Autumn Statement: as it happened

Preamble

With a large amount of news relevant to the construction sector having emerged from the government and government sources in recent days, it is unclear how much more will come out when chancellor George Osborne makes his statement at 12.30 today.

Clearly he has an incredibly difficult hand to play, and most of the eyes of the nation will be on key UK financial data on the national debt, the UK deficit and predicted growth. Speculation is rife that the chancellor will be forced to abandon at least one of the two key fiscal pledges he made upon coming in to office in 2010: that debt as a proportion of GDP would be falling by the the end of the Parliament, and that he would eliminate the structural budget deficit over the same period.

For the construction industry, more detail will be required on the information already briefed. Much of the detail will be in documents published alongside the statement, and only available when Osborne sits down at somewhere around 1.30.

Key things to look out for are:

£5bn of extra spending on capital projects, including schools and roads.

Reform of PFI. There will be a number of documents published alongside the statement, including a policy document explaining the changes, a guide on how to procure under the new system, and a consultation on a cap on off-balance sheet PFI liabilities.

Garden Cities. Nick Clegg has already made it clear the chancellor will talk about bold ambitions to build new communities. There is a chance the prospectus for developers and councils to put forward sites will be published today

Public land. The Homes and Communities Agency is set to be given a more powerful role in ensuring the use of public land for housing development. This was unveiled at by communities secretary Eric Pickles in his September 6 housing statement, but more detail of how it will work are expected.

National Infrastructure Plan. The government will unveil the third iteration of this plan today. It is unclear what new will be included, though expectations of major new info are low.

UK Guarantees. an update on the projects to benefit from underpinning government guarantees is also expected today.

Battersea. The Financial Times is reporting that Osborne will announce how he will unlock the Battersea development today

Possible wild cards. There is always the chance Osborne will announced that EDF have decided to press ahead with the Hinkley nuclear power station…

12.32

Prime minister’s question are still going on. Cameron has just defended the planning minister Nick Boles’ comments on building on greenfield land, and said that Labour’s Plan B stands for “bankruptcy.”

12.35

Osborne stands up. Roars from the opposition as he starts with: “The british economy is healing”. “turning back now would be a disaster.”

12.37

1.2m new jobs created in the private sector since 2010. A £33bn saving on the debt interest payments the government was expected to have to pay in May 2010

12.38

Outline spending for 2017/8 to be published. “On the side of those who want to work hard and get on”

12.40

Growth forecast of -0.1% for 2012. The previous estimate was 0.8% growth. Osborne says the Office of Budget Responsibility blames this on the Eurozone slowdown. Though he admits there are “domestic problems also” with the 2008/9 slowdown now thought to be deeper than previously.

GDP growth will be lower in every year of the forecast

12.42

GDP growth for next year of 1.2%, compared to previous prediction of 2.0%

In better news, unemployment is now predicted to peak at 8.3% not 8.8%. A greater proportion in work than Europe or the US, he says.

12.45

National debt figures will be skewed by transfers to balance sheet of Northern Rock liabilities and Royal Mail pension scheme.

12.46

The deficit will fall this year. This year it will be 6.9%, compared to 7.9% last year

Will borrow £108bn this year - this is up from the prediction of £95bn in the budget

Osborne says: “any way you judge it - the deficit is falling.”

12.48

OBR has says the chancellor is on course to meet the first fiscal mandate

However, the second, to have debt falling as a porpotion of GDP by 2015 will be missed and has been delayed by a year. “Instead of three years to get debt falling, it will take four.”

Abandoning plan A would be hugely damaging, he says

12.51

Debt, however, is rising for the rest of the Parliament

12.52

Austerity - “fiscal consolidation” is to be extended by a further year to 2017/18

“No decision to cut spending is ever easy.”

Total managed expenditure of £745bn in 2015/16. This means, essentially, that the rate of decrease in public spending in this parliament will continue at exactly the same rate beyond it

12.54

Today reducing departmental resource budgets by 1% next year, and 2% the year after. this is the £5bn saving trailed yesterday. This is the money which could be going into new capital projects.

Here we go - this looks like the key section: “switching money into capital”. “All of this money will be switched.”

