Autumn Statement 22: Stability, Growth and Public Services

Domestic politics aside, high inflation, unmanageable mortgage rates and lack of stability are not unique to the UK. As Hunt explained, it is a global situation, influenced by the pandemic quickly followed by Russia’s invasion of Ukraine. This has left economies throughout the world with huge debt from covid support and spending, and an unprecedented increase in energy costs.

It was confirmed that we are now in a recession, with the economy expected to shrink by 1.4% by next year.

Hunt explains in his Statement, that it has three main principles – Stability, Growth and Public Services.

With statements such as the intention to turn the UK into “the next Silicon Valley”, there was a clear focus on investment into education and technology – with the promise of more details to follow. For our local economy, Sizewell C was confirmed, along with an elected Mayor of Suffolk, and in the near future, a Mayor of Norfolk, to assist growth through devolution.

For an Autumn Statement, there was a lot of detail, and perhaps more than what was expected. No doubt some issues will become clearer over the next few days but here are some headlines for you today.

There is no doubt that the next two years are going to be a challenge. This was an Autumn statement about the sharing of the pain, and is heavily based on taxation.

Headlines on the economy and investment:

Despite being in a recession, it is expected to be “shallow” with growth expected in 2024 and 2025. Growth is expected at 1.3% in 2024, 2.6% in 2025, and 2.7% in 2026.

Inflation is expected to be 9.1% this year, and 7.4% next year.

Extra cash will be going to Education and the NHS.

To help growth, and environmental standards, £6bn will be invested in the energy efficiency of homes and industry from 2025.

Windfall tax on major oil and gas producers raised to 35% from 25%, and 45% Energy Profits Levy rate to be imposed on electricity generators. This will raise £14bn next year.

Import tariffs on over 100 goods provided to businesses will be removed.

R&D tax relief for SMEs deduction rate cut to 86% and the credit rate to 10% but increase the rate of the separate R&D expenditure credit from 13% to 20%.

To improve growth and entrepreneurship, a new devolution deal will be bringing an elected Mayor to Suffolk. It is intended that this will also happen in Norfolk, Cornwall and an area in the Northeast.

The headlines for you as a business owner:

National Living Wage, for those over 23 years old, is to rise to £10.42 from April 2023.

The Employment allowance is frozen until March 2026 at £5000.

Employer's National Insurance Contributions remain frozen until April 2028.

Unemployment expected to rise from 3.6% to 4.9% in 2024.

600,000 people on Universal Credit will need to see a work coach and seek to increase working hours or earnings.

The dividend tax allowance will decrease to £1,000 in 2023 and £500 in 2024.

Capital gains exemption will decrease to £6,000 in 2023, and £3,000 in 2024.

Business Properties will be revalued from April 2023, but 700,000 businesses will not pay more in business rates next year, benefiting from £14bn over five years.

Pensions and benefits will increase by 10.1% in April – hopefully not only protecting the poorer pensioners with the cost of living crisis but keeping the silver pound strong in the economy should that be your market.

No further help with energy costs has been announced, with the Energy Bill Relief Scheme due to end April 2023.

The headlines for you as a household:

Tax thresholds have been frozen until 2028 except for the highest rate. The 45% tax threshold has been lowered from £150,000 to £125,140. All other tax thresholds and allowances will remain the same until 2028. With wages increases, the impact is that more tax will be paid. More people will be paying tax, and more people will be paying a higher rate of tax.

The Energy Price cap will increase in April to £3000 – plus the £400 support ends so the real impact of the increase in energy costs could be significant BUT that should be balanced with lower usage at that time of year and hopefully an end to the war in Ukraine, bringing energy costs down.

Further help will be given to pensioners, those receiving universal credit or disability allowance to assist with energy costs. This will impact 21 million households.

Those on alternative fuels will also receive help this winter with fuel costs (£200).

The increase in social rents has been capped at 7% (instead of the planned 11%).

Electric cars' benefit in kind will remain at 2% until April 2025 and will then increase by 1% per year for the following three years.

Electric vehicles will no longer be exempt from Road Tax.

Councils in England will be able to increase council tax up to 5% a year without a local vote: this is currently set at 3%.

The temporary stamp duty thresholds will remain in place until April 2025 – so no stamp duty until the property costs £250,000 or £400,000 for a first-time buyer until then.