The 2016 Autumn Statement will be delivered to Parliament by Chancellor Philip Hammond on Wednesday 23 November.
The Autumn Statement details what the government has planned for the UK’s economy and public finances based on the latest forecasts from the Office for Budget Responsibility (OBR).
I’ve confirmed that the Autumn Statement will be— Philip Hammond (@PHammondMP) September 8, 2016
held on November 23rd https://t.co/uDML0RXEJr
Here’s a roundup of the rumours and what Hammond has indicated he will do on Wednesday.
It’s unlikely the Autumn Statement will contain any major giveaways, as the economy is facing a ‘sharp challenge’ following the UK's Brexit vote.
Speaking on the BBC One Andrew Marr Show the chancellor said he recognised that ‘just about managing’, or Jam, families needed help but stressed he needed room in the public finances to deal with the impact of Brexit with forecasts predicting an economic slowdown and an ‘eye-wateringly large debt.’
However, planned promises set out by former Chancellor George Osborne like a raise in the income tax threshold for higher rate tax payers is likely to be announced as well as a freeze on fuel duty.
Letting agents fees
It’s been confirmed this morning that the Chancellor will ban lettings agents from charging fees to tenants.
These fees are already banned in Scotland, but will no doubt be widely welcomed by tenants across the rest of the UK.
Data from charity Citizen’s Advice suggests such fees cost an average of £337 per person.
However, letting agents have suggested the move will not benefit tenants as rents will simply be hiked to compensate.
David Cox, the managing director of the Association of Residential Letting Agents, added that most agents do not profit from fees.
“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market,” he said
Pension cold calls
Hammond is expected to announce a ban on pension cold calling.
New freedoms introduced last year which allows anyone aged 55 or over to cash in their pension has led to a surge in fraudsters trying to trick people into handing over their savings through dodgy investments.
A whopping £19 million was lost to pension fraud in 2015 and there were an estimated 250 million scam calls.
Under the changes, calls relating to pension investments where a firm has no relationship with an individual will be forbidden with fines of up to £500,000.
The Treasury will also consult on giving pension firms more powers to block suspicious transfers. The new rules will also stop small self-administered schemes from being set up using a dormant company.
Thousands of households being driven mad by slow broadband speeds could soon receive a much-needed boost in the form of a £400 million Digital Infrastructure Investment Fund.
The fund will be aimed at providers of fibre broadband, which offers far higher speeds, looking to expand their coverage.
In order to qualify for the funding they will have to match the amount they receive from the government.
Tax-free employment perks
The Sunday Telegraph suggests there could be a raid on salary sacrifice schemes with the tax-free benefits on cars, health checks, gym memberships and mobile phone contracts targeted.
Tax experts reckon the perks are costing too much in lost income tax and National Insurance contributions.
Employers can benefit from salary sacrifice schemes as it lowers the amount they have to pay in National Insurance contributions meanwhile employees reduce their Income Tax bill.
However, pension contributions, childcare and cycle-to-work schemes are unlikely to be impacted by any of the changes.
The Treasury has said that Hammond will pledge to find £1.3 billion for the UK’s road network.
The investment will include £1.1 billion for reducing congestion and upgrading local roads and a further £220 million for tackling traffic hotspots on England’s motorways and A-roads.
The Treasury claims road congestion costs the UK £13 billion every year and 100 million working days could be lost by 2040 if nothing is done about it. Projects thought to already have been the go ahead include a £27 million expressway connecting Oxford, Milton Keynes and Cambridge.
The pledge is part of a wider package of infrastructure investment worth around £5 billion to help shore up the UK’s economy in the wake of Brexit.
Hammond has said he believes productivity improvements like rail and road repairs had the best returns because they could be started quickly and have long-term benefits.
In a speech at the Conservative conference in Birmingham in October Hammond hinted that investment would be a major cornerstone of his strategy: “Our stock of public infrastructure – like our roads, railways and flood defences – languishes near the bottom of the developed-countries’ league table after decades of under-investment.
"And our businesses, too, are not investing enough. All of this must change to build an economy that works for everyone. We need to close that gap with careful, targeted public investment in high value infrastructure… and encouragement of more private investment in British businesses.”
The economy: austerity vs growth
Hammond has already signalled that he could use the Autumn Statement to scale back on austerity measures in the wake of June's Brexit vote.
Speaking to the FT last month, Hammond said: “As we leave the EU, we need to do so in a way that protects the British economy.” He added that deficit reduction would continue, but the pace and “parameters” would be up for review.
Indeed, Hammond may need to constantly amend his strategy in the build-up to his Autumn Statement speech as more data about the health of the economy filters through.
In October, the chancellor was given a surprise boost when it was revealed the economy had grown by 0.5% in the third quarter, well above economists' expectations.
But just two weeks later that optimism was tempered when influential think tank, the Institute for Fiscal Studies (IFS), warned Hammond he will be facing a £25 billion hole in public finances by the end of the current parliament as a result of slower growth and higher inflation.
So the chancellor will likely tread carefully when it comes to scaling back austerity measures, suggested Thomas Pope, research economist at IFS.
“Given the levels of uncertainty, [Hammond] might be wise to respond cautiously for now," he added.
