What actually goes into the Autumn Statement behind the scenes?

Rhys Jackson is as Associate Director at WPI Strategy

Having left HM Treasury earlier this month, I must say I miss the energy about the place in the run-up to Autumn Statement. Senior officials will have been working around the clock to get all the technical detail behind the Chancellor’s announcements for tomorrow in place - work that will no doubt continue until late tonight - before decamping for a well-earned drink at a Westminster pub tomorrow afternoon.  

But what actually goes into the Autumn Statement behind the scenes, and how can businesses engage with or influence the process?  

It’s first worth mentioning that the Autumn Statement is strictly meant to be an update to Parliament on the state of the economy, but these days, with the Office for Budget Responsibility providing independent forecasts, alongside the need for regular fiscal changes through Covid, it has become a standalone fiscal event, prior to the full Spring Budget, with wide-reaching implications.

 Today, the Prime Minister is clearly under pressure to announce retail-friendly policies in an attempt to reassure his parliamentary party that he has a clear political agenda that creates dividing lines with Labour prior to next year’s election. When Jeremy Hunt stands up at the dispatch box tomorrow, he will attempt both to offer goodies that give him the positive headlines he needs, while simultaneously reassuring the markets that his spending plans align with his self-imposed fiscal rules.

This is where the inner mechanics of how the Government works up its plans are important - and the process is critical for businesses to understand, as there are opportunities here. 

Timings

Treasury typically draws a distinction between “Tier 1 measures” and others. These are big-ticket items typically involving at least £1 billion of spending, foregone tax or revenue-raising across five fiscal years. These need to be signed off at least 2 weeks in advance by the Chancellor personally, so policy development towards them will typically begin many months in advance. 

It’s therefore important for any business or external group seeking to influence fiscal events to bear that timescale in mind. There are exceptions, such as the sudden against-the-clock Covid-19 support measures in March 2020, and also policies injected by No10 late-on for political reasons. I suspect any tax changes, now that inflation has halved, would be fairly last-minute but cannot be ruled out. 

Smaller measures can be created at much tighter timescales - even during the days before the event, and the Chancellor’s speech itself will still be being tweaked by tens of officials in real-time as I write this.

Decision-making 

In terms of how policy decisions that require funding are made, there is a symbiotic relationship between officials and ministers and any industry calls for new policy have to appeal to both. Ministers will rarely (if ever) take any decision without full analysis conducted by officials within a submission of their recommendations. 

This happens across the year, but if tax-related, tends to be worked on towards the next fiscal event. Most of this work is led by the Ministers’ private offices, but ultimately it will be assessed by Treasury officials. For example, if ministers want to explore something like a business tax relief or a cut to stamp duty, officials in the relevant policy teams across Whitehall will have to provide a full cost-benefit analysis to the Exchequer, as well as, in my experience anyway, a review of stakeholder asks.

Influencing policy 

To stand a chance of actually influencing a fiscal event, you should seek to do as much of the kind of work you can expect officials to have to do before it can be submitted for consideration. 

As a priority, this means having strong, robust and coherent analysis that demonstrates its benefits and costs. The value of serious analysis here cannot be underestimated.  

Engagement and support-building are then critical. When trying to influence HMT and ministers, you need to show there is wider industry, and ideally public, support behind your proposals, with supporting market evidence. Gaining positive media exposure for the idea then adds credibility.  

This will prompt ministers to see the idea as serious and commission officials to explore the proposal - and that is where officials will use your research as part of the evidence pool, and take account of who is supporting your ideas. 

Ultimately, it is very difficult to influence spending or tax decisions, but with the right support, it is absolutely achievable.