RECAP: Jeremy Hunt increases the windfall tax on oil and gas giants | Triple lock pension and living wage update | Labour says UK economy put into “doom loop”
Mr Hunt has increased the windfall tax on oil and gas giants from 25% to 35% and imposed a 45% levy on electricity generators to raise an estimated £14 billion next year.
Households will face increased energy bills, high inflation and tax hikes as the country is hit by recession.
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Hide AdChancellor Jeremy Hunt told MPs he was having to make difficult decisions to ensure a “shallower downturn”, but the economy was still expected to shrink 1.4% in 2023.
The Office for Budget Responsibility (OBR) forecast the UK’s inflation rate to be 9.1% this year and 7.4% next year, contributing to the squeeze on living standards.
The cap on average household energy bills will increase from £2,500 to £3,000 from April.
But Mr Hunt said “this still means an average of £500 support for every household”, while there would also be additional cost-of-living payments for people on means-tested benefits, pensioner households and those on disability benefit.
Mr Hunt was setting out a package of around £30 billion of spending cuts and £24 billion in tax rises over the next five years.
His package is in stark contrast to his predecessor Kwasi Kwarteng’s ill-fated plan for £45 billion of tax cuts, less than two months ago, which spooked the markets, pushed up the cost of borrowing and contributed to the downfall of Liz Truss’s short-lived administration.
Autumn Budget LIVE as chancellor to unveil spending cuts and tax rises
The Chancellor said he would add an extra £6 billion of investment in energy efficiency from 2025 to help meet a new ambition of reducing energy consumption from buildings and industry by 15% by 2030.
At a glance. The chancellor has announced
– The threshold at which the 45p top rate of income tax is paid will be reduced from £150,000 to £125,140, although different rates apply in Scotland.
– The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will be frozen until April 2028, something which will result in more people paying more tax as a result of “fiscal drag” as wages increase.
– The windfall tax on oil and gas giants will increase from 25% to 35% and a 45% levy on electricity generators will help raise an estimated £14 billion next year.
– Tax-free allowance for capital gains will reduce in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25.
– Electric vehicles will no longer be exempt from vehicle excise duty from April 2025, to make the motoring tax system “fairer”.
– Government spending will continue to increase in real terms every year for the next five years, but at a slower rate than previously planned.
– Stamp duty cuts announced in Mr Kwarteng’s mini-budget will now be time-limited, ending on March 31 2025.
– The Government would protect the increases in departmental budgets already set out in cash terms for the next two years, meaning real-terms cuts due to inflation and pressure on public sector wages.
– The defence budget will keep meeting the Nato target of 2% of GDP but the overseas aid budget will not be returned to its goal of 0.7% of national income “until the fiscal system allows”.
– An extra £2.3 billion per year will be invested in schools in England over the next two years.
– The implementation of social care reforms will be delayed for two years.
– The NHS budget in England will increase by an extra £3.3 billion in each of the next two years.
The Chancellor said he would not cut “a penny” from Government capital budgets over the next two years, and would then maintain them at that level for the next three years to avoid limiting “our future”.
BREAKING: The national living wage will be increased to £10.42 from April 2023, the Chancellor announced.
Jeremy Hunt told the Commons: “Today, I am accepting the recommendation of the Low Pay Commission to increase it next year by 9.7%.
“That means, from April 2023, the hourly rate will be £10.42 which represents an annual pay rise worth over £1,600 to a full time worker.
“It is expected to benefit over two million of the lowest paid workers in the country and keeps us on track for our target to reach two-thirds of median earnings by 2024.
“And it is the largest cash increase in the UK’s national living wage ever.”
BREAKING: The Pensions Triple Lock and Pension Credit will be protected and rise in April 2023 by 10.1%.
The Government will continue the Energy Price Guarantee for a further 12 months at a higher level of £3,000 per year for the average household, the Chancellor has said.
Jeremy Hunt told the Commons: “One of the biggest worries about families is energy bills, and I pay credit to my predecessor the right honourable member for Spelthorne and the former prime minister, the right honourable member for South West Norfolk, for their leadership in this area.
“This winter, we will stick with the plan to spend £55 billion to help households and businesses with their energy bills – one of the largest support plans in Europe.
“From April, we will continue the Energy Price Guarantee for a further 12 months at a higher level of £3000 per year for the average household.
“With prices forecast to remain elevated through next year, this will still mean an average of £500 support for every household.”
Shadow chancellor Rachel Reeves said “the mess we are in is the result of 12 weeks of Conservative chaos but also 12 years of Conservative economic failure”.
The autumn statement is an “invoice for the economic carnage” of the mini-budget, Labour has said.
Shadow chancellor Rachel Reeves told the Commons: “What does the Chancellor have to offer today? More of the same, with working people paying the price for his failure.
“The Chancellor should have come here today to ask for forgiveness, at the very least he could have offered an apology, but no.
“Instead he says that his predecessor was correct in his analysis at the mini-budget, the mini-budget that put our economy into freefall.
“All the country got today was an invoice for the economic carnage that this Government has created.
“Never again can the Conservatives be seen as the party of economic competence.”
The shadow chancellor told MPs: “What people will be asking themselves at the next election is this – are me and my family better off with a Conservative Government? And the answer is no.”
“Yes!” Conservative backbenchers shouted back.
Ms Reeves continued: “The mess we are in is the result of 12 weeks of Conservative chaos, but also 12 years of Conservative economic failure.
“Growth dismal, investment down, wages squeezed, public services crumbling.”