Scottish Secretary Alister Jack has responded to the Chancellor’s Autumn Statement where the UK Government pledged to restore stability to the economy, protect high-quality public services and build long-term prosperity for the United Kingdom.
Jeremy Hunt outlined a targeted package of support for the most vulnerable, alongside measures to get debt and government borrowing down.
The plan he set out is designed to fight against inflation in the face of unprecedented global pressures brought about by the pandemic and the war in Ukraine.
Scottish Secretary Alister Jack said: “We are facing complex global challenges, and the Chancellor has had to take some difficult decisions. By reducing our borrowing, tackling the root causes of inflation and putting our public finances on a stable footing, we will create the economic stability we need for our long-term prosperity.
“As we promised, we have put in place extra support for those who need it most, with support on energy bills and increases in pensions, benefits and the National Living Wage.
“The Scottish Government will receive an additional £1.5 billion, to help support public services in Scotland. We are also putting extra money into two key projects in Scotland. Catapult will help grow our offshore energy capability, and a feasibility study to upgrade the A75 will pave the way for much improved connectivity between Scotland, Northern Ireland and England.”
As a result of Thursday’s tax and spending decisions, the Scottish Government will receive around an additional £1.5 billion over 2023-24 and 2024-25.
Delivering for the people of Scotland, the Chancellor has reconfirmed the UK Government’s commitment to work with the Scottish Government on options to improve the A75, in line with the findings from the Union Connectivity Review.
He also confirmed that funding for the UK’s 9 Catapult innovation centres will increase by 35% compared to the last funding cycle, this includes the offshore renewable catapult in Glasgow.
To protect the most vulnerable from the worst of cost-of-living pressures, the Chancellor announced a package of targeted support worth [£26bn], which includes continued support for rising energy bills. More than eight million households on means-tested benefits will receive a one-off payment of £900 in instalments, with £300 to pensioners and £150 for people on disability benefits.
The Energy Price Guarantee, which is protecting households throughout this winter by capping typical energy bills at £2,500, will continue to provide support from April 2023 with the cap rising to £3,000. With prices forecast to remain elevated throughout next year, this equates to an average of £500 support for households in 2023-24.
Working age benefits will rise by 10.1%, boosting the finances of millions of the poorest people in the UK, and the Triple Lock will be protected, meaning pensioners will also get an inflation-matching rise in the State Pension and the Pension Credit.
The National Living Wage will be increased by 9.7% to £10.42 an hour, giving a full-time worker in Scotland a pay rise of over £1,600 a year, benefitting 160,000 of the lowest paid workers.
The Scottish Government is receiving additional funding at the Autumn Statement for the current Spending Review period to 2024-25, but will be expected to live within these new budgets and support our mission of fiscal discipline.
To improve public finances, from 2025-26 onwards day to day spending will increase by 1% with capital spending held flat in cash terms. This means overall departmental and devolved administration budgets will continue to rise in real terms, although more slowly, increasing by 0.5% each year to 2027-28.
To raise further funds, the Chancellor has introduced tax rises of £25 billion by 2027-28. Based around the principle of fairness, all taxpayers will be asked to contribute but those with the broadest shoulders will be asked to contribute a greater share.
The threshold at which higher earners start to pay the 45p rate will be reduced from £150,000 to £125,140, while Income Tax, Inheritance Tax and National Insurance thresholds will be frozen for a further two years until April 2028.
The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024 and the Annual Exempt Amount in capital gains tax will be reduce from £12,300 to £6,000 next year and then to £3,000 from April 2024.
The most profitable with the broadest shoulders will also be asked to bear more of the burden. The threshold for employer National Insurance contributions will be fixed until April 2028, but the Employment Allowance will continue protect 40% of businesses from paying any NICS at all.
In addition, the government is implementing the reforms developed by the OECD and agreed internationally to ensure multinational corporations pay their fair share of tax. And as confirmed last month, the main rate of Corporation Tax will increase to 25% from April 2023.
To ensure businesses making extraordinary profits as a result of high energy prices also pay their fair share, from 1 January 2023 the Energy Profits Levy on oil and gas companies will increase from 25% to 35%, with the levy remaining in place until the end of March 2028, and a new, temporary 45% levy will be introduced for electricity generators. Together these measures will raise over £55 billion from this year until 2027-28.
To ensure fiscal discipline while providing support for the most vulnerable, the Chancellor has introduced two new fiscal rules, that the UK’s national debt must fall as a share of GDP by the fifth year of a rolling five-year period, and that public sector borrowing in the same year must be below 3% of GDP.
Overall, the Autumn Statement improves public finances by [£55 billion] by 2027-28, and the OBR forecasts both of these rules to be met a year early in 2026-27.
‘They haven’t got a clue’: Edinburgh residents share experiences of the cost of living crisis
As spending cuts worsen, on Budget Day, Greenpeace volunteers hosted a screening of the new short film ‘The Cost of Living’.
This documentary, made by Greenpeace in partnership with the New Economics Foundation, tells the story of volunteers in food banks and community centres in the Rother Valley, Yorkshire. The film depicts how communities hard hit by the cost of living crisis are pulling together to support each other at this difficult time and how properly insulating homes can help tackle the cost of living and climate crises.
On the eve of the autumn statement, the trailer for the film was projected onto Prime Minister Rishi Sunak’s house in his Yorkshire constituency to encourage him to address the issues shown in the film.
Greenpeace Edinburgh Local Group, as part of the Warm This Winter Coalition, is campaigning for the cost of living and climate crises to be solved by investing in renewable energy, properly insulating homes and providing people with the skills and training needed to deliver this green energy revolution.
Greenpeace is calling for at least £6 billion to be spent on implementing a national insulation and energy efficiency programme during this parliament. People living in poorly insulated homes will have to pay almost £1,000 more than others on their energy bills this winter.
