Chancellor Jeremy Hunt has announced more than 100 measures in the Autumn Statement, which he said will “boost the economy and drive growth”.
The statement, which includes 110 measures, was delivered by Hunt to Parliament on Wednesday afternoon.
Prime minister Rishi Sunak held a meeting with cabinet early on Wednesday morning, in which he said that the UK’s economic policy could now "change gear" with a focus on reducing debt and cutting tax. He added that it was "no accident" that inflation had halved and that it was the result of actions taken by the government.
Delivering the update, Hunt described it as a statement “for a country that has turned a corner”.
“Our choice is not big government, high spending and high tax because we know that leads to less growth, not more,” he said. “Instead, we cut taxes and reward work, we deliver world class education, we build domestic sustainable energy and we back British business with 110 growth measures.”
However, the Office for Budget Responsibility forecasts published alongside the statement predicted the economy will grow by only 0.7% next year, which was revised down from the 1.8% growth that was forecast in March earlier this year.
Inflation is expected to fall to 2.8% by the end of 2024, compared to 11.1% last year.
Shadow chancellor Rachel Reeves responded to the statement by saying that it would do “nothing” to compensate for rising taxes and prices hitting families.
“The truth is that under the Conservatives, growth has hit a dead end,” she said.
“What has been laid bare today is the full scale of the damage that this government has done to our economy over 13 years and nothing that has been announced today will remotely compensate mortgages, rising taxes eating into wages, inflation high with prices still going up in the shops, public services on their knees, and too many families struggling to make ends meet as the sun begins to set on this divided, out of touch, weak government.”
Here are the stand-out announcements in the Autumn Statement:
National insurance cuts
The chancellor has cut the main rate of National Insurance from 12% to 10%, saving someone on the average salary of £35,000 more than £450 a year.
“I would normally bring in a measure like this for the start of the new tax year in April, but instead tomorrow I’m introducing urgent legislation to bring it in from January 6, so that people can see the benefit in their payslips at the start of the new year,” the chancellor said.
Hunt also announced that Class 2 National Insurance, a flat-rate charge paid by self-employed people earning more than £12,570, will be abolished.
“I want to reform and simplify the taxes paid by the self-employed, so today I am announcing a major reform of one of those taxes,” Hunt said.
Tax cuts were significantly trailed before the Autumn Statement, with the prime minister and chancellor likely hoping that reducing direct taxation will satisfy calls from backbench MPs who have been calling for tax cuts for months.
Hunt said that this statement would show the government “backs business”, adding that the 110 measures would “unlock investment with supply side reforms”.
He announced that full expensing would be made permanent, a scheme that was due to expire in 2025 which allows firms to offset investment at a cost of £9 billion.
“This is the largest business tax cut in modern British history,” the chancellor said.
“It means we have not just the lowest headline corporation tax rate in the G7 but its most generous capital allowances.”
He also announced the government would extend the 75% business rates discount for retail, hospitality and leisure businesses for another year.
“It is a large tax cut which recognises the role of pubs and high street shops in our communities,” he said.
Alcohol duty will be frozen until August next year, in another bid to help pubs, but duty on hand-rolling tobacco will be increased by an additional 10%.
Describing AI as “at the heart of any future growth”, the chancellor announced will a further investment of £500m over the next two years to fund innovation centres to “help make us an AI powerhouse”. In addition, an extra £4.5bn will be invested in manufacturing between 2025 and 2030, with about £1m for aerospace and green technology companies.
A new, simplified R&D tax relief scheme will also be created, which combines the existing R&D Expenditure Credit and SME schemes. The rate at which loss-making companies are taxed will fall from 25% to 19%.
Minimum wage rise
The national minimum wage will be increased by 9.8% up to £11.44 per hour, and this will be expanded to 21 and 22-year-olds for the first time.
New investment zones and freeport boost
Further levelling up measures were announced, following the pledge earlier this year to deliver 12 new Investment Zones across the UK.
“I have today decided to extend the financial incentives for Investment Zones and tax reliefs for Freeports from 5 years to 10 years,” Hunt said.
“I will also set up a new £150m Investment Opportunity Fund to catalyse investment into the programme.”
Having confirmed a new Investment Zone in West Yorkshire on Monday, Hunt also announced that three further investment zones focused on advanced manufacturing will be created in the West Midlands, East Midlands and Greater Manchester, expected to create 65,000 new jobs.
Changes to benefits system
The Autumn Statement included multiple changes to the benefits system, such as an increase in Universal Credit and other benefits from next April by 6.7% in line with September’s rate of inflation.
Hunt described this as “financial support to those on the very lowest incomes from a compassionate Conservative government”.
“Post-pandemic we still have over seven million adults of working age, excluding students, who are not working despite nearly one million vacancies in the economy,” he said.
“Many can and want to work – but our system makes that too hard.”
He therefore announced a further £1.3bn of funding to offer extra help to the 300,000 people who have been unemployed for over a year but said that the government would “ask for something in return”.
“If after 18 months of intensive support jobseekers have not found a job, we will roll out a programme requiring them to take part in a mandatory work placement to increase their skills and improve their employability,” he continued.
“And if they choose not to engage with the work search process for six months, we will close their case and stop their benefits.”
The government recommitted to the pensions triple lock which ensures pension rates are linked to earnings or inflation.
“Today we honour our commitment to the triple lock in full,” Hunt said, announcing that from April 2024, the state pension will increase by 8.5% to £221.20 a week, worth up to £900 more a year.
“That is one of the largest ever cash increases to the state pension – showing a Conservative government will always back our pensioners.”
Reforms were also announced to make it easier for savers to pay pension contributions into their existing pension pot if they choose.
The chancellor said he had “listened closely” to think tanks which had advised that unfreezing the local housing allowance was an “urgent priority”.
“I will therefore increase the local housing allowance rate to the 30th percentile of local market rents,” he said.
“This will give 1.6 million households an average of £800 of support next year.”
The planning system will be reformed to allow local authorities to recover the full costs of major business planning applications in return for being required to meet guaranteed faster timelines.
The chancellor also announced £110m in investment over this year and next to “deliver high quality nutrient mitigation schemes, unlocking 40,000 homes”.
£32m will be invested to develop new housing quarters in Cambridge, London and Leeds, and £450m will be allocated to the Local Authority Housing Fund to deliver 2,400 new homes.
Referring to the huge issues facing the NHS, Hunt said that “we need a more productive state, not a bigger state”.
“That is why I want the public sector to increase productivity growth by at least half a percent a year, the level at which the size of our state starts to reduce as a proportion of GDP,” he said.
He said the NHS would need “reform”, not just extra money.
The chancellor announced funding of £50m over the next two years to pilot ways to increase the number of apprentices in engineering and other “key growth sectors”.
He said that alongside the recently announced new Advanced British Standard qualification, encouraging more young people into apprenticeships would help the economy to “prosper”.
Zoe Crowther is a journalist for CSW's sister title PoliticsHome, where this story first appeared