The Scottish Government has launched a new website to help with the cost of living crisis.
The website has a range of information on support available for households facing rising energy, housing and other costs.
Developed by the Scottish Government as a ‘one stop shop’ to help those struggling with the cost of living crisis, the website includes information on help available for households to meet rising energy, housing and other costs.
It also provides details on accessing Scottish and UK social security payments, including online benefit calculators, as well as wider health and wellbeing information.
A Programme for Government 2022-23 commitment, it will be supported by a nationwide media campaign to raise awareness of the website and signpost people impacted by rising costs to the help available.
The website was launched by Social Justice Secretary Shona Robison during a visit to debt help service in Tollcross, run by charity Christians Against Poverty.
Shona Robison said: “I know that people are struggling with the cost of living crisis right now and may not know where to turn for help. Our cost of living website is a trustworthy online resource with information on the wide range of vital support available.
“No one should feel alone in this crisis and this website, along with our campaign, aims to encourage people to find out if they are eligible for the extensive support available to access the advice they need. We want everyone to get all the financial support and help that is available so I would encourage people to apply for the payments they are entitled to – it might be just the lifeline that is needed right now.
“We have allocated almost £3 billion in this financial year to contribute towards mitigating the increased cost of living crisis and the new website highlights the wide range of support at hand. Our package spans a range of support, for energy bills, childcare, health and travel, as well as social security payments that are not available anywhere else in the UK. The website is an important signpost towards them all.
“The cost of living crisis is impacting every household in the UK and the Scottish Government will continue to do everything within its powers and finite budget to ensure people are supported as far as possible.”
Scotland National Director for Christians Against Poverty, Emma Jackson, said: “We are deeply concerned about the impact of rising costs on low income households. Even before rising costs, over a third (36%) of CAP clients had to borrow to meet essential living costs and we know the consequences of problem debt can be devastating for people.
“The new cost of living website from the Scottish Government is a welcome step in helping people to find and access all the vital support that is available to them, including steps to maximise income. People need to know help is available. Now, more than ever, we need to take every action possible to support households who are being hit the hardest by the cost of living crisis.”
Claire (not her real name) is a single parent from Edinburgh who experienced problem debt after her son was born prematurely. She spent a lot of time at the hospital and his health and wellbeing was her primary focus. Due to the stress of this situation she wasn’t able to manage bills or work to earn money and debts began to mount.
Claire’s debt had a significant impact on her mental health. She lived in fear of debt collectors coming to the door and hid the letters in a drawer as she didn’t know how she would be able to pay them. She felt ashamed and embarrassed and for a long time she didn’t know where to turn.
Problem debt had such an impact on Claire’s mental health that she tried to take her own life twice. Claire heard about Christians Against Poverty through her local foodbank and once she met her debt coach she felt like a weight had been lifted and she was able to laugh again. She felt like CAP was her safe place and her befriender became like a mother to her.
Claire was able to go debt free in December 2021, however, she is still struggling on a low income. She already has to travel quite far to shop around and find the cheapest items. She is worried about how she will be able to keep going with rising costs.
She explained: “It’s unbelievable what things cost at the moment, it’s all gone up so much – food, electric, clothes for my son. It all costs so much and right now, I just don’t know how I am going to afford it all. I’ve worked hard to get back on track with my finances, but there isn’t enough to pay for all of these essential things that I need for my son. I don’t want to be in debt again.”
Locals urged to donate to those struggling with the cost of living
Heating bills are at an all-time high, inflation is on the rise, and the temperature outside is plummeting.
There is no doubt that the necessity to keep warm and the stress of trying to keep up with the rising cost of living will sadly push many people to their breaking point this winter. However, one local business is doing all it can to offer practical help.
Saturday 1st October will see The Leith Collective launch its winter coat exchange across its three Scottish stores. Locals are being urged to donate good quality winter coats and waterproof jackets suitable for all ages and sizes. The coats will be available for anyone to collect at Ocean Terminal, Fort Kinnaird and St Enoch Centre completely free of charge, no questions asked.
The Leith Collective launched its first ever winter coat exchange in January 2022. At the time, it proved to be a genuine lifeline for many local individuals and families unable to afford a warm and comfortable coat to protect themselves from the elements.
Sadly, The Leith Collective founder, Sara Thomson, predicts this winter will be even more challenging for even more people: “We launched the winter coat exchange at the beginning of the year and sadly, here we are again. Except this time, it is even worse.
“Right across Scotland, there are people that are genuinely scared of what this winter may bring. People who now can’t afford even the most basic essentials because the cost of living has skyrocketed. For many people, winter 2022 will be a season of crisis. But we are determined to make a difference, and we know there are countless people in Edinburgh and Glasgow that want to help too.”
The winter coat exchange is not only a practical response to the cost of living crisis, but also to the climate crisis – a cause which lies at the heart of The Leith Collective. The winter coat exchange is a sustainable solution that aims to keep quality clothes out of landfill and in use for longer, promoting a circular economy and reducing the environmental impact of the textile industry.
As a Community Interest Company, all profits from The Leith Collective go towards supporting the community and promoting sustainability through the arts.
The Leith Collective actively supports individuals with mental health or support needs to grow in confidence and gain experience in the workplace, and offers business mentorship to any members of the Collective.
It is hoped that by hosting the winter coat exchange in accessible locations such as Ocean Terminal, Fort Kinnaird and St Enoch Centre, those currently experiencing difficulties will be able to receive a helping hand.
Coats can be dropped off or collected at The Leith Collective at Ocean Terminal, The Leith Collective at Fort Kinnaird, and The Clydeside Collective at St Enoch Centre during opening hours.
FRIDAY’S ‘fiscal event’ contained some of the most substantial tax policy changes seen in recent decades (writes Fraser of Allander’s DAVID EISER). Combined with last week’s announcements on the Energy Price Guarantee and Energy Bill Relief Scheme, this constitutes a huge change in the fiscal outlook.
In this context, the decision not to involve the Office for Budget Responsibility (OBR) is irresponsible. It might be billed as a ‘Growth Plan’, but today’s announcements are a budget in all but name. The OBR plays an essential role in scrutinising tax and spend forecasts, assessing the likely impact of policy announcements on growth, the deficit and debt. Its exclusion from the process weakens transparency around the impacts of the proposals.
The new Chancellor (above) used the first part of his speech to reiterate the government’s unavoidably large interventions in the energy market to protect households and businesses from energy price rises. In the remainder of the speech he announced a host of measures designed to stimulate economic growth through a combination of tax cuts and regulatory changes.
Tax changes – implications in Scotland
There were two ‘tax cuts’ that are more accurately described as reversals in recent or planned increases.
A planned increase in the Corporation Tax rate from 19% to 25% will now not go ahead. The Treasury estimates this will cost £12bn in reduced revenue compared to its previous plans in 2023/24, and more in subsequent years.
The Health and Social Care Levy has also been scrapped, together with the 1.25% increase in dividend tax rates. These changes will cost almost £18bn in reduced revenues in 2023/24 compared to previous plans.
Both of these changes had been pre-announced and apply UK-wide.
The big surprises came on income tax. Here the government announced the biggest reforms (at UK level) since 2009.
The basic rate will be reduced from 20p to 19p one year earlier than expected, applying from April 2023 rather than April 2024.
The 45p additional rate will be abolished in April 2023.
Income tax changes and implications for Scotland
Of course, with income tax being devolved, neither of the changes will apply in Scotland. Instead, the Scottish Government will see a smaller reduction in its block grant next year than it was expecting, boosting the resources available to it in 2023/24 (the reduction to the Scottish Government’s block grant is broadly designed to reflect what the UK government would have raised from income tax in Scotland if income tax had not been devolved, and if the UK government income tax policy had continued to apply in Scotland).
In the context of this additional resource through its block grant, the Scottish Government will then need to decide whether and how to respond through its own tax policy.
It could of course keep Scottish tax policy unchanged. This would enable it to use its additional block grant to invest in public services in Scotland. The cost of it doing this politically would be that the gap between Scottish and rUK tax policy would widen substantially. Almost all Scottish income taxpayers would pay more income tax than they would in rUK. A Scottish taxpayer with an income of £29,000 would face liabilities around £160 higher. A Scottish taxpayer with an income of £50,000 would face liabilities almost £2,000 higher (Chart 1, black line).
Chart 1: Potential difference in income tax liability between Scotland and rUK, in 2023/24
Alternatively the Scottish government could mirror UK tax cuts with tax cuts of its own. It could for example decide to reduce the starter, basic and intermediate rates by 1p. This would broadly retain the difference in tax liability for individuals between Scotland and rUK at current levels (Chart 1, grey line). It would allow the Scottish Government to retain its treasured mantra that ‘the lowest income half of Scottish taxpayers pay less tax than they would in rUK’. But such a policy would cost the Scottish government around £400m in foregone revenues.
