Autumn Statement at a glance: Chancellor announces National Insurance cut – plus money for Cambridge housing quarter
Jeremy Hunt cut National Insurance by two percentage points - more than expected - in his Autumn Statement, but a growth forecast for the UK economy next year has been downgraded.
The Chancellor announced tax cuts, tighter welfare rules and further measures aimed at getting more people into work, plus specific investment into delivering a new housing quarter in Cambridge.
The speech, delivered to the Commons on Wednesday, is the Chancellor’s main opportunity outside the Budget to make tax and spending announcements.
Mr Hunt used the statement to introduce changes aimed at reviving the UK’s struggling economy and the Tories’ election chances.
The decision to cut NI by 2 per cent will save workers hundreds of pounds a year, but Labour has pointed to the fact that workers are currently facing the highest tax burden for decades.
The freeze on income tax thresholds is also dragging more people into higher tax brackets.
Mr Hunt, meanwhile, will be hoping his measures can stimulate growth. The Chancellor said the full package has 110 measures aimed at boosting the economy.
The independent watchdog, the Office for Budget Responsibility, said the UK economy will grow 0.6 per cent this year, better than previously predicted. But amid high inflation and interest rates, it has downgraded its forecast on the economy’s growth next year to 0.7 per cent, below the 1.8 per cent previously forecast.
Here is what Mr Hunt announced, at a glance.
£2m to address water scarcity in Cambridge – and £3m to explore the case for a development corporation here
Following the announcement by Michael Gove, Secretary of State for Levelling Up, Housing and Communities, that he wants to supercharge the economy in Cambridge and build 250,000 homes somewhere in the region, Mr Hunt confirmed money to help deliver new housing.
“We'll invest £100m over this year to deliver high quality nutrient mitigation schemes unlocking 14,000 homes and we'll invest £32m to bust the planning backlog and develop fantastic new housing quarters in Cambridge, London and Leeds, which will lead to many thousands of additional dwellings," he said.
The full Autumn Statement expanded on this, stating: “Funding will also accelerate the delivery of new high quality housing in Cambridge, Leeds and London. As part of this, the government will support the Cambridge Delivery Group to drive the long-term vision for Cambridge by exploring the case for a development corporation. The government is also continuing to progress its commitment to deliver East West Rail, with a statutory consultation due next year.”
Elsewhere, the statement added: “The government is announcing a further £2million to address water scarcity in Cambridge, alongside £3million to support the Cambridge Delivery Group drive the long-term vision for Cambridge by exploring the case for a development corporation.”
Employee national insurance will be cut by two percentage points, from 12 per cent to 10 per cent, from January 6. It is currently charged at 12 per cent on earnings between £12,571 and £50,271, then 2 per cent on earnings above that. Mr Hunt said the change would help 27 million people. Someone on the average salary of £35,000 will save more than £450 a year.
Two million self-employed will benefit from the axing of class two national insurance and a cut to class four national insurance to 8%, Mr Hunt said, which he said will save them about £350 a year.
Tighter welfare rules
Welfare recipients who do not get a job within 18 months will be forced to take on work experience under plans to get more people into employment, the Government had already announced.
Those who do not comply will have their benefits, including access to free prescriptions and legal aid, cut off.
Universal Credit uplift
The government chose to raise universal credit by September’s 6.7 per cent rate of inflation, despite speculation it could have based the increase on October’s lower rate of 4.6 per cent to save money.
Pensions will be increased by 8.5 per cent in line with average earnings to £221 a week from April, maintaining the so-called “triple-lock” policy where the amount paid is whichever is highest out of average earnings growth, CPI inflation or 2.5 per cent.
Savers could be given the right to pick the pension scheme their employer pays into, similar to the approach taken by countries like Australia, under proposals being put out to consultation.
A £320million plan to help unlock pension fund investment for technology and science schemes was also announced.
The national living wage will rise by £1.02 to £11.44 from April, with the policy extended to cover workers aged 21 and over for the first time rather than 23 and over.
It means the lowest paid will receive a boost of £1,800 a year.
The standard multiplier for rates on high-value properties will increase in line with inflation, while the small business multiplier will freeze for a further year. The 75 per cent rates discount for retail, hospitality and leisure will all be extended for another year.
R&D tax relief
The Chancellor promised a “simplified” research and development (R&D) tax relief scheme. He plans to combine the existing R&D expenditure credit and SME schemes.
And he announced a cut to the rate at which loss-making tech companies are taxed, from 25 per cent to 19 per cent.
The threshold at which extra support is available for R&D-intensive loss-making small to medium-sized enterprises (SMEs) is also to be reduced to 30 per cent. The Chancellor said that will benefit an extra 5,000 SMEs.
Full expensing – a scheme allowing companies to offset investment in machinery and equipment against their tax bills – will be made permanent, Mr Hunt said.
Alcohol and tobacco duty
Alcohol duty will be frozen until August 1 2024, meaning no increase in duty on beer, cider, wine or spirits, while tobacco duty will rise.
The freeze on the local housing allowance will be ended, Mr Hunt said. The Chancellor will increase the rate to the 30th percentile of local market rents, which he says will give 1.6 million households an average of £800 of support next year.