UK government unveils new “Energy Bills Discount Scheme” for businesses, charities, and the public sector

Scheme will provide a discount on high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets
Businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support.

A new energy scheme for businesses, charities, and the public sector was confirmed yesterday (9th January), ahead of the current scheme ending in March. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31 March 2024.

This will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.

The government provided an unprecedented package of support for non-domestic users through this winter, worth £18 billion per the figures certified by the OBR at the Autumn Statement. This is equivalent to the cost of an increase of around three pence on people’s income tax.

The government has been clear that such levels of this support, unprecedented in its nature and huge scale, were time-limited and intended as a bridge to allow businesses to adapt. The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.

The new scheme therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion. This provides long term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

The Chancellor of the Exchequer, Jeremy Hunt, said: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.

“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”

From 1 April 2023 to 31 March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.

A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

A long standing category associated with higher energy usage; these firms are often less able to pass through cost to their customers due to international competition. Businesses in scope will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40.0/MWh for gas and £89.1/MWh for electricity.

Energy Bill Discount Scheme summary

For eligible non-domestic customers who have a contract with a licensed energy supplier, the government is announcing the following support:

From 1 April 2023 to 31 March 2024, all eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.
This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity. This means that businesses experiencing energy costs below this level will not receive support.
Customers do not need to apply for their discount. As with the current scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

For eligible Energy and Trade Intensive Industries, the government is announcing:

These businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.
The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.
This discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity.

The Chancellor has also written to OFGEM, asking for an update in time for the Budget on the progress of their review into the non-domestic market. He has asked for their assessment of whether further action is action is needed to secure a well-functioning market for non-domestic customers following reports of challenges certain customers are facing, including in relation to the pricing and availability of tariffs, standing charges and renewal terms, and the ability of certain sectors to secure contracts.

Businesses in England will also benefit from support with their business rates bills worth £13.6 billion over the next five years, a UK-wide £2.4 billion fuel duty cut, a six month extension to the alcohol duty freeze and businesses with profits below £250,000 will be protected from the full corporation rate rise, with those making less than £50,000 – the vast majority of UK companies – not facing any corporation tax increase at all.

Financial services reforms ‘set to boost Scotland’s economy’

Economic Secretary, Andrew Griffith MP, hailed the crucial role Scotland plays in maintaining the UK’s position as a world leader in financial services as part of a speech given in Edinburgh today.
He also visited Scottish Widows following insurance industry reforms which could unlock over £100 billion of investment in UK infrastructure and green projects, including in Scotland.

Economic Secretary Andrew Griffith was in Edinburgh today, where he hailed the success of Scotland’s financial services sector and the strength of the Union.

Speaking at TheCityUK’s Annual Conference, the minister praised the energy and vitality of Edinburgh, the second biggest financial hub in the UK, with one seventh of Edinburgh’s workers – 50,000 people – employed by the sector.

Mr Griffith then visited life insurance and pensions firm, Scottish Widows, following reforms to regulation (Solvency II), which could unlock over £100 billion of investment in the UK over the next ten years, boosting infrastructure, green growth and Scottish jobs.

Economic Secretary to the Treasury, Andrew Griffith said: ““Scotland’s economy makes a crucial contribution to maintaining the UK’s position as a leading global hub for financial services – with Edinburgh and Glasgow the two largest clusters outside of the City of London.

“Our reforms to Solvency II have the potential to unlock over £100 billion of investment into the UK economy, including in Scotland – in things like infrastructure and sustainable energy.

“We are committed to maintaining the UK’s place as one of the most open and dynamic markets in the world – and will set out further plans for ambitious reform, in the coming weeks.”

Craig Thornton, Chief Investment Officer, Scottish Widows: “By working together the insurance industry, Government and the Prudential Regulation Authority will now be able to unlock a significant investment boost for the UK economy, while continuing to help people secure their financial futures.

“Scottish Widows has already invested around £3bn in social housing projects across the UK, however we will be able to invest billions more in projects which are vital to the growth of the economy and the transition to net zero.

“We’re looking forward to moving on to the next stage of the reform process at pace, which includes working with Government to accelerate the vital work of identifying suitable investment opportunities in the UK which will benefit from the recently announced changes.”

Solvency II is a set of regulations dictating how much financial reserves insurers have to hold against the risks included in their policies. It also dictates how they are required to report these risks to regulators.

The rules were implemented in 2016, and were a compromise between EU member states. Leaving the EU has enabled us to reform these rules to suit the unique features of the UK insurance market.

At the Autumn Statement, the Chancellor announced steps to reform the legislation that would unlock over £100 billion of investment in UK infrastructure, and drive down prices of life insurance products for consumers.

These included:

A 65% reduction in the risk margin for life insurers, and 30% reduction for general insurers. This will help free up capital on insurers balance sheets.
A significant increase in flexibility of the matching adjustment – freeing up money for long-term assets such as infrastructure.
A meaningful reduction in the current reporting and administrative burden on firms, such as doubling the thresholds at which the regime applies.

These steps act as a first course of the Government’s ambitious agenda to seize on our Brexit freedoms and reform our world leading financial services sector, so that it works in the interest of British people and consumers.

They also build on the measures within the Financial Services and Markets Bill – which grants the UK the power to repeal and replace hundreds of pieces of burdensome EU laws; protects access to cash for communities in Scotland; and compensate the victims of APP fraud.

UK sanctions on Russia top £18 billion

New figures released today reveal the full effect of UK sanctions on Russia – with over £18 billion frozen and reported to OFSI.
The figure, released in OFSI’s Annual Review, is around £6 billion more than held across all other UK sanctions regimes.
The UK and its allies have imposed the most severe sanctions Russia has ever faced, sanctioning more than 1,200 individuals and more than 120 entities.

