Starmer prepares for The King’s Speech at the State Opening of Parliament on Wednesday 17 July
New laws will prioritise growth, the Government’s overarching mission for the year ahead
Legislative programme will support delivery of the Government’s first steps and missions to rebuild Britain
Focus on improving the prosperity of the country and living standards of working people
The Government will use its mandate for change to put economic growth at the heart of its legislative agenda as it prepares for The King’s Speech at the State Opening of Parliament on Wednesday (17 July).
Departments are working on more than 35 bills to deliver an ambitious parliamentary session that will be built on a bedrock of economic security, to enable growth that will improve the prosperity of our country and the living standards of working people.
Legislation will include a bill to enforce tough new spending rules, designed to ensure economic growth, while avoiding the chaos which left families with spiralling bills and wreaked misery on people’s lives.
To ensure nobody can play fast and loose with the public finances ever again, this new bill will strengthen the role of the Office of Budget Responsibility, meaning significant fiscal announcements must be properly scrutinised and that taxpayers’ money is respected.
Prime Minister Keir Starmer said: “Our work is urgent. There is no time to waste. We are hitting the ground running by bringing forward the laws we will need to rebuild our country for the long-term – and our ambitious, fully costed agenda is the downpayment on that change.
“From energy, to planning, to unbreakable fiscal rules, my government is serious about delivering the stability that is going to turbo charge growth that will create wealth in every corner of the UK.
“The task of national renewal will not be easy, and this is just the down payment on our plans for the next five years, but the legislation set out at the King’s Speech will build on the momentum of our first days in office and make a difference to the lives of working people.”
‘His Majesty’s Most Gracious Speech’ will build on the momentum of the Government’s first week in office which saw the Prime Minister and his ministerial team roll up their sleeves and get to work.
Legislation to enact announcements made this week, including the launch of a National Wealth Fund to drive investment into the UK, to a new Mission Control tasked with turbocharging UK to clean power by 2030, to opening the recruitment of a new border security command, show that the Government is getting on with the job.
The package of bills will focus on growing the economy through ‘turbocharging’ building of houses and infrastructure, better transport, more jobs and securing clean energy – helping to make every part of the country better off.
As part of the Government’s plans to empower regions to deliver change for their communities, new legislation will also help to create wealth in every community and hand the power back to local leaders who know what is best for their areas.
Chancellor Rachel Reeves will vow to “fix the foundations of Britain’s economy” to make every part of Britain better off.
In her first major speech, the Chancellor will declare economic growth is “a national mission” and promise to take the tough decisions to deliver on the Government’s mandate.
She is expected to announce swift changes to unblock infrastructure and private investment.
The Government will take the difficult decisions to deliver growth, Rachel Reeves will say in her first speech as Chancellor today.
Business leaders from some of Britain’s most pioneering industries – including its financial services and green industries – are expected to be in attendance in central London to hear Ms Reeves vow to “fix the foundations of our economy so we can rebuild Britain and make every part of our country better off.”
Rachel Reeves will say there is “no time to waste” on delivering change, pledging to reverse “the legacy of fourteen years of chaos and economic irresponsibility”.
The Chancellor is expected to say:““Last week, the British people voted for change. And over the past 72 hours I have begun the work necessary to deliver on that mandate.
“Our manifesto was clear: ‘Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people.’
“Where governments have been unwilling to take the difficult decisions to deliver growth – or have waited too long to act – I will deliver.
“It is now a national mission. There is no time to waste.
“This morning I want to outline the first steps this new government has taken to fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off.
“We face the legacy of fourteen years of chaos and economic irresponsibility.
“New Treasury analysis I requested over the weekend exposed the opportunities lost from this failure.
“Had the UK economy grown at the average rate of OECD economies since 2010, it would have been over £140 billion larger.
“This could have brought in an additional £58 billion in tax revenues last year alone to sustain our public services.
“It falls to this new Government to fix the foundations.”
First Minister John Swinney will welcome new Prime Minister Sir Keir Starmer to Scotland today.
Speaking ahead of the meeting, the First Minister said: “I was really pleased to have the opportunity to speak to the Prime Minister on his first day in office and to congratulate him and wish him, and his family well.
“I look forward to welcoming the Prime Minister to Scotland where I hope to have constructive discussions with him on our shared priorities for the people of Scotland. This includes eradicating child poverty, growing the economy, prioritising net zero, and ensuring effective public services.
