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Autumn Statement Lookahead: Hammond's Big Brexit Debut

9 September 2016

On Wednesday 23 November, Chancellor Philip Hammond will deliver his first, hotly-anticipated Autumn Statement, heralding a "fiscal reset" and the first airing of a new Treasury style after half a decade of Osbornomics.

Echoing the careful public style of his predecessor, George Osborne, he brought the limelight into the normally-rarefied air of the Committee corridors on Thursday 9 September as he made the date public at the outset of a hearing of the Lords Economic Affairs Committee.

During the ensuing proceedings, Mr Hammond kept tight-lipped about what he might be set to announce in the statement, but responded to a series of more abstract questions from the assembled peers - including erstwhile Chancellors Lord Darling and Lord Lamont - designed to elucidate the details of his personal approach.

Grappling with speculation about a major hole in the public finances as a result of Brexit, the slow burn of the EU departure process and fallout means Mr Hammond will be required to tread a delicate course between appearing not to catastrophise and preparing the ground for whatever trouble may be ahead.

Fiscal rule

The themes of the session ranged from the academic to the immediate, as Mr Hammond's interlocutors pursued answers to the central question surrounding his tenure: what will be the ultimate fate of the previous administration's cherished objective of achieving a surplus? Abruptly abandoned by George Osborne amid the shock reaction to Brexit, the oft-amended deadline for getting into the black was central to the previous Chancellor's ambitions, justifying an extended period of austerity in the name of his "long-term economic plan".

While it won't be 2020 Mr Hammond is targeting, he confirmed in the session that he would indeed be seeking a new Fiscal Rule, and remained sober in outlook when it came to the UK's finances.

Intriguingly, however, he dropped strong hints towards investment as he confirmeed that he believed monetary and fiscal policy could function together as part of the response to shocks such as the Brexit vote.

Road and rail

The Times has interpreted Mr Hammond's comments as prefiguring an Autumn Statement underpinned by public infrastructure projects and housebuilding, after he expressed his interest in ensuring any stimulus provide a longer-term structural contribution to the economy.

In arguably the closest hint made during the session, he cited his belief that "modest, rapidly deliverable" projects in road and rail could be the best way to meet these needs.

Housebuilding

Peers also dedicated a significant chunk of the session to quizzing the Chancellor on his views on housing. Explicitly linking homes to wider economic woes, the session touched on the clash between economic and policy objectives, and the relative strength of central bankers and ministers in setting the balance.

Earlier in September, the Telegraph carried the news that the Government would be announcing a "£3bn housebuilding fund" designed to offer cheap loans and funding to developers in order to "get Britain building" following the Brexit vote - an initiative it noted would involve taking "more financial risk" than ever before as it tries to address this major policy headache.

Long-term budgeting

With the Government preferring to answer the numerous journalistic inquiries on post-Brexit financial decisions with a nod to the speech to come, the announcements contained in his speech are inevitably the subject of intense interest.

Another more Osborneque note was struck in the press this week courtesy of Politico, which reported that the Chancellor was considered altering the basis on which Government Departments calculate their budgets, giving them the opportunity to make multi-year calculations, and hence take a longer-term approach.

Mr Hammond's predecessor was sometimes accused of coming up with clever accounting tricks that would permit the economy to jump through convenient hoops and keep the numbers looking sweet, though one might more charitably interpret this departmental proposal as a means to stimulate better and more reasoned Whitehall decisionmaking amid a difficult spending climate.

As the weeks pass, we can expect to hear more trailed announcements and Whitehall whisperings transmitted through the press, though the extent to which the May administration will continue to play the typical media grid game remains to be seen.

To read the DeHavilland report of Mr Hammond's appearance before the Lords Economic Affairs Committee this week, click here.

DeHavilland will be collecting together all the rumours and confirmed announcements ahead of the Autumn Statement in our ever-popular Speculation Briefing. Join DeHavilland to receive it and a range of other informative and timely briefings on key political events.

Anna Haswell, Senior Political Analyst and Content Marketer
Anna Haswell
Senior Political Analyst and Content Marketer

As Senior Political Analyst at DeHavilland, Anna Haswell leads on financial services policy, as well as covering media issues. In her capacity as Content Marketer, she is also responsible for DeHavilland's briefings and analysis output, working across teams to ensure relevant messages reach current and prospective clients alike. She is a graduate of the University of Oxford and Goldsmiths, University of London.