Jeremy Hunt’s Autumn Statement for growth: rhetoric or reality

On Wednesday 22 November, the Chancellor of the Exchequer Jeremy Hunt unveiled the Government’s Autumn Statement – just over a year after former Prime Minister, Liz Truss’ mini budget caused an economic rupture in the UK’s economy. In this sense, this statement represented a culmination of a year of politicking from the Conservative Party and Prime Minister Rishi Sunak in an effort to reassure the public.

The mission of calming the choppy waters has seen the return of David Cameron and the Autumn Statement has been an extension of this: the focus on ‘economic responsibility’ through welfare sanctions and scepticism on borrowing are self-evident staples of Conservatism. This was also complemented by a moral and practical argument for cutting personal taxes and supporting businesses and innovation.

Nevertheless, the statement had missing pieces which made some question whether it really is the coherent economic plan for Government that is claimed, or is, instead, the start of the Conservative’s re-election campaign.

Two days prior to the Autumn Statement Sunak, proclaimed that now is the time to cut taxes. The previous day, Hunt had told Sunday with Laura Kuenssbergy that the Government could not rule out tax cuts, while also refusing to detail specifics. Both of these developments came after a year of the No.10 and HM Treasury press rooms briefing every week that tax cuts would only come once inflation had reduced – after all, Hunt had briefed this at the Conservative Party Conference. This key pledge to reduce inflation formed an important part of Sunak’s five key priorities for 2023 – in essence, the start of the Conservative’s mission of calming the waters.

Sunak’s speech on Monday reaffirmed this sentiment as he announced a further five missions. These were phrased specifically as long term with three out of five focusing on the UK’s macroeconomic situation: reducing debt; cutting taxes and making work pay; and supporting British business. These missions were expanded upon in the Autumn Statement: a cut to NI contributions by 2%; a cut to NI contributions from self-employed; a ‘responsible’ approach to public spending; increasing benefit sanctions; making full expensing permanent; investments in manufacturing and the creation of four new regional investment zones.

Throughout both Sunak’s speech on Monday and Hunt’s speech on Wednesday, the Government’s alleged long term economic plan was emphasised. They both argued that Labour’s strategy is its antithesis; clear dividing lines were set up between the Conservatives and Labour’s supposed preference for regulation, borrowing, taxes, inflationary policies, trade unionism, and intervention.

This approach perhaps raises wider questions for the Conservative’s political strategy. It could elucidate Sunak’s focus on the economy instead of ‘culture wars’ as he attempts to clear the blue water with Labour – that only under Conservative rule will your money be looked after. The very fact that the statement is titled an ‘Autumn Statement for growth’ is testament to this, also. This represents a clear attempt to battle over economic prudence and economic responsibility, just as the Conservatives centred its election strategy in 2010 and 2015. Maybe, then, Lord Cameron’s return last week was not purely ceremonial.

While the Conservative’s Autumn Statement helped illuminate its priorities, by that very nature it also revealed what is potentially on the back foot for the Government.

Despite Sunak and Hunt both focusing on the Conservatives’ commitment to deliver a ‘world class’ education system, there were glaring voids in the concrete substance. A continued commitment to apprenticeships through a £50m pilot scheme will do little to change the fact that the implementation of apprenticeship levy and T Levels has failed. Additionally, the absence of any additional support for childcare could mean that the Government’s plans for 30 hours of free childcare may fall flat due to the significant concerns over the sector’s ability to implement them without additional support. Just 3.9% of the UK’s GDP is spent on education, compared to 5% in OECD. Therefore, perhaps just like the Advanced British Standard, the Government’s vision for a ‘world class’ education system is still in the preliminary spin stage.

In his address to Parliament, Hunt also commended the UK’s Creative Industries for their important role in any growth strategy for the UK economy. However, the sentiment started and ended at warm words; a call for evidence on increasing Film and High End TV tax credit and funding increases to the British Film Institute and British Board of Film Classification may do little for a sector that has been impacted severely by austerity since 2010 and the COVID-19 pandemic. Perhaps the Government’s vision for the creative industry perennially joins that ‘world class’ education system in the preliminary spin stage.

Moreover, there were no commitments to additional public spending in public services in the Statement, with the Government funding its tax cuts by tightening spending. For instance, under the current spending set by this Autumn Statement, there will be real term spending decreases from 2024-25 to 2027-28: -0.7% in Local Government, -0.9% in Schools, -5.6% in the Courts and -6.7% in Prisons. Considering the sluggish growth of the economy and the huge problems faced by public services – RAAC in schools, bankrupt councils, court backlogs and a staffing crisis in prisons – this raises the question of whether more state spending is needed than the Government lets on.

Finally, the Office for Budget Responsibilities’ stagnant growth forecasts and reports that Hunt could fail to meet his debt reduction target could stipulate that the Autumn Statement represents a punch in the dark at Labour, ahead of a nearby election, rather than the long term economic strategy it purports to be. There could be a discrepancy between the rhetoric of the Autumn Statement and its reality.

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