“I welcome the Prime Minister’s commitment to forge a positive relationship between our governments and for our part, the Scottish Government is committed to working constructively with the UK Government to build a better Scotland.”
WHATEVER your political allegiances. the relationship between the two governments is crucial to the people of Scotland. I’d like to think it will be more constructive than it has been in the recent past – Ed.
Chancellor of the Exchequer Rachel Reeves’ speech delivered to HM Treasury staff yesterday (Friday 5 July):
Thanks to all of you for being here. It is such an honour to be here today as the Chancellor of the Exchequer.
I know what a responsibility this brings – to guide our economy through uncertain times;
To restore stability in an age of insecurity;
To build prosperity that draws on the talents of working people.
The central mission of this new Government will be to restore economic growth.
During the election that was the Labour Party’s mission.
It is now our national mission.
And it will be for the Treasury to lead that mission.
Not growth for growth’s sake.
But growth for a purpose.
To make every part of our country better off.
To deliver on this mission, I want this to be the most pro-growth Treasury in our country’s history.
That will mean doing what the Treasury does best – building growth on a rock of economic stability.
But it also means taking on new challenges and new responsibilities.
To fix the foundations.
And to rebuild Britain;
To drive growth not just in a few pockets of our country but in every part of Britain.
To meet the challenges and seize the opportunities of the future – including our energy transition.
That is why this Treasury will play its full part in a new era of industrial strategy;
Working hand-in-glove with business, to make sure Britain is truly open to business once again.
And I know that in an uncertain world, if we can deliver the stability, investment and reform that the Prime Minister and I have set out, then Britain can reap the rewards.
But for families at home – I know that this is about more than just lines on a graph.
It is about tackling the causes of the cost of living crisis and making work pay.
Rebuilding our health service and our schools.
And driving opportunity in every part of Britain.
I will always hold in my minds eye the people across our country whose livelihoods, public services and aspirations will rise or fall based on the decisions we make here.
And I ask you to do the same – whether in Darlington, or Norwich, or in this building.
It is also a huge privilege to be the first ever female Chancellor of the Exchequer.
So every young woman and girl watching this:
Let today show that there should be no ceilings on your ambitions.
Your hopes,
or your dreams.
But there is a deeper responsibility too:
To women whose work is too often undervalued.
Who have borne the brunt of inequality.
And whose lives and interests are too often excluded from economic policymaking.
Together, we are going to change that.
Now, I have been a Member of Parliament for fourteen years now.
And if I’m honest, I’ve spent a lot of those years frustrated.
Talking, not doing.
Responding to constituents’ problems, but not being able to get to the root cause of those problems.
So as far as I’m concerned, there is no time to waste.
I will judge my time in office a success if I know that, at the end of it, there are working-class kids from ordinary backgrounds living richer lives, their horizons expanded, and their potential realised;
If we are leaving to the next generation a country that is more prosperous, with more good jobs paying decent wages, and a country better able to thrive in an uncertain world.
I know that a lot has been asked of you in the last few years – and I know, when the chips are down, staff at the Treasury have risen to the occasion, from furlough to energy price support.
I have often disagreed with the political choices that have been taken in this building.
But I have never been in any doubt about the talent, the dedication and the professionalism that Treasury staff have displayed.
I know too that at times it must have been frustrating for you, working under a weight of uncertainty, changes in direction, and without clarity of political purpose.
As Chancellor, I am determined to change that.
All our plans for government will rely on your hard work.
I’m under no illusion about the scale of the challenges we face.
The difficult choices that we will have to make.
I am not promising you that it will be easy.
There is a long road ahead.
It comes with a great weight of responsibility.
I embrace it.
It will demand hard work.
I am ready for it.
The British people have put their trust in this new government.
They have put their trust in us to run their economy.
The First Minister has set out his ambitions for Scotland’s economy during a speech in Glasgow.
Speaking at the Barclays Campus in Glasgow’s financial district on Friday, First Minister John Swinney outlined his government’s approach to economic policy making.
Mr Swinney said poor decision-making at UK level, typified by Brexit and immigration policy, means the Scottish Government must work even harder with its limited powers to help businesses and workers thrive.
The First Minister stated his determination to bring hope and optimism and said he will “go all out” to encourage economic investment.
John Swinney said policy making will be governed by:
Moderate left of centre, progressive values
A partnership approach with unions and business
A focus on actions
Problem solving based on evidence
The First Minister will highlight significant announcements in Scotland’s renewable energy sector this week and actions the Scottish Government is taking to boost high growth businesses.