Other policy decisions are possible. The Scottish government could decide to cut just the starter and basic rates in Scotland, rather than the intermediate rate as well, at a revenue cost of around £250m.
How the Scottish Government responds to the UK Government’s abolition of the Additional Rate will also be interesting. The Scottish Fiscal Commission is likely to forecast that abolition of the Additional Rate wouldn’t be extremely costly in revenue terms (there are expected to be around 22,000 Additional Rate taxpayers in Scotland in 2023/24 so charging them a few pence less tax on their income above £150k might not have a significant affect in aggregate, particularly if it is assumed, as the SFC will, that the tax reduction will induce some element of a positive behavioural response).
The Additional Rate policy therefore puts the Scottish Government in a difficult political position. If it retains the Additional Rate it will be accused of undermining the ‘competitiveness’ of the Scottish economy, for little direct revenue gain (without any changes to existing policy, a taxpayer with an income of £200,000 would face an additional £5,900 in income tax liabilities in Scotland compared to an equivalent taxpayer in England).
But abolition of the Additional Rate would provide a significant tax cut for the highest income 0.5% of the Scottish adult population (an individual with income of £200,000 would be better off to the tune of £2,500 if the Additional Rate is abolished). The regressivity of a cut to the top rate in Scotland is difficult to reconcile with the Scottish Government’s aspirations for progressivity.
Stamp Duty changes and implications for Scotland
The Chancellor also announced changes to Stamp Duty in England and NI, amounting to an increase in the threshold at which Stamp Duty applies to residential transactions.
As with income tax, these changes will not apply in Scotland. As with income tax, the changes to English policy will pose dilemmas for the Scottish Government when considering its policy on the Land and Buildings Transaction Tax.
The Scottish Government has until now set LBTT in such a way that homes sold in Scotland for less than around £335,000 pay less tax than an equivalent property in England. Above this price, transactions in Scotland face noticeably higher tax liabilities. The changes announced by the UK government today mean that – if there are no changes to the existing Scottish LBTT rates – all property transactions in Scotland would face higher tax liabilities than they would in England (see Chart 2).
The Stamp Duty cuts in England will generate some additional resources for the Scottish Government via its block grant. In ballpark terms the increase in resource might be around £80m. It could use this additional resource to fund public services, or to cut LBTT rates in order to maintain existing tax differentials.
Chart 2: Residential property transactions tax liabilities in Scotland and England
Investment zones – an option for Scotland but at what cost?
The UK government announced the establishment of several dozen ‘investment zones’. It is hoped that these zones will ‘drive growth and unlock housing… by lowering taxes and liberalising planning frameworks’.
Policies implemented within the investment zones will include business rate reliefs for newly occupied or expanded premises, and stamp duty relief on land bought for commercial purposes, and a zero-rate of employer National Insurance Contributions for new employees earning below £50,270.
The hoped-for impacts of these investment zones on UK-wide economic activity – as opposed to their effect on displacing economic activity within parts of the UK – is based more on hope than on empirical evidence.
Several dozen potential zones have been identified in England. The UK government says that it will work with the Scottish government and local authorities to identify zones in Scotland.
What is not yet clear is how the costs of investment zones in Scotland – in the form of reliefs on business rates and stamp duty (which are devolved) and NICs reliefs (which are not devolved) – will be distributed between the Scottish and UK governments. The Treasury’s costing document does not seem to give an indication of the funding associated with the planned investment zones in England, so it is difficult to get a sense of the fiscal scale of these interventions at this stage.
U-turn on IR35
In another regulatory reform design to unlock growth, the chancellor announced the repeal of the anti-avoidance legislation commonly known as IR35. This legislation was designed to reduce so-called “disguised employment”, whereby workers could work long-term for businesses as self-employed contractors rather than employees – and in so-doing reduce the tax liabilities faced by both themselves and the company that they were contracted to.
The IR35 regulations were introduced for public authorities in 2017, and for medium and large enterprises in 2021. The regulation has big impacts on the nature and shape of the workforce in particular sectors.
The introduction of IR35 has been a huge undertaking by public authorities and corporations to ensure compliance with the legislation, so the change announced today is a big deal. It is a shame that we don’t have the view of the OBR of the impact this could have on Income Tax and National Insurance Contributions: but the costing published today by the Treasury suggests it could cut tax receipts by £1.1 billion in 2023-24, rising to £2 billion by 2026-27.
The Energy profits levy – the existing windfall tax
Interestingly, although the Prime Minister has made it clear that additional windfall taxes were not going to be introduced on oil and gas companies, we need to remember that the Energy Profits Levy announced in May is still in place.
This is a 25% additional surcharge on the extraordinary profits that are being made by the oil and gas companies. When it was announced in May, it was expected that this could raise £5 billion this year, although there was a great deal of uncertainty about this.
Under current plans this levy will remain in place until December 2025, and on the basis of the costings published today, the Government has no plans to end it early. The policy is now forecast to raise £28 billion over the next 4 years (including this year). This is another area of costing that it would be particularly useful to get independent scrutiny from the OBR.
Summary: a gamble on growth with long odds
It is undeniably the case that the UK (and Scottish) economies have been characterised for the last 15 years by very weak growth. This has resulted in stagnation in household incomes and living standards, and constrained the growth of government revenues – with implications for investment in public services.
It makes sense therefore for the government to put the objective to raise economic growth at the centre of its strategy. But setting a 2.5% annual growth target, as the UK government has done, is much easier said than achieved.
The government’s decision to reverse the Health and Social Care Levy and cancel the planned Corporation Tax increases merely take policy back to where it has been in the recent past. It is a return to orthodoxy rather than a break from the norm, and in this sense it is difficult to see that it will make any difference to growth.
The substantial cuts to income tax do represent a bigger change to existing policy. But the hope that these will stimulate the economy is based more on blind faith than on any tangible evidence. There is no evidence internationally that countries with lower tax rates grow more quickly. Historically, UK growth rates were highest when tax rates were higher.
Whether today’s announcements unleash economic growth remains very much to be seen. Strikingly, what there was no mention of today was any plans for additional public sector investment. Despite the government’s rhetoric about reforming the ‘supply-side’ of the economy, there was little mention of the role that the skills and health of the population play in influencing the capacity of the economy to grow.
Whilst the government seems comfortable borrowing an additional £30bn or so a year to fund the tax cuts announced today, and is apparently relaxed about an over-growing burden of national debt, the path set out today will constrain the government’s room for manoeuvre on investment in public services in coming years.
At a time when parts of the public sector are struggling to deal with the legacy of the pandemic and other longstanding challenges, the implied prioritisation of tax cuts over public services investment will prove highly contentious, particularly given the regressivity of the cuts.
Households in the top 10% of the income distribution in Scotland will be better off by around £24 per week on average as a result of the cancellation of the Health and Social Care Levy, whereas those in the middle of the distribution will be only £4 per week.
The hope that the policies announced on Friday will boost growth and hence revenues despite cuts in tax rates is a big gamble with long odds.
The City of Edinburgh Council is to write to the Scottish and UK Governments to request emergency and long-term funding to address the scale of Edinburgh’s housing pressures.
It follows a decision taken by the Council this week (Thursday 22 September) to consider freezing tenants’ rents for a third year in a row, in response to the cost of living crisis. The Council Leader will also write to the Scottish Government requesting that the rent freeze across private and social rented homes is maintained until rent controls are in place in Edinburgh.
Moving the motion, the Housing, Homelessness and Fair Work Convener Councillor Jane Meagher described the option of another rent freeze as “a humane response to a massive debt crisis where people are facing the toughest financial squeeze of their lifetimes.”
Instead of a rent consultation, the Council will invite tenants to share views on the financial challenges they are facing in relation to the cost of living crisis – including rent, food, energy and insulation – which will involve tenants’ representatives and inform the work of the Edinburgh Partnership and Poverty Commission.
Officers have also been asked to bring a report to a meeting of the Housing Homelessness and Fair Work Committee on the implications of a rent freeze for council tenants in 2023/24, the subsequent impact of this freeze on the Housing Revenue Account over the next three years, with a detailed financial strategy.
Cllr Meagher said: “We are all in the grip of a cost of living crisis but it is our most vulnerable residents who are on the frontline. Elderly people, those with young families, residents who are ill – many tenants are already facing extreme financial hardship and are struggling at supermarket tills and with their energy bills.
