Yesterday, the Chancellor announced the 2022 Autumn Statement. Like many countries globally, the UK is facing economic challenges. The Covid pandemic and Putin’s invasion of Ukraine have cost billions. The Government rightly spent over £400 billion supporting jobs during the pandemic – but this must be paid back now rather than leaving it to future generations.
The Chancellor has been extremely honest that tough but fair decisions have had to be made to restore stability in our economy and to tackle inflation.
I am pleased to see more money announced for schools and the NHS, as well as a plan to boost economic growth. To achieve growth, inflation must be brought down, and debt must fall as a share of GDP. It is also extremely welcome to see benefits uprating in line with inflation and keeping the pensions triple lock.
Some of the key announcements made include:
- To restore economic stability, spending will grow in real terms more slowly than previously planned. For the next two years, departmental budgets will be maintained at the levels set in 2021. After that, they will grow by 1% per year in real terms until 2028.
- There will be an additional £7.7 billion funding for health and social care in the next two years.
- There will be an additional £4 billion for schools over the next two years, with the Schools Budget increasing by £2 billion this year and £2 billion next year to help schools with the rising cost of inflation.
- Defence spending will continue to exceed 2% of GDP. Further details on the path of the Defence Budget will be set out at the Spring Budget.
The tax rises set out in the Autumn Statement raise £25 billion in additional taxes – these taxes are targeted towards businesses, wealthier households and the oil and gas industry. This ensures that we keep to our manifesto commitment to not increase Income Tax, National Insurance or VAT:
- Instead of raising tax rates, the Government is freezing personal tax thresholds for a further two years. The Additional Rate Threshold (currently those earning over £150k per year) will be reduced to £125,140 from 6 April 2023.
- Windfall taxes on energy companies will be extended and increased. Companies that make genuine windfall profits as a result of the war in Ukraine will have to make an additional contribution. The Energy Profits Levy rate will rise from 25% to 35% from 2023, while a 45% Levy will be applied to extraordinary returns made by electricity generators. These windfall taxes are due to raise £52 billion over six years.
Low-income households will be protected:
- The Energy Price Guarantee will continue to support everyone for another year. This winter, as is currently in place, the price households pay for the energy they use will be capped, meaning a typical household will pay £2,500. From April 2023, the price cap will rise so that a typical household will pay no more than £3,000.
- There will be an additional £12 billion of targeted support for the most vulnerable households. This years cost of living payments will continue, and next year there will be extra one-off payments for £900 for the 8 million households on means-tested benefits, £300 to pensioners, and £150 for disability benefit recipients.
- The Pensions Triple Lock will be protected, meaning that in April the State Pension will rise in line with inflation – which will be the biggest cash increase in the State Pension ever.
- Benefits will be uprated in line with inflation in 2023-24. This means the average uplift for a households’ Universal Credit will be around £600.
As ever, there are more announcements that I haven’t been able to mention above. You can see further information on the below links: