Chancellor sets out Autumn Statement

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Chancellor of the Exchequer, Jeremy Hunt, has set out his plans for the economy in his Autumn Statement, presented to the House of Commons on Wednesday 22nd November.

Addressing the House of Commons, the Chancellor outlined proposals to grow the economy through boosts to productivity, and to reduce the tax burden, describing announcements as ‘decisions for the long term.’ Jeremy Hunt also detailed the UK’s economic outlook in his speech, with inflation having fallen to 4.6% and the economy having outperformed expectation over the past 12 months, avoiding the recession predicted ahead of his 2022 Autumn Statement; headline debt is also predicted to fall to 94% of GDP.

Business leaders responds to Autumn Statement

Key highlights of the measures announced in the Chancellor’s Autumn Statement are detailed below:

Personal tax:

In response to improvements in the economy since last year, the Chancellor announced a cut in the rate of Employee National Insurance from 12% to 10%; Class 4 NICs on all earnings between £12,570 and £50,270 will fall to 8%. Class 2 NICs for the self-employed will be abolished, although access to contributory benefits will be maintained. Changes to Employee National Insurance will come into effect from 6th January, with other changes beginning in April

The Personal Tax Allowance, the income threshold below which no income tax is paid has remained frozen at £12,570.

Business:

The Chancellor has unveiled a £4.3 billion package of business rates support, spread over the next five years, including continuation of the  75% Retail, Hospitality and Leisure relief scheme, and a freeze to the small business multiplier.

In a bid to boost productivity, Jeremy Hunt has announced permanent Full Expensing, allowing businesses to invest in their machinery and equipment and offset the costs against their profits. Schemes to support R&D have also been simplified, combining programmes for larger and smaller businesses into one offer, while the Made Smarter programme to encourage tech adoption at SME manufacturers is to be rolled out nationwide.

Tougher regulation on late payments is also to be introduced to support SMEs, alongside continued funding for the Help to Grow business support scheme.

£4.5 billion for key manufacturing sectors, including automotive, aerospace, life sciences and green energy, was also announced earlier this week.

Investment and levelling up:

The Chancellor announced the creation of three new Investment Zones for the advanced manufacturing sectors in Greater Manchester, the East Midlands, and the West Midlands, with Greater Manchester set to receive a £160 million investment package. The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years. Read more here.

Devolution agreements have also been extended to a number of English counties, which will include new regional mayors for Greater Lincolnshire and for Hull and East Yorkshire; Lancashire and Cornwall have agreed non-mayoral deals. The changes will allow local authorities in these areas to follow in the footsteps of city-regions such as Greater Manchester and take greater control over local public spending.

Minimum wage, pensions and welfare:

The National Living Wage will rise from April to £11.44, a 9.8% increase, and be extended to 21- and 22-year-olds for the first time. Apprentice pay and minimum pay rates for younger workers will also see a pay boost of more than £1 per hour. More details here.

In response to rising numbers of UK workers out of work due to health conditions, Jeremy Hunt announced reforms to the welfare system to get more people back into work. The Work Capability Assessment will be amended to reflect the growing number of flexible working options and adjustments available to see more people supported into employment rather than be deemed not able to work. Those out of work for over 18 months will also have access to mandatory work placements to boost their skills and employability. Universal Credit will also see a 6.7% uplift in April, in line with September inflation.

Local Housing Allowance rates will also be unfrozen in April and increased to 30% of local rents in response to recent rises in housing costs.

The Chancellor has also reaffirmed the government’s commitment to the Pensions triple lock, with the State Pension rising from April by 8.5% in line with wage growth.