Chancellor Philip Hammond to take 'pragmatic' approach to public finances and abandon surplus target

Hammond to tell Conservative conference in Birmingham: 'When times change, we must change with them'

Chancellor Philip Hammond has confirmed he will "reset" the Government's fiscal policies in next month's Autumn Statement, with a new "pragmatic" plan that allows greater scope for investment to boost the economy.

Since Theresa May became Prime Minister in July, both she and Mr Hammond have made clear that they will ditch George Osborne's target to get the UK's finances into surplus by 2020.

A goal that the former chancellor himself acknowledged was unlikely to be attainable following the referendum vote for Brexit.

But Mr Hammond will use a high-profile speech to the Conservative annual conference in Birmingham to signal that this does not mean an end to the age of austerity inaugurated by Mr Osborne in 2010.

The new plan will continue the "task of fiscal consolidation" begun under his predecessor and maintain controls on public spending in order to ensure that Britain lives within its means, Mr Hammond will say.

The Chancellor is set to say: "The fiscal policies that George Osborne set out were the right ones for that time. But when times change, we must change with them.

"So we will no longer target a surplus at the end of this Parliament.

"But make no mistake. The task of fiscal consolidation must continue. And it must happen within the context of a clear, credible fiscal framework that will anchor expectations, control day-to-day public spending, deliver value for money and get us back living within our means."

"At the Autumn Statement in November, I will set out our plan to deliver long-term fiscal sustainability, while responding to the consequences of uncertainty in the short-term and recognising the need for investment to build an economy that works for everyone.

"A new plan for the new circumstances Britain faces."

Mr Hammond will say: "A fundamental part of maintaining our global competitiveness is getting our public finances back in order. The deficit remains unsustainable.

"Piling up debt for our children and our grandchildren to pay off is not only unsustainable, it's not fair.

"The British people elected us on a promise to restore fiscal discipline. And that is exactly what we are going to do.

"But we will do it in a pragmatic way that reflects the new circumstances we face."

Press Association