Data from the End Fuel Poverty Coalition shows that almost a quarter (24.5%) of UK households are currently experiencing fuel poverty.
Around 20 people watched the documentary at the Grassmarket Community Project, one of more than 40 screenings taking place across the UK this winter. The screening was followed by a talk from Greenpeace speaker Issy, and a panel discussion with representatives from local organizations.
The panel was made up of Aditi Jehangir, chair of the Gorgie and Dalry branch of Living Rent, Stuart Bretherton, Energy for All Campaigner at Fuel Poverty Action and Louis Keal, an activist from Just Stop Oil.
After the panel discussion, members of the public were given advice on contacting their local MPs in Edinburgh, Ian Murray, Tommy Sheppard, Deirdre Brock, Joanna Cherry and Christine Jardine, to share how they are being affected by the sharp rise in energy and food prices.
Louis argued that the solution to the crises lies in connecting with one another and ‘finding our people power in a way we never have before,’ while Stuart reiterated the words of one of the film’s interviewees, referring to the government’s understanding of how the crisis is affecting ordinary people: ‘they haven’t got a clue’.
Zoë, a volunteer from Newington, said: ‘The Cost of Living depicts towns in the Rother Valley, but the experience of people living in Edinburgh is very similar. We are facing enormous energy bills, and more and more people are relying on the community to help put food on their table and provide a warm refuge.
“Food banks and community centres are being stretched to the limit as winter approaches. It’s vital that our MPs know how much people are struggling at the moment, but that there are solutions to this problem.
“In this week’s Budget the Government seems to have finally realised that home insulation needs to be done, but not quite how urgently we need to do it. Home insulation will make our homes permanently warmer, and our bills permanently lower, as well as reducing our carbon emissions.
“Almost a quarter of the country is in fuel poverty right now and we need an urgent insulation programme now to fix this. Ministers shouldn’t be waiting another three years to do what should have happened years ago.“
Recent polling conducted by Survation on behalf of Greenpeace shows that 68.8% of people in Scotland have had to make cuts to other spending due to rising energy bills, and 61.8% feel that their standard of living has got worse since the last general election. 83.6% of people in Scotland would support a government programme to install home insulation in their area.
A recent report by Cambridge Econometrics on behalf of Greenpeace UK, highlights how a government backed programme to insulate homes and install heat pumps could inject £6.8 billion into the economy every year and create almost 140,000 new jobs by 2030.
These green home upgrades could provide huge economic and social benefits – including to those on low incomes, older people and People of Colour, who tend to be most exposed to fuel poverty – while slashing bills and carbon emissions.
TUC: ‘we look set to remain trapped in the doom loop of austerity politics’
Tackling inflation is top of the priority list to stop it eating into paycheques and savings, and disrupting business growth plans.
To protect the most vulnerable the Chancellor unveiled £26 billion of support for the cost of living including continued energy support, as well as 10.1% rises in benefits and the State Pension and the largest ever cash increase in the National Living Wage
Necessary and fair tax changes will raise around £25 billion, including an increase in the Energy Profits Levy and a new tax on the extraordinary profits of electricity generators.
Decisions on spending set to save £30 billion whilst NHS and Social Care get access to £8 billion and schools get an additional £2.3billion reflecting people’s priorities.
To deliver prosperity, he’s also committed to infrastructure projects including Sizewell C and Northern Powerhouse Rail, along with protecting the £20billion R&D budget.
The Chancellor has today (Thursday 17th November) announced his Autumn Statement, aiming to restore stability to the economy, protect high-quality public services and build long-term prosperity for the United Kingdom.
Jeremy Hunt outlined a targeted package of support for the most vulnerable, alongside measures to get debt and government borrowing down. The plan he set out is designed to fight inflation in the face of unprecedented global pressures brought about by the pandemic and the war in Ukraine.
The Chancellor of the Exchequer Jeremy Hunt said: “There is a global energy crisis, a global inflation crisis and a global economic crisis. But today with this plan for stability, growth and public services, we will face into the storm. We do so today with British resilience and British compassion.
“Because of the difficult decisions we take in our plan, we strengthen our public finances, bring down inflation and protect jobs.”
To protect the most vulnerable from the worst of cost-of-living pressures, the Chancellor announced a package of targeted support worth £26 billion, which includes continued support for rising energy bills. More than eight million households on means-tested benefits will receive a cost-of-living payment of £900 in instalments, with £300 to pensioners and £150 for people on disability benefits.
The Energy Price Guarantee, which is protecting households throughout this winter by capping typical energy bills at £2,500, will continue to provide support from April 2023 with the cap rising to £3,000. With prices forecast to remain elevated throughout next year, this equates to an average of £500 support for households in 2023-24.
Working age benefits will rise by 10.1%, boosting the finances of millions of the poorest people in the UK, and the Triple Lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation.
The National Living Wage will be increased by 9.7% to £10.42 an hour, giving a full-time worker a pay rise of over £1,600 a year, benefitting 2 million of the lowest paid workers.
The Chancellor also announced a £13.6 billion package of support for business rates payers in England. To protect businesses from rising inflation the multiplier will be frozen in 2023-24 while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year.
To help businesses adjust to the revaluation of their properties, which takes effect from April 2023, the Chancellor announced a £1.6 billion Transitional Relief scheme to cap bill increases for those who will see higher bills.
This limits bill increases for the smallest properties to 5%. Businesses seeing lower bills as a result of the revaluation will benefit from that decrease in full straight away, as the Chancellor abolished downwards transitional reliefs caps. Small businesses who lose eligibility for either Small Business or Rural Rate Relief as a result of the new property revaluations will see their bill increases capped at £50 a month through a new separate scheme worth over £500 million.
To protect high-quality front-line public services, access to funding for the NHS and social care is being increased by up to £8 billion in 2024-25.