The First Minister said: “My goal is to help people live happier and healthier lives with higher living standards and to help businesses boost profitability.
“The evidence shows that independent countries that are comparable to Scotland are wealthier and fairer than the UK.
“Scotland has the talents and resources to match that performance with independence but in the here and now and in the face of Brexit we must work even harder to help Scotland’s economy with the powers we have.
“I will go all out to encourage investment in Scotland and I will ensure people know my government is a firmly pro-business administration.
“A partnership with trade unions and business will be at the core of my approach and through that approach and given our resources, not least incredible renewable energy, we should look to the future with hope and optimism.”
ANALYSIS: FRASER of ALLANDER INSTITUTE
New FM – new approach on the economy?
Today, the new First Minister John Swinney set out his broad economic aspirations for Scotland (write MAIRI SPOWAGE and EMMA CONGREVE).
In a speech at the impressive Barclays Glasgow Campus (which he said embodied the ambition he wished to have for the economy), he set out the vision he had for Scotland to have a strong, successful, innovative and dynamic economy.
For people who were after specific policy actions, the speech was light on detail, but it was not perhaps fair to expect the FM to outline these sorts of specifics in a speech like this.
The FM also had a difficult line to tread, given (as he himself pointed out) that he has been a Minister in government for 16 of the last 17 years and wanted to talk about successes in a record he is “immensely proud of”. At the same time, he needed to recognise that there were failings in the previous administration that had led to him being in office as First Minister.
Economic Growth is front and centre
The First Minister had said as he took office that eradicating child poverty was his key policy objective. This morning he was keen to set out that there is no conflict between eradicating child poverty and boosting economic growth – rather, they go hand in hand. He set out that boosting the economy will create opportunities for people and raise living standards and that reducing poverty raises spending power and boosts productivity. This is to a large degree true, but there will at times be trade-offs that will require one to be prioritised over the other.
Given the key stakeholders from businesses and business organisations in the room for his speech today, he was very keen to set out that his government was going to work collaboratively with businesses and other organisations to design and implement policies to strengthen the economy. Even more broadly, the FM said that he wished to bring more consensus building back into Scottish politics to try to achieve outcomes – to “build up, not tear down” as he put it.
There was a clear “Scotland is open for business” from the FM today. Supporting more investment in Scotland (particularly related to the Energy Transition and Housing) is clearly a priority for this new administration. This featured heavily in this speech and has been supported by some of the policy announcements made earlier this week.
We will do, rather than write strategy documents
A widely welcomed aspect of the speech is likely to be the FM’s acknowledgment that his government could probably do with carrying out “more concrete actions and fewer strategy documents”.
We have been on record a number of times as saying that the Scottish Government produces too many and too weighty strategy documents. So this is a crowd pleaser to a room of people who are likely to want to see action rather than just warm words and have seen endless strategies come and go.
However, it is important to remember what the problem sometimes was with these documents. Sometimes, in the case of recent economic strategy documents, the problem is that they aren’t really strategies – if they set out high-level principles that no one can disagree with, but don’t provide a meaningful framework for prioritisation and dealing with trade-offs, then they aren’t particularly useful.
In other cases, even where strategies are set, they can often gather dust on a shelf rather than meaningfully drive activity in government.
All of this from the FM is likely to be broadly welcomed – it’s an easy sell to say there will be less bureaucracy. But let’s not forget that we still need a clear economic strategy from the FM and the DFM – and that a strategy is not a strategy unless it rules some things out and recognises trade-offs and carries through into day-to-day activity. This clarity and policy stability is what is likely to be required to inspire the confidence in investors that this new administration would like to see.
Looking forward, not back
Many of the questions from journalists in the room today were designed to get the FM’s views on what went wrong with economic policy under the previous leadership, In addition, he was asked what his government was likely to do on policies like rent controls, short term lets legislation, and tax increases (specifically income tax) that have been put in place at the past budgets. Essentially, people were keen to hear what, in these specific areas, might change under a John Swinney government.
The FM said clearly that he was “looking forward, not back” in response to the question about what went wrong under Humza Yousaf.
With regards to specific policies where regulation was impacting businesses, he said his Cabinet colleagues were looking at lots of areas of policy and that more details on specific policies would be following in the weeks and months to come.
