Jeremy Hunt promised to “tackle the cost-of-living crisis” and “rebuild our economy” as he set out plans for tax rises and spending cuts.
The Chancellor said there would be a “shallower downturn” as a result of his measures but the Office for Budget Responsibility (OBR) believed the economy was “now in recession”.
He told MPs his three priorities were “stability, growth and public services”, as he delivered his autumn statement.
The government will continue the Energy Price Guarantee for a further 12 months at a higher level of £3,000 per year for the average household, the Chancellor said.
“From April, we will continue the Energy Price Guarantee for a further 12 months at a higher level of £3000 per year for the average household.“With prices forecast to remain elevated through next year, this will still mean an average of £500 support for every household.”
These are the measures he has announced today:
- The threshold at which the 45p top rate of income tax is paid will be reduced from £150,000 to £125,140.
- The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will be frozen until April 2028, something which will result in more people paying more tax as a result of “fiscal drag” as wages increase.
- The windfall tax on oil and gas giants will increase from 25% to 35% and a 45% levy on electricity generators will help raise an estimated £14 billion next year.
- 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.
- Benefits and the state pensions will rise in line with inflation and that the pension credit will increase by 10.1%
- The national living wage will be increased to £10.42 from April 2023
- The increase in social rents will be capped at a maximum of 7% in 2023-2024
- Electric vehicles will no longer be exempt from vehicle excise duty from April 2025, to make the motoring tax system “fairer”.
- Government spending will continue to increase in real terms every year for the next five years, but at a slower rate than previously planned.
- Stamp duty cuts announced in Mr Kwarteng’s mini-budget will now be time-limited, ending on March 31 2025.
- The Government would protect the increases in departmental budgets already set out in cash terms for the next two years, meaning real-terms cuts due to inflation and pressure on public sector wages.
- The defence budget will keep meeting the Nato target of 2% of GDP but the overseas aid budget will not be returned to its goal of 0.7% of national income “until the fiscal system allows”.
- An extra £2.3 billion per year will be invested in schools in England over the next two years.
- The implementation of social care reforms will be delayed for two years.
- The NHS budget in England will increase by an extra £3.3 billion in each of the next two years.