Chancellor Jeremy Hunt has unveiled the contents of his Autumn Statement in the House of Commons.
He has revealed tax rises and spending cuts worth billions of pounds aimed at mending the nation’s finances.
Here is a summary of the main measures.
Taxation and wages
- Legally-enforceable minimum wage for people aged over 23 to increase from £9.50 to £10.42 an hour from next April
- State pension payments and means-tested and disability benefits to increase by 10.1%, in line with inflation
- Apart from in Scotland, top 45% additional rate of income tax will be paid on earnings over £125,140, instead of £150,000
- Income tax personal allowance and higher rate thresholds frozen for further two years, until April 2028
- Main National Insurance and inheritance tax thresholds also frozen for further two years, until April 2028
- Tax-free allowances for dividend and capital gains tax also due to be cut next year and in 2024
- Household energy price cap extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
- Households on means-tested benefits will get £900 support payments next year
- £300 payments to pensioner households, and £150 for individuals on disability benefit
- Windfall tax on profits of oil and gas firms increased from 25% to 35% and extended until March 2028
- New 45% tax on companies that generate electricity, to apply from January
Economy and public finances
- The Office for Budget Responsibility judges UK to be in recession, meaning the economy has slowed for two quarters in a row
- It predicts growth for this year overall of 4.2%, but size of the economy will shrink by 1.4% in 2023
- Growth of 1.3%, 2.6%, and 2.7% in 2024, 2025 and 2026
- UK’s inflation rate predicted to be 9.1% this year and 7.4% next year
- Unemployment expected to rise from 3.6% to 4.9% in 2024
- Government will give itself five years to hit debt and spending targets, instead of three years currently
Responding to the Autumn Statement delivered by the Chancellor, Dr Liz Cameron CBE, Chief Executive, Scottish Chambers of Commerce, said:
“When appointed, the Chancellor made clear to the business community the scale of fiscal constraints that would influence his decision making. The economic turbulence since the mini-budget needed to be stabilised and the Chancellor has set his direction of travel. But as we brace for recession, business confidence will not shift overnight.
“The biggest worry facing businesses right now is rising energy prices which have eroded profitability for many sectors. Whilst we welcome the Chancellor’s commitment to continue support until April, we need urgent clarity and detail on support beyond that period. We encourage the Chancellor to widen the net of support available to businesses.
“Increasing the windfall tax on energy producers and extending the timeline of application to 2028, will add further tax burdens on the sector. A 75% tax rate will force many companies elsewhere, to the detriment of jobs and efforts to support the just transition. This could put into question the UK’s position as a destination of choice for long-term strategic investment decisions. We urge the Chancellor to ensure confidence and investment in the energy sector is not undermined in the long-run for short-term benefit.
“Firms will welcome steps to bring more people back into the domestic workforce, particularly the review of issues holding back workforce participation. But not nearly enough has been announced to tackle labour shortages which is one of the single biggest challenges facing businesses. Until such times as domestic workforce schemes start to pay dividends, we urge the UK Government to align immigration policy with economic need and open more accessible routes for businesses to fill skills shortages and labour market gaps.”
Read More: https://www.gov.uk/government/news/chancellor-delivers-plan-for-stability-growth-and-public-services