporation tax to keep it at the lowest level in the G20 and also announce a funding boost reaching £2 billion a year by 2020 for science and research.
But the Chancellor is facing pressure to help 'just about managing' families who, he said, 'work hard and by and large do not feel that they are sharing in the prosperity that economic growth is bringing to the country'.
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On Sunday, he appeared to reject Labour calls to reverse former chancellor George Osborne's cuts to the universal credit (UC) welfare system.
But a study published in the Guardian suggests cuts to UC and a four-year benefit rate freeze alongside higher Brexit-related inflation and rising rents will leave such families £2,500 a year worse-off by 2020.
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The research by the consultancy Policy in Practice said the combined impact will squeeze low income families out of £48.90 a week by the end of the decade.
Shadow chancellor John McDonnell has urged Mr Hammond to reverse the UC cuts alongside reductions in disability benefits that will leave some claimants £30 a week worse off.
He also revealed Labour would support an increase in the 40p tax threshold from £45,000 next year to £50,000, a move promised in 2014 by David Cameron to take millions of middle-to-higher income families off the higher tax rate.
The shadow chancellor said: 'It looks as though the threshold will be increased on Wednesday by the Government and we would support that.'
'It's to people some of whom need a tax giveaway at the moment because the mismanagement of the economy by the Conservatives is hitting them hard.
'What we need is a long-term strategy. This Autumn Statement, we're going back to giveaways and gimmicks again.'
Mr Hammond is also poised to announce infrastructure investment to attempt to stave off 'unprecedented' business uncertainty over Brexit, including £1.3 billion for improvements on Britain's roads.
But he warned those hoping he will borrow large sums of money to invest in productive infrastructure that he remains 'highly constrained' by the need to bring down the deficit, despite abandoning Mr Osborne's plan for a budget surplus by 2020.
The Government has already announced plans to ban pension cold calls which can leave people open to scams which trick them out of their life savings and is reportedly expected to approve another freeze in fuel duty until April 2018.
Mr Hammond could also crack down on staff perks like gym memberships and mobile phone contracts which are offered to workers willing to forgo part of their salaries in return in an effort to boost tax revenues, according to reports.