tag:theconversation.com,2011:/africa/topics/autumn-statement-2016-33578/articlesAutumn Statement 2016 – The Conversation2016-11-28T15:21:01Ztag:theconversation.com,2011:article/694462016-11-28T15:21:01Z2016-11-28T15:21:01ZWhy getting rid of letting agent fees won’t solve renters’ biggest problems<figure><img src="https://images.theconversation.com/files/147765/original/image-20161128-22751-1bcbkiv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">from www.shutterstock.com</span></span></figcaption></figure><p>Letting agents <a href="http://www.bbc.co.uk/news/business-38065249">will soon be banned</a> from charging administrative fees to tenants in England. Chancellor Philip Hammond announced the change as part of <a href="https://theconversation.com/most-just-about-managing-families-will-find-life-as-tough-as-ever-after-the-autumn-statement-69242">a series of measures</a> aimed at assisting “just about managing” families. The move could knock anywhere between <a href="http://www.bbc.co.uk/newsbeat/article/38092539/letting-fees-ban-how-it-works-in-scotland">£200 and £700</a> off the up-front cost of renting a home. </p>
<p>This is good news for a growing number of lower income households, and families and young adults, who are relying on rented accommodation for longer periods of time than previous generations. The private rented sector has grown substantially in recent years – today, <a href="https://www.gov.uk/government/statistics/english-housing-survey-2014-to-2015-headline-report">around one in five homes in England is rented</a>. Yet the sector remains poorly regulated, and <a href="https://www.jrf.org.uk/report/links-between-housing-and-poverty">reports show that</a> 38% of private renters live in poverty, after housing costs are paid.</p>
<p>The change has been a long time coming. Back in 2014, <a href="http://www.publications.parliament.uk/pa/cm201314/cmselect/cmcomloc/50/50.pdf">a Communities and Local Government committee</a> criticised the lack of regulation of letting agents, especially the charges made for administrative tasks such as reference and credit checks, tenancy renewals and applications. Fees vary significantly – particularly in larger cities such as London, where demand for housing is high – and up until now there have been no rules governing how they are set.</p>
<h2>A better deal?</h2>
<p>There are a few obvious benefits to the ban. Private renters currently spend <a href="https://www.gov.uk/government/statistics/english-housing-survey-2013-to-2014-headline-report">more of their gross income</a> on housing costs than households in other tenures. Banning fees will reduce the up-front costs of renting, and help to mitigate the cost of accessing housing. </p>
<p>There are concerns that agents will end up passing the administrative fees on to landlords, instead of tenants. This would deal another financial blow to landlords in Britain, a quarter of whom have already been <a href="http://www.telegraph.co.uk/news/2016/10/18/half-a-million-landlords-will-face-harsher-tax-rules/">hit with a tax hike</a> earlier this year. </p>
<p>In turn, landlords may seek to cover their costs by raising rents for tenants, thereby increasing the financial burden, which the government is seeking to lighten. Reassuringly, <a href="https://england.shelter.org.uk/__data/assets/pdf_file/0010/834832/6636_Scottish_letting_fees_report_v9.pdf">evidence from Scotland</a> – where letting agent fees have been outlawed since 2012 – shows that rents did not increase as a direct consequence of banning fees.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147760/original/image-20161128-22765-1yr70kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Can you fix it?</span>
<span class="attribution"><span class="source">from www.shutterstock.com</span></span>
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<p>Banning agent fees is a positive step towards improving the private rented sector for tenants, but it’s not a catch-all solution. As well as affordability issues, private renters are also more likely to live in <a href="https://www.gov.uk/government/statistics/english-housing-survey-2014-to-2015-headline-report">poorer standard housing</a> than home owners or social renters. Amateur landlords <a href="https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwi0yo7m0cvQAhWDIcAKHaP_DNQQFgghMAE&url=http%3A%2F%2Fwww.propertychecklists.co.uk%2Fdownloads%2F20160818_2%2Fdownload&usg=AFQjCNEdZ1BupYEfNgXg3rlFqEIBLvqYFg&sig2=4XGv2MTzoDuAhFt2gFJyYg&bvm=bv.139782543,d.d24">make up a large proportion of the sector</a>, and often unwittingly fail to comply with property standards and basic management practices.</p>
<p>What’s more, the standard short-term tenancies can leave tenants vulnerable to rent increases and “no fault” evictions, and are <a href="https://www.gov.uk/government/statistics/statutory-homelessness-and-homelessness-prevention-and-relief-england-april-to-june-2016">the primary cause of homelessness</a>. While six-month agreements suit tenants who need short-term or flexible housing, such as students, there are a number of groups who desire the security and stability provided by longer-term tenancies – particularly families with school-age children.</p>
<h2>Getting professional</h2>
<p>England’s regulation of these issues lags behind other parts of the UK. In Scotland, the reform of the private rented sector saw the introduction of longer tenancies. Scottish local authorities have also been given the power to introduce rent controls in areas where prices are increasing excessively. And in Wales, mandatory landlord registration and licensing has been introduced, to ensure a level of professionalism and safeguard property standards. </p>
<p>The improvements in conditions for renters in Scotland and Wales suggest that greater regulation may help to professionalise the amateur side of England’s private rental sector, and improve its reputation. </p>
<p>As city-regions across the UK start to <a href="https://theconversation.com/the-northern-powerhouse-what-actually-is-it-50927">receive devolved powers</a> from central government, there’s been a growing appetite for <a href="https://www.london.gov.uk/sites/default/files/at_home_with_renting_march_2016.pdf">greater control of housing and planning</a> issues to be put on the devolution menu. </p>
<p>Local Economic Partnerships (LEPs) and combined authorities are new tiers of governance through which housing and planning policies can be implemented, including the ability for city-regions to design policy that reflects local housing issues and priorities that may not be prioritised by national government. Changes to the private rented sector in Scotland and Wales already suggest that there are differences in policy priorities within the UK, which may also be expressed at city-region level. </p>