New data released today (10th) reveals the full effect of UK sanctions on Russia – with £18.39 billion of Russian assets frozen and reported to the Office of Financial Sanctions Implementation (OFSI).

The figure, released for the first time in OFSI’s Annual Review, demonstrates the key role the UK has played in standing up to Russia following their illegal invasion of Ukraine. It is nearly £6 billion pounds more than reported across all other UK sanctions regimes.

In conjunction with its allies, the UK has imposed the most severe sanctions Russia has ever faced, designating more than 1,200 individuals, over 120 entities and freezing the assets of 19 Russian banks with global assets of £940 billion since they began their illegal invasion.

Economic Secretary to the Treasury, Andrew Griffith said: “As staunch defenders of democracy, the UK is united with its allies in opposition to Russia’s barbaric and unprovoked invasion of Ukraine. We have imposed the most severe sanctions ever on Russia and it is crippling their war machine.

To make sure we are doing all we can to keep the pressure on Putin’s corrupt cronies we are more than doubling OFSI’s headcount. Our message is clear: we will not allow Putin to succeed in this brutal war.

FCDO Minister of State, Anne-Marie Trevelyan said: “When Putin invaded Ukraine he assumed we would sit idly by. He was wrong. Instead, the UK and our international partners have stood shoulder to shoulder with Ukraine in their fight for territorial integrity and political independence.

“Today’s report shows the scale of UK sanctions – freezing over £18 billion of Russian assets to stop Putin funding his war machine. We will continue to ramp up our sanctions to exert maximum economic pressure on the Russian regime until Ukraine prevail.”

By implementing these sanctions alongside our international partners, the UK is degrading Russia’s military machine. Despite the Russian regime’s attempts to firefight, GDP is predicted to decline by up to 6.2% in 2022 when compared to pre–invasion forecasts, and decline a further 2.3% in 2023. 60% of Russia’s foreign reserves have been immobilised, Russia’s exports have plummeted, and imports of critical goods have dropped by 68% from sanctioning countries.

The £18.39 billion figure is a significant contribution to the $30 billion of frozen Russian assets reported by the Russian elites, proxies, and oligarchs (REPO) taskforce in June. All this is having a major impact on the Russian military complex – vital semiconductors are now being scavenged from fridges and soviet-era equipment is being sent to the front line.

In order to ensure that the most stringent financial sanctions in history on Russia have not adversely affected the UK’s private and voluntary sectors, where appropriate OFSI has worked with businesses and granted general and specific licences allowing UK businesses to move away from Russian facing positions without an increased risk.

These licences have been granted where sufficient evidence has been provided and are often for basic needs and legal fees. The careful granting of these licences by OFSI in line with legislation, has helped UK individuals and businesses to function throughout a challenging period and helped maintain the UK’s place as a centre for financial stability.

The Russia sanctions regime will continue to play a major part of the OFSI’s work for as long as Putin’s illegal war against Ukraine continues. The government has committed to ensuring that OFSI is fully resourced, more than doubling its headcount.

CRISIS: Chancellor’s Statement to the House of Commons, 17th October

Mr Speaker,

The central responsibility of any government is to do what is necessary for economic stability.

Behind the decisions we take and the issues on which we vote are jobs families depend on, mortgages that have to be paid, savings for pensioners, and businesses investing for the future.

We are a country that funds our promises and pays our debts.

And when that is questioned, as it has been, this government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances.

That means decisions of eye-watering difficulty.

But I give the House and the public this assurance: every single one of those decisions…

…whether reductions in spending or increases in tax, will prioritise the needs of the most vulnerable.

That is why I pay tribute to my predecessors for the Energy Price Guarantee, for the furlough scheme…

…and indeed for even earlier decisions to protect the NHS budget in a period when other budgets were being cut.

Mr Speaker, I want to be completely frank about the scale of the economic challenges we face.

We have had short term difficulties caused by the lack of an OBR forecast alongside the mini-budget…

…but there are also inflationary and interest pressures around the world.

Russia’s unforgivable invasion of Ukraine has caused energy and food prices to spike.

We cannot control what is happening in the rest of the world, but when the interests of economic stability mean the government needs to change course, we will do so – and that is what I have come to the House to announce today.

In my first few days in this job, I’ve held extensive discussions with the Prime Minister, Cabinet colleagues, the Governor of the Bank of England, the OBR, the head of the Debt Management Office, Treasury officials, and many others.

The conclusion I have drawn from those conversations is that we need to do more, more quickly, to give certainty to the markets about our fiscal plans.

And show through action, not just words, that the United Kingdom can and always will pay our way in the world.

We have therefore decided to make further changes to the mini budget immediately, rather than waiting until the Medium-Term Fiscal Plan in two weeks’ time, in order to reduce unhelpful speculation about those plans.

Mr Speaker I am very grateful for your agreement on the need to give the markets an early, brief summary this morning, but I welcome the opportunity to give the House details of the decisions now.

We have decided on the following changes to support confidence and stability.

Firstly, the Prime Minister and I agreed yesterday to reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not been legislated for in Parliament.

So we will continue with the abolition of the Health and Social Care Levy, changes to Stamp Duty, the increase in the Annual Investment Allowance to £1 million, and the wider reforms to investment taxes.

But we will no longer be proceeding with:

The cut to dividend tax rates, saving around £1 billion a year.

The reversal of the off-payroll working reforms introduced in 2017 and 2021, saving around £2 billion a year.

