Listening to some people about the Autumn Statement, it appears you don’t get much for £4 trillion these days. That’s the amount the government plans to spend in the five years of this current Parliament. They aim to increase total spending by 8.7%, comparing 2019-20 with 2015-16. That’s why we hear endless arguments about cuts and the drive to a smaller state! We heard all the same arguments between 2010 and 2015. At the end of the last Parliament public spending was higher in cash terms and in real terms than in 2010.
We need to remember that the government’s strategy has always been to sustain public spending, and to get the deficit down with a huge increase in tax revenue. The aim this Parliament is to get the tax revenue increase from growth in the economy. This will also have the effect of lowering state spending as a total of the economy as a whole, and leads to all those siren cries that this means the state sector is being cut, when instead it is just growing more slowly than the rest. there were also tax rises, with a new tax on buying Buy to let homes and the apprenticeship levy on business.
The Chancellor was right to abate the severity of his proposed cuts to tax credits. I agree with the strategy of boosting pay through working smarter and paying more for more output. I agree with the policy of cutting income tax on working earnings. As real incomes rise so it is possible to withdraw benefit support to incomes. It makes little sense to tax people on modest incomes, only to recycle the money to them through a tax credit. The Chancellor was right to remove his severe cuts to tax credits before people have the benefit of the wage rise and the tax cut.
The boost to home ownership for sale is just what the economy needs. We are short of homes, and especially short of affordable homes for sale. This policy should help boost housebuilding and construction materials output. Brick kilns are coming out of mothballs, and new ones are being put in. There will be investment opportunities for a wide range of building related manufactured items.