This afternoon (22 November) the Chancellor, Jeremy Hunt, unveiled the Government's Autumn Statement in the House of Commons. I have summarised the main announcements below:
Tax and wages
- From January 2024, Employee National Insurance Contributions will drop from 12% to 10%, which is a £450 tax cut for the average worker earning £35,400.
- The National Living Wage is set to rise to £11.44 from April 2024 and will be extend to those aged 21 and over for the first time.
- This will be a pay boost to millions, supporting families and communities with the cost of living.
- The Government is supporting the self-employed by cutting National Insurance Contributions from April 2024 – a tax cut of £350 for the average self-employed person earning £28,200 a year.
Pensions and working age benefits
- This Government will continue to support pensioners across the UK with the cost of living.
- The Pensions Triple Lock and Pension Credit will be protected and rise in April 2024 by 8.5%.
- This means that the basic State Pension will be £3,750 higher next year than it was in 2010.
- Working age benefits will rise by the rate of inflation at 6.7% from April 2024.
- 5.5 million households on Universal Credit will gain £470 on average in 2024 -2025.
- Local Housing Allowance rates which determine the level of housing benefit and Universal Credit people receive to pay rent is to be unfrozen and increased to 30% of local rents from April. This is something I have push for and raised personally with the Chancellor.
- £1.3 billion is being invested over the next five years to help people with health conditions find jobs and a further £1.3bn will be spent to help people who have been unemployed for over a year.
Economic performance: back on track following the pandemic
- In January, the Prime Minister set out three economic priorities:
- Halving inflation (CPI rate)
- Growing the economy
- Reducing debt
- CPI has now more than halved from a peak of over 11% last autumn to 4.6% in October 2023.
- The economy has recovered from the pandemic more quickly than first thought, grown more than expected this year, and is forecast to grow in every year of the forecast period.
- The independent Office for Budget Responsibility (OBR) expects the economy to grow by 0.6% this year and 0.7% next year, rising to 1.4% in 2025; then 1.9% in 2026; 2% in 2027 and 1.7% in 2028.
- It forecasts that inflation - the rate prices are rising - will fall to 2.8% by the end of 2024, before reaching the Bank of England's 2% target rate in 2025.
- Borrowing forecast to fall from 4.5% of GDP in 2023-24; to 3% in 2024-25; 2.7% in 2025-26; 2.3% in 2026-27; 1.6% in 2027-28 and 1.1% in 2028-29.
- To boost our economic performance, the Autumn Statement includes 110 measures aimed at boosting economic growth.
Supporting small businesses and the high street
- "Full expensing" tax break, which allows companies to deduct spending on new machinery and equipment from profits, will be made permanent.
- The Government will continue to support Small and Medium sized enterprises by taking action to ensure more are paid their invoices on time, expanding the Made Smarter Adoption programme, strengthening support to access export markets.
- High Streets employ millions and are the centre of our communities. The Government are extending 75% business rates relief for retail, hospitality and leisure until 2025.
- Over 1 million ratepayers will also be protected through freezing the small business multiplier. This will save the average shop £1,650.
- Alcohol duty has been frozen until August 2024, which takes 3p off the duty of an average pint of beer.
Encouraging businesses to invest
- Companies that invest in the UK will see their tax reduce by up to 25p for every £1 they spend on plant and machinery.
- The Government will also help support UK manufacturing through investing an extra £4.5 billion.
- This will boost jobs across the UK, safeguarding our energy security, building health resilience and preparing for a green future. Opportunities will increase in, Aerospace, Zero Emission Vehicles, Life Sciences, Carbon Capture Utilisation and Storage, Electricity Networks, Hydrogen, Nuclear and Offshore Wind
Investment in the NHS, social care and education
- £20 million will be invested to accelerate dementia research from the £650 million life science package announced in May to turbocharge clinical trials to combat dementia.
- Apprenticeship funding is being boosted with a further £50 million for training in growth sectors and tackling barriers to entry in high value apprenticeships.
Tackling debt
- Underlying debt is forecast to fall as a proportion of GDP from 2027-28 and the government has greater headroom against its fiscal rules than at Spring Budget 2023.
- The Office for Budget Responsibility (OBR) forecasts that Government policies in the Autumn Statement will reduce inflation next year.
- With inflation falling and the economy and public finances stabilised after a series of unprecedented shocks, the Government can now take the long-term decisions necessary to strengthen the economy and build a brighter future.
For further details on all the measures announced in this year's Autumn Statement, click here.