“We shouldn’t need to add the unbearable burden of a rent rise to that, and we must provide a level of continuity in these uncertain times. It is a difficult decision to take, however, because the money paid by tenants in their rents pays for our Housing Service and enables us to borrow money to improve Council homes and build new affordable housing.
“With construction costs also rising – and without additional support from government – keeping rents the same will without a doubt make our newbuild programme very challenging.
“I’d like to thank Living Rents for joining our Council meeting to highlight the challenges which lie before us. Council Leader Cammy Day will now detail the scale of Edinburgh’s housing crisis to government, requesting both emergency and long-term funding to allow us to purchase and build more homes for social rent.”
OPFS releases new research report based on survey of 260 single parents
Feedback from 260 single parents highlights their experiences and priorities, which includes cost of living, family finances, social security, childcare, employment, access to education, mental health and wellbeing, and the ongoing impact of Covid-19.
Findings showed:
78% of single parents are in work and the same percentage of single parents receive a social security benefit.
Almost all (97.9%) of participants said they felt the impact of rising costs.
Three in five (61.1%) of participants said they are finding it either extremely difficult to afford or could no longer afford electricity, while 58.1% said the same about gas, and 43.7% said the same about food.
More than one in five participants said they can no longer afford to buy clothes (21.2%), pay for travel (22.3%) or childcare (21.2%) at all.
Most participants in the research were women, which is in keeping with the national statistic that 92% of single parent households are headed by women.
The findings of the research and the proposals for policy change suggested by single parents themselves have been used to produce a series of recommendations.
OPFS is calling on the Scottish Government to:
Increase support to families with young parents who are the poorest in Scotland through a top-up to the Scottish Child Payment.
Double the planned “bridging payments” for families with children in receipt of free school meals from £130 to £260.
Uprate Scotland’s 8 social security payments by the rate of inflation – 10% in August 22 and predicted by the Bank of England to hit 13.3% in October.
Widen eligibility for school clothing grants and free school meals to all families on Universal Credit by legislating to remove all income thresholds.
Increase the value and widen eligibility to the new Scottish Carer’s Assistance payment so it reaches many more Carers.
Raise increased finances through devolved taxes. Since 2017, the Scottish Parliament has had the ability to set income tax rates and bands, apart from the personal allowance. We also support IPPR’s call for radical reform of council tax to make it fairer and to raise extra finance for public services.
OPFS says the UK Government should:
Introduce progressive tax measures to reduce inequality.
Tackle the immediate cost-of-living crisis for low-income families with emergency interventions.
Introduce single parents’ rights and protection from discrimination into law.
Invest in a social security system that prevents child poverty, treating single parent families with dignity and respect.
Make childcare work for single parents by enhancing support for childcare costs through Universal Credit.
Support single parents into well paid, family friendly employment.
Make the Child Maintenance Service (CMS) fairer and fit for purpose.
Satwat Rehman, OPFS CEO said:“Living without a lifeline is exactly what so many single parents who took part in our research and who reach out to our services every day say they are doing, which is why we chose this as the title for our report.
“Women who are single parents have been particularly hard hit by the economic storm that has engulfed us and, with women’s poverty being inextricably linked to child poverty, we are living amid a rising tide of family hardship.
“Single parents described the day-to-day struggle to afford food and fuel, and the need to make sacrifices to ensure that children’s basic needs were met. In some cases, mothers go without food and struggle to pay essential bills. Isolation, anxiety, depression, and suicidal thoughts were described.
“The parents responding have also forcefully described the policy areas which must be prioritised by government to tackle poverty and support family wellbeing and the priority areas where we at OPFS need to focus our energies. Over the coming year, these priorities will be our priorities.”
One key theme raised by participants was the difficulty in meeting the demands to pay for uniforms, school trips, and the many other requirements for daily school life. While costs are rising across the board, support for families in these areas is not increasing, leading to an even greater drain on household budgets.
A single mum who took part in the research said: “There is always something extra to pay for – sponsored events, book fairs, craft fairs, Christmas fairs, Halloween costume, Red Nose Day, Christmas jumper, wear a certain colour for sports day, world book day costume, etc …
“Parental events are held either during working hours or in the evening so I feel excluded as I can’t afford a babysitter- shame online events aren’t continuing.”
The research also found that single parents were struggling to afford to pay for essentials regardless of whether they were in paid work and that support through social security did not go far enough.
One single parent commented:“I just feel that I’m totally on my own financially. We can’t claim free school meals or any grants because I’m not on benefits (except Child Benefit).
“Outgoings are increasing, I am as frugal as I can be, my pay was frozen for 3 years and now I have a 2% cost of living increase, better than nothing! Children’s father has not contributed a penny for years now.
“Feel forgotten about. I cut my own hair, I skip meals, I scrimp on heating etc so I can pay the mortgage etc. There is no support for us from anyone.”
Some single parents contributing to the research shared their experiences of living with unmanageable levels of debt, often as a result of losing their job, illness or economic abuse following a relationship breakdown and not having savings to act as a buffer.
One single mum said: ““Father used to pay maintenance when he felt like it, but now has a limited company to avoid declaring his actual income.
“I can’t afford anything and feel like I’m stuck in debt forever. Utilities went from £90 to £160 and is only going to rise.”
The Chancellor today (Friday 23 September) unveiled his Growth Plan to release the huge potential in the British economy by tackling high energy costs and inflation and delivering higher productivity and wages.
Chancellor unveils new growth plan, tackling energy costs to bring down inflation, backing business and helping households.
Corporation tax rise cancelled, keeping it at 19% as government sets sights on 2.5% trend rate of growth.
Basic rate of income tax cut to 19% in April 2023 – one year earlier than planned – with 31 million people getting on average £170 more per year.
Stamp Duty cuts will help people on all levels of the property market and lift 200,000 homebuyers every year out of paying the tax altogether.
The plan set the ambitious target for 2.5% trend of growth, securing sustainable funding for public services and improving living standards for everyone.
The Chancellor of the Exchequer, Kwasi Kwarteng, said: “Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.
“This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.
“Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.
“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”
Scottish Secretary Alister Jack said: “The Chancellor has set out an ambitious package of measures which will cut taxes and drive growth right across the UK.
“A strong economy is the best way to tackle the cost of living challenges we are all facing due to Russia’s invasion of Ukraine.
“Our ‘Plan for Growth’ will support households and businesses in Scotland, while driving economic growth to deliver jobs, investment and prosperity.
“The UK Government is delivering for the people of Scotland when it really matters.”
Setting out the first steps towards growth, Kwasi Kwarteng revealed a package of major cuts to Stamp Duty Land Tax, with the changes expected to increase additional residential investment, boost spending on household goods and support the hundreds of thousands of jobs in the property industry from removals companies to decorators.
The nil rate band will be doubled from £125,000 to £250,000, meaning that 200,000 more people every year will be able to buy a home without paying any Stamp Duty at all. The standard buyer in England will save £2,5000, meaning a typical family moving into a semi-detached property will save £2,500 on stamp duty and £1,150 on energy bills – and if they have a combined income of £50,000 around an additional £560 on tax. This is around £4,200 in total.
And the Government is going even further to support first time buyers, who will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000. This tax cut took effect from midnight today (Friday 23 Sept 2022). The Chancellor also announced that he will further support homebuyers by increasing the disposal of surplus government land to build new homes, increasing supply.
The Chancellor also set out plans to tackle to the biggest drag on growth – the high cost of energy driven by Vladimir Putin’s invasion of Ukraine, which has driven up inflation. To tackle this the government’s Energy Price Guarantee will save the typical household £1,000 a year on their energy bill with the Energy Bill Relief Scheme halving the cost of business energy bills, reducing peak inflation by about 5 percentage points.
Also revealed today were major tax reforms to allow businesses to keep more of their own money, encouraging investment, boosting productivity and creating jobs. New measures include cancelling the planned rise in corporation tax, keeping it the lowest in the G20 at 19%, and reversing the 1.25 percentage point rise in National Insurance contributions, a change which will save 920,000 businesses almost £10,000 on average next year.
The Chancellor also announced more relief for businesses by making the Annual Investment Allowance £1 million permanently, rather than letting it return to £200,000 in March 2023. This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.
It was also confirmed that the government is in discussion with 38 local and mayoral combined authority areas in England including Tees Valley, South Yorkshire and West of England to set up Investment Zones in specific sites within their area.
Each Investment Zone will offer generous, targeted and time limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development. These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.
Revealing further tax reforms, Kwasi Kwarteng outlined sector specific support for pubs and hospitality, freezing alcohol duty for another year. Reforms to modernise alcohol duties will also be taken forward and the government will publish a consultation on these plans.