On tax, he was more forthcoming – acknowledging that the higher tax rates on above-median earners in Scotland are an important component of raising revenue in straitened fiscal times, but also saying that “we can’t keep raising taxes”. It will be interesting to see how this approach to tax is reflected in the Government’s Draft Tax Strategy, which is due alongside the Medium Term Financial Strategy (date currently tbc). That is if these two documents survive the cull of strategies …
Evidence-based approaches
The FM today said a number of times that the government he leads will be more practical and will be driven by the evidence of “what works”. We are very supportive of this, of course, and hope it signals a shift of more meaningful appraisal and assessment of policy options within the Scottish Government, with the associated investment in evaluation.
In doing this, unintended consequences, whether economic or otherwise, are more likely to be identified and can be proactively mitigated, and/or it can allow the government to change course at an earlier stage.
In addition, progress and continuous improvement can only happen in a culture of meaningful evaluation and being prepared to learn from what worked and what didn’t work.
For example, how well has the policy on rent freezes and caps worked to date? It would initially appear from rental costs that it has had the opposite effect on rents than the government presumably desired, and it would also appear to have had an impact on investor confidence in the sector. Given the FM’s focus on housing in his speech today, and his commitment to be evidence-based, it will be interesting to see how this policy area progresses.
Is this a meaningful shift in approach?
With his speech today, that is certainly what the FM is trying to convey. He was saying many of the right things to hearten those who want to see the government focus on economic growth.
However, the proof will be in the policy action that is actually taken. So, let’s wait for these details in the weeks to come.
Millions of workers checking payslips tomorrow will see a tax cut
As the economy turns a corner, the government is rewarding hard work, with over £900 a year boost for typical worker
Marks another step in long-term ambition to end unfair double tax on work
There are 27 million employees in the UK, and today [Tuesday 30 April] millions of them on monthly salaries will wake up with a little more cash in their pockets, as the UK government’s Spring Budget cut to National Insurance appears in April’s pay-packets.
Since Autumn 2023, National Insurance Contributions (NICs) for workers have been slashed by a third – the largest cut to employee and self-employed NICs in history.
The main rate of employee National Insurance has been cut for 27 million workers from 12% to 8%, saving the average employee on £35,400 over £900 a year. An average full-time nurse will save £1053, a typical junior doctor £1508 and an average teacher £1270.
These cuts are possible because the economy is turning a corner, thanks to the government’s decisive action that has helped bring inflation down from 11.1% to 3.2% and ensure borrowing costs start to fall. Because of this progress, the government can now cut taxes to reward work and grow the economy.
This marks another step towards the longer-term ambition to end the unfair double tax on work and abolish employee and self-employed NICs altogether.
These tax cuts – worth over £20 billion a year – have been achievable while protecting spending including keeping the Triple Lock and the government has commitment to going further only when it’s possible to do so.
Prime Minister Rishi Sunak said: ““At the start of last year I made to pledge to half inflation. And because of the difficult decisions we have taken, inflation has more than halved and we are now able to reward work, and cut taxes for millions of workers who are seeing the benefit in their pay checks today.
“We have now cut National Insurance by £900 because it’s unfair that workers pay double tax on their income. We need to make it much simpler and much fairer and we are going to continue cutting this tax until it’s gone – while continuing to protect pensioners with the triple lock and providing record levels of funding to the NHS.”
Chancellor of the Exchequer Jeremy Hunt said: “We’re on the right track – we’ve been able to slash National Insurance to return hundreds of pounds back into the pockets of hard-working Brits because of the decisions we’ve made to manage the economy responsibly.
“Over the years ahead we want to get rid of National Insurance completely for workers – it is an unfair double tax on work and we’ve shown we can protect spending on public services while eliminating it.”
The tax cuts to date mean that for single individuals on average salaries, personal taxes would be lower in the UK than every other G7 country, based on the most recent OECD data.
The smart nature of the tax cuts will also help grow the economy by bringing more people into the labour market. The Office for Budget Responsibility (OBR) expects that, as a result of these combined cuts, total hours worked will increase by the equivalent of almost 200,000 full-time workers by 2028-29.
To mark the record cuts to NICs, HMRC launched an updated online tool earlier this month to help people understand how much they personally could save in National Insurance this year.
These cuts to reward work follow a raft of changes that came into force on 1 April and could save households up to £3,850 a year to help those struggling with cost-of-living while igniting the economy.
This includes a record increase in the National Living Wage from £10.42 an hour to £11.44, and a 12.3% drop in energy bills from the previous quarter.