<p>Whether the government is inclined to agree remains to be seen. Recent interventions have focused on altering the way landlords are taxed and adding to costs for landlords, while at the same time restricting the powers of local authorities to implement <a href="https://www.gov.uk/government/publications/selective-licensing-in-the-private-rented-sector-a-guide-for-local-authorities">much-needed licensing schemes</a> to improve property standards. </p>
<p>So, while tenants can pause to celebrate the ban on letting agent fees, this can only be seen as the first step toward properly regulating the private rented sector. Further regulation needs to focus on major issues confronting the sector – particularly insecurity and affordability. And local governments should be empowered to work with their landlords to improve the sector for all, rather than passing on costs to landlords.</p><img src="https://counter.theconversation.com/content/69446/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Moore has received funding from the Joseph Rowntree Foundation. All views are expressed are those of the author alone.</span></em></p>Without better regulation, renting will still be insecure and unaffordable.Tom Moore, University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/693872016-11-25T14:24:45Z2016-11-25T14:24:45ZCould an end to corporate tax help Britain’s Brexit-burdened finances?<figure><img src="https://images.theconversation.com/files/147440/original/image-20161124-15344-j4fqp9.jpg?ixlib=rb-1.1.0&rect=62%2C59%2C937%2C567&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/rajue/14281288764/in/photolist-nKZkAC-a3FHC7-6T18EB-97TcL-5bTCU-abDH5-5Pvp3e-5BwtM4-6ni7Dz-6fAAok-87WUzU-jTu1U2-pvbh-cGmnco-9z2pw7-odrbbs-Hq2bXZ-96hNh5-HyZkPt-a9Thxn-dJJ1bY-6iektN-qSoPsE-2bSkz-bd3ft4-7WC9x9-8hjibn-D6VeT5-cGmnaY-8UCrwN-8xLH8s-4f2eWA-cye5Tb-cGoXAU-a7n3ey-cGmneJ-9MazHF-f5sapZ-5J4yn5-4fWSm-4UUrtR-r9XFH4-5HZrvK-cyWZqE-cyWZnE-jt1VSN-5HZneT-cyWZsy-7sfoBM-4v5zR">Ralf-Juergen/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>For many of us small government liberals who thought that, however flawed the European project is, the UK was better off staying inside it, there was one <a href="https://theconversation.com/uk/eu-referendum-2016">Brexit</a> argument that resonated. This was the promise that once it had removed itself from <a href="https://theconversation.com/4-300-to-quit-the-eu-bring-me-my-cheque-book-59699">the shackles of Brussels</a>, with its penchant for interference, overregulation, and general <em>dirigisme</em>, the UK would be free to return to the halcyon days of the mid Victorian era. A time of low regulation, low tax and free trade.</p>
<p>What remains of these promises? As I suspected at the time of the referendum campaign, not much. There will be no North Atlantic version of Hong Kong – during its heyday, a free-wheeling haven from overbearing regulation and punitive taxes. My guess is that all the heavy-handed, overweening (and vaguely French) interventionism of the European Union will merely be replaced by good old British red tape. I for one will struggle to appreciate the difference.</p>
<p>On the bright side, it could have been worse. Though there was some additional spending on housing, infrastructure and R&D in the <a href="https://theconversation.com/autumn-statement-2016-tories-shift-to-growth-strategy-in-an-ed-balls-style-pirouette-66531">recent Autumn Statement</a> from chancellor Philip Hammond, we thankfully heard no more of the rhetoric about industrial policy that first <a href="http://uk.reuters.com/article/us-britain-eu-industry-idUKKCN10C3CR">accompanied prime minister Theresa May’s ascension to office</a> in the summer. Perhaps we can thank Hammond for that, or maybe it returns in the spring? </p>
<p>Economic theory as well as historical experience has taught us that best way to fix an ailing economy – and maintain popular faith in liberal democracy – might not be the method we have become used to. In the familiar scenario, we empower our social betters (politicians and Whitehall mandarins) to manage the nation’s resources (other people’s money) to the benefit of the most deserving firms (those that contribute most to the party in government) in areas of the country most in need of investment (marginal constituencies). </p>
<h2>Rising debt</h2>
<p>What we do know for sure is that the aforementioned small increases in government spending on R&D, infrastructure and housing – along with the freeze on fuel duty and the decision not to implement changes <a href="https://www.gov.uk/pip/overview">to the “PIP” payments</a> for those with disabilities or long-term ill-health – will play only a small part in preventing the UK from achieving a budget surplus by the end of this parliament. </p>
<p>More significant is the <a href="http://www.bbc.co.uk/news/uk-politics-38087110">revision downward in forecast growth</a>, accompanied by lower government revenue. By the end of the next fiscal year, the debt burden will have reached 90.2% of GDP. These are the sorts of numbers we normally expect to observe only in the aftermath of a fairly large war – the UK went from 24% to 127% <a href="http://www.res.org.uk/view/article5jan12Correspondence.html">over the course of World War I</a>. </p>
<p>And it gets worse, because any decline that follows will almost certainly be reversed by the end of the next decade due to the costs associated with the UK’s ageing population. This is a problem likely to be exacerbated by any steep reduction in immigration because most immigrants arrive at the beginning of their working lives and often pay more in taxes <a href="http://onlinelibrary.wiley.com/doi/10.1111/ecoj.12181/abstract">than they receive in benefits</a>.</p>
<p>There is a view, promoted by Carmen Reinhart and Kenneth Rogoff at Harvard, based on <a href="https://www.aeaweb.org/articles?id=10.1257/aer.100.2.573">their own empirical research</a>, that a 90% debt burden represents a singular threshold – borrow beyond that and a country suffers particularly low growth. This is a result that deserves to be treated with scepticism – it is generated by throwing into one dataset lots of very different countries across different time periods. Nonetheless, ever higher debts will need to be financed by ever higher tax rates. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147444/original/image-20161124-15365-6f915k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A new model for pensions?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/bugmonkey/5051453089/in/photolist-8Go21M-kQpL4Q-ekHvpL-og5vk6-f2eU7s-og4UJy-8faxV5-orcGqY-9yyKsa-qLTVMD-fHy59G-6Y9PX-LuopP-dY4CGP-cmNJLW-seUGVq-iD1EvW-4HvnYB-jwzhXx-iCYmEs-4HaVvG-cswyyf-ps2Gjn-cswyr3-49NRmr-kQnQbn-5VXzE6-5W2Uff-JnwJBX-ozd6nb-ozftip-afK9pD-7YiQv-cSpYzo-kQnWGZ-fYdYPL-oR8g66-oR8jtt-oR8QqJ-fxHST2-D7YxQ-kQoNQn-cUbABA-guBEKy-5odLFi-ba31xi-p6ArtQ-p8CFJX-5cRi2z-ajqmzt">Neil Wilkie/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p>Doubling a tax rate does not double the amount of revenue a government collects. The distortions and disincentives the tax creates suppress economic activity at an ever increasing rate, shrinking the tax base. Beyond a certain point a debt becomes unsustainable, when taxes can no longer rise enough to service debt interest payments. Though the UK and other western countries may still be far from this Greek scenario, they will suffer, particularly once interest rates begin to rise and refinancing the debt being accumulated becomes more difficult.</p>