The new VAT-free shopping scheme for non-UK visitors, saving a further £2 billion a year.

Or the freeze to alcohol duty rates, saving around £600 million a year.

I will provide further details on how those rates will be uprated, shortly.

Second, the Government is currently committed to cutting the basic rate of income tax to 19% in April of 2023.

This government believes that people should keep more of the money they earn, which is why we have continued with the abolition of the Health and Social Care Levy.

But at a time when markets are asking serious questions about our commitment to sound public finances, we cannot afford a permanent, discretionary increase in borrowing worth £6 billion a year.

So I have decided that the basic rate of income tax will remain at 20% – and it will do so indefinitely, until economic circumstances allow for it to be cut.

Taken together with the decision not to cut Corporation Tax, and restoring the top rate of income tax, the measures I’ve announced today will raise around £32 billion every year.

The third step I’m taking today, Mr Speaker, is to review the Energy Price Guarantee.

This was the biggest single expense in the Growth Plan and one of the most generous schemes in the world.

It is a landmark policy for which I pay tribute to my predecessor.

It will support millions of people through a difficult winter and will reduce inflation by up to 5%.

So I confirm today that the support we are providing between now and April next year will not change.

But beyond next April, the Prime Minister and I have agreed it would not be responsible to continue exposing the public finances to unlimited volatility in international gas prices.

So I am announcing today a Treasury-led review into how we support energy bills beyond April next year.

The review’s objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.

Any support for businesses will be targeted to those most affected. And the new approach will better incentivise energy efficiency.

There remain many difficult decisions to be announced in the Medium-Term Fiscal Plan on October 31st …

…when I confirm that we will publish a credible, transparent, fully costed plan to get debt falling as a share of the economy over the medium term…

…based on the judgement and economic forecasts of the independent Office for Budget Responsibility.

I would like to thank the OBR, whose director Richard Hughes I met this morning, and the Bank of England whose Governor Andrew Bailey I have now met twice.

I fully support the vital, independent roles both institutions play, which give markets, the public, and the world confidence that our economic plans are credible, and rightly hold us to account for delivering them.

But I want some more independent, expert advice as I start my journey as Chancellor.

So I am announcing today the formation of a new Economic Advisory Council to do just that.

The Council will advise the government on economic policy with the first four names announced today:

Rupert Harrison, former Chief of Staff to the Chancellor of the Exchequer,
Gertjan Vlieghe, Element Capital
Sushil Wadhwani, Wadhwani Asset Management
Karen Ward, J. P. Morgan

Mr Speaker,

We remain completely committed to our mission to go for growth, but growth requires confidence and stability – which is why we are taking many difficult decisions, starting today.

But while we do need realism about the challenges ahead, we must never fall into the trap of pessimism.

Despite all the adversity and challenge we face, there is enormous potential in this country.

We have some of the most talented people in the world.

Three of the world’s top ten best universities.

The most tech unicorns in Europe.

One of the world’s great financial centres.

Incredible strengths in the creative industries…

…in science, research, engineering, manufacturing, and innovation.

All that gives me genuine optimism about our long-term prospects for growth.

But to achieve that, it’s vital that we act now to create the stability on which future generations can build.

The reason the United Kingdom has always succeeded is because at big and difficult moments we have taken tough and difficult decisions in the long-term interests of the country. That is what will we now do.

And I commend this statement to the House.

Hunt statement fails to undo damage to families and businesses and leaves more uncertainty, says TUC

Commenting on the Chancellor Jeremy Hunt’s fiscal statement), TUC General Secretary Frances O’Grady said: “The Conservatives drove the UK economy over a cliff. Hunt slamming the gears into reverse now won’t help families and businesses already hit by soaring borrowing costs.

“People needed reassurances today. Instead, they got more uncertainty – about energy bills, about our public services, and about whether universal credit and benefits will rise with inflation.

“We are now on the brink of a deep and damaging recession that threatens millions of jobs. But the latest Conservative Chancellor still has the same basic approach that got us into this mess.

“The Chancellor should have announced a boost to universal credit and pensions, and a comprehensive plan to get wages rising faster for everyone. And he should have announced a much higher windfall tax on oil and gas giants.”

On the announcement of a review of support for families and businesses with energy costs beyond April 2023, she added:

“Families and businesses now face months of worry. There is going to be less help with bills – but no-one knows who will lose out, by how much, or whether there will finally be a programme to fix Britain’s cold and draughty homes. This is not the reassurance working families need.”

Crisis, What Crisis? Chancellor to deliver emergency statement on the Medium-Term Fiscal Plan

HUNT MOVES TO STEADY MARKET JITTERS

The Chancellor will make a statement at 11am, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability.

He will also make a statement in the House of Commons this afternoon.

This follows the Prime Minister’s statement on Friday, and further conversations between the Prime Minister and the Chancellor over the weekend, to ensure sustainable public finances underpin economic growth.

The Chancellor will then deliver the full Medium-Term Fiscal Plan to be published alongside a forecast from the independent Office for Budget Responsibility on 31 October.

The Chancellor met with the Governor of the Bank of England and the Head of the Debt Management Office last night to brief them on these plans.

That racket you hear is those infamous Mini-Budget economic plans being put through the shredder – Ed. …

UPDATE: The Chancellor of The Exchequer Jeremy Hunt has today, Monday 17 October, brought forward a number of measures from 31 October’s Medium-Term Fiscal Plan:

Changes designed to ensure the UK’s economic stability and provide confidence in the government’s commitment to fiscal discipline
Basic rate of income tax to remain at 20% until economic conditions allow for it to be cut, IR35 and dividend tax rate reforms no longer going ahead
Treasury-led review of energy support after April 2023 launched

Following conversations with the Prime Minister, the Chancellor has taken these decisions to ensure the UK’s economic stability and to provide confidence in the government’s commitment to fiscal discipline.