In addition, households can benefit from a separate increase to the Local Housing Allowance that will mean some of the poorest families on either Universal Credit or Housing Benefit will gain £800 a year on average.
Who does this help?
The combined cuts to National Insurance mean:
A ‘hard-working’ family with two earners on the average salary of £35,400 each will be better off by £1,826.
An average full-time nurse on £38,900 will be better off by £1,053.
A senior nurse with five years experience on £42,618 will be better off by £1,202.
The average police officer on £44,300 will be better off by £1,270.
A cleaner working night shifts on £21,058 will be better off by £340.
A typical junior doctor on £65,000 will be better off by £1,508.
A typical self-employed plumber on £34,361 will be better off by £846.
The typical teacher on £44,300 will be better off by over £1,270.
“Scandal of child poverty in a rich country must end”
Scottish child payment must rise to £30 to protect lower income families who don’t benefit from proposed council tax freeze.
Campaigners at the Child Poverty Action Group (CPAG) in Scotland are calling for tax and spending decisions to do more to prioritise hard up families ahead of tomorrow’s Scottish budget.
With the proposed £300 million council tax freeze set to benefit better off households they say the very least that is needed to protect lower income families is a £58 million investment to raise the Scottish child payment to £30 per week. CPAG were one of over 150 signatories to a letter sent to the First Minister Humza Yousaf last month urging him to deliver the increase.
The Scottish child payment, which currently provides a vital £25 per week extra support for children in lower income families, must by law be uprated in line with inflation.
However during the SNP leadership campaign the First Minister said he wanted to see it rise to £30 in his first Budget. In a pre-Budget briefing sent to all MSPs the campaigners say this is the “minimum extra investment that is needed to support lower income families and demonstrate the First Minister is genuinely ‘shifting the dial’ on child poverty.”
The group have also joined over sixty other groups today to call on all Scotland’s political leaders to build a fair tax consensus that can provide the social investment needed for ‘a more equitable, resilient, and prosperous Scotland’. They say the Scottish Budget must be a ‘pivotal moment for fundamental change.’
Speaking ahead of today’s budget statement John Dickie, Director of Child Poverty Action Group in Scotland, said; “Struggling families desperately need a budget that will provide immediate support as well as help meet statutory child poverty targets.
“Increasing the Scottish child payment to £30 is a cost-effective investment that would provide much needed financial support to the lower income families who get little if any benefit from the proposed council tax freeze.
“It would make a substantive impact and demonstrate the First Minister is genuine in his desire to ‘shift the dial’ on child poverty.”
Recognizing the challenging fiscal backdrop Mr Dickie added: “Difficult budget choices will be needed. But the right choice is to prioritise tax and spending decisions that will help end the poverty that still blights the lives of tens of thousands of children across Scotland.
“We are a wealthy country and we need all our political leaders to work together to harness that wealth to end the scandal of child poverty in a rich country once and for all.”
Child Poverty Action Group is calling for a Scottish Budget that:
• Increases the Scottish child payment at the very least to £30 per week from April 2024, as committed by the First Minister in his leadership campaign. This investment is supported by the Children and Young People’s Commissioner and over 150 trade unions, faith groups, children’s charities and community organisations from across Scotland. • Ensures sufficient resources are harnessed and allocated to fund the wider measures (including on childcare, employment and housing) set out in the statutory child poverty delivery plan – Best Start, Bright Futures. • Provides additional cash payments to families impacted by the two-child limit and the under 25 penalty in universal credit. • Invests in childcare so not only can the actions in Best Start, Bright Futures be delivered, but every parent can access the childcare they need, when they need it. • Is bold in using tax powers in a progressive way to ensure sufficient resources are available to fully deliver on the actions that are needed to tackle child poverty.
Barratt Developments Scotland, which includes Barratt Homes and David Wilson Homes, has made a substantial contribution of £355.5m to the Scottish economy, with the housebuilder’s East Scotland division supplying £115.5m in GVA itself.
In the year ending 30 June 2023, Barratt East Scotland also completed 847 new homes of which 187 were affordable, and supported 1,641 direct, indirect and induced jobs across the region, which includes Edinburgh and The Lothians.
2023 also saw the largest UK housebuilder reinforce its commitment to creating homes for nature as well as people. The business created 10.3ha of public green spaces and private gardens around the region, the equivalent of 15 football pitches, to help support wildlife on and around its sites.