<h2>Corporation tax</h2>
<p>So more spending and lower taxes would be a recipe for disaster. That does not mean that the present way the UK spends or taxes is in any way efficient. Hammond did announce that corporation tax cuts planned by his predecessor George Osborne would be implemented. A bolder move, and one more in keeping with the anarchic, anti-bureaucratic spirit of Brexit, would be to abolish corporation tax completely. </p>
<p>Why? Because this is a singularly distortionary tax, and I would argue, deeply unjust as well. It only generates <a href="https://www.ifs.org.uk/uploads/publications/bns/BN163.pdf">about 6% of UK government revenue</a>, but collecting it imposes vastly more administrative costs on UK businesses. Abolish it and armies of intelligent people working as lawyers and accountants could be repurposed to more productive activities in place of their current function of paying (or avoiding) this tax. Justice too would be served.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147446/original/image-20161124-15359-xtjg3p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Reflecting on new tax arrangements for business.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/powerbooktrance/465016782/in/photolist-H6khJ-p65J8c-bAEga1-2E4oz-ePdA2r-4EG82G-4qQTFK-ePpYMQ-fjPkMm-yweWc-6r6g8o-6JuV2v-6gceBv-4FZHmd-AMqJ-H6kiJ-9ZVjnr-H6kg5-8MnN24-4sWK41-nfa8r6-pTk24-ePpYPN-aN8wPF-aZirqa-b5uDgr-ePpYNJ-4EDQCx-5Zgh4b-adSjfV-kzKr8V-sfKi-9r44TS-ePpYYC-8Per87-4CqzEC-9iFBeM-nd7qoQ-oa9e9-yweWg-9oPzzs-8xYGnN-5kt1fX-j6rDos-9BKSHD-fiLCfS-2an28V-cT6ujf-89xyPL-7wiRNK">Terry Johnston/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Personally, I am not bothered that Amazon or Starbucks do not <a href="https://www.theguardian.com/technology/2016/sep/02/multinationals-amazon-starbucks-austria-says">“pay their fair share”</a>. Indeed, I believe they have a fiduciary responsibility to their shareholders to pay only what the law requires and not a penny more. Demanding they do otherwise is an assault on the very concept of the rule of law and seems vaguely fascistic. </p>
<p>What does irk, is that their smaller competitors or new firms that might compete against these incumbents cannot shift their profits to Luxembourg or avail themselves of the services of lobbyists that would ensure that tax regulations are written in a way that benefits them. </p>
<p>Ultimately, shareholders pay this tax and unlike the income tax, everyone, whether a millionaire or a destitute pensioner pays here the same rate. Shifting the burden to income tax would yield less waste and would actually be more progressive. It would also support the creation of a more entrepreneurial society, one with more competition and fewer large monopolies.</p><img src="https://counter.theconversation.com/content/69387/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Ben-Gad does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A zero rate for business could actually be a progressive move and would reflect the anti-bureaucratic spirit of Brexit.Michael Ben-Gad, Professor of Economics, City, University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/692422016-11-23T18:46:41Z2016-11-23T18:46:41ZMost ‘just about managing’ families will find life as tough as ever after the Autumn Statement<figure><img src="https://images.theconversation.com/files/147195/original/image-20161123-19726-3kc3kf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Empty again.</span> <span class="attribution"><span class="source">Andrey_Popov/www.shutterstock.com</span></span></figcaption></figure><p>Both the tone and content of Philip Hammond’s first budgetary statement belied the mood music of the past few weeks: that Theresa May’s government will do much more to help “just about managing families” – dubbed the “JAMs”. Mr Hammond continued in a <a href="https://theconversation.com/autumn-statement-2016-experts-respond-69304">modest way some policies</a> of his predecessor, George Osborne, such as freezing fuel duty and promising more social housing and help-to-buy schemes.</p>
<p>There was also infrastructure support for the regions and support for innovation to improve long-term productivity. But families struggling to make ends meet right now will find it hard to see how such policies will make their lives significantly better in 2017 than in 2016.</p>
<p>The few announcements with a direct effect on personal incomes will come nowhere near undoing recent cuts in state support for families on low incomes, including those who benefit from the welcome pay increase represented by the National Living Wage. Immediately after the summer 2015 budget, I explained in an article for The Conversation why <a href="http://theconversation.com/heres-why-the-national-living-wage-might-not-leave-you-better-off-57017">this measure would not leave most families better off</a> when combined with cuts in tax credits and Universal Credit. </p>
<p>Such critiques led to <a href="https://www.theguardian.com/uk-news/2015/nov/25/george-osborne-u-turn-scrap-tax-credit-cuts-autumn-statement">a climbdown</a> by Hammond’s predecessor at the Treasury, George Osborne, on the cuts to tax credits but not to Universal Credit. Now as Universal Credit is phased in, its declining real value will hit the families finding it hard to manage.</p>
<p>Hammond announced just one measure to help compensate for these losses: a reduction in the very sharp rate at which Universal Credit is reduced as people earn more. For every additional pound you earn, you currently lose 65p in Universal Credit, and this “taper” will fall to 63p in April 2017. For selected families, this change, in combination with the pay rise and higher tax allowances, will turn a small net loss into a net gain. For most, it will come nowhere near doing so.</p>
<h2>Swings and roundabouts</h2>
<p>The two graphs below illustrate who the winners and losers will be. On the left of each graph are families who do not work: they have only seen cuts, and will typically be £750 a year worse off once the announced reductions in entitlements feed through. These are families who are quite clearly not managing, and are finding it ever harder to do so. </p>
<p>My team’s <a href="http://www.lboro.ac.uk/research/crsp/mis/thelivingwage/">research</a> at Loughborough University shows that some families on out-of-work benefits have barely half what they require for an acceptable minimum living standard, based on what members of the public say is essential, compared to nearly two thirds just before the financial crash.</p>
