Autumn Statement: False sense of security?

25 November 2015, Blog

It was always going to be an uphill battle for the Chancellor; finding £20bn worth of cuts to public spending in budgets that are already straightjacketed. But Osborne delivered his joint Autumn Statement and Spending Review with a remarkable level of poise and self-assurance; even managing to get a few laughs, notably at the expense of his Labour counterpart.

His confidence is arguably well founded. As the Chancellor of a majority government, at the beginning of a five year term he is in a relatively good position. Any unpopular cuts made now, will surely be long forgotten by the next election? Indeed in the run up to his big announcement the rumour mill had been working overtime, churning out reports of the “deepest cuts in history”.

Of course, this played into Osborne’s hands perfectly; prepare people for the worst and then deliver something just a little better.

He began his performance by promising to put security first, on both an economic and national level. Following the recent attacks in Paris, this narrative was likely to resonate with the crowd. Osborne announced that according to the OBR, Public finances over the next five years are looking £27bn better than they had done in July. This will mean that the Government can borrow £8bn less over this parliament; sound public finances, he argued, are a precondition of economic growth.

Although not quite the big stamp duty rabbit out of the hat trick from his last Autumn Statement, the Chancellor did produce a few surprises; notably his complete U-turn on proposed plans to cut tax-credits. This is unlikely to be of much consolation to the poorest in society, who still plan to lose out from the £12bn of cuts to social security that the Chancellor has committed to over this Parliament.

He also scored himself an easy win, with a guarantee that there would be real terms protection for the Police budget (Mrs May got her way).  Health, education, international aid and defence budgets were also given a protected status; although the NHS is expected to make £22bn worth of efficiency savings.

Despite weeks of desperate lobbying by ministers attempting to shield their unprotected budgets, the Chancellor revealed that there would be an overall day-to-day departmental spending cut of £20bn, equivalent to 0.8% of total expenditure each year by 2020. Officials in the Department of Transport will be licking their wounds; they suffered the biggest cut of 37%.

Arguably Osborne’s biggest win of the afternoon was a well-delivered jibe at his Labour counterpart; although John McDonnell did a good job of setting himself up as the butt of the joke. In his response to the Statement, the Shadow Chancellor quoted the Little Red Book of the Chinese communist leader Mao Zedong and ceremoniously threw the book across the table at the Chancellor, to which he replied “Oh look! It’s his personal signed copy”. Of course this rather overshadowed McDonnell’s actual point about the selling off of public assets to the Chinese government; and indeed the rest of his speech.

Roz Platt is an Account Manager at JBP’s Westminster Office

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