What did the chancellor announce and how was it received? reports Libby Wiener. Chancellor Jeremy Hunt confirmed the UK is now in recession as he earmarked £55bn of tax rises and spending cuts in his long-awaited Autumn Budget. Confirming rising energy bills, high inflation and tax rises, the chancellor warned: “Anyone who says there are easy answers is not being honest with the British people.” After what was criticized as an “austerity” budget, the pound fell sharply against the US dollar in the wake of gloomy forecasts from the independent budget watchdog, the Office for Budget Responsibility (OBR). Household disposable income will fall by more than 7% over the next two years, according to the OBR – the biggest fall since records began. It added that the economy will shrink by a further 2% next year due to high inflation, while public debt is expected to reach 400 billion pounds higher than previously expected. Mr Hunt has come under pressure to restore the UK’s financial credibility and stability after the fallout from Liz Truss and Kwasi Kwarteng’s disastrous mini-budget, which plunged the country into financial turmoil. The fourth chancellor of the year said he was offering a “balanced path to stability” that included “taking tough decisions” to plug what has been described as the UK’s financial “black hole” to keep mortgage rates low and to address the energy and food spill. prices. Hunt promised his budget would prioritize “stability, growth and public services” as inflation hit a 41-year high on Wednesday at 11.1%, with food growing at an annual rate of 16.5% – exacerbating the cost of living crisis. “High inflation is the enemy of stability. It means higher mortgage rates, more expensive food and fuel bills, business bankruptcies and rising unemployment,” he told the Commons. “It is eroding savings, causing industrial unrest and reducing funding for public services. It hurts the poorest the most and eats away at the trust on which a strong society is built.” He vowed to help the most vulnerable because “to be British is to be compassionate and this is a compassionate Tory government” – a comment met with jeers and laughter from MPs. But Labour’s Rachel Reeves hit out at Mr Hunt saying “Scrooge” has canceled Christmas for ordinary workers and “picked the pockets” of the whole country by implementing a “series of hidden taxes”. “The chancellor has even compared himself to Scrooge – asking workers to take the hit with less money in their pockets in the run-up to Christmas and for years to come,” the shadow chancellor told the Commons. “The mess we’re in is the result of 12 weeks of Conservative chaos but also 12 years of Conservative economic failure,” he said. What was announced in the Autumn Budget? Tax Mr Hunt said his Budget would “ask more from those who have more”, as he announced the 45pc income tax threshold. will be reduced from £150,000 to £125,140. However, different prices apply in Scotland. This means those earning £150,000 or more will pay just over £1,200 a year, he said. The Treasury estimates an extra 232,000 people will pay the top rate of income tax from April. The chancellor also discussed a small change to council tax rules during his announcement, which saw council tax bills top a record £2,000 a year for the first time. While Mr Hunt did not directly refer to the council tax rise in his statement, he said local authorities in England would have “additional flexibility”. Local authorities will be able to increase council tax by up to 5% a year from April 2023 without a referendum – 3% for all local authorities and an additional 2% for local authorities with social care responsibilities. The Treasury estimates that 95% of local authorities will increase rates by the maximum amount. The shadow chancellor, Rachel Reeves, said the chancellor “seems to have confirmed a council tax bombshell today” and said people “will be forced to pay more because of the destruction the Conservatives have wrought on our economy”. Mr Hunt also announced that Personal Income Tax Allowance, the higher rate cap, main national insurance thresholds and inheritance tax thresholds will be frozen until April 2028, which will result in more people paying more tax as a result of “fiscal regression”. wages are rising. Capital gains tax-free will fall in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25. Mr Hunt further announced that electric vehicles will no longer be exempt from Excise Duty from April 2025 to make the car taxation system “fairer”. Elsewhere on energy taxes, the chancellor said he would raise the levy on energy profits from 25% to 35% from January 1 to March 2028 and imposed a 45% tax on electricity generators to raise around 14 billion pounds next year. Mr Hunt told the Commons: “I have no