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<p>Moving to the right along the diagrams, families who work a few hours a week have become worse off as a result of the cuts because Universal Credit starts being withdrawn sooner as their pay rises. Their “work allowances” under Universal Credit have been cut, and the effect is especially sharp for lone parents. On the other hand, the higher minimum wage and Hammond’s cut in <a href="https://about.universalcredit.service.gov.uk/kms/Pages/Earnings_taper_for_Universal_Credit.htm">the “taper” rate</a> at which Universal Credit falls each time a recipient’s earnings rise, from 65p to 63p in the pound, produce offsetting gains, which are larger the more hours you work. </p>
<p>For couples where both parents work full-time on the National Living Wage, there is a small net gain. For everyone else, and especially lone parents, the changes have made things worse overall.</p>
<p>These changes help those low-paid families who manage to find plenty of regular work – but that is not the experience of most people on low incomes. The overwhelming majority getting help from the state do not have two full-time wages coming into the household.</p>
<p>The new work and pensions secretary, Damian Green, has stated that there will be “<a href="http://www.theguardian.com/politics/2016/sep/18/no-more-welfare-cuts-under-theresa-may-says-minister-damian-green-end-to-austerity">no new search for cuts in individual welfare benefits</a>”. This is qualified good news to families depending on state help: among the cuts in the pipeline that were not reversed in the Autumn Statement, the four-year freeze in the cash value of benefits <a href="https://www.gov.uk/government/speeches/chancellor-george-osbornes-summer-budget-2015-speech">announced by Osborne</a> is particularly significant. </p>
<h2>Benefit freeze, as costs go up</h2>
<p>Over the next few years, living standards for the worst off are threatened further not just by renewed inflation, but by the wrong kind of inflation. As the graph below shows, recent years have seen a reversal of the situation in the 1990s, when falling world commodity prices made essentials like food and fuel cheaper even when domestic demand put other prices up. These days, the world price of energy and other commodities have become the driver, and as my <a href="https://www.jrf.org.uk/report/global-influences-cost-minimum-standard-living-uk">research has shown</a>, this means that those on the lowest incomes are hardest hit by inflation.</p>
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<p>This recent decoupling of benefit increases from price rises is unprecedented in the postwar period. Steady prices in the past two years have delayed the impact of the current benefits freeze, but the <a href="http://budgetresponsibility.org.uk/efo/economic-and-fiscal-outlook-november-2016/">latest forecasts</a> from the Office for Budget Responsibility suggest the Consumer Prices Index will rise 10% by the end of this parliament – and the cost of essentials could increase more quickly than this. For many families who just about manage, and for most of those who do not, this augurs a further fall in living standards.</p><img src="https://counter.theconversation.com/content/69242/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Donald Hirsch does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The chancellor’s autumn statement only just about managed to distribute some JAM.Donald Hirsch, Professor of Social Policy, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/665312016-11-23T16:01:10Z2016-11-23T16:01:10ZAutumn Statement 2016: Tories shift to growth strategy in an Ed Balls-style pirouette<p>Needing to perform a fiscal twist in a confined space, it looks like Philip Hammond has borrowed some dance steps from former shadow chancellor Ed Balls. Despite some mockery of <a href="https://www.theguardian.com/tv-and-radio/2016/oct/24/strictly-come-dancing-ed-balls-on-to-a-winner-botch-job">his recent turns on TV show Strictly Come Dancing</a>, Balls’ footprints are clearly visible on the spending boost the chancellor unveiled in his first Autumn Statement. </p>
<p>Balls regularly castigated the 2010-15 coalition government for being too hasty to cut public spending and raise VAT. He called, in particular, for a boost to <a href="http://www.politics.co.uk/comment-analysis/2012/10/01/ed-balls-speech-in-full">infrastructure, skills and housing investment</a> on the basis that without it, a stifled economic recovery would delay the return to budget balance. </p>
<p>Six years on, Hammond has taken much the same stance. Attempts to achieve a budget surplus have been pushed elusively forward <a href="https://www.gov.uk/government/speeches/autumn-statement-2016-philip-hammonds-speech">to “the next parliament”</a>. Meanwhile, the focus shifts to boosting growth, following a forecast downgrade by the Office for Budget Responsibility, with adverse implications for tax revenues.</p>
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<p>To protect against another slowdown, additional <a href="http://www.bbc.co.uk/news/uk-politics-38075649">spending on public infrastructure</a> (especially housing, roads and telecoms) has been announced. Meanwhile, he is also slipping in some tax reductions – including a return to the 50p top rate and a reduction of taxes on in-work benefits – in case the Supreme Court’s Brexit verdict <a href="http://www.telegraph.co.uk/news/2016/11/03/high-court-to-rule-on-brexit-legal-battle-and-theresa-mays-decis/">forces an early election</a>.</p>
<p>Big infrastructure projects are a <a href="https://www.imf.org/external/pubs/ft/wp/2016/wp1640.pdf">favoured way to kickstart stalling economies</a> because they can quickly create jobs in areas that most need them. They also generate income that mostly gets spent, boosting other activity. Such projects can pay for themselves through extra tax revenues which then shrink the budget deficit in relation to GDP. Hammond’s quickstep addition is an annual <a href="https://www.gov.uk/government/news/autumn-statement-2016-some-of-the-things-weve-announced">£2 billion boost to research and development</a>, aimed at making those already in work more productive. </p>
<p>George Osborne did something similar. Following the failure of austerity <a href="http://www.bbc.co.uk/news/business-18882172">and a dip back into recession in 2011-12</a>, he quietly reinstated several of the initially-suspended infrastructure programmes. Hammond has signalled an intention to go much further <a href="http://www.itv.com/news/update/2016-11-23/chancellor-announces-23bn-productivity-investment-fund/">with an extra £23 billion</a> to be channelled in the first five years with his new investment fund. His hope is to reverse the impending slowdown and Brexit aftershocks.</p>
<h2>Selective credibility</h2>
<p>It’s not the first time that a party <a href="http://www.bbc.co.uk/news/business-33074500">committed to cautious and balanced fiscal policy</a> has veered towards plans it <a href="http://www.conservativehome.com/leftwatch/2011/08/pour-petrol-on-a-fire-rub-salt-in-a-wound-increase-debt-in-a-debt-crisis.html">once mocked as ill-timed and irresponsible</a>. A Keynesian-style stimulus – running a deficit to spur growth, and so raising national debt – has historically been easier for Conservative than Labour governments in the UK, and for Republican than Democratic presidencies in the US. </p>
<p>This is because conservatives normally push for lower taxes, based on the belief that tax reductions will actually close a budget deficit by boosting people’s ability and willingness to pay taxes. This wilts under <a href="http://www.princeton.edu/%7Ervdb/LafferCurve/LafferLaughable.html">economic analysis</a>. And when reality bites, a switch is made from taxing less to spending more on structures that can constitute a public asset as “security” for the additional public debt. </p>
<p>Labour broke the <a href="http://news.bbc.co.uk/1/hi/business/8636701.stm">deficit-boosting record in 2008-10</a> – but only after the unprecedented bailing-out of a collapsed financial sector. It had previously reduced the public debt, by moving the budget into surplus <a href="https://mainlymacro.blogspot.co.uk/2012/08/facts-and-spin-about-fiscal-policy.html">earlier in its term</a>. Yet the Conservatives, with Hammond now as chancellor, have used the idea of Labour’s “fiscal irresponsibility” to justify huge public spending cuts. </p>
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<img alt="" src="https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147191/original/image-20161123-19689-1t18zc2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Infrastructure spending.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>While the deficit has steadily narrowed since 2010, Osborne’s missed targets have meant the Conservative-led governments have added more to public debt <a href="http://www.bbc.co.uk/news/business-25944653">than the Labour administration they replaced</a>. Indeed, Labour governments – often elected after a boom has collapsed, and never trusted to borrow as much – have run consistently tighter budgets <a href="http://www.primeeconomics.org/articles/taq30tk04ljnvpyfos059pp0w7gnpe">than those who accuse them of reckless spending</a>. </p>
<p>Hammond’s new investment fund looks very much like the long-term investment bank that Labour has <a href="https://www.theguardian.com/politics/2016/jul/18/labour-vows-to-set-up-national-investment-bank-to-mobilise-500bn">long dreamed of</a>, and never succeeded in, launching.</p>
<p>The Conservatives argue that they can now afford some fiscal relaxation, having earned “credibility” through Osborne’s years of austerity. By drumming home the idea that they will shrink public spending to the smallest fraction of GDP <a href="https://www.theguardian.com/uk-news/2014/dec/03/osborne-plans-public-spending-shrink-1930s">since the 1930s</a> and continuing to lambast Labour for leaving such a large deficit, they manage to deflect criticism. Yet the OBR has confirmed that weaker GDP growth and tax receipts left the 2015-16 deficit at £76 billion, <a href="http://budgetresponsibility.org.uk/docs/dlm_uploads/Forecast-evaluation-report-October-2016-1.pdf">four times its £18 billion forecast</a>. </p>
<h2>Is the timing right?</h2>
<p>Chancellor Hammond can also argue that historically low interest rates on public debt make this the right time for governments to borrow more. In a world seemingly <a href="https://www.brookings.edu/blog/ben-bernanke/2015/04/01/why-are-interest-rates-so-low-part-3-the-global-savings-glut/">awash with capital</a> and large corporations sitting on <a href="http://uk.businessinsider.com/record-us-corporate-cash-holdings-182-trillion-2015-6">mountains of cash</a>, tax cuts haven’t delivered the needed boost to enterprise, so the state must take a more direct hand.</p>
<p>But the six-year gap between Balls’ and Hammond’s plans may also present problems for the Treasury. With more inflation <a href="http://uk.reuters.com/article/uk-britain-inflation-barclays-idUKKBN13G1QK">on the horizon</a> and the UK’s credit rating <a href="http://www.bbc.co.uk/news/business-36644934">heading downwards</a>, the government’s phase of virtually costless long-term borrowing is coming to an end. Even yields on long-term bonds <a href="http://www.marketwatch.com/story/global-bond-retreat-yanks-japanese-yields-firmly-above-zero-2016-11-18">are rising</a>, despite the Bank of England halving its base rate to 0.25% <a href="http://www.bbc.co.uk/news/business-36976528">immediately after the June 23 referendum</a>.</p>
<p>While big projects may cost more to finance under Hammond than if Osborne had launched them earlier, their growth-reviving benefits may also turn out to be smaller. The multiplier effect of deficit spending on national income is highest <a href="https://www.imf.org/external/pubs/ft/tnm/2014/tnm1404.pdf">when labour markets and consumer spending are slackest</a>, as they were in the UK in 2011-12. </p>
<p>Today, although the economy hasn’t grown enough to close the deficit, most of that slack has been taken up. Unemployment is <a href="http://www.bbc.co.uk/news/business-36844302">at its lowest for a decade</a>, employment at its highest <a href="http://www.recruiter.co.uk/news/2016/11/employment-remains-at-record-high/">since records began</a>, and spare resources could soon be even scarcer if the UK adopts a hard Brexit, with tight immigration controls. In these conditions, firms building the extra houses, roads and railways could find themselves bidding for additional employees and raw materials, driving up costs and prices rather than output and employment.</p>
<p>Rising labour costs are, of course, economists’ code for the higher pay which voters – and the Chancellor’s party – expect <a href="https://www.ft.com/content/d0829086-96bc-11e6-a1dc-bdf38d484582">to gain when Brexit uncertainty settles</a>. If that promise secures the government’s re-election by 2020, Ed Balls could well claim to be the ghostwriter denied a royalty.</p><img src="https://counter.theconversation.com/content/66531/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Shipman receives funding from the British Academy/Leverhulme Foundation. </span></em></p>Hammond has taken an oddly similar stance to former shadow chancellor Ed Balls: running a deficit and boosting infrastructure spending.Alan Shipman, Lecturer in Economics, The Open UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/693042016-11-23T14:39:15Z2016-11-23T14:39:15ZAutumn Statement 2016: experts respond<p><em>Philip Hammond, chancellor of the exchequer, has delivered Britain’s first major economic statement since the Brexit vote in June. Here our panellists give their take on what it means for the UK economy. Stay tuned for further updates, and follow @ConversationUK on Twitter.</em></p>
<h2>The economy</h2>
<p><strong>Geraint Johnes, Professor of Economics, Lancaster University</strong></p>
<p>The uncertainty created by the EU referendum left the chancellor with relatively little wiggle room. The Office for Budget Responsibility reduced its forecast of growth in the coming year from 2.3% to 1.4%, with adverse implications for tax revenues. Faced with this, the chancellor has produced a statement that is broadly responsible, prioritising measures that strengthen the resilience of the economy in a turbulent global context.</p>
