Last week saw the first Autumn budget. Up until now, the main budget statement was made in March, whilst the Autumn Budget was more of an update.
There is, inevitably, a great deal about big issues such as slowing rates of economic growth, productivity and pay levels. It is true that pay has stagnated over the last few years, but incomes after tax have increased because of rising tax thresholds. 31 million people will see their incomes go up; a typical taxpayer is £1,075 better off due to falling tax charges since 2010; and 1.2 million more people will not pay income tax at all. Add to that the move to the national living wage (from minimum wage) and the lowest earners in our society are markedly better off than had we stuck with the system in place in 2010. Similarly, stamp duty changes for first time buyers is designed to help people buy homes, without crippling public finances. Plans to build more homes addresses the unaffordable housing market but will take years to start to have an effect. Remember, whilst we here in Wyre Forest consult on the local district plan to build just 6,000 homes over the next 10 years, local building is not always enthusiastically supported.
Key, of course, is how well our economy performs. It has performed very well, compared with other mature economies, over the last 7 years. However, we are in a more mature stage and so naturally will see a slowdown in growth (although a slowdown in growth should not be confused with a recession). But to write that off to economic cycles would be foolish and any government must both accept the reality and address the causes of the slowdown.
Productivity is key. UK workers’ output is lacklustre compared with, for example, Germany. Our workers take a week to produce what German workers take just four days. A lot has written about this, from blaming British workers spending more time checking Facebook at work, to differences in labour laws. German businesses, with far tighter labour laws, invest more in automation but have higher unemployment.
Whilst there may be something in these arguments, key to our future is how we support businesses. This week we are announcing the Industrial Strategy – a long term plan that absolutely addresses the issues we face. This is a positive and welcome measure and one that I fully support.