The Autumn Statement 2022

The Autumn Statement 2022 was delivered by Chancellor Jeremy Hunt today (Thursday 17 November 2022).

In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future. So today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy. Our priorities are stability, growth, and public services.

Click on the following link to read today’s Autumn Statement in full: Autumn Statement

KEY ANNOUNCEMENTS

👉🏽 From April 2023 the rate at which people pay the additional rate of income tax, charged at 45%, will change from £150k to those earning over £125,140. This is a measure to ensure those with the highest incomes contribute more to help strengthen public finances.

👉🏽 Personal tax thresholds will be maintained at current levels for a further 2 years, until April 2028 to strengthen public finances.  Highest-earners will contribute more because it's fair those with the broadest shoulders should help the most vulnerable.  

👉🏽 The tax free dividend allowance will be reduced to £1,000 in 2023-24, and then to £500 in 2024-25. This is a fair way to strengthen the public finances.

👉🏽 To restore public finances and make the tax system fairer, 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. 

👉🏽 The shift to Electric Vehicles is continuing at pace as the UK moves to net zero. Therefore from 2025, road tax will be introduced for EVs so all motorists begin to pay a fair share.   Support for charging infrastructure is continuing.

👉🏽 Stamp Duty cuts announced in the Growth Plan will now be time-limited, ending on 31 March 2025. This is to help the jobs & firms that rely on the housing market through the current challenges, while strengthening the public finances in the longer term.

👉🏽 From 31 December 2023 we will introduce theOrganisation for Economic Co-operation and Development's historic global tax reforms to make sure multinational corporations – including big tech companies – pay the right tax in the countries they operate, so the UK gets its fair share. 

👉🏽 The Energy Profits Levy is being increased & will be extended. We're also introducing a temporary tax on proceeds from electricity generators. The taxes capture the extraordinary returns oil & gas & some electricity generators have seen due to global events.

👉🏽 Businesses are struggling with prices rising and growing uncertainty. This is why the government is providing a £13.6bn package of business rates support, to help businesses through these tough times. 

👉🏽 Government spending will continue to increase in real terms every year for the next 5 years but at a slower rate. This will help to support and prioritise vital public services.

👉🏽 Fraud is stealing from honest taxpayers. This is why we're investing £280m to help the Department for work and Pensions crack down on fraud, error & debt across the benefit system.   This funding will help to save £410m in the next two years and save £2.2bn per year by 2027-28.  

👉🏽 The budget for schools will be increasing by £2.3bn next year & £2.3bn the year after - taking the core schools budget to a total of £58.8bn.    This will help to deliver the best education for young people & prepare them for their future careers.

👉🏽 The health of a nation is vital. The government is making available: Up to £2.8bn in 23-24 & £4.7 billion in 24-25 for Adult Social Care, to help the most vulnerable. £3.3bn in 23-24 & a further £3.3bn in 24-25 to improve the performance of the NHS.

👉🏽 To level up the entire of the UK, the devolved administrations will receive £3.4 billion over the next two years. £1.5bn for Scotland, £1.2bn for Wales and £650m for Northern Ireland. This will help people across the union during these challenging economic times.

👉🏽 Energy Efficiency Taskforce established to save people money on bills. This will save people, businesses and the public sector money on energy bills, and will be backed by £6bn in new funding.  Good for bills, energy security and our climate commitments. 

👉🏽 The building of new infrastructure such as roads, train lines and communities will be safeguarded by over £600bn in capital investment over the next 5 years.   Projects like these help to grow our economy and level up regions across the UK.

👉🏽 Round 2 of the Levelling Up Fund will invest at least £1.7bn in local projects’ across the UK. Successful projects will be announced later this year.

👉🏽 R&D investment is vital to help companies grow. This is why the government is protecting 20bn in Research & Development investment in 2024-25, as well as reforming Tax Credits, to ensure that taxpayers’ money is spent as effectively as possible.

👉🏽 Post-Brexit reforms of Solvency II will unlock tens of billions of pounds in investment by UK insurance companies. The reforms will also slash red tape left over from the EU & maintain high standards of customer protection.

👉🏽 To support vulnerable households following changes to the Energy Price Guarantee, further Cost of Living Payments will be made next year. The Government will also provide a further £1bn to enable an extension to the Household Support Fund over 2023-24.

👉🏽 The Government will cap rent increases in the social rented sector under inflation next year, at 7%.  This will help protect households across England from the rising cost of living.

👉🏽 £1,600 annual increase for full time workers on The National Living Wage. The National Living Wage will see its largest ever cash increase, and all National Minimum Wage rates will also receive a boost from April 2023. This will help reward workers for hard work and make significant progress on ending low hourly pay by 2024-25.

👉🏽 Working age benefits will rise by the rate of inflation at 10.1% and the household benefit cap to be increased from April 2023. This will support families during these challenging economic times.

👉🏽 To help people with rising interest rates, homeowners on Universal Credit will be able to apply for Support for Mortgage Interest loans after 3 months instead of 9 months, including those in employment. This will come into effect in Spring 2023.

