Hannah Walton-Hughes
On Wednesday, the Chancellor the Exchequer Jeremy Hunt unveiled the government’s Autumn Statement, with what was termed a focus on growth. The inflation reduction to 4.6% announced last week meant that the Conservatives felt there was an opportunity to cut taxes, due to economic headroom.
The overall National Living Wage will rise to £11.44 an hour
One of the most significant tax cuts was to the employee rate of National Insurance. Currently at 12%, the Chancellor announced that this would be cut to 10%, which he said would save workers on a £35,000 salary over £450.
This will be brought in by emergency legislation from January 6th 2024.
The overall National Living Wage will rise to £11.44 an hour, taking on a recommendation by the Low Pay Commission.
The issue of rent was also covered. Mr. Hunt stated that he will be increasing “the Local Housing Allowance rate to the 30th percentile of local market rates”, claiming this will support 1.6 million households with approximately £800 next year.
The government will be making… the “largest business tax cut in modern British history.”
In terms of house building, there were further announcements. The government will invest £450 million in the Local Authority Housing Fund – predicted to create 2,400 new homes.
In addition, Jeremy Hunt announced that the government will be making “full expensing”, announced in Spring last year, permanent, calling it the “largest business tax cut in modern British history.”
Another significant tax cut was in relation to the self-employed, many of whom currently pay Class Two National Insurance and Class Four National Insurance.
The Chancellor announced that he will be abolishing Class Two National Insurance altogether and cutting Class Four by 1% from April 2024.
Another change was to the Welfare system. The Chancellor also announced that benefits will rise by 6.7% next April, despite speculation that the government would increase them in line with the lower inflation figure of October.
The Chancellor pledged to spend £1.3 billion over five years to help 700,000 people with health conditions find jobs, and £1.3 billion extra help to people out of work without sickness.
£50 million will be invested to increase apprenticeships over two years
However, the government have also said that, if people do not get a job after receiving government support for eighteen months, they will require them to take part in mandatory work placements to increase skills. If they still do not engage 6 months from that, they will have their benefits stopped.
Education was covered, although this was not a key part of the statement. £50 million will be invested to increase apprenticeships over two years, particularly to increase opportunities in key growth sectors.
Regarding Net Zero initiatives, the Chancellor stated that strategic manufacturing industries will be supported with £4.5 billion between 2025-2030, including £2 billion towards “zero emissions investments by the automotive sector”.
The Green Industries Growth Accelerator (representing renewable energy initiatives such as nuclear, hydrogen and offshore wind) will receive £960 million in funding.
Jeremy Hunt described Artificial Intelligence (AI) as being “at the heart of any future growth”, and has announced investment of £500 million over two years to make the UK an “AI power house”.
Other reforms and announcements, such as those relating to pension funds and Investment Zones in the East Midlands, can be read here.
Jeremy Hunt revealed that the OBR predicts headline inflation will continue to drop to 2.8% by the end of 2024 and the target of 2% by the end of 2025.
The OBR also predicts that underlying debt will fall to 91.6% of GDP in 2024, and will drop for the next few years thereafter. Borrowing is also lower this year, and is predicted to fall by £0.7 billion every year, compared to what was expected in Spring.
The overall tax burden […] will be at record highs by 2030
The Chancellor also pointed to the OBR’s prediction that growth this year will be 0.6% and 0.7% next year.
Despite some positive economic progress, the OBR has also said that growth is still lower than was previously expected. Plus, the overall tax burden is still going up and will be at record highs by 2030.
The Shadow Chancellor, Rachel Reeves, gave her response following the Chancellor’s statement. She claimed the statement had lifted the lid on “thirteen years of economic failure.”
She pointed to the fact that the U.K. has had zero growth in the third quarter of this year, and that the U.K. was the only G7 country whose employment had not returned to pre-pandemic levels.
She said the statement was: “their own poor cover version of what [Labour] have already announced.”
Impact spoke to the Nottingham University Conservative Association for their reaction. They said: “it is fantastic to see the Government finally commit to slashing taxes and reducing the size of the state”, and called the Chancellor’s plan to make full expensing permanent “very welcome”.
However, NUCA also stated “the tax burden is still far too high”, and “there is a long way to go for us to believe that the Conservative Party is once again the party of small state and low taxes.”
Meanwhile the University of Nottingham Labour Students society have called the statement “further confirmation that the Tory government is ideologically bankrupt and a disastrous steward of the economy for both workers and businesses.”
They said that the government “failed” to use “lower than expected borrowing figures” to “make proper investments in […] crumbling public services”, as well as investing in “improv[ing] our energy security, leaving us acutely vulnerable to another shock.”
NLS also referred to what they see as the “disgraceful attack on those with disabilities” , and said “what the country needs is a proper national plan which gets the government, organised labour and businesses working together on a programme of national renewal, and an end to the Tory psycho drama which has held this country back for far too long.”
The full statement by the Chancellor and the response by the Shadow Chancellor can be heard here. The majority of quotes/facts not hyperlinked above, have come from this coverage.
Hannah Walton-Hughes
Featured image courtesy of Marcin Nowak via Unsplash. Image license found here. No changes were made to this image.
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