The Chancellor made clear in his statement that the UK’s public finances must be on a sustainable path into the medium term.

Today’s announcement represents another down payment following the reversal of the corporation tax cut announced on Friday 14 October by the Prime Minister. The Chancellor will publish the government’s fiscal rules alongside an OBR forecast, and further measures, on 31 October.

In his statement the Chancellor announced a reversal of almost all of the tax measures set out in the Growth Plan that have not been legislated for in parliament.

The following tax policies will no longer be taken forward:

Cutting the basic rate of income tax to 19% from April 2023. While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely. This is worth around £6 billion a year.
Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place. This is valued at around £1 billion a year.
Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place. This will cut the cost of the government’s Growth Plan by around £2 billion a year.
Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain. Not proceeding with this scheme is worth around £2 billion a year.
Freezing alcohol duty rates from 1 February 2023 for a year. Not proceeding with the freeze is worth approximately £600 million a year. The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.

This follows on from the previously announced decisions not to proceed with the Growth Plan proposals to remove the additional rate of income tax and to cancel the planned increase in the corporation tax rate.

Taken together, these changes are estimated to be worth around £32 billion a year.

The government’s reversal of the National Insurance increase and the Health and Social Care Levy, and the cuts to Stamp Duty Land Tax, will remain benefitting millions of people and businesses. The £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue to further support business investment.

Energy bills support review

The government has announced unprecedented support within its Growth Plan to protect households and businesses from high energy prices. The Energy Price Guarantee and the Energy Bill Relief Scheme are supporting millions of households and businesses with rising energy costs, and the Chancellor made clear they will continue to do so from now until April next year.

However, looking beyond April, the Prime Minister and the Chancellor have agreed that it would be irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices.

A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023. The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need. The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

The government is prepared to act decisively and at scale to regain the country’s confidence and trust. The Chancellor stated in his speech that there will be more difficult decisions to take on both tax and spending. This means doing what is needed to lower debt in the medium term and to ensure that taxpayers’ money is well spent, putting public finances on a sustainable footing.

In light of this, government departments will be asked to find efficiencies within their budgets. The Chancellor is expected to announce further changes to fiscal policy on 31 October to put the public finances on a sustainable footing.

Further information

Table of total benefit of tax policy reversals:

Policy (£bn)	2022-23	2023-24	2024-25	2025-26	2026-27
Re-instate plans to raise Corporation Tax to 25% from April 2023	+2.3	+12.4	+16.6	+17.6	+18.7
Suspend 1p reduction in the basic rate of income tax	0	+5.3	+5.9	+5.8	+5.9
Maintain additional rate of income tax	+2.4	-0.6	+0.8	+2.2	+2.1
Maintain 1.25 percentage point increase in dividends tax rates	0	+1.4	-1.0	+1.1	+0.9
Maintain 2017 and 2021 reforms to off-payroll working rules (also known as IR35)	0	+1.1	+1.4	+1.7	+2.0
Cancel VAT-free shopping scheme for non-UK visitors to Great Britain	0	0	+1.3	+2.0	+2.1
Cancel one year freeze to alcohol duty rates	+0.1	+0.5	+0.6	+0.6	+0.6
Total	+4.7	+20.1	+25.4	+30.9	+32.3

Costings in the table are as set out in the Growth Plan 2022 – except for the 1p reduction in the basic rate of income tax, which is the costing from Spring Statement 2022 as adjusted in the Growth Plan 2022. Final costings will be set out as part of the Medium-Term Fiscal Plan on 31 October. Totals may not sum due to rounding.

THE CHANCELLOR’s STATEMENT:

A central responsibility for any Government is to do what is necessary for economic stability.

This is vital for businesses making long-term investment decisions and for families concerned about their jobs, their mortgages, and the cost of living.

No government can control markets, but every government can give certainty about the sustainability of public finances and that is one of the many factors influencing how markets behave.

And for that reason, although the Prime Minister and I are both committed to cutting corporation tax on Friday she listened to concerns about the mini budget and confirmed we will not proceed with the cut to Corporation Tax announced.

The government has today decided to make further changes to the mini budget.

And to reduce unhelpful speculation about what they are, we have decided to announce these ahead of the Medium-Term Fiscal Plan, which happens in two weeks.

I will give a detailed statement to Parliament and answer questions from Members of Parliament.

But because these decisions are market sensitive, I have agreed with the Speaker the need to give an early, brief summary of the changes which are all designed to provide confidence and stability.

Firstly, we will reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not started Parliamentary legislation.

So whilst we will continue with the abolition of the Health and Social Care Levy and Stamp Duty changes we will no longer be proceeding with:

The cut to dividend tax rates.
The reversal of off-payroll working reforms introduced in 2017 and 2021.
The new VAT-free shopping scheme for non-UK visitors.
Or the freeze on alcohol duty rates.

Secondly, the government’s current plan is to cut the basic rate of income tax to 19% from April 2023.

But at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut. So I have decided that the basic rate of income tax will remain at 20% and it will do so indefinitely, until economic circumstances allow for it to be cut.

Taken together with the decision not to cut Corporation Tax, and restoring the top rate of income tax the measures I’ve announced today will raise, every year, around £32bn.

Finally, the biggest single expense in the Growth Plan was the Energy Price Guarantee.