This will enable the NHS to take action to improve access to urgent and emergency care, get waiting times down, and will mean double the number of people can be released from hospital into care every day from 2024.
The schools budget will receive £2.3 billion of additional funding in each of 2023-24 and 2024-25, enabling continued investment in high-quality teaching and tutoring and restoring 2010 levels of per pupil funding in real terms.
All other departments will have their Spending Review settlements to 2024-25 honoured in full, with no cash cuts, but will be expected to work more efficiently to live within these and support the government’s mission of fiscal discipline.
To improve public finances, from 2025-26 onwards day to day spending will increase more slowly by 1% above inflation, with capital spending maintained at current levels in cash terms. This means departmental spending will still be £90 billion higher in real terms by 2027-28, compared with 2019-20 while £30 billion of public spending will be saved.
To raise further funds, the Chancellor has introduced tax rises of £25 billion by 2027-28. Based around the principle of fairness, all taxpayers will be asked to contribute but those with the broadest shoulders will be asked to contribute a greater share.
The threshold at which higher earners start to pay the 45p rate will be reduced from £150,000 to £125,140, while Income Tax, Inheritance Tax and National Insurance thresholds will be frozen for a further two years until April 2028. The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024 and the Annual Exempt Amount in capital gains tax will be reduced from £12,300 to £6,000 next year and then to £3,000 from April 2024.
The most profitable businesses with the broadest shoulders will also be asked to bear more of the burden. The threshold for employer National Insurance contributions will be fixed until April 2028, but the Employment Allowance will continue to protect 40% of businesses from paying any NICS at all.
In addition, the government is implementing the reforms developed by the OECD and agreed internationally to ensure multinational corporations pay their fair share of tax. And as confirmed last month, the main rate of Corporation Tax will increase to 25% from April 2023.
To ensure businesses making extraordinary profits as a result of high energy prices also pay their fair share, from 1 January 2023 the Energy Profits Levy on oil and gas companies will increase from 25% to 35%, with the levy remaining in place until the end of March 2028, and a new, temporary 45% levy will be introduced for electricity generators. Together these measures will raise over £55 billion from this year until 2027-28.
To ensure fiscal discipline while providing support for the most vulnerable, the Chancellor has introduced two new fiscal rules, that the UK’s national debt must fall as a share of GDP by the fifth year of a rolling five-year period, and that public sector borrowing in the same year must be below 3% of GDP. Overall, the Autumn Statement improves public finances by £55 billion by 2027-28, and the OBR forecasts both of these rules to be met a year early in 2026-27.
To ensure prosperity in the future, the Chancellor recommitted to the £20 billion R&D budget and made numerous infrastructure commitments. Sizewell C nuclear plant will go ahead, with the EDF contract to be signed at the end of the month, providing reliable, low-carbon power to the equivalent of 6 million homes for over 50 years.
The Chancellor also confirmed commitments to transformative growth plans for our railways including High Speed 2 to Manchester, the Northern Powerhouse Rail core network and East West Rail, along with gigabit broadband rollout.
Plans for the second round of the Levelling Up Fund were confirmed, with at least £1.7 billion to be allocated to priority local infrastructure projects around the UK before the end of the year.
In further efforts to level up the UK, a new Mayor will be elected in Suffolk as part of a devolution deal agreed with Suffolk County Council, and the government is in advanced discussions on mayoral devolution deals with local authorities in Cornwall, Norfolk and the North East of England.
Many of today’s tax and spending decisions apply in Scotland, Wales and Northern Ireland.
As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £1.5 billion over 2023-24 and 2024-25, the Welsh Government will receive £1.2 billion and the Northern Ireland Executive will receive £650 million.
As a result of today’s tax and spending decisions, the Scottish Government will receive around an additional £1.5 billion over 2023-24 and 2024-25.
The Chancellor has reconfirmed the UK Government’s commitment to work with the Scottish Government on options to improve the A75, in line with the findings from the Union Connectivity Review.
He also confirmed that funding for the UK’s 9 Catapult innovation centres will increase by 35% compared to the last funding cycle, this includes the offshore renewable catapult in Glasgow.
The Chancellor of the Exchequer Jeremy Hunt said:“This Autumn Statement will help deliver economic stability across the UK. We’ve made tough decisions to tackle inflation, but we’re committed to protecting the most vulnerable against the rising cost of living.
“Scottish familieswill receive billions of pounds of UK Government support, such as inflation-matching increases in benefits and the state pension, and the Scottish Government is receiving an additional £1.5 billion over the next two years to help protect vital public services and drive prosperity through the challenging times ahead.”
Scottish Secretary Alister Jack said: “We are facing complex global challenges, and the Chancellor has had to take some difficult decisions. By reducing our borrowing, tackling the root causes of inflation and putting our public finances on a stable footing, we will create the economic stability we need for our long-term prosperity.
“As we promised, we have put in place extra support for those who need it most, with support on energy bills and increases in pensions, benefits and the National Living Wage.
“The Scottish Government will receive an additional £1.5 billion, to help support public services in Scotland. We are also putting extra money into two key projects in Scotland. Catapult will help grow our offshore energy capability, and a feasibility study to upgrade the A75 will pave the way for much improved connectivity between Scotland, Northern Ireland and England.”
COMMENT and REACTION
Households ‘paying a steep price for UK economic mismanagement’ – Swinney
The UK Government’s Autumn Statement fails to address the pressure on devolved budgets to help people with the cost of living crisis, support public services, and finance fair pay offers, according to Deputy First Minister John Swinney.
Reacting to Chancellor of the Exchequer Jeremy Hunt’s fiscal announcement, Mr Swinney expressed dismay at his failure to address the impact of inflation on the Scottish Government’s budget, when businesses and households continue to face financial uncertainty and £1 billion in savings have had to be found to help those who need it most.
The Deputy First Minister said: “Today’s statement shows that households across Scotland are paying a steep price for the economic mismanagement of the UK Government, with average household disposable incomes forecast to fall by 7% in real terms according to the Office for Budget Responsibility.
“This would erode just under 10 years of growth in living standards, taking them back to levels not seen since 2013-14, meaning they would not recover to pre-pandemic levels until after 2027-28 – a devastating indictment of the UK Government’s management of the economy.
“Inflation is eating away at the Scottish budget, and due to the lack of additional funding in 2022-23 and the financial restrictions of devolution, we have had no choice but to make savings of more than £1 billion.
“I welcome the Chancellor’s decision to increase benefits in line with inflation from next financial year and retain the triple lock on pensions – both measures we have consistently called for. However, the higher energy price cap from April is still unsustainable for many households.
“The proposals may limit the impact for some consumers, but the UK Government needs to carefully consider the affect a £500 rise in energy bills will have on those who are in or at risk of fuel poverty. And there’s still no certainty on how businesses struggling to stay afloat will be supported from April after the Energy Bill Relief Scheme ends.
“The constant U-turns on tax by the UK Government have made planning for the Scottish Budget more challenging this year. We will take time to consider the implications for Scotland before setting out our own plans as part of the normal budget process.
“I am pleased the Chancellor has finally listened to our calls to tax more of the windfall gains in the energy sector, but he should have gone further to remove the poorly targeted investment allowance, which only serves to encourage short-term investment in fossil fuels rather than promoting long-term, sustainable energy solutions.
“This leaves me with the difficult task of setting Scotland’s Budget for 2023-24 with no hope of financial flexibility to make a real difference in the lives of those who need it most.”
HEALTH
Amanda Pritchard, NHS Chief Executive, said:“When the government – and the country – face such a daunting set of challenges, we welcome the chancellor’s decision to prioritise the NHS with funding to address rising cost pressures and help staff deliver the best possible care for patients. This shows the government has been serious about its commitment to prioritise the NHS.
“The NHS is already one of the most efficient health services in the world and we are committed to delivering further efficiencies, with over £5 billion already freed up for reinvestment in patient care this year.
“NHS staff are delivering a huge amount in the face of record demand with 10% more GP appointments than before Covid, an extra 35 million in a year, more support than ever for peoples’ mental health and the highest level of cancer checks while transforming peoples’ lives with innovative treatments such as laser therapy for epilepsy and genetic testing for sick babies and children.
“While I am under no illusions that NHS staff face very testing times ahead, particularly over winter, this settlement should provide sufficient funding for the NHS to fulfil its key priorities. As ever, we will act with determination to ensure every penny of investment delivers for patients.”
SCHOOLS
Leora Cruddas CBE, Chief Executive, Confederation of School Trusts said:“We are delighted that the Government has prioritised schools in the Autumn statement.
“We know economic times are tough. But investment in the education of our children is an investment in our future.
“Schools and school trusts have the talent and expertise to find innovative and cost-effective ways to keep improving education and supporting their local communities, and the announcement today will help them to plan ahead.”
INFLATION
Helen Dickinson, Chief Executive, the British Retail Consortium, said: “High inflation remains a major threat to the UK economy and we support the government’s objective of bringing this down.
“Inflation is making people poorer, damaging consumer confidence and holding back demand. It pushes up the costs to businesses which further increases prices for consumers. As the retail industry enters the crucial Christmas period, it is vital that inflation is brought to heel.”
NATIONAL LIVING WAGE
Bryan Sanderson, Chair, Low Pay Commission, said:“The rates announced today include the largest increase to the NLW since its introduction in 2016 and will provide a much-needed pay increase to millions of low-paid workers across the UK, all of whom will be feeling the effects of a sharply rising cost of living.
“For a full-time worker, today’s increase means nearly £150 more per month. The tightness of the labour market and historically high vacancy rates give us confidence that the economy will be able to absorb these increases.
“Businesses also have to navigate these economically uncertain times and by ensuring we remain on the path to achieve our 2024 target, employers will have greater certainty over the forward path. These recommendations have the full support of the business, trade union and academic representatives who make up the Commission.”
BUSINESS RATES – ONLINE SALES TAX
Baldock, CEO, Currys plc, said:“We’re happy that the Treasury listened to our concerns on business rates, and acted quickly.
“I’m also delighted at the ditching of the Online Sales Tax, which would have added costs for consumers and depressed business investment. We will continue to support customers and colleagues through this cost-of-living crisis, keeping prices low, jobs well-paid, and helping everyone enjoy amazing technology.”
James Lowman, Chief Executive, Association of Convenience Stores (ACS) said:“We welcome the freeze of the business rates multiplier for another year. The extension and increase in the retail, hospitality and leisure relief scheme will be warmly welcomed by small business in particular.
“Scrapping downward transition will help the businesses most adversely impacted by the pandemic and other market factors, and the Supporting Small Business Scheme will help those who have grown their business to the point where they lose some business rates relief they previously claimed.
“This package of business rates measures meets our asks to the Chancellor and we are delighted that he has listened. We will continue to work with the Treasury and other departments on modernising the whole business rates system.”
A spokesperson for ASOS said:“We welcome the Chancellor’s decision to rule out an Online Sales Tax after considering the evidence and arguments.
“Like other online retailers and major High Street names, we opposed this new sales tax which would have added significant business costs against the backdrop of the current challenging economic environment and risked higher prices, so this decision is good news for consumers and businesses alike.”
Reserch & Development
A spokesperson for GSK said:“We welcome the Government’s continued commitment to increase investment in R&D and boost incentives for businesses to invest in innovation.
“Given the challenging economic circumstances we face, it’s even more important that the Government continues to take steps to secure the UK’s leadership in science and technology, including life sciences which are a key source of jobs and growth, and we look forward to working with the Government to deliver this ambition.”