Across the UK, Barratt is working towards reducing its direct carbon emissions by 29 per cent by 2025 and indirect emissions by 24 per cent per square metre by 2030. In the past year, CO2e emissions per 100m.sq. of completed build area fell to 1.87t in Scotland – a reduction of 2 per cent from the 2018 benchmark.
Alison Condie, managing director for Barratt Developments East Scotland, said:“As the UK’s largest housebuilder, and one of the most sustainable, we place considerable emphasis on supporting people, the environment and generating strong economic growth for the region.
“We are proud to have made such a positive contribution to the region in 2023 with 847 new homes being delivered to families and boosting the local economy by £115.5m.”
As part of its housebuilding activity, Barratt East Scotland has made £3.4m in local contributions to help build new facilities and community infrastructure. This contribution includes the provision of 173 new school places. More than £27.3m has also been spent on physical works within communities, such as highways, environmental improvements and community facilities.
Other key findings from the Barratt East Scotland 2021 socio-economic report include:
Increased support for public services with £28.9m in generated tax revenues
Over £96,000 donated to local charitable and community causes
296 supplier and 276 sub-contractor companies supported
Increased support for the UK supply chain with 90% of all components centrally procured, assembled or manufactured in-country
More than £15.2m in retail spending by new residents, helping support 150 retail and service-related jobs
The development of new and future talent remains a key priority for Barratt Developments Scotland and 75 graduates, apprentices and trainees launched their careers with the company in 2023, including 24 from its East Scotland division.
The assessment of Barratt Developments’ performance was carried out by independent consultants Lichfields, who analysed socio-economic impacts through the delivery chain for new housing based on Barratt datasets, published research and national statistics.
Changes could add £30 million to Scotland’s economy annually
Allowing asylum seekers the right to work could help them settle into communities better while boosting Scotland’s economy and workforce.
Research by the Scottish Government’s independent Expert Advisory Group on Migration and Population sets out how enabling asylum seekers to gain employment could improve health and wellbeing and reduce the risk of exploitation.
Changes could also benefit the Scottish economy, help fill gaps in the workforce and see increased council tax paid directly to local authorities which host asylum seekers.
The report will underpin the development of proposals for a Scottish Asylum Right to Work pilot, to be submitted for consideration to the Home Office in 2024.
Migration Minister Emma Roddick said: “Scotland provides a welcoming home to many people seeking asylum, with policies underpinned by dignity, respect and compassion.
“This independent report shows how enabling asylum seekers to find work could reduce anxiety and improve the wellbeing of vulnerable people, while supporting Scotland’s economy by helping fill skills shortages and addressing population challenges.
“As the UK Government continues to pursue repugnant policies on asylum and immigration, we are developing mitigations as far as possible within our devolved powers and budget, including through our New Scots refugee integration strategy.
“The Scottish Government will now use this report to design a proposal to work within the current devolution settlement, but only independence would give us power to implement a full Scottish asylum system rooted in respect for human rights.”
Chair of the Scottish Government’s independent Expert Advisory Group on Migration and Population Rebecca Kay said: “Our report shows strong international evidence that strict restrictions on the right to work have negative consequences for asylum seekers’ material and emotional well-being, and for long-term integration outcomes.
“We also find substantial evidence of the considerable barriers which people seeking asylum are likely to face on entering the labour force. These will require careful consideration by Scottish Government, and deliberate remedy, when designing a pilot proposal.
“Wider measures to provide adequate reception, settlement and integration services will be required in order to realise the full benefits of a right to work policy for asylum seekers.”
Plan for stronger economy will reward hard work, putting £450 back into the pocket of the average worker earning £35,400 a year thanks to National Insurance tax cut from 12% to 10% for 27 million working people from January.
Tax to be cut and simplified for 2 million of the self-employed, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
Biggest permanent tax cut in modern British history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
Triple lock maintained for pensioners, benefits to rise in line with inflation and Local Housing Allowance increased to continue supporting families with the cost-of-living. Government is making work pay.
National Living Wage rise represents boost of £1,800 to the average annual earnings of a full-time worker, and the Back to Work Plan will help over a million people start, stay, and succeed in work while ensuring tougher consequences for those choosing not to.
Great British pubs, breweries and distillers backed by freezing alcohol duty for six months to August 2024.
Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.
Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ yesterday.
Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers – the biggest tax cut on work since the 1980s.
With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.
To that end, Mr Hunt announced that a 2 percentage point cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.
For the average worker earning £35,400 a year, that amounts to an over £450 annual tax cut – almost immediately improving living standards for millions of people and rewarding hard-work as the government builds an economy for the future.
Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25.
Taken together, this is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) says these reductions will lead to an additional 28,000 people entering work.
Cutting National Insurance will not lead to any change in NHS funding or pension payments. Services will remain unchanged and continue to be funded as they are now.
Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.
Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy.
With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany.
Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.
To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase.
The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.
The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will also be boosted by 6.7% in April, in line with September’s inflation figure as is convention.
Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit.
Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.
Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.
Tax
With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.
The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate. The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.
Business
Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.
Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.
Work and welfare reform
Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth.
The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.
From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
The government is reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
The boosting of four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – will benefit up to 1.1 million people over the next five years.
The government is exploring reforms of the fit note process to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities.
£4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.
The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
£500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain.
The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
Scottish Secretary Alister Jack said: ““This is an Autumn Statement to support hard working families and grow our country’s economy. It is great news for Scotland.
“The National Insurance cut and increase in the National Living Wage will mean a pay boost for millions of workers right across Scotland. We have honoured the pensions triple lock, meaning pensioners will get a £900 a year increase.
“Vital new support for Scottish businesses will ensure we get growth back into our economy.
“The Chancellor confirmed more than £200 million of new, direct UK Government investment in exciting projects across Scotland, which will create jobs, boost growth and transform communities.
“Plus, there will be an additional £545 million in Barnett Consequentials for the Scottish Government, on top of their record block grant.
“There is a lot to cheer about, not least the duty freeze on spirits to support Scotland’s biggest export industry.”
Rain Newton-Smith, Chief Executive, Confederation of British Industry said:“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy.
“While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.
“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.
“Moves to speed up planning and grid connectivity should also bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.”
Eve Williams, General Manager, eBay UK said: “The hundreds of thousands of UK small businesses who use eBay and other online marketplaces will warmly welcome the Chancellor’s cuts in national insurance, more support for the self-employed, as well as the decision to make permanent full expensing.
“There are enormous productivity gains to be had from encouraging the long tail of Britain’s SMEs to invest in existing digital technologies. And given that around half of our online businesses also trade offline, they will benefit hugely from the measures on business rates for retail as well as freezing the business rate multiplier.”
Kate Nicholls, Chief Executive, UKHospitality said:“The Chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country. UKHospitality led the calls for Government to extend relief and take action on the multiplier and I’m delighted the Chancellor has acted on our asks.
“Reforms to the planning system to drive quicker approvals will remove a significant barrier to business investment. This type of reform to reward the best performing local planning authorities is exactly the type of change we have been suggesting to drive growth in hospitality.
“We’re also pleased that the Chancellor has acted on our proposal and frozen alcohol duty until August next year to support our supply chain.
“The reduction in National Insurance for employees will put more money in people’s pockets and provide a boost to hospitality in the New Year, often a challenging time for the sector.”
Responding to the freeze in alcohol duty until 1 August 2024
Nuno Teles, Managing Director, Diageo GB said:“Today we raise a glass to the Chancellor and the Prime Minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.
“Drinkers and pub-goers across the country now have even more reason to celebrate this festive season. Cheers, Chancellor!”
Responding to the announcement of £7million of funding to tackle antisemitism
Mark Gardiner, Chief Executive, Community Security Trust (CST) said:“The commitment to fund education to tackle antisemitism in universities and schools, alongside the promise to continue the increase in funding for security guarding in the Jewish community, is not just a welcome, concrete contribution to the fight against antisemitism: it sends an important and powerful message to the Jewish community that we have the sympathy and support of government in this struggle.
“We are grateful for the Chancellor for this commitment and we will work with government and communal partners to ensure it is put to effective use.”
Responding to the protection of the Triple lock
Caroline Abrahams, Influencing Director, Age UK said:“We’re pleased and relieved the Government kept its promise to older people to honour the Triple Lock.
“For the 4.2 million older people who recently cut back on food and groceries to make ends meet, having a State Pension that delivers the basics in life is essential.
“Today’s decision also crucially makes is more likely that older people will keep their homes adequately warm this winter, with less fear of facing an energy bill they simply cannot afford to pay come the spring.”
Responding to the support for Veterans
Anna Wright, Chief Executive, the Armed Forces Covenant Fund Trust said: “We are delighted by Chancellor of the Exchequer’s announcement of an additional £10 million to support the Veterans’ Places, People and Pathways programme.
