Tax cuts, benefits, pensions: Millions to be hit by changes in autumn statement

Despite the cut in National Insurance, taxes will be higher at the next election than they were at the last. Indeed the tax burden is higher than at any time since the Second World War. ITV News' experts examine the chancellor's autumn statement .Article by Westminster Producer Lewis Denison

Millions of people in the UK are set to benefit from changes set out by the chancellor in his autumn statement.

Taxes are being cut, benefits will increase, pensions are rising and even minimum wage will be boosted, Jeremy Hunt has announced.

The chancellor, seeking to grow the supply side of the economy, also set out a raft of measures aimed at boosting business and growing the economy.

“Taken together we will increase business investment in the UK economy by around £20 billion a year over the next decade and get Britain growing,” Mr Hunt said.

But Shadow Chancellor Rachel Reeves said Britons are "worse off" after 13 years of Conservative government and even with the fall of inflation, "prices are still rising in the shops, energy bills are up and mortgage payments are higher".

“The Conservatives have become the party of high tax because they are the party of low growth. Nothing the Chancellor says or does in his autumn statement can change their appalling record,” she added.

And the Office for Budget Responsibility (OBR) downgraded its growth forecast for the economy.

Growth for 2024 fell from 1.8% to 0.7% while 2025 has gone from 2.5% to 1.4%.

Despite repeatedly warning that finances were too tight for any big giveaways, an unexpected drop in the level of inflation gifted the government extra fiscal headroom to announce 110 different measures.

It's presented Rishi Sunak with an opportunity to win backing from the right of his party by cutting taxes after losing support over his sacking of former Home Secretary Suella Braverman, but Labour points out there have been "25 Tory tax rises since 2019".

Mr Sunak on Monday said it was now time to “start to responsibly cut taxes” after achieving his aim set out at the start of the year to halve inflation.

  • National Insurance Contributions

Mr Hunt announced he was cutting employee National Insurance by 2 percentage points from 12% to 10%.

He said the change, which will be implemented from January 6 next year, will help 27 million people.

"It means someone on the average salary of £35,000 will save over £450," the chancellor told MPs.

  • Minimum wage

Millions of people will see their pay increase after Mr Hunt announced a boost to both the minimum wage and the national living wage.

The national living wage - which is the minimum wage for adults aged 23 and over - will rise by £1.02-an-hour in April, from £10.42 to £11.44 an hour.

Eligibility for the National Living Wage will also be extended by reducing the age threshold to 21-year-olds for the first time. 

And national minimum wage for those aged between 18 and 20 will increase by £1.11 to £8.60 per hour.

These changes will impact around 2.7 million workers, according to the government.

What did Jeremy Hunt announce in the autumn statement? Political Correspondent Shehab Khan reports

  • Welfare benefits

A boost for the millions of working age people on benefits has also been confirmed, although it is not strictly a new announcement.

Welfare payments are always uprated each April, in line with the inflation rate the previous September, however there had been speculation that Mr Hunt may choose to link the increase to October's lower figure.

It means Universal Credit payments will rise by 6.7% next April, rather than 4.6%.

The chancellor said this will mean an increase of £470 per year for five and half million households.

But a number of other changes have been announced to address what prime minister Sunak calls the “national scandal” of around two million working-age people being unemployed.

Mr Hunt's bid to get people back to work will see a tougher sanctions regime use tools to to “track” attendance at job fairs and interviews.

Free prescriptions and legal aid will be also be cut off for benefit claimants who are deemed fit to work and do not seek employment.

Mr Hunt told Cabinet that it was “economically and morally wrong” that 100,000 people were on benefits with no requirement to look for work.

He said the work capability assessment will be reformed “to reflect greater flexibility and availability of home-working after the pandemic” and outlined £1.3 billion in spending over the next five years which he said will be focused on helping nearly 700,000 people with health conditions find jobs.

But the Disability Benefits Consortium, a national coalition of more than 100 charities, described the government’s plan as a “cynical attack on disability benefits (which) will have a devastating impact on those on the lowest incomes”.

Charity Scope said Mr Hunt's autumn statement "demonises disabled people".

"The government is hellbent on reducing the benefits budget come what may, but inflation is still high, prices are rising and disabled people are still facing sky high bills.

"Disabled people are struggling to make ends meet.

“Life costs more if you are disabled. We’re hearing from disabled people who are using candles instead of putting the light on, skipping meals, and taking cold showers.”

Mr Hunt added: “Over 180,000 more people will be helped through the universal support programme, and nearly 500,000 more people will be offered treatment for mental health conditions and employment support.

“Over the forecast period, the OBR (Office for Budget Responsibility) judge these measures will more than halve the flow of people who are signed off work with no work-search requirements.

  • Pensions

The chancellor confirmed the pensions triple lock is being protected and payments will rise in line with wages by 8.5% next April.

He said the change is worth up to £900 more a year. "That is one of the largest ever cash increases to the state pension – showing a Conservative government will always back our pensioners."

