“Our plan for the British economy is working”
On 22 November, Chancellor of the Exchequer Jeremy Hunt unveiled the government’s latest tax and spending plans saying “we back British business” announcing 110 growth measures which he said would boost business investment by £20bn a year. The Chancellor said the government had taken difficult decisions to put the economy “back on track” and claimed, “our plan for the British economy is working.” He also stressed that “the work is not done,” before outlining his package of measures which he said would cut business taxes, raise business investment and get more people into work.
Mr Hunt started his statement by revealing updated economic projections produced by the Office for Budget Responsibility (OBR) which he said showed the government had delivered on all three of the Prime Minister’s economic priorities: to halve inflation, grow the economy and reduce debt.
The Chancellor began with inflation, reiterating that recently released official data showed the Consumer Prices Index (CPI) rate had more than halved from a peak of 11.1% in October 2022 to 4.6% last month. He then detailed some of the latest OBR projections, which suggest inflation will fall to 2.8% next year and hit the government’s 2% target in 2025.
In terms of growth, Mr Hunt said the OBR now expects the economy to expand by 0.6% this year, 0.7% in 2024 and 1.4% in 2025. While this year’s figure is a considerable improvement on the OBR’s previous prediction of a small contraction, the forecast for the following two years represents a relatively sharp downgrade from the previous forecast of 1.8% for 2024 and 2.5% for 2025.
The Chancellor acknowledged that the private sector is more productive in countries like the US, Germany and France and that, “If we want those [growth] numbers to be higher, we need higher productivity.” He also said that the measures being announced today would help close the productivity gap by “boosting business investment by £20bn a year.”
Backing British business
The 110 measures aimed atcreating the right conditions for the private sector to thrive include:
Turning his attention to the small business community, Mr Hunt said, “I have always known that every big business was a small business once,” as he announced a package of measures designed to support SMEs across the UK. Following consultation with the Federation of Small Businesses (FSB), Mr Hunt argued that tougher regulation was needed to stop the “scourge of late payments.” He announced that businesses bidding for large government contracts over £5m will have to prove they pay their invoices within an average of 55 days, reducing progressively to 30 days. On business rates, he announced a freeze on the small business multiplier for a further year, amongst other measures.
Personal taxation, wages and pensions
As recently announced, the government will increase the National Living Wage for individuals from £10.42 an hour to £11.44 an hour, with the threshold lowered from 23 to 21-years-old, effective from 1 April 2024.
The commitment to the pensions Triple Lock remains, meaning that the basic State Pension, new State Pension and Pension Credit standard minimum guarantee will be uprated in April 2024 in line with average earnings growth of 8.5% (September 2023). The value of the new State Pension will increase in April 2024 from £203.85 per week to £221.20 per week, while the basic State Pension will rise from £156.20 to £169.50 per week.
Universal Credit and disability benefits will increase by 6.7% next tax year, equivalent to CPI inflation in the 12 months to September 2023, which is the typical basis for benefit uprating. This represents an average increase of £470 for 5.5 million households next year.
Changes to National Insurance contributions (NICs) were revealed:
No changes were announced for the following allowances:
The latest steps to deliver the Mansion House Reforms for pensions, announced in the days leading up to the Autumn Statement, include:
Next, the Chancellor spoke about ‘levelling up’ measures designed to support growth and investment, starting with three new Investment Zones set to be introduced in Greater Manchester, the West Midlands and the East Midlands. Together, he said, these Investment Zones will generate £3.4bn of private investment and create 65,000 jobs over the next decade.
Also included in the measures:
Back to work
The Chancellor then took the opportunity to reinforce his Back to Work Plan – worth £2.5bn – which was published the previous week. In addition to helping over a million people with long-term health conditions, disabilities and long-term unemployment issues to find and stay in work, the Plan also imposes tough sanctions on those who can work but choose not to.
Other key points
Alcohol duty – frozen until 1 August 2024
Mortgage Guarantee Scheme – extended until the end of June 2025
Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) extension – the government will legislate in the Autumn Finance Bill 2023 to extend the existing sunset clauses from 6 April 2025 to 6 April 2035
Apprenticeships – £50m funding for a 2-year pilot to explore ways to stimulate training in growth sectors and address barriers to entry in high-value apprenticeships
Support for affected communities within the UK following the conflict in Israel and Gaza – funding that the government has already provided to the Community Security Trust will be maintained in 2024/25
Housing and planning investment – an additional £32m to unlock development of thousands of homes across the country, including funding to tackle planning backlogs in Local Planning Authorities (LPA), alongside further reforms to streamline the system through a new Permitted Development Right to enable one house to be converted into two homes
Creative industries – £2.1m of funding for the British Film Commission and the British Film Institute Certification Unit for 2024/25.
Jeremy Hunt signed off his Statement saying, “We are delivering the biggest business tax cut in modern British history, the largest ever cut to employee and self-employed National Insurance, and the biggest package of tax cuts to be implemented since the 1980s. An Autumn Statement for a country that has turned a corner. An Autumn Statement for Growth, which I commend to the House.”
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