“These projects have delivered significant work already to support our veterans, growing collaborative cross sector working and giving a more seamless interface between statutory and charity or not for profit support.
“They have great potential to help even more veterans, and further develop better, more inclusive local support and better coordination and communication that sustains into the future”
Autumn Statement offers ‘worst case scenario’ for Scotland
Deputy First Minister responds to announcements from Chancellor
The Autumn Statement delivered the ‘worst case scenario’ for Scotland’s finances and failed to live up to the challenges posed by the cost of living and climate crises, Deputy First Minister Shona Robison has said.
The statement failed to deliver the investment needed in services and infrastructure, Ms Robison said. While welcoming the increase in the statutory minimum wage, she said this did not go far enough and fell well short of the Real Living Wage of £12 an hour for 2024-25.
The Deputy First Minister said: ““Today’s Autumn Statement from the UK Government has delivered what is the worst case scenario for Scotland’s finances. Scotland needed a fair deal on investment for infrastructure, public services and pay deals – the UK Government has let Scotland down on every count.
“We needed investment in the services that people rely on and in infrastructure vital to the economy, but the Chancellor’s actions failed to live up to the challenges we are facing as a nation, while not doing enough to help those on the lowest incomes.
“The cut to National Insurance shows the UK Government has the wrong priorities at the wrong time, depriving public services of vital funding. Shockingly, the health funding announced today represents an increase of less than 0.06% to Scotland’s health budget in 2023-24 of £19.138 billion.
“The increases to the state pension and Local Housing Allowance are welcome, but the increase to the minimum wage falls well short of the Real Living Wage. Some of the measures for businesses are also positive, but they come in the face of UK growth having been projected downwards as a result of Brexit and the UK Government’s mismanagement of the economy.
“As global temperatures push ever higher, the Autumn Statement was a chance to fund efforts to cut the UK’s carbon emissions – but it did not. It’s not enough to say they support measures to encourage more renewable energy developments and expand the UK’s electricity grid need. It needs to be matched with funding to actually deliver and help us meet our net zero targets.
“We will now assess the full implications of today’s statement as we develop a Budget that meets the needs of the people of Scotland, in line with our missions of equality, community and opportunity.”
The Scottish Budget will be announced on 19 December.
TUC: Hunt’s Autumn Statement “is a plan for levelling the country down”
Chancellor has confirmed “another round of punishing spending cuts to public services and investment”
Cutting NI won’t make up for “13 continued “years of economic failure on living standards and growth”
Growth forecasts revised down with real wages set to remain below 2008 level until 2028
“The Conservatives have broken Britain. They cannot be trusted to fix it,” says TUC
Commenting on the Autumn Statement, TUC General Secretary Paul Nowak said: “This is not a plan for rebuilding Britain. It’s a plan for levelling the country down.
“At a time when our schools and hospitals are crumbling – the Chancellor has confirmed another round of punishing and undeliverable spending cuts to public services and investment.
“Be in no doubt – if the Tories win the next election, even more austerity is on the way.
“Cutting national insurance won’t make up for 13 continued years of economic failure on wages and living standards.
“Jeremy Hunt has nothing to smile about when working people are on course for a 20-year real wage freeze.
“The Conservatives have broken Britain. They cannot be trusted to fix it.”
Responding to the 2023/24 Autumn Statement, SCVO Chief Executive Anna Fowlie, said: “I share the disappointment of other voluntary sector bodies that this week’s budget Autumn Statement did not recognise the essential services and support of voluntary organisations both in Scotland and across the UK.
“Our sector is a major employer, a partner in delivering public services, and a vital contributor to society and the economy.
“The last few years have been a period of significant change and upheaval for Scottish voluntary organisations, their staff and volunteers, and the people and communities they work with. Rising inflation and the resulting cost-of-living crisis and running costs crisis has strained sector finances and increased demand for the support and services many organisations provide, as demonstrated in our Third Sector Tracker.
“This crisis is not over. We welcome the increase in the National Living Wage which will offer some support to the lowest paid, but to meet the rising cost-of-living this needed to go further, lifting both the National Living Wage and the National Minimum Wage to at least Real Living Wage.
“Our sector is central to building a stronger economy and offers specialist support to those furthest from the labour market and should be included in these plans.
“To protect our sector’s essential contributions for the future, underfunding and a lack of inflation-based uplifts in grants and contracts needed to be addressed in this statement. As people and communities struggle through the largest reduction in household incomes since records began in the 1950s, our support will be needed more than ever.”
