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
Shadow chancellor Rachel Reeves said the Government has forced the UK economy into a “doom loop”.
She told MPs: “Nobody doubts that the Covid pandemic and the war in Ukraine have had profound implications and the whole House is united in its condemnation of Russia’s aggression.
“But Britain’s problems started before the Covid pandemic and they started before Russia’s illegal invasion of Ukraine. The UK has grown by an average of 1.4% a year under the Conservatives compared to 2.1% a year in the Labour years before that.
“We are the only G7 economy that is still poorer than before the pandemic.”
Ms Reeves went on: “The Chancellor is saying today he will be honest, so let’s be honest: no-one was talking about cuts to public spending two months ago and no other advanced economy is cutting spending or increasing taxes on working people as they head into recession.
“This Government has forced our economy into a doom loop where low growth leads to higher taxes, lower investments and squeezed wages, with the running down of public services – all of which hits economic growth again.”
The Conservatives have picked the pockets and purses and wallets of the entire country, Labour shadow chancellor Rachel Reeves said.
She told the Commons: “In the last hour, the Conservatives have picked the pockets and purses and wallets of the entire country as the Chancellor has deployed a raft of stealth taxes taking billions of pounds from ordinary working people.
“A Conservative double whammy that sees frozen tax thresholds and double-digit inflation erode the real value of people’s wages.
“Just one of those freezes, in the personal allowance, will cost an average earner more than £600.”
Rishi Sunak spent so much time when he was chancellor practising his signature for “glossy Instagram graphics” that he failed to put in place “simple checks” on Covid-19 support, MPs have heard.
Shadow chancellor Rachel Reeves told the lower chamber that “while our public services are struggling and working people are being stretched, the ramp of waste and cronyism from this Government continues apace”.
She added: “It does not seem to concern the Chancellor that his Government dished out £3.5 billion of contracts to friends and donors of the Conservative Party and the latest Prime Minister spent so much time when he was chancellor practising his signature for his glossy Instagram graphics, that he failed to put in place even though most simple checks on Covid support.”
Conservative former Prime Minister Theresa May commended the Chancellor and the Government “for their commitment to sound money”.
She said: “Can I welcome and commend my right honourable friend and the Government for their commitment to sound money and sound public finances.”
She welcomed the commitment to “innovation and R&D”, saying: “But could I ask him to go further and to look again at the definition of what qualifies for R&D for tax credits? I think there is more that can be done to boost our economy for the future.”
Chancellor Jeremy Hunt said: “We are looking at all the taxes around R&D relief. We want to encourage it. There has been a certain amount of abuse.
“But we particularly want to encourage it amongst small companies who often can be the most innovative.”
The Chancellor’s announcement on health spending was “not even Osborne-esque funding for the NHS”, the Labour MP who chairs the Public Accounts Committee said.
Labour former minister MP Dame Meg Hillier said: “The Chancellor has unveiled large numbers, or numbers that seem large. But let’s be clear, take the NHS that £3.3 billion a year is not even Osborne-esque funding for the NHS.
“It is not enough to keep the NHS standing still. Will he level with us and tell us what percentage of the NHS budget it is?”
Chancellor Jeremy Hunt referenced the Parliament of 2010 to 2015, and said: “I apologise to her… for not being able to do that kind of maths in my head. But I can tell you that in that period the NHS budget went up by 0.1% a year, and this is a lot more than that.”