Chancellor Jeremy Hunt delivered his Autumn statement.
Speaking in the House of Commons, Mr Hunt introduced cuts to public spending as well as tax hikes to help patch up the massive hole in the country's finances. It comes after his predecessor, Kwasi Kwarteng, unveiled a £45 billion tax-cutting spree which threw markets into chaos and ultimately resulted in then-Prime Minister Liz Truss' career coming to an end.
Previously, Mr Hunt stressed that "sacrifices" would have to be made nationwide to get the economy back to a stable outlook. He confirmed today that Britain is facing a recession and that the target of the Budget was to bring stability and growth to the economy.
In a speech to the Commons shortly before the Budget announcement, Mr Hunt said: "We are not alone facing these problems, but today our plan reflects British values as we respond to an international crisis.
“We are honest about the challenges and fair in our solutions. Yes, we take difficult decisions to tackle inflation and keep mortgage rises down but our plan also leads to a shallower downturn; lower energy bills; higher long-term growth; and a stronger NHS and education system.”
Here are all the key announcements from today's Budget that will affect the country's economy and institutions.
Energy bills to rise as government support reduced from April
The energy price guarantee scheme will increase from £2,500 for the average household to £3,000 for 12 months from April, Mr Hunt confirmed.
Jeremy Hunt told the Commons: “One of the biggest worries about families is energy bills, and I pay credit to my predecessor the right honourable member for Spelthorne and the former prime minister, the right honourable member for South West Norfolk, for their leadership in this area.
“This winter, we will stick with the plan to spend £55 billion to help households and businesses with their energy bills – one of the largest support plans in Europe.
“From April, we will continue the Energy Price Guarantee for a further 12 months at a higher level of £3000 per year for the average household.
“With prices forecast to remain elevated through next year, this will still mean an average of £500 support for every household.”
New cost of living payments
The Chancellor announced a wave of new targeted Cost of Living payments for households while teasing more plans for businesses next April.
Mr Hunt MPs: “At the same time, for the most vulnerable we will introduce additional cost-of-living payments next year, of £900 to households on means-tested benefits; £300 to pensioner households; and £150 for individuals on disability benefit.
"We will also provide an additional £1 billion of funding to enable a further 12-month extension to the Household Support Fund, helping local authorities to assist those who might otherwise fall through the cracks. And for those households who use alternative fuels such as heating oil and LPG to heat their homes, I am today doubling the amount of support from £100 to £200, which will be delivered as soon as possible this winter.
“Before the end of this year, we will also bring forward a new targeted approach to support businesses from next April.”
Universal Credit and benefits
Mr Hunt said working age and disability benefits will increase in line with inflation, with a rise of 10.1%, costing £11 billion.
He declared that the Department for Work and Pensions (DWP) will receive an extra £280 million to tackle fraud and error. Mr Hunt noted that 600,000 on Universal Credit will be encouraged to meet up with caseworkers to help them get back into the workforce.
He said he will also move back the managed transition of people from employment stand support allowance onto Universal Credit to 2028 while the governments' review of the state pension age will be published in early 2023.
Pensions
Jeremy Hunt has confirmed benefits and the state pensions will rise in line with inflation and that the pension credit will increase by 10.1%.
The Chancellor told the Commons: “Today I also commit to uprate such benefits by inflation with an increase of 10.1%, that is an expensive commitment costing £11 billion.
“But it means 10 million working-age families will see a much-needed increase next year.
“On average, a family on universal credit will benefit next year by around £600. And to increase the number of households who can benefit from this decision I will also increase the benefit cap with inflation next year.”
He added: “To support the poorest pensioners, I have decided to increase the pension credit by 10.1% which is worth up to £1,470 for a couple and £960 for a single pensioner in our most vulnerable households.
“But the cost-of-living crisis is harming all pensioners so because we have taken difficult decisions elsewhere in this statement, I can today announce that we will fulfil our pledge to the country to protect the pensions triple-lock.”
National living wage increased
The national living wage will be increased to £10.42 from April 2023, the Chancellor announced.
Jeremy Hunt told the Commons: “Today, I am accepting the recommendation of the Low Pay Commission to increase it next year by 9.7%.
“That means, from April 2023, the hourly rate will be £10.42 which represents an annual pay rise worth over £1,600 to a full time worker.
“It is expected to benefit over two million of the lowest paid workers in the country and keeps us on track for our target to reach two-thirds of median earnings by 2024.
“And it is the largest cash increase in the UK’s national living wage ever.”