objection to windfall taxes if they are genuine windfalls caused by unexpected increases in energy prices. “But any such tax should be temporary, not deter investment and recognize the cyclical nature of many energy businesses.” Shadow chancellor Ms Reeves accused the government of still leaving “billions of pounds on the table”. “Because they’ve failed to close a huge loophole they’ve created that gives huge tax breaks to these oil and gas giants to do the things they’d be doing anyway,” he told the Commons. NHS and social care The NHS budget will rise by an extra £3.3bn in each of the next two years, he announced as part of a “record £8bn package” for the health and social care system. Mr Hunt said the NHS would publish an independently verified plan of the number of doctors, nurses and other professionals needed in five, ten and 15 years. The devolved countries will also get a cash boost for the NHS and schools – an extra £1.5bn for the Scottish Government, £1.2bn for the Welsh Government and £650m for the Northern Ireland Executive. On social care, Mr Hunt said the growing number of over-80s was putting “massive pressure” on services and would delay the implementation of Dilnot’s reforms by two years. In a bid to free up some of the 13,500 hospital beds taken up by those who should be at home, Mr Hunt has given adult social care an extra grant of £1bn next year and £1.7bn the year after. . Work, pensions and benefits Mr Hunt confirmed he had accepted a recommendation to increase the National Living Wage by 9.7%, making it £10.42 an hour from April 2023. The government also delivered on its promise to protect triple-lock pensions and confirmed that state pensions will rise in line with inflation. For the poorest pensioners the pension credit will increase by 10.1%. The Treasury estimates this would be worth up to £1,470 for a couple and £960 for a single pensioner. It has been confirmed that a review of the state pension age will be published in early 2023. The Treasury will also increase benefits. On average, a family on Universal Credit would benefit next year by around £600, he said. “And to increase the number of households that can benefit from this decision, I will also increase the benefit cap by inflation next year,” he added. However, 600,000 more people with Universal Credit will be asked to meet a coach to increase their hours or earnings. Education Mr Hunt also announced that the Government would invest an extra £2.3bn a year in UK schools over the next two years. But he rejected calls for VAT on independent school fees and said some estimates believed it could lead to up to 90,000 children from the independent sector switching to state schools, adding: “Giving with one hand and taking away with the other.” . Housing The chancellor said he would limit the rise in social rents to a maximum of 7% in 2023/24, saving the average tenant £200 next year. The stamp duty cuts announced in its predecessor’s mini-budget will remain in place – but only until 31 March 2025, as the OBR said it expects housing activity to slow over the next two years. Help with living costs The cap on average household energy bills will rise from £2,500 to £3,000 from April. But Mr Hunt said “this still means an average support of £500 for each household”. The Government will introduce additional cost of living payments for the “most vulnerable” at £900 for those on benefits, £300 for pensioners and £150 for those on disability allowance, Mr Hunt said. Energy Mr Hunt said Vladimir Putin’s “weaponisation” of international gas prices had helped “raise the cost of our national energy consumption”. “This year we will spend an extra £150 billion on energy … the equivalent of paying for a whole second NHS through our energy bills,” he said. The chancellor unveiled plans for a new nuclear power plant that would create 10,000 jobs while providing cheap, low-carbon. “It is the biggest step in our journey to energy independence,” he said. Defense Mr Hunt said he would continue to keep the defense budget at “at least 2% of GDP” in line with the NATO target. However, the foreign aid budget will not be returned to the target of 0.7% of national income “until the fiscal system allows”. The chancellor told the Commons that he and the prime minister “both recognize the need to increase defense spending”, adding: “But before we make that commitment, it is necessary to review and update the Comprehensive Review, written as it was before since the invasion of Ukraine. . “I have called for this vital work to be completed before the next budget and today I am confirming that we will continue to keep the defense budget at least 2% of GDP to be consistent with our commitment to NATO.” Want a quick and special update on the biggest news? Listen to our…