"Any decisions to increase spending or cut taxes in the short run should be taken in the knowledge that significant further austerity after 2020 looks to be on the cards.”
Pensions could well be one of the key talking points in this year's Autumn Statement. There are already growing calls for the chancellor to scrap the state pension triple lock.
This measure ensures the amount of state pension people receive rises each year by the highest of inflation, earnings growth or 2.5%.
However, critics claim it's no longer needed or affordable. It's highly unlikely Hammond will make any changes in the short term, but he may well launch a review into the matter.
There is also speculation that he could make further reductions to the lifetime allowance or the amount people can pay into pensions each year.
Corporation and landlord taxes
Hammond has already indicated that he won't cut corporation tax to 15% to boost the economy following Brexit – as George Osborne had pledged.
Hammond has reportedly told European finance ministers that he is sticking to a previous plan to cut the rate to 17% by 2020.
It's also likely that he may reconsider the upcoming changes to landlord tax.
From April 2017 landlord tax relief for mortgage costs will be phased out. However, a similar tax policy has just been scrapped in Ireland, which could give the chancellor room to reverse the restrictions before they come into force in Britain.
Hammond also admitted the housing shortage would be a challenge he will need to tackle.
He said that the government would address this problem “using all the tools” at its disposal “because making housing more affordable will be a vital part of building a country that works for everyone.”
Hammond, along with Communities Secretary Sajid Javid, have already announced a £3 billion Home Building Fund to help smaller firms build 25,000 new homes by 2020 and up to 225,000 in the longer term.
A separate £2 billion loan will pay for 15,000 new homes by 2020 on surplus public sector land.
What businesses want
Here’s what businesses and industry think will and should happen when Hammond takes to the despatch box later this week.
Seven-day switching for savings
Tom McPhail from Hargreaves Lansdown reckons an easy win for the government and a popular move would be to extend the seven-day switch guarantee that exists for current accounts to savings.
Lifetime Isa could be scrapped
Investment company AJ Bell's senior analyst Tom Selby thinks the Lifetime Isa will be scrapped.
“The Lifetime ISA could be a useful extra option for would-be homeowners and retirement savers – particularly those who are basic-rate taxpayers and the self-employed.
“However, the product also has powerful enemies - most notably Baroness Ros Altmann in the House of Lords – who argue it risks undermining automatic enrolment.
"Furthermore, several major providers have said they won’t be ready to launch in April next year.
“The chancellor will not want a failed product that was conceived by his predecessor to become a millstone around his neck. He could conceivably scrap the Lifetime Isa and roll the Help-to-Buy government bonus into the existing Isa product."
What businesses and trade bodies want to see
Barclays believes that a second post-referendum interest rate cut and any major spending will be saved until the first half of next year.
The CBI has been pretty vocal about its wishes for the upcoming statement, saying that the government will need an "ambitious, pro-enterprise agenda" to encourage firms to invest and to improve future productivity. It also wants to see a boost in maternity pay and an extension of paid maternity leave from 39 weeks to a full year.
Fellow advocates at the British Chambers of Commerce call for Hammond to "expand the scope of investment allowances, bring forward changes to local taxation and increase spend on trade promotion."
RSM, a tax specialist firm, wants to see the chancellor shake up VAT and suggest Sweden could be a source of inspiration.
From 2017 the Swedish government will cut VAT on repairs from 25% to 12% to encourage citizens to stop throwing away items and mend them instead.
Tax refunds will also be offered to people that get white goods like dishwashers fixed instead of sending them to a landfill and replacing them with new products.
George Bull, senior tax partner at RSM, explained how this policy would benefit the UK economy: “If the UK followed the Swedish approach, more jobs would be created in the repairs industry, less waste would go to landfill and family finances would be boosted because repairs will generally cost considerably less than replacements.
"At a time when there are fears of job losses and rising import costs reflecting a weak pound, this could be very beneficial to the UK economy.”
Meanwhile, the Chartered Institute of Housing (CIH) wants to see Hammond and Javid's mega £3 billion housebuilding fund come to fruition.
It also wants the government to substantially increase the number of affordable rented homes in the UK as well as increasing funding for regeneration, improving standards in the private rented sector, renewing the fight against homelessness and keeping its pledge to introduce greater flexibility for affordable homes funding.
OakNorth Bank thinks Hammond should extend the Funding for Lending Sscheme which could help small banks like itself get an equal footing with larger banks.
Finally, the CIH wants the government to allow councils to borrow more for housebuilding by "reshaping and extending" the housing revenue account borrowing provisions.
The CIH said local authorities should be exempt for the scheme to cut social housing rents in exchange for extra investment in rented homes.
Ideas from the opposition
Shadow chancellor John McDonnell has said the party would set a living wage above £10 an hour by 2020.
The National Living Wage was introduced in April earlier this year. Workers over 25 now have to be paid £7.20 an hour, but the government has pledged to increase that to £9 an hour by 2020.
The speech also suggested a better tax strategy to shift from wages towards those who hold wealth.
Labour's vision, should they win the next election, is to be an 'interventionist but innovative' government. The party promises to make up shortfall in structural funding in the 2020s and beyond as well as funding reconciliation projects in Northern Ireland.