Eight Autumn Budget announcements set to affect the cost of living - and what was missing
Watch ITV News journalist Ayshah Tull explain the key Budget takeaways you need to know
By ITV News content producer Talia Shadwell
Millions of households will notice their everyday costs changing as a result of Autumn Budget announcements made by Chancellor Jeremy Hunt.
Mr Hunt said the measures unveiled on Thursday would create a “stronger, fairer United Kingdom”.
But the chancellor told the Commons he had been forced to take "difficult" decisions, as the Office for Budget Responsibility (OBR) confirmed the UK is now in recession.
Inflation soared to a 41-year high of 11.1% in October, as rocketing energy and food prices intensified the cost of living crisis.
The chancellor faced pressure to tackle the strain on household finances and frontline public services like the NHS ahead of Thursday's Autumn Budget.
Mr Hunt told MPs: “There may be a recession made in Russia but there is a recovery made in Britain – and we do so today with British resilience and British compassion.”
Prime Minister Rishi Sunak's Conservative Party is also under pressure to deliver stability in the wake of the markets turmoil sparked by former chancellor Kwasi Kwarteng and leader Liz Truss' mini-budget.
So, what does its Autumn Budget hold for the everyday household facing the rising cost of living?
1. New cost of living payments and some benefits uplifted
The chancellor said he will increase working age and disability benefits in line with inflation by a rise of 10.1%, at a cost of £11 billion.
The chancellor also announced new cost of living payments for the most vulnerable households.
The payments include £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit, Mr Hunt said.
Mr Hunt also announced changes would kick in requiring 600,000 more people on Universal Credit to meet with a work coach to receive support to increase their hours or earnings.
The government was under pressure to raise benefits in line with soaring everyday prices.
Benefits had increased by 3.1% this year - at the same pace as pensions, following the temporary suspension of the pensions triple-lock during the pandemic.
Mr Hunt said he would also move back the managed transition of people from Employment and Support Allowance onto Universal Credit to 2028, and invest an extra £280 million in the Department for Work and Pensions (DWP) to crack down on benefit fraud and error over the next two years.
Anti-poverty campaigners and think-tanks had called for benefits reform, which they estimated would lift 900,000 children and 300,000 adults out of poverty.
The Institute for Public Policy Research (IPPR), the Trades Union Congress (TUC) and Child Poverty Action Group (CPAG) called for three changes to the social security system.
They had urged the government to boost child benefit by £20 per week per child, to remove the two-child limit on Universal Credit and legacy benefits, which restricts the amount of financial support families with at least three children can receive, and to end the total family benefit cap.
2. Income tax and national insurance thresholds frozen
Mr Hunt imposed what critics have branded 'stealth taxes' - by freezing the rates at which workers begin paying higher tax bands, drawing more into higher brackets as inflation soars.
The chancellor said he had taken the "difficult" decision to maintain the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds at current levels for a further two years, until April 2028.
3. Pensions triple-lock protected
The chancellor said he will increase state pensions in line with inflation in April 2023, in what he said would be the “biggest ever cash increase in the state pension.”
The pensions triple-lock guarantees an increase in line with average earnings, inflation, or 2.5% - whichever of the three is higher.
State pensions increased by 3.1% this year, after the triple lock was temporarily suspended for a year in the wake of the economic damage wrought by the pandemic.
The Autumn Budget announcement means pensions will rise with inflation in the next tax year, which begins April 2023.
Inflation is currently riding high, reaching a headline rate of 11.1% in October - a 41-year high and five times the Bank of England's target rate.
Mr Hunt said the OBR forecasts the UK’s inflation rate will be 9.1% this year and 7.4% next year.
The government’s review of the state pension age will be published in early 2023, the chancellor added.
Mr Hunt also announced an increase in funding for the social care sector of up to £2.8 billion next year and £4.7bn the following year.
