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63 About this deal
Source: Office for Budget Responsibility and International Monetary Fund, Fiscal Monitor, October 2023. Long-term decisions for a brighter future The government is growing the supply side of the economy The OBR confirms that policies announced at the Autumn Statement will increase economic growth. It estimates that the overall effect of these supply-side measures is to boost the size of the economy by 0.3% by the end of the forecast. The OBR’s forecast also reflects long-term demographic and technological changes. The OBR judges that as the population ages, individuals will work for fewer hours on average. Due to the higher proportion of intangible assets in the economy, it assumes capital is being retired at a faster rate than previously. These factors mean that, prior to the impact of policy measures, labour and capital are assumed to grow more slowly than before, which pulls down long-term growth. This further justifies the government’s continued focus on creating growth by boosting the supply side of the economy. VAT: extend the zero rate on Women's Sanitary Products to include period underwear from January 2024 Alongside this, the audit of Equality, Diversity, and Inclusion (EDI) spending is coming to conclusion and, subject to further work, the Government is considering introducing a presumption against external EDI spending and increasing ministerial scrutiny of EDI spending whilst streamlining EDI training and HR processes with a view to getting value for the taxpayer. The Minister for the Cabinet Office will be outlining the final proposals, in due course.
To support these aims, the government continues to focus on delivering the spending plans agreed at Spending Review 2021. It is also taking targeted action against non-compliance in the tax system. Looking forward, the government is committed to reimagining the way it delivers public services through the Public Sector Productivity Programme. This aims to place public spending on a sustainable footing over the long-term and maximise value for the taxpayer. Public spending
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The Autumn Statement reaffirms the commitments made at Autumn Statement 2022 to provide additional support to the NHS and adult social care in England in response to the pressures facing the health service. More detail is provided in box 2.A below. Additional Jobcentre Support – The government is expanding Additional Jobcentre Support currently live in 90 Jobcentres in England and Scotland to trial intensive support for people who have been receiving Universal Credit for 7 weeks, in addition to the support after 13 and 26 weeks announced at Spring Budget 2023. Tax simplification is an ongoing priority for this government, and it will aim to demonstrate progress on this agenda at every fiscal event. International taxation – OECD Pillar 2 From 6 April 2024 the government will also ensure that no one will be required to pay Class 2 self-employed NICs. Details of this change are: To deepen devolution in England and further empower local leaders to drive growth in their areas, the government has agreed with local partners a Memorandum of Understanding outlining the approach to the single funding settlements which will be implemented at the next Spending Review for the West Midlands and Greater Manchester Combined Authorities. The government is also publishing a new ‘Level 4’ of the devolution framework. Devolved institutions with a directly elected leader that meet eligibility requirements will be able to draw down from this framework, which delivers deeper powers alongside new scrutiny expectations. The powers include new levers over local transport, reflecting the substantial progress made towards the National Infrastructure Commission’s recommendation to devolve local transport powers and funding to local authorities. The government has already agreed to negotiate a further trailblazer devolution deal with the North East and discussions have now commenced with a view to finalising a deal in spring 2024. The deal will empower local leaders to develop existing and potential industrial strengths across the region, from creative industries to advanced manufacturing.
Closing claims for disengaged UC claimants on open-ended sanction for over 6 months – The government will take steps to close the claims of sanctioned Universal Credit claimants in Great Britain who have not engaged with Jobcentre support for over 6 months and are solely eligible for the Universal Credit standard allowance. The Royal Navy have deployed a task group to the eastern Mediterranean, supported by the Royal Air Force patrolling the skies – they are working with partners in the region to deter those who may seek to escalate tensions and are monitoring threats to regional stability, including the transfer of weapons to terrorist groups. In June, the government also announced the Mortgage Charter to support residential mortgage customers. This Charter sets out the standards that Signatory Lenders – who represent over 90% of the UK mortgage market – will adopt when helping their customers. [footnote 91] This offers mortgage holders greater flexibility in managing their finances and offers protections against repossession. To ensure the door is held wide open to those that want to invest in the UK’s future, the government is taking steps to boost foreign direct investment, through supporting the Office for Investment to strengthen its concierge offer to strategically important investors. Fiscal policy affects growth, inflation and monetary policy because changes in spending and taxation add or withdraw demand to and from the economy. Measures of the level of that impact are called the ‘fiscal stance’; measures of changes in that impact are called the ‘fiscal impulse’.
Alongside its focus on fiscal sustainability the government continues to support the MPC in its action to bring inflation down to the 2% target. The government has published the remit for the MPC alongside Autumn Statement, to reaffirm that the MPC’s target of price stability is defined as 2% CPI inflation, which applies at all times. Post-Restart Claimant review point – From late 2024, Universal Credit claimants in England and Wales who have completed Restart and remain unemployed after 18 months will undergo a review conducted by a work coach. Claimants who do not agree to revised claimant commitments without a good reason, which could include attending a mandatory work placement or new intensive work search activities, will have their claim closed. The government’s priority to reduce debt is aligned with the approach of other advanced economies. Several countries have reaffirmed their commitments to medium-term fiscal sustainability. In Europe, Germany has reimposed its constitutional debt brake, which limits its core budget deficit to 0.35% of GDP, while France has set out commitments to get debt falling over the medium term. [footnote 13], [footnote 14] The European Commission has consulted on changes to the Stability and Growth Pact, proposing to reintroduce updated debt and deficit rules that have been suspended since the COVID-19 pandemic. [footnote 15] Elsewhere, Canada and Australia have committed to reducing their debt-to-GDP ratios over the medium term. [footnote 16], [footnote 17] To incentivise compliance, the government will strengthen the Universal Credit sanctions regime. This will further enforce the government’s expectation that those who can work must engage with the support available or lose their benefits:
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