Richard Torbett, Chief Executive, The Association of the British Pharmaceutical Industry (ABPI), said: “The Chancellor has delivered a pragmatic Autumn Statement, taking some tough decisions while recognising the vital role innovation must play in setting the economy back on the path to recovery.
“The decision to protect spending on research and development, as well as increasing the R&D expenditure credit from 13 to 20 percent are both essential to boosting the UK’s share of global pharmaceutical R&D spending and investment.
“The life sciences industry is uniquely well-placed to deliver the innovation-led growth the UK needs. To realise this opportunity, the government must continue striving to make the UK a more competitive and attractive place to invest. This journey is already well underway, but we need to raise our ambitions even further if we are to truly make the UK a life science superpower.”
SOLVENCY II
Hannah Gurga, Director General, The Association of British Insurers (ABI), said:“We strongly welcome these changes to the Solvency II regime which will allow the UK insurance and long-term savings sector to play an even greater role in supporting the levelling up agenda and the transition to Net Zero.
“Meaningful reform of the rules creates the potential for the industry to invest over £100bn in the next ten years in productive finance, such as UK social infrastructure and green energy supply, whilst ensuring very high levels of protection for policyholders remain in place.
“More broadly, it will encourage a thriving and competitive industry which will ultimately benefit the UK economy, the environment and customers. This meets the objectives that HM Treasury set out to achieve and which the industry has supported throughout.”
TUC: Working people take the hit for Tory economic failure
In his Autumn Statement today, Jeremy Hunt, the fourth Conservative Chancellor this year, announced that the UK economy is in recession. The documents that accompanied his statement warned of half a million job losses. Staggeringly workers face in 2022 and 2023 the worse years of a pay crisis that is now reckoned to be lasting basically for two decades.
Rightly protections were announced against further energy price rises, and social security protection was uprated in line with inflation. The government took the advice of the low pay commission to increase the minimum wage to £10.42 an hour.
But this support is paid for by steep cuts to departmental budgets from 2024-25 onwards. And immediately there was no extra money to support public servants in the face of double-digit inflation.
As Frances O’Grady said: ““This is a recession made in 10 Downing Street, which will put jobs at risk and hit workers’ wages. We are all paying the price for the last decade of Tory governments, which decimated growth and living standards.
“Today’s statement shows it will be two decades until real wages recover. Millions of key workers across the public sector – who got us through the pandemic – face years of pay misery as departmental budgets are brutally squeezed.”
Real pay and jobs
The OBR forecast expects that the real pay squeeze that’s already in its fourteenth year is set to last another five. Real average weekly earnings aren’t expected to go back above 2008 levels until 2027 – a 19-year pay squeeze that’s hit workers hard and is longer than any other since the Napoleonic times. The statement itself did little to help. The minimum wage has increased, but by less than inflation and still below the level of a real living wage. There was nothing to suggest public sector workers will get pay rises to help face the rising cost of living, after a decade in which their pay has been squeezed time and time again.
In terms of the labour market, the OBR has forecast a sustained fall in employment, still flatlining economic participation, and a rise in unemployment, which is not expected to return to the pre-crisis level until beyond the end of the forecast period in 2027. In terms of headcount the rise in unemployment is half a million – though the Bank of England is forecasting that it will rise by double this.
Policies to support working people and households
Ahead of the disastrous mini budget we called for protection against rising bills, with any costs shared fairly. And we called for a plan to grow the economy. The most prominent feature of the Chancellor’s plan was also the most worrying – to celebrate Nigel Lawson’s big bang that scrapped regulation on the city and set the trajectory to the global financial crisis.
Protection against inflation
A universal protection against rising energy bills was replaced with a more targeted approach, with bills now allowed to rise to an average of £3,000 p.a. (up from £2,500), but extra support for those on means tested benefits, pensioners, and disabled people. But energy are not the only bills that are soaring – CPI inflation is now at a forty year high of 11.1 per cent. Food inflation is at a record level, fuel prices are very high and prices are up across the board. The ONS reported this week that inflation rates hitting the lowest earners are three percentage points higher than those for the highest earners.
Benefits
Chancellor said, ‘I am proud to live in a country with one of the most comprehensive safety nets anywhere in the world.’ This comment is beyond belief, as since 2010 this Government have implemented cuts which have decimated the social security system.
The benefit uprating by the Chancellor today has been the bare minimum. The standard out of work benefit is now worth just 13% of average weekly earnings. And the basic amount of universal credit will be worth £43 a month less than in 2010 even after this uprating is in place.
The state pension has fared better than working age benefits thanks to the triple lock, but ours remains one of the least generous in Europe. So the decision to return to the triple lock formula and increase pensions by CPI inflation after this year’s real terms cut, and to increase pension credit in line with prices too, was the bare minimum.
The autumn statement also contained a strong hint that the government was preparing to axe its formula linking state pension age rises to improvements in life expectancy and bring forward its planned increase. The savings to government – and cost to the public people – of this move would dwarf the impact of pension increases resulting from the triple lock in any given year.
The minimum wage will be raised to £10.42 in 2022/23. Significant increases are needed especially after real terms declines over the last couple of years. But the announced increase will still leave the real value of the minimum wage 1.1 per cent below where it was two years before. The government must, instead, put the minimum wage on a growth path to £15 as soon as possible.
Infrastructure investment
The Chancellor warned that capital investment was too soft a soft target for austerity (like under George Osborne), then proceeded to cut planned spending by £5bn in 25-26, £9bn in 26-27 and £15bn in 27-28.
This will have major impacts on delivering the infrastructure needed to keep people moving, the UK economy competitive, and to hit climate targets.