The new measures backing business come on top of the government’s Energy Bill Relief Scheme for businesses to cap costs per unit, which will protect them from soaring energy costs this winter by providing a discount on wholesale gas and electricity prices.
The Chancellor also reiterated the important principle of people keeping more of what they earn, incentivising work and enterprise. He announced a 1p cut to the basic rate of income tax one year earlier than planned.
From April 2023, the basic rate of income tax will be cut to 19% and will mean 31 million people will be better off by an average of £170 per year. Due to the combined impact of the reversal of the HSCL and the reduction of the Income Tax Basic Rate, someone working full time on the current National Living Wage will see a tax cut of over £100.
Alongside cutting the basic rate of income tax, the Chancellor also abolished the additional rate of tax, taking effect from April 2023. In its place will be a single higher rate of income tax of 40%. The policy removes the UK’s previous top rate tax, which was higher than countries like Norway, USA and Italy, and is designed to attract the best and the brightest to the UK workforce, helping businesses innovate and grow.
In a further move to grow the economy, the Chancellor announced plans to accelerate new roads, rail and energy infrastructure. In 2021 it took 65 per cent longer to get consent for major infrastructure projects than in 2012. New legislation will cut barriers and restrictions, making it quicker to plan and build new roads, speeding up the deployment of energy infrastructure like offshore wind farms and streamlining environmental assessments and regulations.
To further support businesses, the Chancellor announced new measures to unlock private investment. The Government will change regulations to increase investment by pension funds into UK assets, benefiting savers and boosting economic growth, and incentivising investment into Britain’s science and tech companies.
New measures were also announced to help people on low incomes secure more and better paid work. Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their benefits reduced.
This change is expected to bring an additional 120,000 people into the more intensive work search regime. Jobseekers over the age of 50 will also be given extra time with jobcentre work coaches, to help them return to the jobs market.
Rising economic inactivity in the over 50s is contributing to shortages in the jobs market, driving up inflation and limiting growth. Returning to pre-pandemic activity rates in the over 50s could boost the level of GDP by 0.5-1 percentage points.
The majority of announcements today are UK-wide, however the Scottish Government is expected to receive more than £600 million extra funding over the 2021 Spending Review period as a result of the changes to income tax and Stamp Duty Land Tax and the Welsh Government will receive around £70 million over the same period as a result of the change to Stamp Duty Land Tax.
The reversal of the Health and Social Care Levy will save 4.3 million people across Scotland, Wales and Northern Ireland more than £230 on average next year.
In the coming weeks, the Government will set out further details of plans to speed up digital infrastructure, reform business regulation, increase housing supply, improve our immigration system, make childcare cheaper, improve farming productivity and back our financial services.
The business community has welcomed the Chancellor’s announcement.
Martin McTague, National Chair of the Federation of Small Businesses said:“The Truss Government is off to a flying start. The Chancellor has delivered pro-small business measures today and has rightly recognised that removing taxes on jobs, investment and entrepreneurs is essential for our economy.
“Ministers need to be relentless in removing barriers to small business success – especially with the current headwinds. The Government has today signalled its determination to back small firms and we look forward to working with Ministers and departments to put in place measures to help small businesses grow and succeed.”
Amanda Tickel, Head of Tax and Trade Policy, Deloitte said:“This Budget will undoubtedly attract international attention.
“With the UK now retaining the lowest corporate profits tax rate in the G20, a maximum income tax rate of 40%, and extra incentives available in investment zones, the UK is on a stronger footing to compete for international investment.
Emma Jones CBE, Founder, Enterprise Nation said:“It’s bold, it’s agile and it’s speedy. Economists will be arguing for months to come, but small businesses will be waiting for the impact of this budget trickling down into their sales tonight.
“The new administration clearly set out its stall today and that it is firmly on the side of entrepreneurs and wealth creators. The tax cuts, both business and personal, will deliver confidence and unleash the entrepreneurial spirit that we know exists across the UK and to which the Chancellor referred so often.
“The UK’s small businesses have wanted growth acceleration but have had to be content with stagnation because of barriers to growth such as access to finance, business rates and employment complexity.
“The extension of EIS and SEIS and the pension charge cap reforms will be welcomed with open arms by the small business community, and we expect more start-ups to follow with an emphasis on supporting those who are 50+ to move from unemployment into self-employment. Thanks to the removal of IR35, many experienced individuals that left the employment market will now return.
“Our view for more than a decade has been that one of the most important things a government can do is to champion entrepreneurs and this morning’s statement and announcements most seriously deliver on that.”
Kate Nicholls, CEO of UKHospitality said: “The stated objectives of boosting growth and tackling inflation are a positive statement of intent to rightly put business at the heart of the Government’s agenda.
“We support the ambition for a globally competitive tax regime, to unleash entrepreneurship, growth and investment, and we look forward to working with the Chancellor to deliver that.
“Energy support and NIC measures will allow our businesses to better plan for a tough winter ahead. Today’s announcement included many positive measures that will bear fruit in due course, and we look forward to continuing to work closely with the Government on our immediate challenges.”
Tony Danker, CBI Director-General, said:“This is a turning point for our economy. Like Covid, the energy crisis has meant Government has had to spend massively to protect people and businesses. That means we have no choice but to go for growth to afford it.
“Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK. Fifteen years of anaemic growth cannot be repeated.
“Taking action to get Britain’s economy moving again by beginning construction on transport and green infrastructure projects shows immediate delivery. Planning reform is long overdue.
“A simpler, smarter approach to tax can pay dividends, and firms will be keen to make the most of the investment incentives on offer.
“It’s not perfect – it’s just the beginning – but there’s plenty business can work with. The Chancellor signalled more proposals to come this Autumn and these will be vital to sustain momentum on growth.”
Michelle Ovens CBE, Founder, Small Business Britain said:“The focus on entrepreneurship in today’s Growth Plan statement is good news for small businesses, and a hugely encouraging step towards supporting this key part of the economy in a tough financial climate.
“The energy plan already announced, cutting prices for small businesses and addressing some of the astronomical rises we have seen this summer, will give businesses some reassurance over the winter months, even if there are still questions over the long term plans.
“There is no doubt that rolling back national insurance rises, IR35 regulations and the planned corporation tax rise next year will be welcomed by small businesses and the business community more widely. In the medium to long term, this will support and encourage entrepreneurial growth, which is very welcome.
“However there remain serious challenges in the short term as entrepreneurs battle with rising costs across all areas of the business, not just in energy and tax. Finance, input prices, export and staffing all remain challenging and we continue to see businesses failing at a high rate with little to fall back on after a very difficult few years.
“More will need to be done at all levels of society and government to ensure the 5.6 million small businesses in the UK can weather this winter and make the most of the supportive policies announced today.
“The direction of travel is absolutely right for small businesses. This now needs to be delivered by us all.”
Nicolas Burquier, Managing Director of Pizza Hut Europe said:“It’s great to see Government has acknowledged and is acting on the significant pressures facing the UK hospitality sector as a result of the rise in global inflation.
“Combined with the recently announced support on energy bills, the tax changes and Investment Zones unveiled today, all will offer some respite for many hard-pressed restaurants and takeaway owners like our franchisees.
“We look forward to continuing to work with the Government to ensure that hospitality receives the sustained support it requires as the sector looks to recover from current setbacks.”
Dr Liz Cameron CBE, Director & Chief Executive, Scottish Chambers of Commerce said:“The Chancellor’s commitment to pro-growth and pro-enterprise policies will be eagerly welcomed by businesses. The specifics on reducing business costs, cutting red tape and boosting infrastructure development are exactly the levers the UK Government should be pulling to support economic growth.
“The plans for Investment Zones strike an ambitious tone but these plans must provide equitable benefits to the UK nations ensuring new economic activity is generated, not simply displaced from one location to another. Similarly, fixing the complex and burdensome planning system must be a joint priority for both the Scottish and UK Government if we are to attract investors.
“As we look ahead to the Scottish Government’s emergency budget, businesses and households now play the waiting game to see if the Scottish Government opts to take similar moves. With control of powers such as income tax and land & buildings transaction tax devolved to Scotland, the expectation will be for Scottish Government to deliver parity with the rest of the UK. Divergence between the nations risks dampening business and investor confidence.
“The string of policy announcements from the Chancellor signal a bold start. As firms continue to navigate unprecedented challenges in the economy, consistent collaboration and partnership will be essential between both governments and the business community if we are to move from survival to growth.”