Income tax changes
The government is asking those with more to contribute more. Mr Hunt announced that the threshold at which the top rate of income tax is paid will be reduced from £150,000 to £125,140.
Speaking in the House of Commons, Mr Hunt said: "Those earning £150,000 or more will pay just over £1,200 more a year". He also announced that allowance on unearned income will also be reformed, stating: "The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024.
“The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024. These changes still leave us with more generous allowances overall than countries like Germany, Ireland, France, and Canada.”
Furthermore, allowances and thresholds for income tax, national insurance, and inheritance tax will be frozen for a further two years, creating a new deadline of April 2028 - meaning that as people's wages go up, they will be paying more in tax. The dividend allowance will also be cut from £2,000 to £1,000 next year, and then to £500 in April 2024.
House buying and renting
Stamp Duty tax cuts announce in the mini-budget will remain in place until March 31, 2025. Speaking to the Commons, the Chancellor said: "The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-budget will remain in place but only until March 31 2025.
“After that, I will sunset the measure, creating an incentive to support the housing market and all the jobs associated with it by boosting transactions during the period the economy most needs it.”
The Government also announced it will cap the increase in social rents at a maximum of 7% in 2023-2024.
The Chancellor told MPs: “I want to go further to support people most exposed to high inflation,” adding: “Around four million families live in the social rented sector – almost one-fifth of households in England.
“Their rents are set at 1% above the September inflation rate which means that on current plans they are set to see rent hikes next year of up to 11%.
“For many, that would clearly be unaffordable, so today I can announce that this Government will cap the increase in social rents at a maximum of 7% in 2023-24.
“Compared to current plans, that is a saving for the average tenant of £200 next year.
Windfall tax changes
Mr Hunt stressed that he is in favour of taxes on windfall tax as long as they meet his criteria of being genuine and temporary. He announced that from January 1 to March 28, the energy profits levy will increase from 25 per cent to 35 per cent.
He added: "The structure of our energy market also creates windfall profits for low carbon electricity generation. So from January 1st we’ve decided to introduce a new temporary 45% levy on electricity generators.
"Together these measures raised £14bn."
Business rates
Mr Hunt confirmed that the government will reevaluate properties for business rates, but stressed that there will be compensation provided for firms to help alleviate the burden.
He highlighted that the announcement means two-thirds of properties will not pay any more while also introducing a new transitional relief scheme as part of a £13.6bn package.
NHS and social care budgets
Over the next two years, the NHS budget will increase by £3.3bn and will cover all areas. Mr Hunt told the Commons: “The NHS budget has been increased to record levels to deal with the pandemic and today I am asking it to join all public services in tackling waste and inefficiency.
“We want Scandinavian quality alongside Singaporean efficiency, both better outcomes for citizens and better value for taxpayers. That does not mean asking people on the frontline, often exhausted and burned out, to work harder, which would not be fair.
"But it does mean asking challenging questions about how to reform all our public services for the better." He also noted that an independently verified plan for the number of doctors, nurses, and other professionals will be published by the Department of Health and Social Care and the NHS.
On social care, Mr Hunt said the increasing number of over 80s is putting “massive pressure” on services and he will delay the implementation of the Dilnot reforms for two years and allocate the funding to allow local authorities to provide more care packages.
Mr Hunt said: “I also want the social care system to help free up some of the 13,500 hospital beds that are occupied by those who should be at home. I have therefore decided to allocate for adult social care additional grant funding of £1 billion next year and £1.7 billion the year after.
“Combined with the savings from the delayed Dilnot reforms and more council tax flexibilities, this means an increase in funding available for the social care sector of up to £2.8 billion next year and £4.7 billion the year after.”
Mr Hunt said the increase in funding will allow the social care system to help deliver an estimated 200,000 more care packages over the next two years.
Defence budget will be maintained at 'at least 2pc'
Jeremy Hunt has said he would continue to maintain the defence budget at “at least 2% of GDP”.
The Chancellor told the Commons he and the Prime Minister “both recognise the need to increase defence spending”, adding: “But before we make that commitment it is necessary to revise and update the Integrated Review, written as it was before the Ukraine invasion.
“I have asked for that vital work to be completed ahead of the next Budget and today confirm we will continue to maintain the defence budget at least 2% of GDP to be consistent with our Nato commitment.”
On overseas aid, he said: “The OBR’s forecasts show a significant shock to public finances so it will not be possible to return to the 0.7% target until the fiscal situation allows.
“We remain fully committed to the target and the plans I have set out today assume that ODA spending will remain around 0.5% for the forecast period.”
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