Autumn Statement: Plan for recovery working

BRITAIN’S economic plan for recovery is working but the job is still not done and the UK must not squander the gains it has made so far – that was the message delivered by Chancellor George Osborne in today’s Autumn Statement.

Improvements to productivity and an increase in skills levels, especially in young people are still needed if the recovery is to be sustained, he told the Commons.

Based on predictions from the Office for Budget Responsibility he outlined how growth would increase, unemployment would fall and help with the cost of living would be provided for hard-working families.

He began by saying a reassessment of the economic crisis had shown £112bn being wiped off the value of the British economy – far worse than originally thought.

However, austerity measures backed by prudent housekeeping was helping to redress deficit levels.

This has been reflected by growth estimates doubling to 1.4% during the current year. Future estimates show growth rising from 1.8% to 2.4% next year with faster growth over the following years, up to 2.7% over the forecast period.

The British economy is currently rising faster than any other major advanced economy in the world, including the US, France and Germany, said the Chancellor.

However, he said there were continuing weakness with their economies and declines in the Eurozone were continuing to impact British exports, said Mr Osborne.

He said our exports were growing but not as fast as the country needed. He said the UK was still too dependent on traditional markets and exporters needed to target the emerging markets for growth.

To help with this he said export finance capacity to support British business was being doubled to £50bn.

On employment, he said an additional 400,000 jobs were expected to be created this year. The rate of unemployment is expected to drop from its current 7.6% (UK average) to 7% in 2015 and 5.6% in 2018.

He said the encouraging thing was the private sector was creating three jobs for every one lost in public sector and this meant 3.1m more jobs would be created by 2019, more than offsetting public sector job losses.

Borrowing levels have fallen to £111bn this year and this pattern will continue, said the Chancellor, dipping by £96bn, £79bn, £51 and £23bn over subsequent years. This means borrowing levels will be £73bn lower than forecast in March. However, Mr Osborne said  reductions in deficit would have to continue in order for this to be sustained.

He said the Government did not intend there to be any let up in dealing with debts and therefore outlined three new steps to “sound finances” and would “fix the roof while the sun is shining”.

He said he intended to bring forward an updated charter for Budget Responsibility, cap overall welfare spending to bring benefit bills down – while preserving the state pension – and continue to trim Government departmental spending by £1bn for each of the next two years.

He confirmed proposals released in the National Infrastructure Plan but said if the country was serious about competing with the rest of the world then more needed to be done.

As part of this there is a plan to build more homes and he said to counteract a shortage of housing £1bn of loans would be released to unlock housing schemes in places such as Leeds and Manchester.

To improve skills levels he said the Government would fund employers directly through HMRC and create an additional 20,000 higher apprentices over the next two years. Loans to support 50,000 more start-up businesses will also be implemented, said Mr Osborne.

In addition, to encourage more learning, 30,000 more student places are being created and this will be followed in 2015 with the abolition of student capping levels.

Mr Osborne said it would be “economic madness” to pursue increases to corporation tax and besides, he claimed evidence had shown cuts to CT had increased investment and raised productivity.

Business rate relief is being extended for another year and he said he would relax rules to dissuade firms from opening new premises. He also capped business rates at 2% from next April and said that for greater flexibility, firms would be able to pay these in 12 monthly instalments.

For local retailers facing competition from the internet and in a bid to help the recovery of the High Street, Mr Osborne announced new re-occupation relief for new shop tenants which will see a halving of their rates bills.

Also, for the next two years every retailer with rateable up to £50,000 will get a discount of £1,000 on their business rates.

To help ease the cost of living, Mr Osborne confirmed plans to trim energy bills by £50 and reiterated that next year’s fuel duty increase would also be scrapped. Also, from April 2015 a new married couple tax relief system will be introduced, which is expected to benefit more than 4m families.