All The Major Announcements In Jeremy Hunt's Autumn Statement
Jeremy Hunt has announced a major increase in tax raising measures
7 min read
Chancellor Jeremy Hunt promised "stability, growth and public services" in a major Autumn Statement laying out the government's spending plans, including increases to tax and cutbacks on public spending.
Hunt has raised the UK's tax burden to its highest level since World War Two and admitted he had been forced to take "difficult decisions" to limit the impact of the coming recession.
Here are all the key announcements of Hunt's major economic statement:
Tax
In a complete evisceration of former prime minister Liz Truss's economic plans, Hunt is not only retaining the top 45p rate of income tax, but lowering the threshold at which it is paid from £150,000 to £125,140. The move will pull an estimated 250,000 people into the top tax band. He claimed it would mean those earning £150,000 or above would pay on average an extra £1,200 in tax.
The current freeze on income tax personal allowance, higher rate threshold and inheritance tax threshold will be extended for a further two years until April 2028.
The amount that people can earn tax-free from dividends is also being reduced from £2,000 to £1,000 next year and then £500 in April 2024.
The tax-free allowance on capital gains is also being cut significantly from it's current £12,000 amount, to £6,000 next year and then £3,000 in April 2024.
The stamp duty cuts announced in former chancellor Kwasi Kwarteng's budget will be retained, but will now be time-limited until 31 March 2025 because housing activity was expected to "slow" over the period.
Hunt said after that point he would "sunset" the measure and replace it with a new incentive to support the housing market.
In a particularly controversial announcement, Hunt said to achieve a "fairer" motoring tax system he was scrapping the Vehicle Excise Duty exemption for electric vehicles from April 2025.
Defence and Foreign Aid
The Chancellor confirmed he would maintain the defence budget at a minimum of two per cent of national spending, abandoning a pledge by Truss to raise spending to three per cent by the end of the decade.
Pointing to the £2.3bn in military assistance provided to Ukraine since the start of the Russian invasion, Hunt said he recognised the need for increased defence spending, but would not lift the rate until the completion of the current Integrated Review into the UK's defence needs.
Overseas aid spending will also remain at its 0.5 per cent level, with Hunt saying it would "not be possible" to return the aid budget to its previous 0.7 per cent "until the fiscal situation allows".
Education and Skills
While the Chancellor insisted there would be no major surprises in his statement, he announced a significant package of investment in education budgets, with a further £2.3bn to be added to school budges for the next two years.
Hunt said he recognised the pressure that teachers have faced as a result of the pandemic as he thanked them for their work, and announced a new review would be delivered to improve the government's skill reform programme.
Despite fears that research and development funding could be slashed to reduce government spending, Hunt said such a move would be a "mistake" and confirmed the current research budget would instead increase by a further £20bn by 2024-25.
Energy Tax
After months of pressure from Labour, the Chancellor announced he was increasing the energy windfall tax from 25 per cent to 35 per cent.
Hunt said he was not opposed to increasing levies on firms if they were "genuinely" linked to unexpected rises in energy prices, but said the "temporary" increase would only remain in place until March 2028.
Electricity generators will also face a new windfall tax of 45 per cent, with the Chancellor claiming that taken together, the changes would raise £14bn in extra tax revenue next year.
That will come alongside further energy bill support for households, with Hunt announcing new one-off payments to help offset rising bill. They will include a new £900 payment to households on means-tested benefits, £300 to pensioners and £150 for those on disability benefit.
The Chancellor also confirmed the current energy price guarantee will be retained for a further 12 months.
To improve the UK's energy security, he formally announced a new nuclear power plant at Sizewell C would proceed, with a major government investment of £700m towards the project.
That came alongside a pledge to provide a further £6bn increase in funding for energy efficiency projects, with a promise to set up a new Energy Efficiency Taskforce to lead on reviewing the government's current efforts to reduce usage.
Business
Hunt said the planned review of business rates would take place from April 2023, but insisted he would "soften the blow" on firms by introducing a new £14bn tax cut over the next five years.
In addition, the national minimum wage is also set to rise by 9.7 per cent next year to £10.42, meaning a full-time worker could receive on average an extra £1,600 per year.
Health and Social Care
Overall NHS budgets will rise by £3.3bn in each of the next two years as the government faces warnings over record waiting lists and a looming nurses strike over pay and conditions.
Hunt suggested the increase would help shore up NHS budgets while a new independent review is undertaken to assess the number of doctors and nurses who were expected to be needed in the next 5, 10 and 15 years.
Hunt confirmed he was delaying the implementation of the Dilnot reforms – a major review into how the UK delivers social care – saying instead that funding earmarked for the changes could be used directly by local authorities to provide extra social care packages in the community.
The Chancellor said a further £1bn would be delivered next year and £1.7bn in 2024 for social care provision, but said local authorities could top up their budgets through what he branded "flexibilities" in council tax – essentially giving the green light for council tax hikes of up to five per cent.
Under the current system, councils can only raise tax rates by more than three per cent if they hold a referendum on the changes, but the Treasury documents that set out the detail of the plans show that a new two per cent social care levy can be added on in addition.
Pensions and Benefits
Following weeks of uncertainty, the Chancellor confirmed he was retaining the triple lock on pensions, and raising benefits in line with inflation.
Hunt said benefits would rise 10.1 per cent next year and cost around £11bn, despite claiming he'd received "representations" to limit the increase. But he insisted anything less than an inflation-linked increase would "not be consistent with our commitment to protect the most vulnerable".
According to Treasury figures, the uplift will mean a family on Universal Credit will receive up to £600 next year, pension credits will rise by up to £1,470 for a couple and £960 for a single pensioner, while those receiving the state pension will receive an additional £870.
The Chancellor also announced that social housing rents, which usually rise in line with inflation, would be capped at seven per cent next year – a move which he claimed would save the average tenant £200.
But highlighting that employment levels were still lower than pre-pandemic levels despite high job vacancy rates, Hunt said around 600,000 people claiming Universal Credit would be asked to meet with work coaches to help "support" them to increase their hours.
He announced a further £280m in funding would be given to the Department of Work and Pensions to help crackdown on benefit fraud over the next two years.
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