<p>This entails a relaxation of fiscal constraints. Hammond has delayed both the return to fiscal balance and the time at which the debt:GDP ratio starts to fall. Some will perceive this as can-kicking, but it seems wise.</p>
<p>The chancellor has also announced major new infrastructure investment – in R&D, transport, digital resources and housing. This is welcome and should bring a boost to the economy.</p>
<p>A particularly important provision concerns the reduction in the <a href="https://about.universalcredit.service.gov.uk/kms/Pages/Earnings_taper_for_Universal_Credit.htm">Universal Credit taper rate</a> from 65% to 63%, increasing the amount of in-work benefits people can receive. This could be seen as a response to the view that the referendum result reflected a call for change by those most adversely affected by austerity. But the adjustment will most help the least needy of those who receive Universal Credit. It is a measure for the <a href="http://www.bbc.co.uk/news/uk-politics-38049245">“just about managing”</a> more than the “frankly not managing”.</p>
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<p><strong>Michael Kitson, University Senior Lecturer in International Macroeconomics, Cambridge Judge Business School</strong></p>
<p>A damp squib: economic policy needed a reboot and instead it got a light makeover. The economy is facing two big challenges: productivity growth is stagnant (“shocking” according to the chancellor) and the Brexit iceberg is looming. </p>
<p>First, Philip Hammond could have recast fiscal policy to allow significantly more public investment in the economy. Instead he merely acknowledged that the government will fail to achieve its fiscal targets. Monetary policy is running out of steam and an expansionary fiscal policy is one of the few effective options to deal with the challenges ahead. A preoccupation with “balancing the books” makes sense for a household, but not for an economy that is suffering from a severe lack of investment. </p>
<p>Second, there is the need for a coherent industrial policy to promote productivity growth. Instead we get a few piecemeal initiatives which are more symbolic than substantial. There is £23 billion over five years for a new investment fund. Yes, “every little helps”, but this is a paltry figure when you consider that the annual size of the British economy was £1,865 billion in 2015. The devil will be in the detail, but the investment fund is likely to only amount to around 0.2% of GDP. As a result, the UK will continue to lag behind the investment in innovation of most of its major industrialised peers. </p>
<p>The Autumn Statement was a lost opportunity to implement a major transformation in the economy’s productive potential and capacity for innovation – which are the best ways of ensuring future prosperity for “hard-working families”.</p>
<h2>Investment and productivity</h2>
<p><strong>David Bailey, Professor of Industry, Aston University</strong></p>
<p>The marked deterioration in growth forecasts and the public finances announced in the Autumn Statement meant that the government didn’t have many options in terms of fiscal giveaways to develop a wide ranging industrial strategy. But, as Hammond quite rightly stressed, UK productivity lags behind that of other countries. </p>
<p>To tackle this, he announced a “new national productivity investment fund” worth £23 billion which will focus on innovation and infrastructure. Investment in R&D will also rise by £2 billion a year by 2020. But this is small scale stuff.</p>
<p>There were some other, good small scale steps like boosting support for exports, more funding for venture capital for growing firms, and £390m for low carbon vehicles and connected cars. But whether Hammond’s pretty modest package stacks up as being able to transform UK productivity is surely questionable.</p>
<p>Rather than big transformational projects (which Hammond doesn’t anyway have the cash for), he favoured small-scale shovel-ready ones – like an extra £1.1 billion for English transport networks – which can deliver some small but quick economic wins.</p>
<p><strong>Stephen Roper, Professor of Enterprise and Director of the Enterprise Research Centre, Warwick Business School</strong></p>
<p>Addressing the UK’s productivity gap moved centre stage today as the chancellor announced a range of investments to make UK businesses more “resilient” and “match fit”. </p>
<p>The productivity challenge is significant and borrowing to address it is a gamble. As the chancellor indicated, it currently takes an average UK worker five days to generate the same productivity as German employees generate in four. It remains to be seen how effective the chancellor’s package of measures will be in addressing the productivity challenge. Public investment alone is unlikely to close the gap, however. UK firms too will need to significantly increase their investment which is perhaps unlikely given the uncertainties of Brexit.</p>
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<img alt="" src="https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147217/original/image-20161123-19685-18zmxuz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hammond hopes R&D funding will boost growth.</span>
<span class="attribution"><span class="source">Shutterstock.com</span></span>
</figcaption>
</figure>
<p>Other aspects of the Autumn Statement will be welcomed by business. Confirmation of planned corporation tax reductions to 17%, business rate reductions and rural rate relief are all positive steps. Less welcome in some quarters will be the increase in insurance taxes. </p>
<p>Reflecting Theresa May’s comments in June on the steps of 10 Downing Street, Hammond also signalled his aim to “build an economy which works for everyone”. Cash for regional transport, city deals that inject cash into regions and £1.8 billion from the Local Growth Fund to boost infrastructure in English regions will help perhaps. But there was little here to directly address issues of inclusivity or boosting growth in the UK’s poorest communities. </p>
<h2>Personal Finances</h2>
<p><strong>Jonquil Lowe, Lecturer in Personal Finance, The Open University</strong></p>
<p>Just-about-managing households will welcome the further freeze on fuel duty, worth £130 a year to an average car driver. The duty accounts for just under 58p per litre or nearly half of the current pump price. Less welcome is the rise in Insurance Premium Tax (IPT) from the current rate of 10% to 12% from June 2017. IPT is a bit of a stealth tax. Because we buy most insurance only once a year and providers invariably hike up premiums for existing customers at renewal, we tend not to notice this embedded tax. But it’s a great money spinner for the government with each 1 percentage point rise bringing in an extra £400 million a year.</p>
