Autumn Statement winners and losers: Defence industry cheers but civil servants hit by cuts

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Big guns in the defence industry were firing on all cylinders yesterday as they emerged as one of the main winners from the Autumn Statement.

Shares in companies in the sector raced ahead as Chancellor George Osborne said the defence budget was set to rise to £40billion from £34billion by 2020.

He maintained spending on the sector at 2 per cent of national income and said there would be no real-terms cuts in police budgets. But Osborne fired a friendly shot across the industry’s bows, saying he expected the Armed Forces to make efficiency savings by sharing resources.

Under fire: The Armed Forces must make efficiency savings

Defence has moved back into public focus in the past few months after the Paris terror attacks, the war in Syria and heightened tensions in the Middle East.

On Monday an extra £12billion of spending on equipment such as a new fleet of marine patrol aircraft was outlined. Osborne told MPs the moves were designed to prioritise economic and national security.

House-builders were celebrating after Osborne announced plans to hand billions to the industry to build 400,000 new homes in England. 

But Laith Khalaf at Hargreaves Lansdown said: ‘Enthusiasm was tempered somewhat as the Chancellor announced a rise in stamp duty for buy-to-let landlords, which is likely to take a little shine off the housing market.’

Healthcare companies were also likely to welcome a rise in the NHS budget to £120billion by 2020-21 from £101billion currently. Osborne said the health service would get an upfront cash injection of £6billion next year and mental health services would receive £600million.

But Whitehall civil servants were among the big losers of the Autumn Statement, with the transport, energy and climate change, justice, business and other departments all having to find double digit savings in their running costs.

The Foreign Office budget will escape the cuts, while the overseas aid budget will increase to £16.3billion by 2020.

Businesses were unlikely to be thrilled by moves to introduce an apprenticeship levy in April 2017 at 0.5 per cent of an employer’s paybill.

But Kent was promised an easier ride as Osborne provided £250million to relieve pressure on its motorways from lorries queuing to reach the Channel Tunnel.