Stephen Phipson, Chief Executive, Make UK said:“The Chancellor has clearly recognised that we are heading for very stormy waters in the face of eyewatering increases in energy and other costs, together with a difficult international environment.
“Industry will welcome today’s statement which, coming on the back of the support for energy, contains a number of positive measures to help shield viable companies from the worst impact of escalating costs and help protect jobs. The focus on prioritising growth with plans to speed up planning reforms, boost infrastructure and investment is especially welcome.
“However, this is the sixth growth plan in little over a decade which has seen ever increasing political uncertainty. This has resulted in zero certainty for business, the most important thing it needs. Government must try and reverse this process by working with industry to develop a long-term economic strategy together with a National Manufacturing Plan.
“At its heart must be a properly designed tax system and a certainty of policy that aims to transform the low level of business investment, develops the workforce of the future and equips people with the digital skills they will need in the new industries and technologies which are rapidly emerging.
“Given the tools and, the right economic environment, industry can help itself and, at the same time, help the Government meet its growth target. Now is the time to end to put in place the right building blocks for the long-term.”
Emma McClarkin, Chief Executive of the British Beer and Pub Association, said:“We welcome the steps taken by the Government in the Chancellor’s fiscal statement. The measures announced today will mean a boost of £500m for our sector, enabling growth following successive crises and allowing us to thrive in the future.
“Coupled with this week’s intervention on energy bills, these commitments will make a significant difference to our pubs and brewers at an acutely difficult time.
“The Chancellor’s plans show that the Government recognises how extreme the cost of doing business has become and the enormous investment our sector makes, not only in the economy, but to the social fabric of communities across the breadth of the UK and why it must be protected. We look forward to the continued reduction of taxation on the sector at the next Budget – the need for a reduced VAT rate for hospitality and business rates reliefs remain as strong as ever.
“We will continue to work with the Government to ensure that reforms to the draft beer duty rates are brought forward as soon as possible, meaning that our pubs and brewers can contribute to, and be at the heart of villages, towns and cities for many years to come.”
Shevaun Havilland, Director General of the British Chambers of Commerce said:“Businesses will welcome many of the measures announced today that should boost economic growth, relieve cost pressures and encourage investment.
“The announcement to reverse the increase to National Insurance Contributions (NIC) is a big win for the British Chambers of Commerce and the business community. This is much needed support for companies during these difficult times.
“Firms will also be glad to see the Annual Investment Allowance made permanent. It is a crucial tool which gives them the confidence to push ahead with investment, and will add greater certainty to their plans, now we know it is guaranteed to remain.
“Business wants to create the wealth that funds Government spending, and plans for Investment Zones, and steps to encourage new funding in our growth industries have the potential to do just that.
“Investment Zones could also finally deliver on the Government’s long-standing promise to level up, if the scheme is truly UK-wide. But lessons must be learned from the past, otherwise they can simply displace growth and investment from one area to another without creating new economic activity.
“This is a bold start, and we now await further detail on the further reforms the Treasury announced, to see if this will develop into a comprehensive long-term economic strategy.
“All eyes will also now turn to the forecasts by the Office of Budget Responsibility in the autumn for reassurance on public finances.”
TUC: ‘ROBIN HOOD IN REVERSE’
Union body attacks Liz Truss for holding down wages while lining bankers’ pockets – “The party of pay cuts strikes again.”
Fresh attack on right to strike is “designed to hold down pay”
Responding to today’s ‘mini budget’, which announced tax cuts for corporations and the wealthy, but no help to get wages rising in the current cost of living crisis, TUC General Secretary Frances O’Grady said: “This budget is Robin Hood in reverse.
“We should be rewarding work, not wealth. But at the first opportunity, Liz Truss is holding down wages and lining the pockets of big corporations and City bankers. The party of pay cuts strikes again.
“We need a very different plan in the full autumn budget to do right by workers. The Chancellor should boost the minimum wage, universal credit and pensions before winter sets in.
“He should fund pay rises in the public sector that keep up with prices. And ministers should extend collective pay bargaining rights across the economy so that whatever your job, you can negotiate a fair pay rise.”
On restrictions on the right to strike, she added:“Nobody takes the decision to strike lightly. But the right to strike to defend pay and conditions is a fundamental British freedom.
“And it’s the last line of defence against employers who refuse to negotiate fair pay. These new restrictions are unworkable, very likely illegal and designed to hold down pay across the economy.”
On support with energy costs and the government’s rejection of calls for a higher windfall tax, she added:“Ministers are letting oil and gas giants use Britain like a cash machine with no withdrawal limit.
“We need a much higher windfall tax on greedy energy companies to protect families from profiteering. That could fund free home improvements so that families don’t lose money by leaking heat from their homes.”
The TUC’s submission to the Treasury in advance of today’s mini budget called for the following actions:
Bring forward inflation proof increases in the minimum wage, universal credit and pensions to October to help families through the cost-of-living emergency.
Get the minimum wage on a path to £15 an hour as soon as possible.
Give public service staff a real-terms pay rise that at least matches the rising cost of living and begins to restore earnings lost over the last decade.
Strengthen and extend collective bargaining across the economy, including introducing fair pay agreements to set minimum pay across whole sectors.
Impose a larger windfall tax on oil and gas companies that that are profiteering from UK families.
Make sure everyone pays their fair share of taxes by going ahead with increases in corporate tax, and equalising capital gains tax rates with income tax as a first step to fair taxes on wealth.
Chancellor’s measures fail to target support
Deputy First Minister says statement is ‘cold comfort for many’
The Chancellor’s fiscal statement and package of announcements targets the most wealthy, shifting further pressure onto the shoulders of those on the lowest incomes, Deputy First Minister John Swinney has said.
Reacting to the statement, Mr Swinney expressed his disappointment that while many households across Scotland are already struggling to pay their bills and heat their homes, the measures offer tax cuts for corporations and bankers.
The Deputy First Minister said: “The Chancellor’s statement today will provide cold comfort to the millions of people across Scotland who have been looking for the UK Government to use its reserved powers to provide support for those that need it most. Instead we get tax cuts for the rich and little for those who need it most.
“We estimate that the increase in the price cap to £2,500 will force an estimated 150,000 more Scottish households into extreme fuel poverty. Instead of offering these people support, the Chancellor is threatening to cut their family budgets further, with a new regime of benefit sanctions.
“On Land and Buildings Transaction Tax and on Scottish income tax, the Scottish Government will set out its plans as part of the normal budget process. We will discuss the proposed investment zones with the UK Government but we are clear they have to be the right fit for Scotland.
“Because of inflation, the Scottish Government’s budget is worth £1.7 billion less than it was when we set it in December, yet the Chancellor has refused to provide a single additional penny for public services or increase public sector pay.
“We are doing everything within our power to support people, public services and the economy, but these efforts are under threat by a reckless UK Government beginning a new, and dangerous race to the bottom. With a fixed Budget and no scope to borrow for short term challenges, Scotland is at the mercy of UK decisions. This reinforces the urgent need for independence.”
Factsheets on each of the major measures can be found here:
The Growth Plan speech delivered by Chancellor Kwasi Kwarteng:
Mr Speaker,
Let me start directly with the issue most worrying the British people – the cost of energy.
People will have seen the horrors of Putin’s illegal invasion of Ukraine.
They will have heard reports that their already-expensive energy bills could reach as high as £6,500 next year.
Mr Speaker, we were never going to let this happen.
The Prime Minister has acted with great speed to announce one of the most significant interventions the British state has ever made.
People need to know that help is coming.
And help is indeed coming.
We are taking three steps to support families and businesses with the cost of energy.
Firstly, to help households, the Energy Price Guarantee will limit the unit price that consumers pay for electricity and gas.
This means that for the next two years, the typical annual household bill will be £2,500.
For a typical household, that is a saving of at least £1,000 a year, based on current prices.
We are continuing our existing plans to give all households £400 off bills this winter.
So taken together, Mr Speaker, we are cutting everyone’s energy bills by an expected £1,400 this year.
And millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.
Secondly, as well as helping people, we need to support the businesses who employ them.
The Energy Bill Relief Scheme will reduce wholesale gas and electricity prices for all UK businesses, charities, and the public sector like schools and hospitals.
This will provide a price guarantee equivalent to the one provided for households, for all businesses across the country.
Thirdly, energy prices are extremely volatile, erratically rising and falling every hour.
This creates real risks to energy firms who are otherwise viable businesses.
Those firms help supply the essential energy needed by households and businesses.
So to support the market, we are announcing the Energy Markets Financing Scheme.
Delivered with the Bank of England, this scheme will provide a 100% guarantee for commercial banks to offer emergency liquidity to energy traders.