But he delayed implementing the Dilnot reforms, which recommended a cap on lifetime contributions of an individual at an amount between £25,000–50,000 to protect adults from soaring care costs, for another two years.
Former prime minister Boris Johnson had promised a lifetime cap on social care costs.
4. Minimum wage to rise
The national living wage will rise from £9.50 an hour to around £10.42, as Mr Hunt accepted a recommendation to increase the amount by 9.7%.
He said the rise would amount to about £1,600 annually to a full-time worker, and is expected to benefit about two million earners.
The chancellor described the uplift as the largest increase in the UK's national living wage ever.
The national living wage is the UK hourly minimum wage, which employers legally must pay to employees aged 23 and above.
5. Wealthiest to pay more
Mr Hunt said he was "asking more from those who have more means" as millions of lower and middle-income households struggle to weather the cost of living crunch.
The chancellor announced the threshold for when the 45% rate of income tax kicks in for the highest earners has been decreased from £150,000 to £125,140.
That means thousands more earners will be pulled into the higher income tax bracket.
Those earning £150,000 or more will pay just over £1,200 more a year, Mr Hunt told MPs.
The announcement contrasts with Ms Truss and Mr Kwarteng's mini-budget plan to abolish the 45p top rate of tax.
The pair faced criticism over the proposal, led by backlash from critics who accused them of attempting a 'trickle-down economics' experiment rewarding the wealthiest earners.
Mr Hunt said he would also reform allowances on unearned income, cutting the dividend allowance from £2,000 to £1,000 next year and then to £500 from April 2024.
Th annual exempt amount for capital gains tax - which is the amount paid on profits made from selling an asset- will also be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024.
"These changes still leave us with more generous allowances overall than countries like Germany, Ireland, France, and Canada,” Mr Hunt told MPs.
6. Energy bills support changes
The energy bills support package unveiled by Ms Truss to tackle rocketing electricity and gas prices will become less generous from April, when the average household's bill is set to rise from £2,500 to £3,000.
The Truss government's 'energy price guarantee' capped household energy bills shortly before the energy regulator Ofgem was set to lift the price cap.
The measure was expected to save the average household on a typical tariff around £1,000 annually for two years.
In May, then-chancellor Rishi Sunak had introduced a package of measures, including discounts to all households' energy bills of £66 a month in instalments for six months, which kicked in from October.
The most vulnerable households have recently begun receiving additional payments to help with the rising cost of living.
Mr Hunt told MPs on Thursday he would increase the energy price guarantee from a £2,500 annual bill for the average home on a typical tariff to £3,000, for 12 months from April 2023.
That means energy bills could go up for households during that period if prices continue to rise.
The chancellor also increased the windfall tax on oil and gas giants from 25% to 35% and imposed a 45% levy on electricity generators, saying the measures would raise an estimated £14 billion next year.
7. Cash for the NHS and schools
The government is facing pressure to throw a lifeline to the NHS, as it faces the prospect of an historic nationwide nurses' strike, and growing public anger over hospital waiting lists, growing A&E waiting times, and GP shortages.Mr Hunt said he will increase the NHS budget by an extra £3.3 billion in each of the next two years.
The chancellor said he recognised that “efficiency savings alone will not be enough to deliver the services we all need”.
But, he added: “The chief executive of the NHS, Amanda Pritchard, has said this should provide sufficient funding for the NHS to fulfil its key priorities, she said it shows the government is serious about its commitment to prioritise the NHS.”
The chancellor also said he will invest an extra £2.3 billion per year in schools over the next two years.
However he rejected calls to impose VAT on independent school fees, arguing some estimates suggested such a tax change could result in up to 90,000 children from the independent sector switching to state schools, which he described as: “Giving with one hand and taking away with another.”
8. What about the soaring cost of mortgages and rent?
Mortgage interest rates spiked in the wake of the short-lived Truss government's mini-budget.
Rates soared above 6% for the first time since the 2008 global financial crisis, and lenders pulled hundreds of mortgage products from the market.
