Autumn Statement 2015: who will win and who will lose?

Autumn Statement: who will be the winners and losers?

25 November

George Osborne will attempt to walk a fine line today. The first Autumn Statement of the new parliament will set out severe cuts as part of the chancellor's third major government spending review, but also reveal the investment being made in key areas to present a positive economic vision for the next four years.

Low-paid workers will be looking to see how Osborne delivers on his pledge to soften more than £4bn of cuts to working tax credits. The BBC's Laura Kuenssberg says that the average reduction in handouts of £1,300 could be lowered to £300 – meaning most recipients will be able to make up the difference from the 'national living wage' – which will be paid for possibly through reductions in housing benefit.

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Such concessions will not mollify critics entirely – working people claim housing benefit, too.

To "repair relations" with the "strivers" the chancellor has alienated through his proposed tax credit cuts, the Financial Times reports that Osborne is expected to invest up to £7bn supporting those looking to buy a home, rather than rent one. Osborne will also invest heavily in house building in order to avoid accusations that he is merely contributing to spiralling demand and thereby creating a price 'bubble'.

Other areas of investment that will form part of the chancellor's five-year economic plan include infrastructure projects which will be managed by an independent commission set up last month. Today could see the announcement of hundreds of millions of pounds' worth of railway development, including a high-speed line between Leeds and Manchester dubbed 'HS3'.

Where will the money come from? There is a lot of "concern" in this morning's headlines, especially from police forces who face losing an aggregate 25 per cent from their collective budgets over the years to 2020. One commissioner warned on the BBC this morning that this could mean the loss of 18,000 front-line jobs.

The Autumn Statement is expected to bring severe cuts to funding for councils – although this might be more than made up for by local authorities being given the power to raise additional council tax themselves – and in areas such as business grants and further education colleges.

Osborne should also get a boost to the Treasury's coffers from lower debt interest repayments. But if, after all this, his figures still don't add up, we can expect him to soften his target for a £10bn surplus by 2019/2020 – he only needs to be 1p in the black to meet his 'fiscal charter', the BBC's Robert Peston points out.

Check back here from 12.30pm for live updates from Osborne's speech in the House of Commons.

Autumn Statement 2015: what we know and what to expect

24 November

Tomorrow, the chancellor George Osborne will stand in the House of Commons to deliver the third package of fiscal policy measures this year.

The majority of attention is focused on cuts to spending and how this is balanced with demands for greater funding in some critical areas – as well as pledges to soften savings in others. Can Osborne make his figures add up?

Tax credits

The most controversial of any of the 'austerity' cuts made by Osborne, the cuts to working tax cuts, which would have saved more than £4bn a year by 2020 have been thrown out by the House of Lords. He's pledged some support for those who will lose out, at least until the full effects of the new national living wage are felt by the end of the parliament.

The government is keen that the cuts continue in principle, so expect this to be time-limited support for the next four years. This may not mollify critics who say some claimants will still lose, especially part-time workers with children. As for how it will be funded, the Financial Times reckons further cuts to housing benefit are in the crosshairs.

Government spending

On Sunday Osborne said he'd agreed the full package of cuts with all departments. He'd already signed up most secretaries of state, with hold-outs such as the Foreign Office now on board, having agreed to cuts that will total £20bn, or 25 per cent of spending, by 2020. That's a cut of around seven per cent each year.

Where specifically the scythe will fall is less clear. Particularly interesting will be the Home Office, where Teresa May is thought to have secured a 30 per cent increase in spending on counter-terrorism activities, but accepted another hit to the police budget. Osborne refused to rule out cuts to police numbers.

Devolution

One area that has been particularly controversial is the cuts to central government grants to councils, which, combined with higher staff costs as a result of the increases to the minimum wage, are creating a funding crisis in the social care sector. There will be a concession here, it is believed.

The olive branch will take the form of councils being allowed to increase council tax by two per cent on top of the two per cent leeway they already have. Public Sector Executive says the measure could raise £2bn to plug the shortfall in the sector. Combined with giving control over business rates and new powers for cities, it'll be presented as part of a wider devolution drive.

NHS

We heard yesterday that the NHS is to get another £3.8bn to help counter its own funding crisis, as deficits in NHS England are the worst they've ever been. It's not new money, says The Guardian, but a 'frontloading' of the £8.4bn a year previously pledged by 2020. But it's still going to help in the short-term – and it'll still need to be funded earlier than planned.

There could be offsetting measures announced tomorrow affecting parts of the health budget that are not ringfenced (the protection only applies to NHS frontline services). The public health budget that pays for education services in areas like weight loss and smoking could be reduced, as could that of the healthcare regulator the Care Quality Commission.

Defence

An increase in the defence budget of £12bn over the next decade has already announced, and this will be confirmed tomorrow along with details on the wider budget. It's likely that day-to-day admin spending in the department will be cut sharply.

Pensions and taxation

There had been talk of further restrictions on pension tax relief to shift the system to one based on upfront taxation and tax-free withdrawals, similar to Isas, but the Daily Telegraph says this will come in the next Budget in March. Pensions are being uprated in line with the triple lock, taking spending power to the highest level in 25 years, according to Sky News.

Elsewhere some new revenues might be earmarked from diesel fuel levies, which face being hiked in the wake of the global emissions scandal. There is also expected to be a further move to clamp down on tax avoidance to raise as much as £400m a year.

Totals

The smart money says Osborne will give up on his previous plan to run a £10bn surplus on the annual budget by 2020 – which was little more than 'wiggle room' anyway – but stick to his 'charter' and get the numbers at least some way into the black. Savings on debt servicing costs from lower interest rates could be the saving grace.

Autumn Statement 2015: Osborne hints that surplus target may fall

23 November

George Osborne has hinted that he may reduce his target for a budget surplus of £10bn by the end of this parliament, which he set as recently as July.

The suggestion comes on the back of a humiliating defeat for the government in the House of Lords over £4.6bn of cuts to working tax credits, and amid pressure to commit to extra spending in a number of areas.

The latest addition to the budget comes from the prime minister himself, who has committed to spend an additional £12bn on defence equipment in the next decade.

As he plans to make the case for Britain joining airstrikes against Islamic State in Syria and pledges solidarity with France after the Paris atrocities this month, Cameron will announce a five-year defence review that will increase spending on equipment to £178bn by 2025.

There will also be more funding for counter-terrorism intelligence activities. The Financial Times says the commitments will be funded by "spending cuts elsewhere, with police, welfare and business grants in the line of fire".

The Independent says Osborne announced all departments had now agreed the level of spending cuts over the next four years – and he repeated that there would be transitional measures to help those worst hit by the tax credit cuts.

But he refused to rule out decreasing the number of police officers, for example, and also declined to confirm the previous target of a £10bn surplus by 2019/2020 would be maintained. Speaking on BBC1's Andrew Marr show, he would say only that the "precise level of the surplus will be set out in the forecasts on Wednesday".

Analysts have repeatedly referred to this as "wiggle room" for the Chancellor – he can dip into it and still assert he is meeting the terms of his "fiscal charter" to eliminate the deficit by the end of this parliament.

He is also expected to get some help from low interest rates reducing debt servicing costs.