This is a landmark policy supporting millions of people through a difficult winter and today I want to confirm that the support we are providing between now and April next year will not change.

But beyond that, the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices. So I am announcing today a Treasury-led review into how we support energy bills beyond April next year.

The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.

Any support for businesses will be targeted to those most affected.

And the new approach will better incentivise energy efficiency.

The most important objective for our country right now is stability.

Governments cannot eliminate volatility in markets, but they can play their part, and we will do so because instability affects the prices of things in shops, the cost of mortgages, and the value of pensions.

There will be more difficult decisions to take on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.

All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.

But, as I promised at the weekend our priority in making the difficult decisions that lie ahead will always be the most vulnerable.

And I remain extremely confident about the UK’s long term economic prospects as we deliver our mission to go for growth.

But growth requires confidence and stability, and the United Kingdom will always pay its way.

This Government will therefore make whatever tough decisions are necessary to do so.

REACTION:

Commenting on the Chancellor Jeremy Hunt’s fiscal statement today (Monday), TUC General Secretary Frances O’Grady said: “The Conservatives drove the UK economy over a cliff. Hunt slamming the gears into reverse now won’t help families and businesses already hit by soaring borrowing costs.

“People needed reassurances today. Instead, they got more uncertainty – about energy bills, about our public services, and about whether universal credit and benefits will rise with inflation.

“We are now on the brink of a deep and damaging recession that threatens millions of jobs. But the latest Conservative Chancellor still has the same basic approach that got us into this mess.

On the announcement of a review of support for families and businesses with energy costs beyond April 2023, she added: “Families and businesses now face months of worry. There is going to be less help with bills – but no-one knows who will lose out, by how much, or whether there will finally be a programme to fix Britain’s cold and draughty homes. This is not the reassurance working families need.”

Director of Policy & Communications at Independent Age, John Palmer, said: “Older people living on low and modest incomes were hoping to be reassured today, but frustratingly the Chancellor’s statement posed more questions than answers.

“Instead of ensuring stability, today only provided uncertainty. The review of the Energy Price Guarantee is extremely concerning. It’s no longer clear who will receive support beyond April 2023. Now millions of older people are wondering if they will be abandoned by the government and left with unaffordable energy bills and freezing homes next year.

“We know that many people in later life are already making dangerous cutbacks on heating and food. Our own polling revealed that 65% of older people plan to use less heating this winter.

“The government must ensure that its new targeted approach from next year helps older people in financial hardship, including the 850,000 older people who are currently entitled to Pension Credit but do not receive it.

“A fundamental, non-negotiable way to help older people’s incomes keep up with the price of essentials is for the government to uprate benefits and the State Pension with inflation. Today was another missed opportunity to offer this reassurance. Instead, millions of people over 65 will continue to live in fear that they will be made even poorer, when their budgets have been broken by the cost-of-living crisis.”

Will Hodson, consumer champion and founder of How To Save It commented: ‘The Chancellor’s announcement that the Government will review the energy price cap in April is welcome. Supporting millionaires in paying their energy bills for two years was both morally and economically wrong.

“However, many households will be concerned about what this change means for them. The Government needs to make sure that their support is both good value to the taxpayer and provides sufficient, targeted support to those who really need it.’

UK mini-budget a “huge gamble on health of economy”

SWINNEY SEEKS URGENT MEETING WITH CHANCELLOR

Deputy First Minister John Swinney and his counterparts from other devolved governments are seeking an urgent meeting with Chancellor of the Exchequer Kwasi Kwarteng to discuss immediate actions needed to reverse the damaging effects of the UK Government’s tax proposals.

Mr Swinney and the Finance Ministers from Wales and Northern Ireland are highlighting the profound impact of “the largest set of unfunded tax cuts for the rich in over 50 years” warning that it is “a huge gamble on public finances and the health of our economy”.

In a joint letter to Mr Kwarteng, they warn against being condemned to another decade of austerity and express deep concern over reports that UK Government departments will be asked to make spending cuts to balance the budget, which may have profound consequences for devolved budget settlements already eroded by inflation.

The Ministers also renew calls for the UK Government to provide targeted support for households and businesses, funded through a windfall tax on the energy sector. In addition, they call for Social Security benefits to be increased, and request additional resources for the devolved governments to protect public services and to fund public sector pay settlements.

Read the letter in full here.

National Insurance increase reversed

The 1.25 percentage point rise in National Insurance will be reversed from 6 November, Chancellor Kwasi Kwarteng has announced

April’s National Insurance increase to be reversed from November – delivering on key PM pledge to cut tax burden and promote economic growth
Health and Social Care Levy will be cancelled through Bill introduced today – Chancellor has confirmed funding for health and social care services will be protected and will remain at the same level as if the Levy were in place
Almost 28 million people will keep an extra £330 of their money on average next year, whilst 920,000 businesses are set to save almost £10,000 on average next year thanks to the change

Delivering on the Prime Minister’s pledge to slash taxes to help drive growth, scrapping the rise will reduce tax for 920,000 businesses by nearly £10,000 on average next year as they will no longer pay a higher level of employer National Insurance and can now invest the money as they choose.

The government will also cancel the planned Health and Social Care Levy – a separate tax which was coming into force in April 2023 to replace this year’s National Insurance rise.

This will help almost 28 million people across the UK keep more of what they earn, worth an extra £330 on average in 2023-24, with an additional saving of around £135 on average this year.

The Health and Social Care Levy (Repeal) Bill, legislating for the tax change, has been introduced into the House today. As part of the cancellation of the Levy, The Chancellor is also set to confirm that the increases to dividend tax rates will be scrapped from April 2023 in his Growth Plan tomorrow.

