Today I was in the Chamber whilst the Chancellor outlined a targeted package of support for the most vulnerable, alongside measures to get debt and government borrowing down. The plan he set out is designed to fight inflation in the face of unprecedented global pressures brought about by the pandemic and the war in Ukraine.
The Autumn Statement in full can be found here: Autumn Statement 2022: documents - GOV.UK (www.gov.uk)
Support with energy bills
To protect the most vulnerable from the worst of cost-of-living pressures, the Chancellor announced a package of targeted support worth £26 billion, which includes continued support for rising energy bills. More than eight million households on means-tested benefits will receive a cost-of-living payment of £900 in instalments, with £300 to pensioners and £150 for people on disability benefits.
The Energy Price Guarantee, which is protecting households throughout this winter by capping typical energy bills at £2,500, will continue to provide support from April 2023 with the cap rising to £3,000. With prices forecast to remain elevated throughout next year, this equates to an average of £500 support for households in 2023-24.
Benefits and Pensions
Working age benefits will rise by 10.1%, boosting the finances of millions of the poorest people in the UK, and the Triple Lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation.
National Living Wage
The National Living Wage will be increased by 9.7% to £10.42 an hour, giving a full-time worker a pay rise of over £1,600 a year, benefitting 2 million of the lowest paid workers.
Support for Businesses
The Chancellor also announced a £13.6 billion package of support for business rates payers in England. To protect businesses from rising inflation the multiplier will be frozen in 2023-24 while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year.
To help businesses adjust to the revaluation of their properties, which takes effect from April 2023, the Chancellor announced a £1.6 billion Transitional Relief scheme to cap bill increases for those who will see higher bills. This limits bill increases for the smallest properties to 5%. Businesses seeing lower bills as a result of the revaluation will benefit from that decrease in full straight away, as the Chancellor abolished downwards transitional reliefs caps. Small businesses who lose eligibility for either Small Business or Rural Rate Relief as a result of the new property revaluations will see their bill increases capped at £50 a month through a new separate scheme worth over £500 million.
NHS funding
To protect high-quality front-line public services, access to funding for the NHS and social care is being increased by up to £8 billion in 2024-25. This will enable the NHS to take action to improve access to urgent and emergency care, get waiting times down, and will mean double the number of people can be released from hospital into care every day from 2024.
Schools funding
The schools budget will receive £2.3 billion of additional funding in each of 2023-24 and 2024-25, enabling continued investment in high quality teaching and tutoring and restoring 2010 levels of per pupil funding in real terms.
Tax thresholds
To raise further funds, the Chancellor has introduced tax rises of £25 billion by 2027-28. Based around the principle of fairness, all taxpayers will be asked to contribute but those with the broadest shoulders will be asked to contribute a greater share.
The threshold at which higher earners start to pay the 45p rate will be reduced from £150,000 to £125,140, while Income Tax, Inheritance Tax and National Insurance thresholds will be frozen for a further two years until April 2028. The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024 and the Annual Exempt Amount in capital gains tax will be reduced from £12,300 to £6,000 next year and then to £3,000 from April 2024.
The most profitable businesses with the broadest shoulders will also be asked to bear more of the burden. The threshold for employer National Insurance contributions will be fixed until April 2028, but the Employment Allowance will continue to protect 40% of businesses from paying any NICS at all.
In addition, the government is implementing the reforms developed by the OECD and agreed internationally to ensure multinational corporations pay their fair share of tax. And as confirmed last month, the main rate of Corporation Tax will increase to 25% from April 2023.
Energy Profits Levy
To ensure businesses making extraordinary profits as a result of high energy prices also pay their fair share, from 1 January 2023 the Energy Profits Levy on oil and gas companies will increase from 25% to 35%, with the levy remaining in place until the end of March 2028, and a new, temporary 45% levy will be introduced for electricity generators. Together these measures will raise over £55 billion from this year until 2027-28.
Fiscal rules
To ensure fiscal discipline while providing support for the most vulnerable, the Chancellor has introduced two new fiscal rules, that the UK’s national debt must fall as a share of GDP by the fifth year of a rolling five-year period, and that public sector borrowing in the same year must be below 3% of GDP. Overall, the Autumn Statement improves public finances by £55 billion by 2027-28, and the OBR forecasts both of these rules to be met a year early in 2026-27.
To ensure prosperity in the future, the Chancellor recommitted to the £20 billion R&D budget and made numerous infrastructure commitments. Sizewell C nuclear plant will go ahead, with the EDF contract to be signed at the end of the month, providing reliable, low-carbon power to the equivalent of 6 million homes for over 50 years.