👉🏽 The Pensions Triple Lock and Pension Credit will be protected and rise in April 2023 by 10.1%.   This will support pensioners through the challenging economic situation.

MORE DETAIL ON THE ABOVE INFORMATION

Our plan is fair and involves a roughly equal split between tax rises and spending cuts, with the greatest burden falling on those who can afford it most. We are restoring stability and tackling inflation by:

• Protecting and maintaining public spending for the next two years at the levels set out in 2021 and then increasing spending by 1 per cent in real terms a year until 2027-28.
• Increasing taxpayer funding for our NHS and schools by an extra £11 billion over the next two years.
• Supporting every household with higher energy bills by extending the Energy Price Guarantee until April 2024, while providing over £12 billion in additional support to help the most vulnerable households.
• Uprating benefits in line with inflation and protecting the pensions Triple Lock, delivering on our manifesto commitment and supporting the most vulnerable.
• Boosting growth with over £600 billion in capital investment over the next 5 years, protecting the Levelling Up Fund, protecting R&D spending, using our Brexit freedoms to reform the financial services sector, and providing a £14 billion business rates cuts packag

The OBR expects this package to reduce peak inflation and unemployment. They note that GDP will be 1% higher due to these measures. The Bank of England expects this package to help tackle inflation and keep interest rates lower for borrowers and mortgage holders.

Restoring economic stability

• We have made some tough but fair decisions to restore economic stability. Over the next 5 years spending will grow more slowly and taxes will rise more than planned. The OBR has confirmed that these plans will restore the public finances to a sustainable position and help reduce inflation and unemployment – we have achieved this whilst prioritising extra investment into schools and the NHS.
• 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 Departmental spending will grow by 1% a year in real terms until 2028. Planned departmental capital spending will be maintained in cash terms.
• Taxes will rise, but those with the broadest shoulders will pay their fair share. The Autumn statement raises £25 billion in additional tax revenue. The decisions we have made since the Spring Statement mean the wealthier households will contribute more allowing us to target support at those who need it most.
• The Conservative Government remains committed to reducing taxes. When debt is falling and economic conditions are stable, we will reduce the tax burden. But when facing the choice between sound money and tax cuts, sound money must come first.

Protecting public services, prioritising the NHS and schools

The tough decisions we have made have allowed us to increase spending on schools and the NHS. We will provide £4 billion in additional funding to schools and £7.7 billion in additional funding to the NHS and social care sector over the next two years. We are prioritising the public services that matter most to the country and our constituents.

• £7.7 billion in additional funding for health and social care in the next two years. Despite the challenging economic circumstances, we are providing £2-3 billion additional funding for the NHS in each of the next two years so we can bring down ambulance waiting times, tackle the Covid backlog and improve access to GPs. We are also providing £2.8 billion next year and £4.7 billion the year after for adult social care, which will double the number of people leaving hospitals on time and into care by 2024, addressing unmet needs and boosting low pay in the sector.
• £4 billion in additional funding for schools over the next two years. We are increasing the schools budget by £2 billion this year and £2 billion next year to help schools with rising costs as a result of inflation. This level of funding will mean we have fulfilled our pledge to restore per pupil funding to record levels, with real term per pupil funding rising at least to 2010 levels.

Defence spending will continue to exceed 2 per cent of GDP. The defence budget will continue to meet our commitment to exceed 2 per cent of GDP - as we give the Ukrainian people the support they need, we are also harnessing the breadth and depth of UK expertise to protect ourselves and our allies. Further detail on the path of the defence budget will be set out at the Spring Budget.

A fair approach to tax rises

• The Autumn Statement raises £25 billion in additional taxes over the forecast period but there are no increases in the headline rates of tax. By targeting tax rises towards businesses, wealthier households, and the oil and gas industry, we have ensured that we can honour our manifesto commitment not to increase Income Tax, National Insurance or VAT.
• A fair approach to personal taxation. Instead of raising rates, the Government is freezing personal tax thresholds for a further two years. We are also reforming the Additional Rate threshold, so that a taxpayer who earns more than £150,000 will pay £1,200 more in tax per year. Changes to the dividends allowance and Capital Gains Tax Annual Exemption Amount will mean that alternative forms of income will be taxed more fairly.
• Small businesses shielded from most tax rises. We will still have the lowest headline rate of Corporation Tax rate of the G7 after it rose to 25 per cent and we have announced further reforms to employer National Insurance, but small businesses will be protected from these increases through the Small Profits Rate and Employment Allowance. This means only the largest 10 per cent of companies will pay the top rate of Corporation Tax and 40 per cent of all businesses will be unaffected by the freeze in National Insurance thresholds.
• Windfall taxes on energy companies extended and increased. It is only fair that companies who have made genuine windfall profits as a result of the war in Ukraine make an additional contribution to pay for the support we have outlined. So from 2023, the Energy Profits Levy rate will rise from 25% to 35% and will continue until the end of March 2028. A 45% Levy will be applied to extraordinary returns made by electricity generators. In total these windfall taxes will raise £52 billion over 6 years.
• £14 billion business rates package to support high streets. We will go ahead with the Business Rates Revaluation and over the next five years the Government will provide a generous support package to help the high street and protect businesses from large Rates increases. This support includes a freeze to the Business Rates multiplier, a Transitional Relief Scheme, a Supporting Small Businesses Scheme, and a 75 per cent retail, hospitality and leisure relief, worth up to £110,000 per business.

