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Autumn Statement 2022: The key points

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Today, the Chancellor Jeremy Hunt has announced the Autumn Statement. After the kerfuffle of ‘Trussonomics’ and the saga of Kwasi Kwarteng’s mini-budget back in September, the country was waiting eagerly to see what Mr. Hunt had to say. 

The Chancellor started his speech in the House of Commons with a statement suggesting that, “Unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future. So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.” 

He then went on to say that his priorities are stability, growth and public services. He stated he wants to protect the most vulnerable in our society, and that, “To be British is to be compassionate”. 

Mr. Hunt did mention the previous Chancellor’s mini-budget. He said he understood the motivations behind Mr. Kwarteng’s budget, but unfunded tax cuts are risky. However, he suggested Kwasi Kwarteng was correct to identify growth as a priority. 

Here are the key points from today’s Autumn Statement

More people to pay top rate of income tax

Jeremy Hunt announced the threshold for when the highest earners pay top rates of tax will be reduced. The amount somebody can earn before paying top-rate tax is currently £150,000. This will be reduced to £125,140. 

This means, according to the Chancellor, that those earning over £150,000 annually will pay just over £1,200 per year more in taxes. 

Energy bills

Hunt confirmed energy bill support will be extended. However, it will be less generous. From April, energy bills will go up by hundreds of pounds a year for millions of households across the UK. 

A household using a typical amount of gas and electricity will pay £3,000 annually, up from £2,500, as the Energy Price Guarantee rises. Without support, this figure could hit £3,700 annually. The scheme will run for 12 months from April 2023. 

Energy firms targeted with windfall tax

It has been confirmed that the energy industry will face higher windfall tax. This will increase from 25% to 35%. 

Gas and Oil companies face windfall tax

In a huge move, the Chancellor announced oil and gas companies would be hit with increased taxes. Windfall taxes on profits of UK operations will increase from 65% to 75% until March 2028.  

There will also be a 40% tax on profits of older renewable and nuclear electricity. This will raise an estimated £14 billion in 2023 alone – a huge amount. 

Tax thresholds frozen

Next up, Mr. Hunt announced the income tax personal allowance threshold will be frozen until 2028. Freezing these thresholds means that tax bands will remain the same, even as people’s wages rise. So, as living wages increase, people will be paying more tax on their earnings, with more people moving into higher tax brackets. 

The thresholds were already frozen until 2026, with an extension of two years being added to the policy. This means millions of people will pay more tax. Taxes as a proportion of o0ur income will rise by just over 1% over the next five years. 

Motor tax

Electric vehicles will no longer be exempt from Vehicle Excise Duty, as of April 2025. The Chancellor suggested this would make the motoring tax system fairer. 

Spending squeezes

Jeremy Hunt announced that there will be restrictions on spending within government departments, announcing tough decisions would have to be made over the next two years to deal with inflation.  

The health budget will not be reduced, and will be protected, however. The Chancellor said a strong NHS is at the heart of Prime Minister Rishi Sunak’s vision for the country going forward.  

The Chancellor also noted overall spending on public services would rise over the next five years, after taking inflation into account. 

Cost of living support

The Chancellor also announced targeted support to help with the cost of living. Those on low incomes, pensioners and those on disability benefits will be helped more. 

Payments of an additional £900 will be paid to those on means-tested benefits. £300 will be given to pensioners and £150 will be given to those on disability benefits. 

National living wage

The National Living Wage will increase from £9.50 an hour for those over 23 to £10.42. This will come into force in April 2023, announced earlier than usual to allow businesses to prepare accordingly. 

Universal credit and benefits

Mr. Hunt confirmed he is committed to helping the public increase their income, find work and become more financially dependent. To do this, over 600,000 people on Universal Credit will be asked to meet with a work coach. 

It was also announced that £280 million would be invested into the Department for Work and Pensions (DWP), in order to tackle benefit fraud and reduce the number of errors in the system. 

Means-tested benefits, including UC, will rise in line with the inflation figure of 10.1% from April, said Hunt. Some disability benefits rise in line with inflation by law. 

The NHS

Hunt asked the NHS to join other public services in tackling waste and improve efficiency. He suggested the UK needs “better outcomes for citizens and better value for taxpayers”. 

According to Mr. Hunt this will not ask more of NHS workers, but asks they join in with this process. However, he notes being more efficient will not be enough. The NHS budget will be increased by £3.3 billion over the next two years. 

The Chancellor also said both schools and the NHS in Scotland, Wales and Northern Ireland need help. He has pledged £1.5 billion to the Scottish government, £1.2 billion to the Welsh government and £650 million to the Northern Ireland Executive. 

Pensions

In early 2023, the government’s review on the current pension age will be published. 

The state pension will also rise in line with September’s inflation rate of 10.1% in April. Hunt also said the government is sticking to its “triple lock” promise. This promise means the state pension rises in line with either the previous September’s inflation figure, the average wage increase or 2.5% – whichever is highest. 

Foreign aid

In terms of overseas spending, Mr. Hunt said it was not possible to maintain the 0.7% target. This is due to the current economic situation not allowing for this. For now, spending will remain at around 0.5%, until the economy allows. 

Climate change

According to the Chancellor, the UK is a global leader in cutting emissions. He said now would be the wrong time to step back from international climate responsibilities, especially as we cut more emissions than “any G20 country”. 

The government is fully committed to the historic Glasgow climate pact agreed at COP26, says Jeremy Hunt. This includes a 68% reduction in emissions by 2030. 

Education

Providing children with a good education is a “moral mission”, according to Mr. Hunt. He has appointed Sir Michael Barber as an advisor to work on implementing a “skills reform programme” to help those entering a workplace involved in education. 

He also promised to do more than protect the school budget, actually increasing it. In the next two years, the government are to invest £2.3 billion in schools. He also thanked school staff for their brilliant work. 

Sizewell C 

Sizewell C is a planned nuclear plant for the south-east of England. It is expected to provide 7% of the UK’s electricity needs. Mr. Hunt has given the go-ahead for contracts to be signed in the coming weeks and get the building of the plant off the ground. 

It will be very expensive and take years to build, not expected to provide electricity until at least 2030. However, it will create 100,000 jobs and provide power to six million homes for 50 years. 

Capital Investments

Hunt said cutting capital investments is often seen as an “easy option” when looking to find areas to make cuts. However, he suggested doing this limits our future. He said he will not be “cutting a penny” from the UK’s capital budgets for at least the next two years. 

Railways

The Chancellor confirmed the Northern Powerhouse rail, East West Rail and HS2 railway projects will go ahead. 

Connectivity

Over 600 billion will be invested within the next five years. This will aim to connect our country as well as growing the economy, through the new hospitals programme and gigabit broadband rollout, said the Chancellor. 

Rental prices

The Chancellor has said rental price increases in the social sector will be capped at 7% next year, helping over four million families in the UK. 

The post Autumn Statement 2022: The key points appeared first on MoneyMagpie.

Original source: https://www.moneymagpie.com/make-money/autumn-statement-2022-the-key-points

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