The increased dividend tax was introduced in April 2022 to ensure those who gained income from dividends contributed the same amount to help fund health and social care.

The Levy was expected to raise around £13 billion a year to fund health and social care. The Chancellor confirmed today that the funding for health and social care services will be maintained at the same level as if the Levy was in place, protecting the NHS through the winter and ensuring long-term investment in social care.

Chancellor of the Exchequer Kwasi Kwarteng said: “Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.

“Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the Levy will help them grow, whilst also allowing the British public to keep more of what they earn.”

The previous government decided to raise National Insurance by 1.25 percentage points in April 2022 to fund health and social care. The rate was due to return to 2021-22 levels in April 2023, when a separate new 1.25% Health and Social Care Levy was due to take effect. Today’s legislation reverses the rise from earlier this year and cancels next year’s introduction of the Levy.

This is part of the government’s pro-growth agenda, backing business to invest, innovate and create jobs and helping raise living standards for everyone across the UK.

920,000 businesses will see a cut in National Insurance bills, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.

In particular, many small and medium businesses (SMEs) – who employ over 13 million people in the UK – will see a cut to their National Insurance bills. Next year this will be worth £4,200 on average for small businesses and £21,700 for medium sized firms who pay National Insurance. In total 905,000 micro, small and medium businesses will benefit from 2023-24.

National Insurance thresholds increased in July 2022 to lift 2.2 million of the poorest people in the UK out of paying the tax. The Chancellor has committed to retaining the level of these thresholds to support families. Taken together, the higher thresholds and the Levy reversal mean that almost 30 million people will be better off by an average of over £500 in 2023-24.

With immediate action pledged by the Prime Minister to maximise the cash benefit for people and businesses this year, the government is implementing the changes as soon as possible. Most employees will receive a cut to their National Insurance directly via payroll in their November pay, with some receiving it in December or January, depending on the complexity of their employer’s payroll software.

In addition, the Chancellor is expected to announce in his fiscal event tomorrow that the 1.25 percentage point increase to income tax on dividends announced alongside the Levy, and introduced in April 2022, will be reversed from April 2023.

Those who pay tax on dividends will save an average of £345 next year. The reversal of the ‘dividend tax’ rise signals renewed support for entrepreneurs and investors as part of the government’s drive to grow the economy and improve the standard of life for families across the UK.

Overall funding for health and social care services will be maintained at the same level as if the Levy were in place, and the government will be doing this without a tax increase. The additional funding used to replace the expected revenue from the Levy will come from general taxation.

The Chancellor is committed to reducing debt-to-GDP ratio over the medium-term and boosting growth, which will help sustainably fund public services.

Business leaders have welcomed the announcement.

Martin McTague, National Chair, the Federation of Small Businesses said: “This is clear and decisive action to support growth.

“The decision to reverse all four of these tax rises will support livelihoods, jobs and small businesses across the UK. Removing taxes on jobs, investment and growth is the right thing to do, and FSB has campaigned long and hard for this decision.

“The Chancellor is making clear he will let small businesses do what they do best: create jobs and support their local communities.

Shevaun Haviland, Director General, the British Chambers of Commerce said: “After months of campaigning, today’s Government announcement to reverse the increase to the National Insurance Contribution (NIC) is a big win for the British Chambers of Commerce and the business community.

“This is much needed support for businesses during these difficult times.

“There are a range of other challenges that must be addressed including labour shortages, supply chain disruption, and rising raw material costs.

“Tomorrow’s mini budget from the Chancellor is now a critical moment. To truly revitalise our economy for the difficult months ahead then tomorrow must bring a clear long-term plan that gives business the confidence to grow.”

Michelle Ovens CBE, founder, Small Business Britain said: “Small businesses need all the help they can get right now, so this move to reverse the national insurance rise will no doubt be received positively by business owners across the country, providing a boost that will go some way to help the many small firms out there struggling with cash flow.

“It is also good to see the immediacy of the action taken.”

Kitty Ussher, Chief Economist, the Institute of Directors, said: ““Businesses right across the country will be applauding the Government’s realisation that raising employers’ national insurance was a mistake.

“As the Institute of Directors has consistently and repeatedly argued from the outset, this was quite simply a tax on jobs, which businesses had to pay regardless of whether they are profitable. And the public agreed – the petition we launched at the beginning of the year attracted over 189,000 signatures.

“Many of our members told us that the impact of the increase was that they would have no choice but to push up prices, making inflation even worse. Others said the rise in the cost of employing people meant they would think twice about taking new staff on, or potentially make the difficult decision to let colleagues go.

“An independent report we commissioned from NIESR confirmed that the tax would reduce the UK’s international competitiveness and hit hardest those parts of the economy that suffered most from the pandemic. And even the Treasury itself said it would have ‘significant macroeconomic impact’.

Verity Davidge, Director of Policy, Make UK, said: “The Chancellor has clearly recognised the difficult situation companies are facing in response to eye watering increases in costs across the board.

“This is a welcome common sense reversal of a proposal which was both illogical and ill-timed when it was announced and, is even more so now given it is a tax on jobs. With the cost of employment in particular skyrocketing this will put cash back in the pockets of businesses and consumers at a time when they are burning through their cashflow at a rate of knots.

“Therefore, at a time when business is already facing unprecedented energy and other supply-side costs, this is a hugely important change that can improve the situation for SMEs trying to grow in very difficult circumstances.”