Public investment as a share of GDP will be higher in this parliament than under labour

£1bn to roads - key sections of the A1, A5-M1 link, upgrading the M25 around Thurrock, and dualling trunk roads in Cornwall

£1bn loan and guarantee to extend the Northern Line in Battersea

12.58

Confirming funding for 120,000 new homes - not clear what this refers to or whether it’s new money

More money also for rolling out enhanced broadband

Guarantees for projects worth £10bn have pre-qualified under the UK Guarantees scheme.

£1bn to build 100 new schools and academies

Infrastructure investment will increase to £33bn annually, up from £29bn under Labour

PFI will be reformed, he says - sharing the benefits with taxpayers

13.02

He now on to tax evasion - time to recap on that canter through investment in infrastructure: I think the only information not already leaked was that schemes worth £10bn have pre-qualified for government underwriting of loans on the UK Guarantees scheme. The Battersea information, leaked to the FT this morning, is interesting though - what happened to Nick Clegg’s 2010 announcement that Tax Increment Financing would be used to fund that scheme? And what about all the developers in Nine Elms that are paying huge s106 settlements to fund it?

13.04

No new tax on property - “this would require a re-valuation of hundreds of thousands of homes” - “we’re not having a new homes tax”

13.06

Cutting tax relief on pension savings. Osborne provokes the biggest uproar from the opposition of the afternoon when he explains “we have to demonstrate we are all in it together.”

13.09

The Chancellor has moved on to public pensions, and child tax relief for now. As he’s doing that here’s the exact wording of the key section from earlier, taken from Politics Home:

“We’re committing an extra billion pounds to roads, including four major new schemes to: - upgrade key sections of the A1, bringing the route from London to Newcastle up to motorway standard. - link the A5 with the M1. - dual the A30 in Cornwall. - and upgrade the M25, which will support the biggest port developments in Europe, and I pay tribute to my HF for Thurrock for campaigning to achieve this.

“We’ve already set out plans this autumn for a huge investment in rail, and my RHF the Transport Secretary will set out in the new year plans to take High Speed 2 to the North West and West Yorkshire.

“I today confirm a billion pound loan and a guarantee to extend the Northern Line to Battersea Power Station and support a new development on a similar scale to the Olympic Park.

“We’re confirming funding and reforms to assist construction of up to one hundred and twenty thousand new homes and delivering on flood defence schemes in more cities.

“On top of broadband expansion for our countryside and our larger cities, we’re funding ultrafast broadband in twelve smaller cities – [Brighton and Hove, Cambridge, Coventry, Derby, Oxford, Portsmouth, Salford, York, Newport, Aberdeen, Perth and Derry-Londonderry].

“In addition to the third of a billion pounds announced this autumn for British science, we are today announcing £600 million more for the UK’s scientific research infrastructure. And since improving our education system is the best investment in a competitive economy, I am today committing £270 million to fund improvements in further education colleges and one billion pounds to expand good schools and build 100 new free schools and academies. Scotland, Wales and Northern Ireland will get their Barnett share of additional capital spending put at the disposal of their devolved administrations.

“On top of this £5 billion of new capital spending in infrastructure and support for business, we are ready to provide guarantees for up to £40 billion more – today I can announce that projects worth £10 billion have already prequalified. We’re offering £10 billion worth of guarantees for housing too. Our country’s pension funds will launch their new independent infrastructure investment platform next year as well.”

13.14

Energy Bill - “today we publish our Gas strategy, and new tax incentives for Shale Gas”. Says this will ensure UK energy customers don’t get left behind when gas prices fall in the US following shale gas expansion

13.15

“I also want to help the construction industry - the last government abolished empty property tax relief.” This is an important one for the property industry

Osborne says he will create a long grace period before buildings have to pay empty property tax “we will increase this next year.”

13.17

Cutting the rate of corporation tax by 1% again, will be cut to 21% from April 2013. “It is an advert for our economy that says Britain is open for business.”

13.19

One for the motoring lobby - Osborne cancels proposed fuel tax rise altogether, rather than just postponing it as he has done previously

13.20

Personal tax allowance will be increased again - Osborne says 2 millioni taken out of tax altogether, and those on minimum wage having income tax cut in half

13.21

“there are no miracle cures” “It is a hard road but we are making progress. But we are helping those who want to work hard and get on. Thank-you.”

13.22

Osborne sits down, and Ed Balls rises to give his response

Follow live coverage of the chancellor’s Autumn Statement … from 12.30