<p>Given current paltry returns, not-managing-at-all savers will welcome the announcement of a new National Savings & Investments savings bond next year, with an expected return of 2.2% a year (before tax) for a three-year term. However, they must wait until the March 2017 Budget for details. By then, inflation will be on the rise and interest rates may also be picking up – so we wait to see how attractive this bond will really be.</p>
<h2>Welfare</h2>
<p><strong>Peter Taylor-Gooby, Professor of Social Policy, University of Kent</strong></p>
<p>The chancellor has announced a “cap” on welfare spending. This is an overall limit set for spending on all welfare benefits apart from pensions and those, like Jobseekers’ Allowance, where outside factors such as the state of the jobs market affects demand.</p>
<p>Comparing the rate of increase allowed for the cap with expectations of economic growth shows how the poor – in work and not in work – will lose out by some 2% a year, with some slackening in the run-up to the next election. This throws into relief the chancellor’s failure to do much to address the continuing impact of the legacy of Osborne’s cuts.</p>
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<img alt="" src="https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147241/original/image-20161123-19722-153rq9.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Expected GDP and Welfare Cap Growth, 2016-2021.</span>
<span class="attribution"><a class="source" href="https://www.gov.uk/government/publications/autumn-statement-2016-documents/autumn-statement-2016#fnref:7">Peter Taylor-Gooby</a></span>
</figcaption>
</figure>
<p>The 4% increase in the national minimum/living wage is helpful to low-wage workers. So too is the 2% slackening of the taper on the Universal Credit work allowance (which means that the low-paid keep 2p more of any extra pound that they earn). Together, this may halve the likely cumulative cut of about 4% in living standards for this group over the life of the parliament.</p>
<p>But these changes are incapable of addressing the serious problems of rising inequality and poverty resulting from the benefit freeze, tightening of eligibility for child benefit, removal of the family element <a href="http://www.resolutionfoundation.org/media/blog/the-big-picture-tomorrow-will-be-about-the-consequences-of-brexit-but-dont-forget-its-causes/">and all the other cuts</a>.</p>
<h2>Housing</h2>
<p><strong>Michael White, Director, Real Estate Economics and Investment Research Group, Nottingham Trent University</strong></p>
<p>The chancellor has announced a £2.3 billion housing infrastructure fund to build up to 100,000 new homes in high demand areas. London is to receive funding for 90,000 affordable homes and 40,000 new affordable homes are planned in England. These measures have to be welcomed along with the banning of letting agents’ fees. </p>
<p>But the chancellor’s plans to pilot a right-to-buy scheme for housing association tenants are worrying. This would reduce the supply of more affordable homes.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/147194/original/image-20161123-19685-ydvho0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Britain needs to build, build, build.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>It is particularly at the lower end of the market that housing problems are most acute. Hence developing more affordable housing is essential if housing need and housing affordability are to be addressed. </p>
<p>The chancellor’s announcements are far from enough. Even if the new proposed units are delivered it will not be enough to meet demand for housing, regardless of tenure type. Experts suggest 240,000 new homes are needed <a href="https://theconversation.com/will-camerons-200-000-starter-homes-really-help-solve-the-housing-crisis-48842">to meet demand annually</a>. This total has never been achieved in the past 30 years, leaving a significant shortfall. Nothing has really managed to replace house building on the scale achieved by councils in the 1960s and 1970s.</p>
<h2>Health</h2>
<p><strong>Karen Bloor, Professor of Health Economics and Policy, University of York</strong></p>
<p><a href="https://theconversation.com/spending-review-2015-the-experts-respond-51063">This time last year</a> I expressed concern that the promised spending increases for the NHS could well be inadequate. Much has changed in UK politics in 2016, but the financial landscape for health and social care remains extremely rocky. The Autumn Statement did little to alleviate this – in fact there was barely any mention of NHS finances.</p>
<p>In the past year, <a href="https://www.nao.org.uk/wp-content/uploads/2016/11/Financial-Sustainability-of-the-NHS.pdf">NHS finances have worsened</a>, with Trust deficits over £2.5 billion in 2015-16. This is affecting access to and quality of care: waiting time targets and four-hour A&E standards <a href="http://qmr.kingsfund.org.uk/2016/21/overview">are increasingly missed</a>. </p>
<p>Next year, NHS spending will increase in real terms, but in later years it <a href="https://www.kingsfund.org.uk/publications/autumn-statement-2016">will flat-line</a>. Access to the government’s new <a href="https://www.gov.uk/government/news/hospitals-get-18-billion-for-sustainability-and-transformation">“Sustainability and Transformation Fund”</a> for hospitals depends on meeting finance and performance targets, and locally drafted plans to reorganise services are likely to meet with considerable resistance. Restructuring services is <a href="https://www.kingsfund.org.uk/sites/files/kf/field/field_publication_file/never-again-story-health-social-care-nicholas-timmins-jul12.pdf">extremely challenging</a>, even with increased spending – and it may be impossible without it.</p>
<p>Outside NHS England, finances are even worse. <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499614/PH_allocations_and_conditions_2016-17_A.pdf">Public health spending continues to fall</a>, limiting capacity to prevent illness. And strains on social care continue to worsen: older people accessing publicly funded social care <a href="https://www.kingsfund.org.uk/publications/autumn-statement-2016">have fallen by over a quarter since 2010</a> as a result of local authority funding constraints. We are failing to care for our frail elderly people outside hospital, and <a href="https://www.england.nhs.uk/statistics/wp-content/uploads/sites/2/2016/06/September-16-DTOC-SPN.pdf">increasing pressures on the NHS</a> as a consequence.</p>
<h2>Roads</h2>
<p><strong>David Metz, Honorary Professor of Transport Studies, University College London</strong></p>
<p>The chancellor has announced additional spending on road infrastructure of £1.3 billion, intended to cut congestion, tackle pinch-points on major roads and upgrade local roads. The aim is to make journeys quicker and easier for millions of commuters.</p>
