The Chancellor of the Exchequer George Osborne today announced the cancellation of next month’s 3p per litre rise in fuel duty as part of his mission to get the UK economy back on track.
Giving his Autumn Statement on the UK economy, Osborne said the move to cancel the duty rise meant that there had been no tax rises on petrol in the past two and a half years.
His comments came as he outlined the government’s deficit reduction programme, which would see the austerity programme extended by a year to 2018.
Pointing to forecasts by the Office for Budget Responsibility (OBR), Osborne said that economic growth was expected to reach 1.2% growth next year, 2% in 2014, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.
These forecasts, which include a -0.1% figure for 2012, are lower than those made in March this year.
While Osborne said the economy was “healing” and that the government is “on course” to meet its target of getting rid of the structural deficit over five years, he admitted that the OBR said the government will miss its target of getting debt falling by 2015. Instead it will start falling a year later, meaning the austerity programme would continue until 2018.
As part of an effort to kick-start the UK economy Osborne said there would be £5bn-worth of investment in capital spending on infrastructure projects, an extra £1bn on roads, £600m for scientific research infrastructure and £270m to fund improvements in further education colleges.
A £1bn loan would be made available to extend the London Underground’s Northern Line to the site of the former Battersea Power station in south London, where a development along the lines of the Olympic park was being proposed. Plus the construction of around 120,000 new homes will be centrally funded.
He also confirmed reports that the government planned a new gas strategy to include investigating shale gas resources and announced a 25% increase in funding for UKTI to help UK companies export their goods and services.
The new business bank, designed to help firms expand, would receive an extra £1bn in capital funding, he added.
The British Plastics Federation (BPF) welcomed the chancellor's statement, saying it was "good news for business".
Peter Davis, the BPF's director-general said: “Much of what the BPF-led Seven Associations asked for in their 20 November letter to the chancellor has been announced by him today and is very welcome.”
Davis highlighted more support for the advanced manufacturing supply chain, which includes plastics; the rejig of capital allowances, with £250,000 worth of investment eligible for 100% relief; up from £25,000; more money for the Regional Growth Fund which has already benefited plastics companies, and a 25% increase in UKTI funds which the BPF hopes will meet its request to increase export grant aid to trade associations and companies attending trade fairs in growth economies, plus a new £1.5bn export finance facility, said Davis.
In response to the chancellor’s statement indicating the government will provide £120m to the Advanced Manufacturing Supply Chain Initiative, Dr Christos Tsinopoulos, senior lecturer in Operations & Project Management at Durham University Business School, said: “Initiatives that are aimed at supporting the UK's supply chain are always welcome.
“The devil is always in detail, which is not yet available, and one could argue that given the potential overall impact of the sector the proposed sum is not significant. Nevertheless, such initiatives send a positive signal about the importance of manufacturing in the UK's economy and the role that the government wants to play in supporting it.”
The challenge will be to find the projects that will have the highest impact, Tsinopoulos said.
“Finding winners will be challenging, but projects that support ‘high end manufacturing’ and support high technology would be the ones I would vouch for.”
George Osborne said people knew that there were “no quick fixes to the problems we face but they want to know we are making progress. The message from today's autumn statement is we are making progress.
“We want to show the world that the UK is open for business. We’re on the side of those who want to work hard and get on.
“It will be a hard road to recovery, but to change direction now would be a disaster,” he added.