Theresa May has welcomed Philip Hammond’s “prudent” approach to running Britain’s economy, as he prepares to deliver his first autumn statement, reviving a favourite catchword of Gordon Brown’s.
Hammond set out his plans for his first set-piece parliamentary event as chancellor to his fellow ministers at Wednesday morning’s cabinet meeting.
He is expected to announce sharply weaker economic forecasts and reveal the full extent of the deterioration in the public finances likely to be caused by Britain’s exit from the European Union.
The Treasury has already announced a series of modest giveaways, including a partial reversal of deep cuts to in-work benefits.
The chancellor is expected to confirm a ban on letting fees for millions of families who are being charged hundreds of pounds by agencies to cover the supposed administrative costs of renting.
Hammond is also expected to announce an increase in the “national living wage” from £7.20 to £7.50 an hour from April 2017, although this is slightly below the £7.60 figure that the independent Office for Budget Responsibility estimates would be necessary for it to stay on course to match the pledge of £9 an hour by 2020.
However, the modest measures for “just about managing” families, known as “Jams”, are expected to be accompanied by sharply weaker forecasts for GDP growth and the public finances.
Predictions from City forecasters suggest that economic growth will slide from about 2% this year to little more than 1% in 2017.
The softening of in-work benefit cuts was welcomed by those campaigning for a reversal but there is already pressure for bigger changes. Iain Duncan Smith, the former work and pensions secretary, told the BBC’s Today programme: “I consider this a down payment. This is not game over.”
Hammond told colleagues his approach was “focused on preparing and supporting the economy as we write a new chapter in the country’s history”, and on tackling the productivity shortfall, which means Britain’s workers are “working longer hours, for less pay”, compared with similar countries.
The prime minister’s spokeswoman said May had welcomed his remarks, and said: “This is a balanced and prudent autumn statement that will make sure that Britain is open for business and the government is on the side of ordinary working people.”
She said it would help to deliver on the Conservatives’ pledge of creating “an economy that works for everyone”.
Hammond’s colleagues, as is traditional, banged the table in approval of his plans, the spokeswoman said.
Fiscal prudence and tackling Britain’s long-term productivity shortfall were key themes of the Treasury’s work during Brown’s tenure as chancellor.
May’s spokeswoman also highlighted that Hammond’s colleagues had welcomed the way he and Treasury officials had worked constructively with other departments, and the renewed focus on the long-term weaknesses of the economy.
Hammond has consciously sought to reject the meddling approach of former chancellors, and insiders say he will allow his colleagues more leeway over how they spend their budgets. He is also expected to deliver a slimmed-down statement, with few gimmicks.