Protecting low income households

• The Energy Price Guarantee will continue to support everyone for another year. This winter, the price households pay for the energy they use will be capped, so that a typical household will pay £2,500. From April 2023, the price cap will rise so that a typical household will pay £3,000. The Energy Price Guarantee will then end in April 2024.
• Over £12 billion of additional targeted support to help the most vulnerable households. We will continue providing this year’s cost of living payments and next year, we will provide extra one-off payments of £900 for the 8 million households on means-tested benefits, £300 to pensioners, £150 for disability benefit recipients and through the Energy Price Guarantee the average household will save a further £500, to help with their energy bills. As part of this we are also providing £1 billion of extra funding by extending the Household Support Fund for another year.
• £6 billion of additional funding to help deliver a national ambition to reduce energy use by 15 per cent by 2028. Our nation’s energy costs have increased from 2 per cent of GDP to 8 per cent of GDP. Never again must Russia or anyone else be able to weaponise our energy bills. That is why, in addition to the generous support we have provided to help with rising energy costs, we will be investing £6 billion to deliver our national ambition to reduce energy use by 15 per cent by 2028. The Business Secretary will announce details of a new taskforce and a national campaign to deliver this in due course.
• Protecting the Triple Lock. Because of the difficult but necessary decisions we have taken elsewhere, we are able to protect the Triple Lock for pensions in full. This means that in April, the State Pension will increase in line with inflation, which is the biggest cash increase in the State Pension ever.
• Uprating benefits in line with inflation. To protect the most vulnerable, benefits will be increased in line with inflation for 2023–24. More than 10 million households in receipt of working-age and disability benefits will see an increase in their benefit payments. The average uplift for households Universal Credit will be around £600.
• Increasing the National Living Wage to provide £1,600 to 2 million low paid workers. From 1 April 2023, the National Living Wage will increase by 9.7 per cent to £10.42 an hour for workers aged 23 and over. This represents an increase of over £1,600 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2 million low paid workers.

Boosting economic growth

• £600 billion in capital investment is protected. The Autumn Statement maintains public capital investment at record levels, delivering over £600 billion of investment over the next five years. The Government remains committed to key national infrastructure projects such as High Speed Rail, Northern Powerhouse Rail, and Sizewell C.
• £1.7 billion Levelling Up Fund protected. Round two of the Levelling Up Fund will continue as planned and at already announced funding levels. This means at least £1.7 billion of projects will be announced shortly.
• R&D funding protected and reformed. The Autumn Statement reconfirms the Government’s ambitions on research and innovation by recommitting to increasing publicly funded R&D to £20 billion by 2024–25. We are also increasing the Research & Development Expenditure Credit from 13 per cent to 20 per cent, which will increase the international competitiveness of our R&D support and boost economic growth.
• £14 billion business rates package to support high streets. Over the next five years the Government will provide a generous support package to help the high street and protect businesses from large business rate increases by freezing the multiplier and reducing bills by 6 per cent from what they would be. This support will particularly benefit the retail, hospitality and leisure sectors.
• £1 million Annual Investment Allowance made permanent. An estimated 99 per cent of UK businesses will be supported to invest through the now permanent £1 million level of the Annual Investment Allowance.
• Supporting business with the cost of their energy bills. By January 2023, we will bring forward proposals to support energy bills beyond April 2023. Full details will be made available then, but we will focus future support where it is needed most - for energy intensive industries, small businesses, and the hospitality sector.

Strengthening the Union

• £3.4 billion of additional funding for the devolved nations. Today’s statement means an extra £1.5 billion for Scotland; £1.2 billion for Wales, and £650 million for the Northern Ireland Executive.
• A boost for key projects. We are also announcing funding for the feasibility study for the A75 in Scotland, the Advanced Technology Research Centre in Wales, and a global trade and investment event in Northern Ireland.

Levelling up the country

• £1.7 billion Levelling Up Fund protected. The autumn statement reaffirms our commitment to the Levelling Up Fund, with at least £1.7 billion to be allocated at Round 2 this year.
• £14 billion business rates package to support high streets. Over the next five years the Government will provide a generous support package to help the high street and protect businesses from large business rate increases by freezing the multiplier and reducing bills by 6 per cent from what they would be. This support will particularly benefit the retail, hospitality and leisure sectors.
• Support for key transport projects. The Autumn Statement restated our commitment to transformative growth plans for our railways, such as East West Rail and the Transpennine Route Upgrade.
• Further devolution deals. The Government has agreed a new devolution deal with Suffolk County Council and will shortly be agreeing a further deal with Cornwall County Council, as well as an expanded deal in the North East with the local authorities of Northumberland, Newcastle Upon Tyne, North Tyneside, Gateshead, South Tyneside, and Sunderland.