Welcome to this week’s Autumn Statement special edition of PA’s PA. This was Chancellor Philip Hammond’s first major economic speech in office and the first financial statement since the UK’s vote to leave the European Union. The main takeaways included the announcement that the Brexit vote would force the government to borrow £122 billion more than it planned and the news that there will be no more autumn statements from next year – with an autumn Budget in 2017 and spring statement in 2018 instead. It was a fairly cautious statement, with no grand gestures, but there were modest giveaways on infrastructure spending and housing as well as a few measures of interest to publishers.
One of the key measures was an extra £2 billion investment per year in research and development by 2020. The plan was first announced by Prime Minister Theresa May on Monday and has been sold as one of the first steps in the government’s new industrial strategy. It forms part of the £23 billion investment in innovation and infrastructure to counter the UK’s productivity gap. The government has also committed to a review of tax incentives for research and development in an effort to make the UK a more competitive place for innovation, and announced a new Industrial Strategy Challenge Fund which will back collaborations between business and science. In his statement Hammond said that the UK does not invest enough in research, development and innovation, and said it must build on its strengths in science and tech innovation to keep up with increasing competition from the rest of the world.
The government ignored calls from school leaders for the autumn statement to include extra funding for schools, with the main education announcement focusing around the government’s plans to allow the expansion of selective education in England. Philip Hammond said the government would provide £50m of extra capital funding per year to support the expansion of existing grammar schools from 2017-18.
The Treasury also announced it would devolve the adult education budget for London to the Greater London Authority from 2019-20.
One of the chancellor’s headline announcements was a cut to the rate of corporation tax to 17% by 2020. The government committed to reducing the burden of business rates by £6.7 billion over the next five years. Hammond said that the government will lower the transitional relief cap from 45% next year to 43% and from and from 50% to 32% the year after. He also said there would be an increase in the Rural Rate Relief to 100%, which he said would give small business in rural areas a tax break worth up to £2,900 per year.
There were a few pieces of good news for the creative sector. Following a consultation the museums and galleries tax relief, which will be available from April 2017, will be extended to include permanent exhibitions. According to the government, this will mean the relief is accessible to a wider range of institutions across the country.
Meanwhile there will be over £10m to support arts and cultural heritage projects, including £7.6m for repairs at Wentworth Woodhouse. The rest of the funds will go towards:
- Supporting a new creative media centre in Plymouth
- The development of the new Studio 144 arts complex in Southampton
- A Royal Society of the Arts pilot to promote cultural education in schools.
Philip Hammond also announced plans to add £400m into venture capital funds the British Business Bank, which is expected to unlock £1bn for start-ups hoping to scale up.
He also said he would double the UK Export Finance capacity “to make it easier for British businesses to export” and increase its risk appetite to £5bn.
The government said it would invest more than £1bn for digital infrastructure, and 100% business rates relief on new fibre infrastructure.