<p>Transport infrastructure investment is the current fashion among all the political parties, who hope it will stimulate a sluggish economy and boost long-term economic growth in the regions. But there is too much wishful thinking about the scope for congestion reduction and the benefits of improving connectivity between cities. We know from experience that <a href="http://peakcar.org/can-we-build-our-way-out-of-congestion/">we can’t build our way out of congestion</a> – any increase in road capacity in populated parts of the country attracts additional commuting traffic.</p>
<p>The chancellor has backed a recommendation of the <a href="https://www.gov.uk/government/news/new-east-west-transport-links-could-provide-a-once-in-a-generation-opportunity-for-britains-silicon-valley-armitt">National Infrastructure Commission</a> to fund the next stage of development of an Oxford-Cambridge Expressway, worth £27m. But the commission’s main concern was the need to stimulate housing development if the potential economic benefits along the Oxford-Milton Keynes-Cambridge corridor are to be achieved. To this end, his plans to boost house building in areas of high demand are welcome. </p>
<h2>Science and research</h2>
<p><strong>James Wilsdon, Professor of Research Policy, University of Sheffield</strong></p>
<p>The confirmation of the £2bn of extra funding for R&D in today’s Autumn Statement is hugely welcome. Experience teaches us that it’s sensible to treat headline numbers like this with caution until there’s opportunity to read the fine print but it seems that this is genuinely new money, which is fantastic news. And it’s a real credit to John Kingman, chairman of UK Research and Innovation, and Jo Johnson, as science minister, that they have secured such a substantial boost from HM Treasury. </p>
<p>Some important details are still to emerge: how much of the new money will go to the research councils, and how much to the new Industrial Strategy Challenge Fund? How will the new challenges and priorities be defined, and with what mix of government, academic, disciplinary and user input? And will this extra investment be enough to offset the damaging uncertainties being created for the research community by Brexit? </p>
<p>But overall, this is an unexpected and exciting statement of intent. When the Prime Minister said this money was coming in a speech on November 21, I put some champagne on ice. Tonight, after the Autumn Statement, I’ll be cracking open the bottle. </p>
<h2>Education</h2>
<p><strong>Anna Vignoles, Professor of Education, Jesus College, University of Cambridge</strong></p>
<p>The Autumn Statement confirmed capital funding for new grammar schools, despite the fact that the government is still consulting on this issue. Given the difficult financial situation faced by the education sector, this resource could be used to shield existing schools from existing cuts. </p>
<p>So far the proposals for the expansion of grammar school places have been met with strong opposition from both the education sector and the wider public. The <a href="http://www.parliament.uk/business/committees/committees-a-z/commons-select/education-committee/news-parliament-2015/selective-education-evidence-16-17/">evidence </a> is quite clear about the potential negative impact the expansion of selective schooling would have on social mobility. Of course, if the consultation does not result in a large number of new grammar schools, this capital funding may still remain available.</p>
<p>The announcement of funds for research and development – which <a href="https://www.theguardian.com/science/2016/nov/21/theresa-may-to-promise-2bn-a-year-for-scientific-research">Theresa May outlined earlier this week</a>, is to be welcomed of course. But given Brexit – and the implications of that for EU funded research grants – higher education still faces considerable uncertainty about research funding going forward. All in all, difficult times ahead for education, as for so many public services.</p><img src="https://counter.theconversation.com/content/69304/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geraint Johnes is Research Director of the Work Foundation.</span></em></p><p class="fine-print"><em><span>Anna Vignoles receives funding from a variety of government departments, including the Department for Education and BIS. She also receives funding from the ESRC and sits on the ESRC research committee, and is a trustee for the Nuffield Foundation.</span></em></p><p class="fine-print"><em><span>David Bailey receives funding from the European Commission through the MAKERS H2020 Marie Curie RISE project, as well as the ESRC ‘Structural Transformations’ programme.</span></em></p><p class="fine-print"><em><span>James Wilsdon receives funding from the ESRC and is the chair of the Campaign for Social Science.
</span></em></p><p class="fine-print"><em><span>Karen Bloor has received project funding from the National Institute for Health Research, the Department of Health's Policy Research Programme and the European Union. The views expressed are her own.</span></em></p><p class="fine-print"><em><span>Michael Kitson has received funding from BIS, HEFCE, EPSRC, ESRC, AHRC, NERC and MRC.</span></em></p><p class="fine-print"><em><span>Michael White receives funding from the Economic and Social Research Council and has received funding from Department of Communities and Local Government but the views expressed in this article are his own.</span></em></p><p class="fine-print"><em><span>Peter Taylor-Gooby receives funding from from ESRC on new developments in education, the EU on labour market reform and NORFACE on the future development of the European welfare state, which are indirectly relevant. He is a member of the Labour Party and of UCU.</span></em></p><p class="fine-print"><em><span>Stephen Roper is Director of the Enterprise Research Centre which is funded by the department of Business, Innovation and Skills, InnovateUK, the British Business Bank and ESRC.</span></em></p><p class="fine-print"><em><span>David Metz and Jonquil Lowe do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Philip Hammond has delivered Britain’s first major economic statement since its Brexit vote. Our panellists give their take on what it means.Geraint Johnes, Professor of Economics, Lancaster UniversityAnna Vignoles, Professor of Education, Jesus College, University of CambridgeDavid Bailey, Professor of Industry, Aston UniversityDavid Metz, Honorary Professor of Transport Studies, UCLJames Wilsdon, Professor of Research Policy, University of SheffieldJonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open UniversityKaren Bloor, Professor of Health Economics and Policy, University of YorkMichael Kitson, University Senior Lecturer in International Macroeconomics, Cambridge Judge Business SchoolMichael White, Director, Real Estate Economics and Investment Research Group, Nottingham Trent UniversityPeter Taylor-Gooby, Professor of Social Policy, University of KentStephen Roper, Professor of Enterprise and Director of the Enterprise Research Centre, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.