The Labour Party's analysis claimed the average household was paying more than £530 extra monthly on their mortgage compared to this time last year, due to the fallout.First-time buyers reported finding themselves priced out of the market as they faced being unable to meet the new mortgage payment estimates.
And tenants nationwide reported vast rent hike demands from landlords as mortgage interest rate rises piled on top of cost of living pressures, and demand surged for a squeezed supply of rental properties.
The chancellor announced he would cap the increase in social rents at a maximum of 7% in 2023/24, which he said would save the average tenant £200 next year.
Mr Hunt also said the OBR expects housing activity to slow and he would retain the stamp duty cuts announced in the mini-budget for a further two years, ending March 2025.
The threshold for paying stamp duty was raised to £250,000, up from £125,000 by Mr Hunt's predecessor, Mr Kwarteng.
First-time buyers won't have to pay stamp duty on any property up to £425,000, compared to £300,000 previously.
The value of the property on which first-time buyers can claim relief has also been increased, from £500,000 to £625,000.
The measures reduce stamp duty bills for all movers by up to £2,500, with first-time buyers able to access up to £8,750 in relief.
Council tax 'flexibilities'
Some widely anticipated changes were absent from the chancellor's headline speech.
Mr Hunt made no statements to MPs on council tax, despite reports he was considering changes allowing local authorities can increases without holding public referendums to 5%.
Presently, local authorities can only raise council tax by up to 2.99% without triggering a public vote.
The average Band D council tax set by local authorities in England for 2022-23 is £1,966. A 3% hike would lift it above £2,000 annually for the first time.
However, while Mr Hunt didn't address it directly in his statement, the government is giving local authorities in England additional 'flexibility' by increasing the referendum limit for increases in council tax from 2.99% to 3% per year from April 2023.
Local authorities with social care responsibilities will still be able to increase the adult social care precept by up to 2% per year.
The Local Government Association has said the government must plug a severe gap in local authority funding, warning cash-strapped councils are already carrying out major cuts.
The chancellor also made no announcement on changes to fuel duty, in another notable absence from his Budget speech.
Fuel duty has been frozen since 2011. Rishi Sunak cut the duty by a further 5p per litre in March this year, when he was chancellor.
Mr Hunt was being urged to extend the 5p cut and the freeze amid the “nightmare” of high costs for motorists.
The RAC had urged the chancellor not to hike fuel duty, warning him that increased pump prices could push inflation even higher.
The 5p cut was set to remain in place until March 2023.
However, the chancellor did not address the future of the freeze or the 5p cut in his speech.
The OBR's economic and fiscal outlook for November 2022 mentioned a fuel duty forecast.
However, the government has not made a decision on whether an extension of either the freeze or the 5p cut remains on the table.
The OBR's forecast described a "planned 23 per cent increase in the fuel duty rate in late-March 2023, which adds £5.7 billon to receipts next year. This would be a record cash increase, and the first time any government has raised fuel duty rates in cash terms since 1 January 2011. It is expected to raise the price of petrol and diesel by around 12 pence a litre."
ITV News approached the Treasury requesting clarity on the future of the fuel duty.
The Treasury said the 23% figure came from the OBR, and was not a figure it had issued. The figure was based on an OBR forecast subject to change, and Treasury had not announced any updates on fuel duty during the Autumn Statement, a spokeswoman said.
The existing 5p cut, which is worth £2.4bn, will remain in place until March 2023, and final decisions on fuel duty rates will be made along with decisions on other tax measures at the time of the Spring Budget, she added.
Pressure is building to retain the freeze as average pump prices fall from the record highs of 192p per litre for petrol and 199p per litre for diesel in July.
However, the RAC said the average cost of a litre of petrol rose by 4p in October while diesel was up 10p.
In his Budget statement on Thursday, Mr Hunt announced that electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025 to make the motoring tax system “fairer," because the OBR forecasts half of all new vehicles will be electric by 2025.
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