A change to the winter fuel allowance has been ruled out. A Treasury spokesman said: “This is not something we are going to do.”

Pension savers will also have the right to have “one pension pot for life”, Mr Hunt said.

The chancellor told MPs: “I will also consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose, meaning people can move to having one pension pot for life.

“These reforms could help unlock an extra £75 billion of financing for high-growth companies by 2030 and provide an extra £1,000 a year in retirement for an average earner saving from 18.”

  • Housing

Measures were announced on nutrient neutrality which Mr Hunt said would unlock the building of 40,000 homes.

Mr Hunt said the government would invest £110 million over this year and next to deliver “high-quality nutrient mitigation schemes, unlocking 40,000 homes” and consult on a new permitted development right to allow any house to be converted into two flats provided the exterior remains unaffected.

On private rents, Mr Hunt said he had heard representations on the need to unfreeze local housing allowance.

He said: “I will therefore increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year.”

  • Business and self-employment reforms

Some two million self-employed people will benefit from the axing of class 2 national insurance and a cut to class 4 national insurance from 9% to 8%, saving them around £350 a year, Chancellor Hunt said.

Mr Hunt said he also decided to freeze the small business multiplier for a further year, adding: “I have also decided to extend the 75% business rates discount for retail, hospitality and leisure businesses for another year too.

“This will save the average independent pub over £12,800 next year and at a cost of £4.3 billion, it is a large tax cut which recognises the role of pubs and high street shops in our communities.”

The “full expensing” scheme for businesses introduced in March will become permanent, the chancellor confirmed.

This means that for every million pounds a company invests, they get £250,000 off their tax bill in the very same year.

Mr Hunt said it was the “largest business tax cut in modern British history”.

  • Growth

The chancellor said it was an "autumn statement for growth" and while the OBR has upgraded its GDP growth forecast this year, it has downgraded the figure for subsequent years.

The budget watchdog’s forecast in March was for the economy to shrink by 0.2% in 2023, but that has now been revised up to 0.6%.

But in 2024 growth is forecast to be 0.7% rather than the 1.8% expected at the time of the Budget, 2025 is expected to see 1.4% rather than 2.5%, and 2026 could be 1.9% instead of 2.1%.

"In our central forecast," the OBR said, "we have revised down our estimate of the medium-term potential growth rate of the economy to 1.6 per cent, from 1.8 per cent in March".

Mr Hunt, asked about the OBR's growth revision by Political Editor Robert Peston, said the impact from his supply side reforms "will take a decade to happen".

He said the measures "will help the growth in GDP" - but do I want us to have higher growth than 1.6% in the long run? Absolutely".

He added: "The measures that will boost investment in the economy by businesses, which is the way we get productivity, salaries, living standards up, they will take a decade to happen."

The OBR also said it expected inflation to “remain higher for longer”, taking until the second quarter of 2025 to return to the Bank of England’s 2% target, more than a year later than forecast in March.

The Institute of Export & International Trade welcomed the changes to business rates but said there was a "missed opportunity" for the chancellor to further boost growth.

Its director general, Marco Forgione, said it is clear from the OBR forecast that "growth is still constrained" and the institute's members "will be looking for much more in the spring which encourages investment and supports UK businesses". 

"The failure to define a clear plan for business growth including an import strategy, linked to the current export strategy, was a missed opportunity," he said. "Real growth and economic security can only be achieved through unlocking the potential of international trade in every town, city and region of the UK.”

  • Debt and borrowing

The chancellor said the UK would meet its goal of having debt falling as a percentage of GDP after he had "taken difficult decisions to reduce borrowing"

He told the Commons that the economy had “outperformed expectations” since last year’s autumn statement, adding: “We therefore meet our fiscal rule to have underlying debt falling as a percentage of GDP in the final year of the forecast, with double the headroom compared to the OBR’s March forecast.

“And we continue to have the second lowest government debt in the G7 – lower than the United States, Canada, France, Italy or Japan.”

Mr Hunt said, according to the OBR, borrowing is “lower this year and next” before saying: “It falls from 4.5% of GDP in 2023/24, to 3%, 2.7%, 2.3%, 1.6% and 1.1% in 2028/29.

“That means we also meet our second fiscal rule – that public sector borrowing must be below 3% of GDP – not just by the final year, but in almost every single year of the forecast."

But ITV News Political Editor Robert Peston questioned the chancellor's claim to have cut debt, suggesting it "will be seen as creative accounting".

On X, he said Mr Hunt "appears to be using government debt figures that exclude debt held by the Bank of England".

"This will be seen as creative accounting. On this adjusted or what he calls "underlying" measure, he says debt will be 92.8% in 2028-29. I assume on the normal basis, it will be 100% of GDP by then."

  • Alcohol duty

Mr Hunt announced a freeze all alcohol duty until August 1st.

He said: "So as well as confirming our Brexit Pubs Guarantee, which means duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until August 1st next year. That means no increase in duty on beer, cider, wine or spirits."

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