Mr Speaker,
The consensus amongst independent forecasters is that the Government’s energy plan will reduce peak inflation by around 5 percentage points.
It will reduce the cost of servicing index-linked government debt and lower wider cost of living pressures.
And it will help millions of people and businesses right across the country with the cost of energy.
Let no one doubt: during the worst energy crisis in generations, this Government is on the side of the British people.
The Bank of England are taking further steps to control inflation, acting again only yesterday.
I can assure the House, this Government considers the Bank of England’s independence to be sacrosanct.
And we remain closely coordinated, with the Governor and myself speaking twice a week.
But Mr Speaker,
High energy costs are not the only challenge confronting this country.
Growth is not as high as it should be.
This has made it harder to pay for public services, requiring taxes to rise.
In turn, higher taxes on capital and labour have lowered returns on investment and work, reducing economic incentives and hampering growth still further.
This cycle has led to the tax burden being forecast to reach the highest levels since the late 1940s – before even Her Late Majesty acceded to the throne.
We are determined to break that cycle.
We need a new approach for a new era, focused on growth.
Our aim, over the medium term, is to reach a trend rate of growth of 2.5%.
And our plan is to expand the supply side of the economy through tax incentives and reform.
That is how we will deliver higher wages, greater opportunities, and crucially, fund public services, now and into the future.
That is how we will compete successfully with dynamic economies around the world.
That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.
So as a Government, we will focus on growth – even where that means taking difficult decisions.
None of this is going to happen overnight. But today we are publishing our Growth Plan that sets out a new approach for this new era, built around three central priorities:
Reforming the supply-side of the economy.
Maintaining responsible approach to public finances
And cutting taxes to boost growth.
Mr Speaker,
The UK has the second-lowest debt to GDP ratio of any G7 country.
In due course, we will publish a Medium-Term Fiscal Plan, setting out our responsible fiscal approach more fully.
Including how we plan to reduce debt as a percentage of GDP over the medium term.
And the OBR will publish a full economic and fiscal forecast before the end of the year, with a second to follow in the new year.
Fiscal responsibility remains essential for economic confidence, and it is a path we remain committed to.
Today we are publishing costings of all the measures the Government has taken.
And those costings will be incorporated into the OBR’s forecast in the usual way.
The House should note that the estimated costs of our energy plans are particularly uncertain, given volatile energy prices.
But based on recent prices, the total cost of the energy package, for the six months from October, is expected to be around £60bn.
We expect the cost to come down as we negotiate new, long term energy contracts with suppliers.
And, in the context of a global energy crisis, it is entirely appropriate for the government to use our borrowing powers to fund temporary measures in order to support families and businesses.
That’s what we did during the Covid-19 pandemic.
A sizeable intervention was right then…and it is right now.
The heavy price of inaction would have been far greater than the cost of these schemes.
Mr Speaker,
We are at the beginning of a new era.
As we contemplate this new era, we recognise that there is huge potential in our country.
We have unbounded entrepreneurial drive.
We have highly skilled people.
We have immense global presence in sectors like finance, life sciences, technology, and clean energy.
But Mr Speaker, there are too many barriers for enterprise. We need a new approach to break them down. That means reforming the supply side of our economy.
Over the coming weeks, my Cabinet colleagues will update the House on every aspect of our ambitious agenda.
Those updates will cover: the planning system, business regulations, childcare, immigration, agricultural productivity, and digital infrastructure.
And Mr Speaker, we start this work today.
An essential foundation of growth is infrastructure.
The roads, railways, and networks that carry people, goods, and information all over our country.
Today, our planning system for major infrastructure is too slow and fragmented.
The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead.
We have to end this.
We can announce that in the coming months, we will bring forward a new Bill to unpick the complex patchwork of planning restrictions and EU-derived laws that constrain our growth.
We will streamline a whole host of assessments, appraisals, consultations, endless duplications, and regulations.
We will also review the government’s business case process to speed up decision making.
And today, we are publishing a list of infrastructure projects that will be prioritised for acceleration, in sectors like transport, energy, and telecoms.
And, to increase housing supply and enable forthcoming planning reforms, we will also increase the disposal of surplus government land to build new homes.
Mr Speaker, we are getting out of the way to get Britain building.
Mr Speaker,
One of the proudest achievements of our government is that unemployment is at the lowest level for nearly fifty years.
But with more vacancies than unemployed people to fill them, we need to encourage people to join the labour market.
We will make work pay by reducing people’s benefits if they don’t fulfil their job search commitments.
We’ll provide extra support for unemployed over-50s.
And we’ll ask around 120,000 more people on Universal Credit to take active steps to seek more and better paid work, or face having their benefits reduced.
And, Mr Speaker,
At such a critical time for our economy, it is simply unacceptable that strike action is disrupting so many lives.
Other European countries have Minimum Service Levels to stop militant trade unions closing down transport networks during strikes.
So we will do the same.
And we will go further.
We will legislate to require unions to put pay offers to a member vote, to ensure strikes can only be called once negotiations have genuinely broken down.
Of course, Mr Speaker, to drive growth, we need new sources of capital investment.
To this end, I can announce that we will accelerate reforms to the pension charge cap so that it will no longer apply to well-designed performance fees.
This will unlock pension fund investment into UK assets and innovative, high growth businesses.
It will benefit savers and increase growth.
And, we will provide up to £500 million to support new innovative funds and attract billions of additional pounds into UK science and technology scale-ups.
And Mr Speaker, this brings me to the cap on bankers’ bonuses.
A strong UK economy has always depended on a strong financial services sector.
We need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York.
All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe.
It never capped total remuneration, so let’s not sit here and pretend otherwise.
So we’re going to get rid of it.
And to reaffirm the UK’s status as the world’s financial services centre, I will set out an ambitious package of regulatory reforms later in the Autumn.
But Mr Speaker,
To support growth right across the country, we need to go further, with targeted action in local areas.
So today, I can announce the creation of new investment zones.
We will liberalise planning rules in specified agreed sites, releasing land and accelerating development.
And we will cut taxes.
For businesses in designated tax sites, for ten years, there will be:
Accelerated tax reliefs for structures and buildings.
And 100% tax relief on qualifying investments in plant and machinery.
On purchases of land and buildings for commercial or new residential development, there will be no stamp duty to pay whatsoever.
On newly occupied business premises, there will be no business rates to pay whatsoever.
And if a business hires a new employee in the tax site, then on the first £50,000 they earn…
…the employer will pay no National Insurance whatsoever.
That is an unprecedented set of tax incentives for business to invest, to build, and to create jobs right across the country.
I can confirm for the House that we’re in early discussions with nearly 40 places like Tees Valley, the West Midlands, Norfolk and the West of England to establish Investment Zones.
And we’ll work with the devolved administrations and local partners to make sure Scotland, Wales and Northern Ireland will also benefit, if they are willing to do so.
If we really want to level up, Mr Speaker – we have to unleash the power of the private sector.
And now, Mr Speaker, we come to tax – central to solving the riddle of growth.
The tax system is not simply about raising revenue for public services, vitally important though that is. Tax determines the incentives across our whole economy.
And we believe that high taxes reduce incentives to work, they deter investment and they hinder enterprise.
As the Prime Minister has said, we will review the tax system to make it simpler, more dynamic, and fairer for families.
And we are taking that first step today.
Mr Speaker,
The interests of businesses are not separate from the interest of individuals and families.
In fact, it is businesses that employ most people in this country.
It is businesses that invest in the products and services we rely on.
Every additional tax on business is ultimately passed through to families through higher prices, lower pay, or lower returns on savings.
So I can therefore confirm that next year’s planned increase in Corporation Tax will be cancelled.
The UK’s corporate tax rate will not rise to 25% – it will remain at 19%.
We will have the lowest rate of Corporation Tax in the G20.
This will plough almost £19bn a year back into the economy.
That’s £19bn for businesses to reinvest, create jobs, raise wages, or pay the dividends that support our pensions.
I’ve already taken steps elsewhere in this statement to support financial services, so the Bank Surcharge will remain at 8%.
But, Mr Speaker, we will do more to encourage private investment.
The Annual Investment Allowance, which gives 100% tax relief on investments in plant and machinery, will not fall to £200,000 as planned…
It will remain at £1m.
And it will do so permanently.
Our duty is to make the UK one of the most competitive economies in the world – and we are delivering.
And Mr Speaker,
We want this country to be an entrepreneurial, share-owning democracy.
The Enterprise Investment Scheme. The Venture Capital Trusts. We will extend them beyond 2025.
The Seed Enterprise Investment Scheme. Company Share Option Plans. We will increase the limits to make them more generous.