Taxing wealth and windfalls
The Chancellor was duty bound to hit the better off. But these were not big changes in the great scheme of things. The biggest hits came on the energy profits levy and the electricity generator levy, raising £14bn in 23-24 and £11bn in 24-25. The wider hit from the 20% income tax thresholds will earn the Treasury a cool £6bn a year, compared to less than £1bn raised from lowering the threshold for paying the top rate of tax. All these changes are however dwarfed by the reversal of Rishi Sunak’s health and social care levy which costs £16-£17bn a year.
More pay misery for millions of public sector workers and the services they deliver
A strong economy relies on strong public services. Welcome words from the Chancellor as he set out his fiscal statement. Yet, warm words failed to match spending plans.
The Chancellor confirmed government would stick to cash spending plans set out in the Comprehensive Spending Review 2021. Meaning departmental budgets would not be adjusted to account for soaring inflation, placing unsustainable pressure on public services and creating more years of pay misery for the millions of key workers across the public sector who got us through the pandemic.
Analysis carried out by NEF for the TUC ahead of the budget showed, departmental budgets needed an additional £43 billion just to remain at the level set out in the Comprehensive Spending Review 2021 and keep public sector pay in line with the cost-of-living. This did not materialise.
Some relief was provided for key government departments such as the NHS, social care and schools. Nothing for public sector pay rises or cash starved areas like the court system, prisons, HMRC and local government.
Schools will receive an additional £2.3 billion in funding for 2023-24 and 2024-25, representing an overall spending increase of 4 per cent, returning per pupil spending to 2010 levels.
But no additional funding was provided for adult education, where spending fell by 49 per cent between 2009 and 2019 – surprising given the Chancellor’s emphasis on the importance of skills to economic stability and growth.
Nor for the cash-strapped early years sector, where the number of providers fell by 4,000 between 1 April 2021 and 31 March 2022, in large part due to a toxic combination of unsustainable funding levels and soaring costs for essential expenditure such as energy and food.
Health and social care will receive additional funding of around £7.5 billion. An estimated £1.6 billion of the money identified for social care requires local authorities generating additional revenue through rises to council tax.
At a time when millions of households are struggling with the cost-of-living, it is hard to see how councils will do this without putting even more financial strain on families.
Councils in areas of high socio-economic deprivation, often the most cash strapped when it comes to social care, will have the hardest time raising additional revenue.
The additional £3.3 billion for the NHS represents less than 1% of it’s overall budget. A drop in the ocean. Only a fraction of what our NHS and its workforce needs this winter. With NHS vacancies at a record-high, one in ten posts unfilled, what the health system desperately needed was investment in its workforce.
Indeed, across the public sector, what was needed and missing from today’s fiscal statement was a recognition that after twelve years of government imposed pay restraint and real terms pay cuts, our public sector workforce are on their knees. To deliver world class, high-quality public services, we need to treat the people that deliver them, with respect and dignity. That starts with spending plans that deliver cost-of-living proof pay rises in 2022 and beyond.
Public spending, GDP and the government finances
In spite of all this pain, the biggest risk is still the economy. Here the OBR have let the government off lightly. While the recession means a decline in GDP next year of 1.4 per cent, activity recovers quickly into 2024 and then continues at rates that would be exceptional given the experience since 2008. When asked at their press conference why the forecasts were so much stronger than those of the Bank of England, the OBR offered – ‘ask the Bank’.
This vigour comes in spite of much higher than anticipated central bank interest rates, virtually unchanged government support on the immediate horizon, and heavy austerity into the future (at the press conference the OBR equivocated whether it was comparable to Osborne’s).
In a way we are lucky. Better projected GDP outcomes protect against the need for even tougher austerity, given the vogue for fiscal rules. Nonetheless the government have also accepted a fairly substantial increase in borrowing over coming years, with public sector debt is expected to peak at 97.6 per cent of GDP in 2025-26.
There are no game changers here, and there is very little protection against a steeper deterioration. In the meantime workers face yet another severe reduction in the standard of life. But sadly nothing here is new. Until we have a government that has a serious plan to put work before wealth, we look set to remain trapped in the doom loop of austerity politics.
We know that today’s choices weren’t inevitable. There is a better plan to grow the economy, protect our public services, and get wages rising. Now we need a government prepared to deliver it.
Almost one in four families across the UK will receive £324 from the government this month as the latest Cost of Living Payments are sent out from today (8 November 2022).
Over 8 million households in England, Wales, Scotland and Northern Ireland who claimed qualifying means-tested benefits during the eligibility period will be automatically paid £324 this month, as part of £1,200 worth of direct help for households.
over 8 million benefit claimants to receive £324 this month as part of Cost of Living support
DWP claimants will receive their second Cost of Living payment by 23 November 2022, and eligible tax credit claimants, on no other means-tested benefits, will receive it between 23 and 30 November 2022
payments will automatically be made to everyone eligible, with no need for anyone to apply
The payments, starting today from the Department for Work and Pensions, are made directly into eligible recipients’ bank accounts, with no need for people to apply or do anything to receive it.
The payment reference on DWP recipients’ bank accounts will be their national insurance number, followed by “DWP COL”. For HMRC recipients the payment reference will be “HMRC COLS”.
Work and Pensions Secretary, Mel Stride said: “We understand that people are struggling and that is why we’ve consistently acted to ensure millions of low-income families are supported. We will continue to act with compassion as we navigate challenging global economic circumstances.
“As part of a wider £37 billion package of support, this latest £324 payment will help the most vulnerable people in our society who are worrying about their finances through the winter months.”
The UK government’s £1,200 support package contains £400 for energy bills that is being paid in monthly instalments to all domestic energy customers between now and March 2023. It also includes a £150 Council Tax rebate for 85% of all UK households and the previous £326 Cost of Living Payment made by DWP in July and by HMRC in September.
On top of this, nearly one in ten people received the £150 disability payment in September, and a £300 addition to Winter Fuel Payments will go to over eight million pensioner households over the winter.
