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Autumn Statement: £5bn stimulus expected for the 'Jams'

Further details of how this week’s Autumn Statement will help those the prime minister says are 'just about managing' have emerged.

 
Autumn Statement: £5bn stimulus expected for the 'Jams'

Further details of this week’s Autumn Statement announcements by chancellor Philip Hammond have emerged in weekend newspaper reports. The expected announcements include billions of pounds worth of infrastructure spending, a tax freeze and new measures to protect company pension schemes.

Roads will be a major beneficiary of Hammond’s spending plans, with £1 billion to upgrade local routes and another £220 million to ease the worst congested spots in the country. His statement will also recommend a £27 million expressway between Oxford, Cambridge and Milton Keynes, according to the Independent newspaper. 

The government is also expected to stick to the previous administration’s commitment to raise the level people start paying income tax to £12,500 and the 40p tax threshold to £50,000 by 2020, said the Sunday Times.

The prime minister Theresa May will tell business chiefs at the CBI's annual conference today that she wants to fulfil the wish of former chancellor George Osborne to cut corporation tax from 20% to the lowest level of any G20 country. That might mean targeting 17% given incoming US president Donald Trump has said he wants to slash American corporation tax to 15% from 35%.

Measures will also be announced that follow the high profile collapse of department store chain BHS which resulted in the pension falling on lifeboat scheme the Pension Protection Fund (PPF).

The chancellor is expected to announce a new public interest test that would allow ministers to intervene in takeovers. This measure would supposedly help safeguard company pension funds or mean employers could be fined for diverting needed funds away from pensions.

Other expected measures include:

  • giving shareholders an annual and binding vote on the pay of company bosses;
  • but watering down proposals for workers to sit on company boards;
  • committing tens of millions of pounds to grammar schools funding;
  • set departmental spending limits;

Altogether the pledges will amount to an overall spending stimulus package worth £5 billion. That is as much as the chancellor thinks the public finances can bear given the 'sharp challenge' and 'unprecedented uncertainty' they face following the Brexit vote, he told the BBC's Andrew Marr Show yesterday.

Philip Shaw of Investec Economics said Hammond's position was better than he might have expected after the EU referendum as economic growth had only slowed to 0.5% in the third quarter from 0.7% in the previous three months. 'Pressure to indulge in a substantive reflationary fiscal package to bolster demand has therefore subsided,' he said.

However, with the prime minister looking to protect the 'Jams' or those people 'just about managing', Shaw expected a cut in fuel duty and a boost for training in areas of skills shortages such as construction and science.

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