Crucial steps on the road to making this a nation of entrepreneurs.
Mr Speaker,
For the tax system to favour growth, it needs to be much simpler.
I’m hugely grateful to the Office of Tax Simplification for everything they have achieved since 2010.
But instead of a single arms-length body which is separate from the Treasury and HMRC, we need to embed tax simplification into the heart of Government.
That is why I have decided to wind down the Office of Tax Simplification, and mandated every one of my tax officials to focus on simplifying our tax code.
To achieve a simpler system, I will start by removing unnecessary costs for business.
Firstly, we will automatically sunset EU regulations by December 2023, requiring departments to review, replace or repeal retained EU law.
This will reduce burdens on business, improve growth, and restore the primacy of UK legislation.
Mr Speaker, we can also simplify the IR35 rules – and we will.
In practice, reforms to off-payroll working have added unnecessary complexity and cost for many businesses.
So, as promised by My RHF the Prime Minister, we will repeal the 2017 and 2021 reforms.
Of course, we will continue to keep compliance closely under review.
Mr Speaker,
Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centres, to feel the economic benefit.
So we have decided to introduce VAT-free shopping for overseas visitors.
We will replace the old paper-based system with a modern, digital one.
And this will be in place as soon as possible.
This is a priority for our great British retailers – so it is our priority, too.
Our drive to modernise also extends to alcohol duties.
I have listened to industry concerns about the ongoing reforms.
I will therefore introduce an 18-month transitional measure for wine duty.
I will also extend draught relief to cover smaller kegs of 20 litres and above, to help smaller breweries.
And, at this difficult time, we are not going to let alcohol duty rates rise in line with RPI.
So I can announce that the planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled.
Now, Mr Speaker, we come to the question of personal taxation.
It is an important principle that people should keep more of the money they earn. And it is good policy to boost the incentives for work and enterprise.
Yesterday, we introduced a Bill that means the Health and Social Care Levy will not begin next year… it will be cancelled.
The increase in Employer National Insurance Contributions and dividends tax… will be cancelled.
And the interim increase in the National Insurance rate, brought in for this tax year…will be cancelled.
And this cut will take effect from the earliest possible moment, November 6th.
Reversing the Levy delivers a tax cut for 28 million people, worth, on average, £330 every year;
A tax cut for nearly a million businesses;
And I can confirm: the additional funding for the NHS and social care services will be maintained at the same level.
Mr Speaker,
I have another measure.
Today’s statement is about growth.
Home ownership is the most common route for people to own an asset, giving them a stake in the success of our economy and society.
So to support growth, increase confidence, and help families aspiring to own their own home, I can announce that we are cutting stamp duty.
In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value.
We are doubling that – to £250,000.
First time buyers currently pay no stamp duty on the first £300,000.
We’re increasing that threshold as well, to £425,000.
And we’re going to increase the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.
The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether.
This is a permanent cut to stamp duty, effective from today.
And Mr Speaker,
I have another measure.
High tax rates damage Britain’s competitiveness.
They reduce the incentive to work, invest, and start a business.
And the higher the tax, the more ways people seek to avoid them, or work elsewhere or simply work less…
…rather than putting their time and effort to more creative and productive ends.
Take the additional rate of income tax.
At 45%, it is currently higher than the headline top rate in G7 countries like the US and Italy.
And it is higher even than social democracies like Norway.
But I’m not going to cut the additional rate of tax today, Mr Speaker.
I’m going to abolish it altogether.
From April 2023, we will have a single higher rate of income tax of 40 per cent.
This will simplify the tax system and make Britain more competitive.
It will reward enterprise and work.
It will incentivise growth.
It will benefit the whole economy and whole country.
And, Mr Speaker, after all, this only returns us to the same top rate we had for 20 years.
And that’s not all.
I can announce today that we will cut the basic rate of income tax to 19p in April 2023 – one year early.
That means a tax cut for over 31 million people in just a few months’ time.
This means we will have one of the most competitive and pro-growth income tax systems in the world.
Mr Speaker,
For too long in this country, we have indulged in a fight over redistribution.
Now, we need to focus on growth, not just how we tax and spend.
We won’t apologise for managing the economy in a way that increases prosperity and living standards.
Our entire focus is on making Britain more globally competitive – not losing out to our competitors abroad.
The Prime Minister promised that this would be a tax-cutting government.
Today, we have cut stamp duty.
We have allowed businesses to keep more of their own money to invest, to innovate, and to grow.
We have cut income tax and national insurance for millions of workers.
And we are securing our place in a fiercely competitive global economy…
…with lower rates of corporation tax…
…and lower rates of personal tax.
We promised to prioritise growth.
We promised a new approach for a new era.
We promised, Mr Speaker, to release the enormous potential of this country.
Our Growth Plan has delivered all those promises and more.
Dogs Trust warns many families are in danger of losing their dogs to the financial crisis this winter
43% of dog owners in Scotland think it is now more difficult to give their dog all they need, compared to before the cost of living crisis began.
As new Chancellor Kwasi Kwarteng’s mini-budget looms, the UK’s leading dog welfare charity, which has a rehoming centre in Glasgow and West Calder, has warned that it is receiving unprecedented numbers of enquiries from desperate dog owners who feel they’ve run out of options.
Record numbers
In recent months, the charity has received a record number of calls from people asking it to take in their dogs. August surpassed its previous record for the most enquiries in a single month, with almost 5,000 (4,993) owners enquiring about its handover service – a 14% increase on July this year, and a 26% increase from August 2021.
September YouGov poll
The number of people looking to give up their dogs is placed in context by Dogs Trust’s September poll of the UK’s dog owners, run by YouGov. This month’s poll shows that 43% of respondents in Scotland thought they would find it more difficult to give their dog all they needed, compared to before the cost of living crisis began.
Vet bills continued to cause the most worry; 52% of dog owners in Scotland said vet bills were currently their biggest financial canine concern for the coming year. 23% of respondents were most worried about the cost of dog food, while 10% named insurance as their lead worry.
Meanwhile, when non-dog owners were asked, as part of the September poll, whether the rising cost of living would prevent them from adopting or buying a dog, more than 6 out of ten (65%) said it would.
Owen Sharp, Dogs Trust CEO, says: “Dogs Trust has been receiving a shocking and unprecedented number of calls from dog owners asking us to take in their dogs because they feel they won’t be able to see them through this crisis.
“Over the last month, we received on average 17 handover calls an hour from desperate owners feeling they’ve run out of options.
“Combine this with the fact that 65% of people in Scotland told us, in our new cost of living poll, that they wouldn’t be prepared to take on a dog right now, and it’s clear to see we’re about to have a serious animal welfare issue on our hands.”
How you can help
As the nation faces its worst financial crisis in decades, Dogs Trust is urgently seeking help for the dogs who will feel the impact. The charity is calling out, in particular, to people with space in their homes and hearts for dogs that are more difficult to find forever homes for, such as big dogs, un-housetrained dogs, and dogs with challenging behaviour.
Support for households, businesses and public sector organisations facing rising energy bills has been unveiled
New government scheme will see energy prices for non-domestic energy customers such as businesses, charities and public sector organisations cut – protecting them from rising energy costs
government work with suppliers will reduce wholesale energy costs – and the significant rises in bills that businesses have seen
this support is in addition to the Energy Price Guarantee for households, with further measures today to strengthen support for families across the United Kingdom, including those in rentals or park homes
New support for households, businesses and public sector organisations facing rising energy bills in Great Britain and Northern Ireland has been unveiled by Business Secretary Jacob Rees-Mogg today (Wednesday 21 September) – supporting growth, preventing unnecessary insolvencies and protecting jobs.
Through a new government Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.
It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial 6 month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.
As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to bills.
To administer support, the government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity.
This is equivalent to the wholesale element of the Energy Price Guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.
The level of price reduction for each business will vary depending on their contract type and circumstances:
non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1 October will receive support on the same basis
those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases. This is why the government is working with suppliers to ensure all their customers in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the government’s Energy Bill Relief Scheme support
for businesses on flexible purchase contracts, typically some of the largest energy-using businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the Maximum Discount
A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.
If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.
We will publish a review into the operation of the scheme in three months to inform decisions on future support after March 2023. The review will focus in particular on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs.
Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.
“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.
“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”
Chancellor Kwasi Kwarteng said: “We have stepped in to stop businesses collapsing, protect jobs, and limit inflation.
“And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”
Business Secretary Jacob Rees-Mogg said: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.
“The help we are already putting in place will save families money off their bills, and the government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.
“This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter.”
Kate Nicholls, CEO of UKHospitality said: “This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter.