Chancellor of the Exchequer, Jeremy Hunt added: “Prices are rising across the world as we manage the aftershock of COVID-19 and Putin’s invasion of Ukraine. We recognise that families back home are struggling, which is why we’ve taken decisive action to hold down energy bills this winter, and provided hundreds of pounds of cash support for each vulnerable household.
“As part of that support, over 8 million vulnerable households – almost a quarter of families in the UK – will automatically receive a second cost of living payment worth £324 in their bank account from today.
“And while we can’t completely protect people from rising prices, my priority at the upcoming Autumn Statement will be to protect the poorest in society as we take the tough decisions necessary to fix our public finances.”
Those eligible to receive the second cost of living payment from today include people on:
Universal Credit
Income-based Jobseekers Allowance (JSA)
Income-related Employment and Support Allowance (ESA)
Income Support
Pension Credit
To be eligible, claimants must have been claiming and entitled to a payment between 26 August and 25 September 2022, with the exception of pensioner households, who may be able to have a new Pension Credit claim backdated.
They have until 18 December 2022 to submit a valid claim for Pension Credit, which could entitle them to the £324 Cost of Living payment. Anyone can check their eligibility for Pension Credit using the online calculator or by calling the freephone claim line, on: 0800 99 1234.
Even if you are not on a qualifying DWP benefit you may still be eligible for the £324 payment, as HMRC are also making payments to over a million people who receive Working Tax Credit or Child Tax Credit and no other eligible benefits. These will be paid between 23 and 30 November 2022 and customers do not need to contact the government or apply for the payment at any stage
The £324 payment and the overall £1,200 package come on top of wide-ranging government support with the cost of living this winter, including an extension to the Household Support Fund, which is providing an extra £421 million between October and March to help vulnerable people with the essentials.
As well as this, the Energy Price Guarantee is ensuring people across the country pay significantly less for their energy bills, with a typical household saving around £700 this winter.
The Chancellor will make a statement at 11am, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability.
He will also make a statement in the House of Commons this afternoon.
This follows the Prime Minister’s statement on Friday, and further conversations between the Prime Minister and the Chancellor over the weekend, to ensure sustainable public finances underpin economic growth.
The Chancellor will then deliver the full Medium-Term Fiscal Plan to be published alongside a forecast from the independent Office for Budget Responsibility on 31 October.
The Chancellor met with the Governor of the Bank of England and the Head of the Debt Management Office last night to brief them on these plans.
That racket you hear is those infamous Mini-Budget economic plans being put through the shredder – Ed. …
UPDATE: The Chancellor of The Exchequer Jeremy Hunt has today, Monday 17 October, brought forward a number of measures from 31 October’s Medium-Term Fiscal Plan:
Changes designed to ensure the UK’s economic stability and provide confidence in the government’s commitment to fiscal discipline
Basic rate of income tax to remain at 20% until economic conditions allow for it to be cut, IR35 and dividend tax rate reforms no longer going ahead
Treasury-led review of energy support after April 2023 launched
Following conversations with the Prime Minister, the Chancellor has taken these decisions to ensure the UK’s economic stability and to provide confidence in the government’s commitment to fiscal discipline.
The Chancellor made clear in his statement that the UK’s public finances must be on a sustainable path into the medium term.
Today’s announcement represents another down payment following the reversal of the corporation tax cut announced on Friday 14 October by the Prime Minister. The Chancellor will publish the government’s fiscal rules alongside an OBR forecast, and further measures, on 31 October.
In his statement the Chancellor announced a reversal of almost all of the tax measures set out in the Growth Plan that have not been legislated for in parliament.
The following tax policies will no longer be taken forward:
Cutting the basic rate of income tax to 19% from April 2023. While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely. This is worth around £6 billion a year.
Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place. This is valued at around £1 billion a year.
Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place. This will cut the cost of the government’s Growth Plan by around £2 billion a year.
Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain. Not proceeding with this scheme is worth around £2 billion a year.
Freezing alcohol duty rates from 1 February 2023 for a year. Not proceeding with the freeze is worth approximately £600 million a year. The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.
This follows on from the previously announced decisions not to proceed with the Growth Plan proposals to remove the additional rate of income tax and to cancel the planned increase in the corporation tax rate.
Taken together, these changes are estimated to be worth around £32 billion a year.
The government’s reversal of the National Insurance increase and the Health and Social Care Levy, and the cuts to Stamp Duty Land Tax, will remain benefitting millions of people and businesses. The £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue to further support business investment.
Energy bills support review
The government has announced unprecedented support within its Growth Plan to protect households and businesses from high energy prices. The Energy Price Guarantee and the Energy Bill Relief Scheme are supporting millions of households and businesses with rising energy costs, and the Chancellor made clear they will continue to do so from now until April next year.
However, looking beyond April, the Prime Minister and the Chancellor have agreed that it would be irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices.
A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023. The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need. The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.
The government is prepared to act decisively and at scale to regain the country’s confidence and trust. The Chancellor stated in his speech that there will be more difficult decisions to take on both tax and spending. This means doing what is needed to lower debt in the medium term and to ensure that taxpayers’ money is well spent, putting public finances on a sustainable footing.
In light of this, government departments will be asked to find efficiencies within their budgets. The Chancellor is expected to announce further changes to fiscal policy on 31 October to put the public finances on a sustainable footing.