Andrew Goodacre, Chief Executive, British Independent Retailers Association said: “We have been concerned for some time about the rising costs of running a business. We therefore welcome this reversal of the NI increases as it will reduce the burden on employers as well as employees.

“Together with the recent energy support package, we hope the consumer confidence and business confidence return in readiness for the most important trading time of the year”.

REVERSAL OF THE HEALTH AND SOCIAL CARE LEVY: FACTSHEET

The government is committed to a low-tax, high-growth economy. To make sure people keep more of the money they earn and for businesses to have the right conditions to drive investment, growth and productivity.
The government is therefore cancelling the Health and Social Care Levy – initially introduced via a 1.25 percentage point rise in National Insurance contributions (NICs) – which took effect in April 2022.
This will be delivered in two parts:
- The government will reduce National Insurance rates from 6 November 2022, in effect removing the temporary 1.25 percentage point increase for the remainder of the 2022-23 tax year;
- The 1.25% Health and Social Care Levy will not come into force as a separate tax from 6 April 2023 as previously planned.
This tax cut reduces 920,000 businesses’ tax liabilities by £9,600 on average in 2023-24. This is 60% of the UK’s businesses with employer NICs liabilities.
It means 28 million people across the UK will keep an extra £330 a year, on average, in 2023-24.
We are making this change as quickly as possible, with it coming into force on 6 November.

How does cancelling the Health and Social Care Levy help spur growth?

This government’s central mission is to raise living standards for all in the UK through growing the economy through the private sector.
As a result of this tax cut, businesses will have more money to invest in becoming more productive, pay higher wages, create more jobs and support the overall growth of the UK economy.
Approximately 60% (920,000) of businesses with NICs liabilities will see a reduction their National Insurance bills, with 20,000 of these businesses taken out of paying NICs entirely due to the Employment Allowance, a relief which allows eligible businesses to reduce their employer National Insurance bills each year.
- At Spring Statement, on 23 March 2022, the previous government announced this would be rising by £1,000 from £4,000 to £5,000, which means 40% of businesses with NIC liabilities do not pay NICs.
The average saving for businesses is £9,600 in 2023-24.
For small and medium businesses who see their NICs bills reduced, the average saving is £4,200 and £21,700 respectively in 2023-24.
The sectors benefitting most from the reversal are professional, scientific and technical; wholesale and retail trade, repair of motor vehicles and motorcycles; and construction.

When will people receive the extra cash?

Most employees will receive the cut in their November 2022 pay directly via their payroll.
Basic rate taxpayers will on average see a gain of approximately £75 in 2022-23 rising to £175 in 23-24. For higher rate taxpayers, these figures are on average approximately £300 in 2022-23 rising to £700 in 23-24. For additional rate taxpayers, the gain will be on average approximately £1,650 in 2022-23 rising to £3,890 in 23-24.
Due to the complexities of some payroll software systems, there will be some people who receive the cut backdated in December 2022 or January 2023.
Although individuals should contact their employer for refunds as a first port of call in all circumstances, there may be circumstances where individuals may need to apply to HMRC for a refund (for example, if their employer is no longer trading, or if an individual has moved roles and their previous employer has confirmed they are unable to issue a refund retrospectively themselves).

Will there be less funding for health and social care as a result?

The Levy and increased dividend tax was expected to raise approximately £13 billion a year to fund health and social care. Funding for health and social care services will be maintained at the same level as if the Levy was in place.

What does this mean for the self-employed ?

Self-employed people and company directors will pay a blended rate of National Insurance – taking into account the changes in rates throughout the year – when they submit their annual self-assessment return.

What is happening to income tax on dividends?

From April 2023 the government is reversing the 1.25 percentage point increase to the rate of income tax on dividends which took effect in April 2022.
This move is designed to support entrepreneurs and investors as we seek to raise living standards through economic growth.

Extra information

For more information on National Insurance click here.

UK Government launches new online Cost of Living tools

New online tool will show how the take home pay of 30 million people will be boosted by July tax cut.
Workers across the UK will be able to go online, input their salary and see how much they could save thanks to the tax cut which comes in on 6th July.
New Financial Support and Benefits Checker Tool will also help people find the government support they’re eligible for.

The UK Government has launched a new online tool to show how the take home pay of 30 million ‘hard-working Brits’ will be boosted by the imminent £6 billion National Insurance tax cut.

With the historic tax cut just weeks away, the online checker will use salary information to give employees personalised estimates of how much they could save because of the government’s changes.

The cut, which will see the point at which people start paying National Insurance rise to £12,570, is worth up to £330 and seven in ten workers will pay less National Insurance even after accounting for the Health and Social Care Levy.

Rishi Sunak, Chancellor of the Exchequer said: “With our historic £6 billion National Insurance tax cut just weeks away, this new tool will show hard-working Brits how much more of their pay will be going directly into their pocket.

“This tax cut, combined with £400 off energy bills and direct payments of £1,200 to 8 million families, will help shield people from rising prices.”

Alongside this tool, the government has also launched a new Financial Support and Benefits Checker Tool. It enables people to answer 10 simple questions to find out what support they might be eligible for by cross-checking against 25 individual benefits and support offers.

This should help people find out what support they may be eligible for that they may currently not be accessing and is part of the government’s drive to help people manage the increased cost of living.

Both tools will be hosted on the government’s gov.uk Cost of Living page.

The new online tax tool will give personalised estimates for employees paid monthly through the PAYE system of how the tax cut, which comes into effect from 6 July, will boost take home pay. This will help people budget during this challenging time by seeing how much they will be saving in tax.

