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Autumn Statement 2022 summary: key points and changes at a glance

 Chancellor launches stealth tax raid and squeezes department budgets in a belt-tightening Autumn Statement

Source - Daily Telegraph - 17/11/22

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Jeremy Hunt has delivered billions of pounds of extra NHS and schools funding but launched a slew of stealth taxes to shore up the country's finances in a belt-tightening Autumn Statement.



The Chancellor has frozen or cut a number of tax thresholds, extended the windfall tax on energy producers and put the squeeze on department budgets. 

Mr Hunt said his plan will lead to a shallower recession and higher long-term growth as he promised to prioritise "stability, growth, and public services". He found a total of £55bn in tax increases and spending restraints to help boost the country's coffers

He said: "British families make sacrifices every day to live within their means and so too must their government because the UK will always pay its way."

Here are all of Mr Hunt's measures from the Autumn Statement:


Economic forecasts & fiscal rulesNo

  • The Office for Budget Responsibility warned that the UK is already in a recession as it delivered a grim set of forecasts to the Chancellor. GDP will fall 1.4pc in 2023 before bouncing back to growth of 1.3pc in 2024. It predicted that the UK’s inflation rate will be 9.1pc this year and 7.4pc next year. Inflation peaks at 11pc this quarter.
  • The OBR predicted that borrowing will hit 7.1pc of GDP, or £177bn, in 2022/23 and 5.5pc of GDP, or £140bn, next year, far worse than previous forecasts. Back in March, the OBR predicted that borrowing would hit £99bn in 2022-23 and fall to £50bn in 2023-24.
  • Debt is is expected to hit a peak of 97.6pc of GDP in 2025-26, a 63-year high, before falling to 97.3pc in 2027-28.
  • The Chancellor set new fiscal rules: underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period and public sector borrowing, over the same period, must be below 3pc of GDP.

Tax changes

  • The OBR predicted that the tax burden will hit a record high of 37.5pc as a share of GDP in 2024-25. Taxes as a share of the economy will rise to 36.4pc of GDP this year and 37.4pc in 2023-24, breaking the previous record.
  • The threshold for the top rate of income tax has been cut from £150,000 to £125,140, dragging hundreds of thousands of workers into the highest tax band.
  • The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will be frozen for a further two years until April 2028. This fiscal drag effect will mean that millions of people will either start paying certain taxes or be dragged into higher bands.
  • Mr Hunt slashed tax-free allowances on dividends and capital gains tax. The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024. The Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.
  • The windfall tax targeting the profits of energy companies is being extended. From January 1st until March 2028, the Energy Profits Levy will rise from 25pc to 35pc.
  • The Chancellor said that electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
  • The Employers NICs threshold will be frozen until April 2028 but the employment allowance will be kept at its high level of £5,000.

Spending

  • The NHS and schools have been given a multi-billion boost to their budgets but overall department spending will be squeezed in the coming years.
  • Department budgets set out for the next two years at the 2021 Spending Review will be kept despite being significantly eroded by high inflation.
  • Resource spending will rise 1pc a year in real terms for the following three years. The Chancellor said overall spending on public services will still increase in real terms over the next five years.
  • The NHS budget will increase by an extra £3.3bn in both of the next two years. Social care funding will climb by £2.8bn next year and £4.7bn the following year, Mr Hunt said. It includes extra social care grant funding of £1bn next year and £1.7bn the year after.
  • Schools will be given by an extra £2.3bn in both 2023/24 and 2024/25.
  • Next year's increase in benefit and pension payments will be tied to inflation, Mr Hunt confirmed, while pension credit will rise by 10.1pc.
  • Mr Hunt said the defence budget will remain at at least 2pc of GDP and he delayed the return to an international aid target of 0.7pc of GDP. It was cut to 0.5pc of GDP during the Covid crisis.
  • Public investment will not be slashed in the coming years as he confirmed that capital spending on HS2, Northern Powerhouse Rail and new hospitals will go ahead. Research and development spending has also been protected and will hit £20bn by 2024/25.
  • Debt will be much higher than expected

Energy

  • The cap on energy bills will continue for a further 12 months but will rise from £2,500 to £3,000. He said this is expected to provide households an extra £500 of support on average.
  • An extra £900 of energy bills support will be provided to households on means-tested benefits, £300 more will be given to pensioners and £150 will be given to those on disability benefit.
  • The Government will double investment in energy efficiency to hit a new aim of reducing energy consumption from buildings and industry by 15pc by 2030. An extra £6bn of funding to boost energy efficiency will be provided from 2025.
  • Mr Hunt confirmed that the Government will proceed with the new nuclear power plan at Sizewell C.

Other

  • Mr Hunt said that changes to leftover EU regulations in five growth industries - digital technology, life sciences, green industries, financial services and advanced manufacturing - will be reviewed by the end of next year.
  • The Treasury will also publish its decision on the Solvency II rules, which could unlock investment by cutting the buffers insurers are forced to hold.
  • The National Living Wage will increase next year by 9.7pc, pushing up the hourly rate to £10.42 from April.
  • Work and Pensions Secretary Mel Stride has been tasked with carrying out a view into how to tackle Britain's rising economic inactivity rates as more workers drop out of the jobs market.





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