“We particularly welcome its inclusiveness – from the smallest companies to the largest – all of which combine to provide a huge number of jobs, which are now much more secure.
“The government has recognised the vulnerability of hospitality as a sector, and we will continue to work with the government, to ensure that there is no cliff edge when these measures fall away.”
Support for households in Great Britain and Northern Ireland
Today’s announcement follows the launch of the Energy Price Guarantee for households in Great Britain, under which a typical household will pay on average £2,500 a year on their energy bill for the next two years from 1 October.
The scheme limits the price suppliers can charge customers for units of gas and electricity, taking account of the Exchequer temporarily funding for two years environmental and social costs, including green levies – worth around £150 – which are currently included in domestic energy bills. The guarantee supersedes the existing price cap and is expected to save the average household £1,000 a year based on current energy prices from October.
It also comes in addition to the announced £400 energy bills discount for all households and together, they will bring costs close to where the energy price cap currently stands.
Today, the Business Secretary also confirmed equivalent support for households in Northern Ireland. The Northern Ireland Energy Price Guarantee will offer households the same level of gas and electricity bill support as the equivalent scheme in Great Britain.
Households in Northern Ireland will also receive a £400 discount on bills through the Northern Ireland Energy Bills Support Scheme (NI EBSS), the same support as is available in Great Britain.
For the Energy Price Guarantee, the scheme will still work through electricity and gas bills. The scheme will provide households in Northern Ireland with equivalent financial support with their electricity and gas bills as for those in Great Britain. Energy suppliers will reduce bills by a unit price reduction of up to 17p/kWh for electricity and 4.2p/kWh for gas, and there is no need to take any action to receive this support.
This will take effect from November, but the government will ensure households receive support so they will see the same benefit overall as those households in Great Britain backdating support for October bills through bills from November.
Targeted support
The government also announced today further details on the separate Energy Bills Support Scheme (EBSS) to ensure that the £400 discount to households starting from October will also be available to the 1% of households who would not otherwise have received this support.
Additional funding will be made available so that £400 payments will be extended to include people such as park home residents and those tenants whose landlords pay for their energy via a commercial contract. The government is committed to ensuring such households receive the same support for their energy bills. The government will introduce legislation to make sure landlords pass the EBSS discount on to tenants who pay all-inclusive bills.
The government will also provide an additional payment of £100 to households across the UK who are not able to receive support for their heating costs through the Energy Price Guarantee. This might be because they live in an area of the UK that is not served by the gas grid and is to compensate for the rising costs of alternative fuels such as heating oil.
Chancellor urged not to pass on costs to struggling households
The UK Government is being urged by the devolved governments to fund its cap on energy prices through a windfall tax, not higher borrowing.
In a joint letter to the new Chancellor of the Exchequer Kwasi Kwarteng (below), Deputy First Minister John Swinney is joined by Finance Ministers from Wales and Northern Ireland in calling for more targeted support to those impacted the most by the cost of living crisis.
They express their concern that more action is needed to prevent further hardship for households and businesses and say support “should be funded by targeting the windfall gains in the energy sector rather than passing on the cost through higher borrowing”.
The Finance Ministers also call for additional funding to support vital public services in the face of rising prices, energy costs and wage pressures as devolved settlements are worth considerably less in real terms than last October when they were set.
The joint letter reads:
Dear Kwasi,
We want to jointly congratulate you on your new role as Chancellor of the Exchequer. We are committed to working constructively with you and the new UK Government. A productive working relationship will be essential to tackle the economic crisis facing our citizens, communities and businesses.
We wrote to your predecessor on 15 July outlining our considerable concerns with the worsening economic situation in the UK including the cost crisis, funding for public sector pay and the impact of inflation on the Devolved Governments’ budgets. Our letter has been included as an annex here.
The Prime Minister’s announcement of 8 September limiting increases in energy bills will alleviate some of the anticipated additional pressures on households and businesses. However, it is important to recognise that overall this is an expensive package of measures that does not target support to those who need it most. We are deeply concerned at who will bear the brunt of these costs. Support should be funded by targeting the windfall gains in the energy sector rather than passing the cost to households through higher borrowing.
Looking ahead to your forthcoming fiscal statement, we urge you to focus efforts on those most impacted, not just relying on blanket interventions which do not recognise the scale of hardship particular households are facing. An extended and targeted support package needs to be provided to help those who, even with the cap, are facing the impossible choice between heating their homes and feeding themselves and their loved ones. Even with the price cap, energy costs are still double what they were last year.
In addition to households, early clarity and additional support is also required for businesses and the third sector, who are facing substantial challenges. The current measures provide businesses with only a temporary respite and little certainty to help them plan for the future. Many organisations would be forced to close if they are not supported.
Ministers in the Devolved Governments have exhausted the options available to us to address the cost crisis, stretching every pound available to us to provide support. The main levers that can make a difference are held by the UK Government and it must now take urgent steps to use these to provide much needed certainty to those suffering hardship and poverty.
The crisis has also resulted in a major squeeze on funding for public services and increases in demand. Additional funding is urgently needed to support our vital public services in the face of rising prices, energy costs and wage pressures, alongside unforeseen pressures. Based on recent inflation and widespread inflationary expectations for the next year or two, our respective three-year spending review settlements are worth considerably, potentially billions, less in real terms than when we received them last October.
Further, Russia’s unprovoked invasion of Ukraine has resulted in many Ukrainians seeking safety across the UK, however it is necessary to increase the funding available to support them here. In particular, there is a lack of parity in the funding available for those arriving under the Ukraine Family Scheme and the Ukraine Sponsorship Scheme, which cannot be right. ‘Thank You Payments’ to host families should also, in line with Lord Harrington’s recommendation, be doubled to ensure that those who have opened their homes to Ukrainians do not lose out financially as a result.
We would welcome early engagement and clarity on planned fiscal events to enable us to set out the implications for the devolved nations and effectively plan our own budgets, which are significantly impacted by UK spending and tax decisions.
Collaborative working between the UK Government and the Devolved Governments in a spirit of mutual respect would be of benefit to all of us.
Given that, now overdue, action is required to tackle the crisis we propose a quadrilateral meeting with the Chief Secretary to the Treasury as soon as possible and in advance of the FISC to agree the immediate steps that must be taken to tackle this issue and support households, businesses and the public sector.
This letter has been copied to the Chief Secretary to the Treasury and the Secretaries of State for Scotland, Wales and Northern Ireland.
Yours sincerely,
John Swinney BPA/MSP
An Leas-phrìomh Mhinistear agus Ath-shlànachadh Cobhid, Riaghaltas na h-Alba
Deputy First Minister and Cabinet Secretary for Covid Recovery, Scottish Government
Rebecca Evans AS/MS
Y Gweinidog Cyllid a Llywodraeth Leol, Llywodraeth Cymru
Minister for Finance and Local Government, Welsh Government
From today (20 September) around six million disabled people in the UK will start to receive their one-off £150 Disability Cost of Living payment
Six million people who are paid certain disability benefits will begin to receive a one-off payment of £150 from today
Payments are part of the government’s wider £37 billion support package, including the Energy Price Guarantee and cost of living payments totalling £650
Those who had confirmed payment of their disability benefit for 25 May will receive the £150 automatically, with the vast majority to be paid by early October.
The payment will help disabled people with the rising cost of living, acknowledging the higher disability-related costs they often face, such as for care and mobility needs.
The cost of living payments from the government are part of a £37 billion package of support, which will see millions of households receive at least £1,200 this year to help cover rising costs, and follows the Prime Minister’s announcement of a new Energy Price Guarantee for the next two winters saving households on average £1,000 a year on their energy bills.
Work and Pensions Secretary Chloe Smith said: “We know disabled people face additional costs and this government is listening and taking decisive action to protect the most vulnerable in our society.
“In addition to the £150 Disability Cost of Living payment, households will save an average of £1,000 a year through our new Energy Price Guarantee and the lowest-income households will receive at least £1,200 to help with the rising cost of living this year.
“This multi-billion-pound package of support reinforces our commitment to help UK households, particularly those with disability challenges, through the tough times ahead.”
UK Chancellor of the Exchequer Kwasi Kwarteng said: “The government is providing vital support to shield the most vulnerable from rising prices caused by global economic challenges.
“From today, a one-off £150 payment will automatically land in over six million disabled peoples’ accounts. This is in addition to the decisive action we took last week to hold down energy bills over the next two years, saving the average household £1,000 a year.
“The government is standing behind people this winter, and in the longer term we are focusing on driving economic growth – the only way to permanently boost everyone’s living standards.”