Everyone who pays National Insurance will see a tax cut, and the tool will show that employee earning up to £51,000 will see this cut more than offset the impact of the Health and Social Care Levy. This means the majority of working people will see a boost to their take home pay.

The tax cut is part of the biggest net cut to personal taxes in a quarter of a century, which was announced by the Chancellor earlier this year, and includes a cut to the basic rate of income tax of 1 percentage point from April 2024. This is the first cut to the basic rate of income tax in 16 years, benefiting 30 million taxpayers by £175 on average.

This tax cut comes on top of the £1,200 in direct payments the Government will provide for the most vulnerable people in the country and universal support worth £400 as a discount on energy bills from October.

This takes total Government support to £37 billion this year, helping tens of millions of people across the country from rising cost of living triggered by Putin’s illegal war in Ukraine.

Never Never Land

Buy Now Pay Later regulations to be strengthened

Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today.
Lenders will be required to ensure loans are affordable and rules will be amended to ensure advertisements are fair, clear and not misleading.
UK Government will expand rules to cover other forms of unsecured short-term credit that pose similar risks to consumers, such as those used for dentistry work.
Millions of people will be protected through strengthening regulation of interest-free Buy-Now Pay-Later credit agreements, under plans announced by the government today (20th June).

Buy-Now Pay-Later credit agreements can be a helpful way to manage your finances, allowing people to spread the full cost of a purchase over time. However, people do not currently have the usual full range of borrower protections when taking out this type of loan and they are rapidly increasing in popularity, resulting in a potential risk of harm to consumers.

Under plans set out by the government today it confirmed that lenders will be required to carry out affordability checks, ensuring loans are affordable for consumers, and will amend financial promotion rules to ensure Buy-Now Pay-Later advertisements are fair, clear, and not misleading. Lenders offering the product will need to be approved by the Financial Conduct Authority (FCA), and borrowers will also be able to take a complaint to the Financial Ombudsman Service (FOS).

Economic Secretary to the Treasury, John Glen said: “Buy-Now Pay-Later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place.

“By holding Buy-Now Pay-Later to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK.”

Today’s consultation response sets out the government’s proposals for regulation of the sector. Given its complexity, the government will publish a consultation on draft legislation toward the end of this year. Following this, the government aims to lay secondary legislation by mid-2023, after which the FCA will consult on its rules for the sector.

The government has also confirmed that other forms of short-term interest-free credit, such as those used to pay for dental work or larger items like furniture, will be required to comply with the same rules announced today, given the risks posed are similar and consumers should receive consistent protections from similar products.

These rules will apply to businesses who partner with a third-party lender to provide credit, and the government is asking for further stakeholder feedback to confirm whether they should also apply to online merchants who directly offer credit for the purchase of their own products.

Today’s announcement forms part of the government’s plan to grow the economy to tackle the cost of living. The Chancellor has provided £37 billion of support to help, including providing the eight million most vulnerable British families with at least £1,200 of direct payments this year – and giving every household right across the UK £400 to help with their energy bills.

New powers to protect access to cash

Millions of people in communities across the UK will see their ability to access cash protected in new powers set out by the government today (Thursday 19th May).
For the first time, the UK’s largest banks and building societies will be subject to new Financial Conduct Authority powers to ensure the continued availability of withdrawal and deposit facilities in local communities across the UK.
Measures will be legislated for in the upcoming Financial Services and Markets Bill which will protect consumers and enhance the UK’s position as a global leader in financial services.

MILLIONS of people across the UK will benefit from new legislation to protect access to cash, helping to level up opportunity and ensure financial inclusion across the UK, the government announced today (Thursday 19 May).

Under the new rules, the financial regulator – the Financial Conduct Authority (FCA) – will be granted new powers over the UK’s largest banks and building societies, to ensure that cash withdrawal and deposit facilities are available in communities across the country.

The FCA’s new powers will allow it to address cash access issues at both a national and local level. To support the FCA, the government will in due course set out its expectations for a reasonable distance for people to travel when depositing and withdrawing cash. This will reflect the existing spread of cash withdrawal and deposit facilities in the UK.

Cash is the second most frequently used method of payment in the UK, and around 5.4 million adults rely on cash to a very great or great extent in their daily lives – further emphasising the importance of this legislation and new FCA powers.

Economic Secretary John Glen, who will be visiting Scotland today, said: “Millions of people across the UK still rely on cash, particularly those in vulnerable groups, and today we are delivering on our promise to ensure that access to cash is protected in communities across the country.

“I want to make sure that people are still able to use cash as part of their daily lives, and it’s crucial to ensure that no person nor community across the UK is left behind as we embrace a more digital world.”

The Chancellor set out in his Mansion House Speech in 2021 that the UK must remain at the forefront of innovation and technology, and the government recognises the need to embrace the transition to a more digital world and realise the opportunities this brings individuals and businesses.

But as we transition to a digital payments system, it is critical to acknowledge that cash access remains vital to millions of people in communities across the UK, particularly those in vulnerable groups, and no one should be left behind.

The government passed legislation to enable the widespread adoption of cashback without a purchase as part of the Financial Services Act 2021, which was possible as a result of the UK’s departure from the European Union.

And last month the government announced its intention to legislate to provide the Bank of England with the powers necessary to ensure the UK’s wholesale cash infrastructure – which includes the network of cash centres integral to the sorting, storing and distribution of notes and coin – remains effective, resilient, and sustainable, and continues to support access to cash across the UK.

Taken together, these measures will ensure that the UK’s cash infrastructure is viable for the long term.

These powers will be legislated for in the upcoming Financial Services and Markets Bill, which will protect consumers and enhance the UK’s position as a global leader in financial services.