Further information
Table of total benefit of tax policy reversals:
Policy (£bn)
2022-23
2023-24
2024-25
2025-26
2026-27
Re-instate plans to raise Corporation Tax to 25% from April 2023
+2.3
+12.4
+16.6
+17.6
+18.7
Suspend 1p reduction in the basic rate of income tax
0
+5.3
+5.9
+5.8
+5.9
Maintain additional rate of income tax
+2.4
-0.6
+0.8
+2.2
+2.1
Maintain 1.25 percentage point increase in dividends tax rates
0
+1.4
-1.0
+1.1
+0.9
Maintain 2017 and 2021 reforms to off-payroll working rules (also known as IR35)
0
+1.1
+1.4
+1.7
+2.0
Cancel VAT-free shopping scheme for non-UK visitors to Great Britain
0
0
+1.3
+2.0
+2.1
Cancel one year freeze to alcohol duty rates
+0.1
+0.5
+0.6
+0.6
+0.6
Total
+4.7
+20.1
+25.4
+30.9
+32.3
Costings in the table are as set out in the Growth Plan 2022 – except for the 1p reduction in the basic rate of income tax, which is the costing from Spring Statement 2022 as adjusted in the Growth Plan 2022. Final costings will be set out as part of the Medium-Term Fiscal Plan on 31 October. Totals may not sum due to rounding.
THE CHANCELLOR’s STATEMENT:
A central responsibility for any Government is to do what is necessary for economic stability.
This is vital for businesses making long-term investment decisions and for families concerned about their jobs, their mortgages, and the cost of living.
No government can control markets, but every government can give certainty about the sustainability of public finances and that is one of the many factors influencing how markets behave.
And for that reason, although the Prime Minister and I are both committed to cutting corporation tax on Friday she listened to concerns about the mini budget and confirmed we will not proceed with the cut to Corporation Tax announced.
The government has today decided to make further changes to the mini budget.
And to reduce unhelpful speculation about what they are, we have decided to announce these ahead of the Medium-Term Fiscal Plan, which happens in two weeks.
I will give a detailed statement to Parliament and answer questions from Members of Parliament.
But because these decisions are market sensitive, I have agreed with the Speaker the need to give an early, brief summary of the changes which are all designed to provide confidence and stability.
Firstly, we will reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not started Parliamentary legislation.
So whilst we will continue with the abolition of the Health and Social Care Levy and Stamp Duty changes we will no longer be proceeding with:
The cut to dividend tax rates.
The reversal of off-payroll working reforms introduced in 2017 and 2021.
The new VAT-free shopping scheme for non-UK visitors.
Or the freeze on alcohol duty rates.
Secondly, the government’s current plan is to cut the basic rate of income tax to 19% from April 2023.
But at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut.So I have decided that the basic rate of income tax will remain at 20% and it will do so indefinitely, until economic circumstances allow for it to be cut.
Taken together with the decision not to cut Corporation Tax, and restoring the top rate of income tax the measures I’ve announced today will raise, every year, around £32bn.
Finally, the biggest single expense in the Growth Plan was the Energy Price Guarantee.
This is a landmark policy supporting millions of people through a difficult winter and today I want to confirm that the support we are providing between now and April next year will not change.
But beyond that, the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices.So I am announcing today a Treasury-led review into how we support energy bills beyond April next year.
The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.
Any support for businesses will be targeted to those most affected.
And the new approach will better incentivise energy efficiency.
The most important objective for our country right now is stability.
Governments cannot eliminate volatility in markets, but they can play their part, and we will do so because instability affects the prices of things in shops, the cost of mortgages, and the value of pensions.
There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.
All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.
But, as I promised at the weekend our priority in making the difficult decisions that lie ahead will always be the most vulnerable.
And I remain extremely confident about the UK’s long term economic prospects as we deliver our mission to go for growth.
But growth requires confidence and stability, and the United Kingdom will always pay its way.
This Government will therefore make whatever tough decisions are necessary to do so.
REACTION:
Commenting on the Chancellor Jeremy Hunt’s fiscal statement today (Monday), TUC General Secretary Frances O’Grady said: “The Conservatives drove the UK economy over a cliff. Hunt slamming the gears into reverse now won’t help families and businesses already hit by soaring borrowing costs.
“People needed reassurances today. Instead, they got more uncertainty – about energy bills, about our public services, and about whether universal credit and benefits will rise with inflation.
“We are now on the brink of a deep and damaging recession that threatens millions of jobs. But the latest Conservative Chancellor still has the same basic approach that got us into this mess.
“The Chancellor should have announced a boost to universal credit and pensions, and a comprehensive plan to get wages rising faster for everyone. And he should have announced a much higher windfall tax on oil and gas giants.”
On the announcement of a review of support for families and businesses with energy costs beyond April 2023, she added: “Families and businesses now face months of worry. There is going to be less help with bills – but no-one knows who will lose out, by how much, or whether there will finally be a programme to fix Britain’s cold and draughty homes. This is not the reassurance working families need.”
Director of Policy & Communications at Independent Age, John Palmer, said: “Older people living on low and modest incomes were hoping to be reassured today, but frustratingly the Chancellor’s statement posed more questions than answers.
“Instead of ensuring stability, today only provided uncertainty. The review of the Energy Price Guarantee is extremely concerning. It’s no longer clear who will receive support beyond April 2023. Now millions of older people are wondering if they will be abandoned by the government and left with unaffordable energy bills and freezing homes next year.
“We know that many people in later life are already making dangerous cutbacks on heating and food. Our own polling revealed that 65% of older people plan to use less heating this winter.
“The government must ensure that its new targeted approach from next year helps older people in financial hardship, including the 850,000 older people who are currently entitled to Pension Credit but do not receive it.
“A fundamental, non-negotiable way to help older people’s incomes keep up with the price of essentials is for the government to uprate benefits and the State Pension with inflation. Today was another missed opportunity to offer this reassurance. Instead, millions of people over 65 will continue to live in fear that they will be made even poorer, when their budgets have been broken by the cost-of-living crisis.”
Will Hodson, consumer champion and founder of How To Save It commented:‘The Chancellor’s announcement that the Government will review the energy price cap in April is welcome. Supporting millionaires in paying their energy bills for two years was both morally and economically wrong.
“However, many households will be concerned about what this change means for them. The Government needs to make sure that their support is both good value to the taxpayer and provides sufficient, targeted support to those who really need it.’
