Jeremy Hunt has today announced the largest tax rises in a generation as millions of Brits struggle with the cost of living crisis.
He told the House of Commons that energy bills will rocket by £500 to an average £3,000 a year from April - nearly £2,000 higher than they were in 2021 - as the Energy Price Guarantee is made less generous.
The Tory Chancellor announced tens of billions of pounds in cuts and stealth hikes - which will create misery for millions - in the Autumn Statement.
Local authorities will be allowed to increase council tax by up to 4.99% from April next year - at the moment they cannot do this by more than 2.99% without a referendum. It means people in Band D homes will on average pay over £2,000 a year for the first time as bills go up by around £100.
Household disposable income will plummet 7.1% in real terms over this year and next year put together, the OBR watchdog said - the biggest drop since records began in 1956. It will still be below pre-pandemic levels by 2028.
He announced a rise to the minimum wage and additional funding for schools and the NHS - and said the pensions triple lock will remain in place - with state pensions and benefits set to go up by 10.1%.
Here we look at some of the key announcements laid out by the Autumn Statement.
Economy
- OBR forecasts: The Office for Budget Responsibility (OBR) says it predicts inflation to be 9.1% this year, falling to 7.4% next year.
- Recession: The UK is in recession, the OBR has ruled. The watchdog says GDP is to grow by 4.2% this year then falls 1.4% in 2023, before rising again by 1.3%, 2.6% and 2.7% in the following three years.
- Borrowing: Government borrowing in the current financial year will be 7.1% of GDP, the OBR said. It forecasts that it will fall to 5.5% next year and 2.4% by 2028.
Tax rises
- Income tax thresholds frozen: This will be one of the most painful aspects of the budget - with a "stealth" raid forcing millions to pay more as their wages rise, with average earners shelling out around £2,500 more over six years. The £12,570 Income Tax and National Insurance thresholds will remain in place until April 2028, adding around £5billion to the Treasury
- National Insurance thresholds frozen: These remain at their current levels for a further two years to 2028 - again meaning that more pay higher rates as wages rise.
- Council tax rises: Local authorities will be permitted to raise council tax by 4.99% - at the moment it's capped at 2.99% without a referendum.
- More to pay 45p rate of income tax: A quarter of a million high earners will be shuffled into the highest tax bracket, with the threshold lowered from £150,000 to £125,000 - shelling out an average of £580 a year
- Capital Gains Tax: Mr Hunt announced the threshold for paying this tax on sales of shares and second homes will be slashed to £6,000 from £12,300
- Dividend taxes: Those who profit from the sale of shares will be hit with the dividend tax rate rising by 1.25% and the threshold dropping to £1,000 from £2,000.
- Inheritance tax: A freeze on rates will be extended until 2027-28, meaning a rate of 40% will be paid on estates worth more than £325,000 for an individual and £650,000 for a couple.
- Stamp duty: Stamp duty cuts announced in the mini-budget will remain in place - but only until March 31 2025. Mr Hunt said OBR expects housing activity to slow over the next two years.
Minimum wage
- Minimum wage rise: Around two million low-paid workers will be given a boost with an increase in the so-called national living wage, which will rise to £10.42 an hour from £9.50 for staff over the age of 23 - a rise of £1,600 per year for those on lowest wages. The rate for 21-22 year olds will go up by 10.9% to £10.18 an hour;, while for 18-20 year olds it will rise by 9.7% to £7.49 an hour. Apprentices and those aged 17-18 will be paid at least £5.28 an hour, an increase of 9.7%.
Energy bills and cost of living
- Energy Price Guarantee: Energy bills will rise to £3,000 a year for the typical household from April - up from £2,500 now, the Chancellor announced.
Cost of living payments: Additional cost-of-living payments for the "most vulnerable", with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.
Rent controls: The government will cap increase in social rents to a maximum of 7% in 2023/24 - saving for the average tenant of £200 next year.
Benefits and state pension
- State pension: In a massive relief to struggling pensioners, Mr Hunt confirmed that these would rise by 10.1%, following weeks of anxiety and the threat of a Tory rebellion. It means an average pensioner will see a £18.70 per week uplift.
- Universal Credit and other benefits: Similarly these are set to go up in line with inflation. While there will be huge variation depending on circumstances, it means a single person over the age of 25 on Universal Credit will see payments rise by nearly £34 a month.
- Benefit fraud crackdown: The Chancellor said that the DWP will be given £280 million to tackle fraud and error.
- Managed migration: Government will move back the managed transition of people on ESA to Universal Credit to 2028 - a FOUR year delay on top of many delays already.
Public spending cuts
- Public spending: Mr Hunt said public spending would grow "slower than the economy" as he said that the Government would protect the increases in departmental budgets already set out in cash terms, before growing resource spending at 1% a year in real terms over the next three years.
- Public sector pay: The Chancellor did not shed any light on what the government plans to do, but documents state: "The government is seeking recommendations from Pay Review Bodies where applicable for pay awards for 2023-24."
NHS spending: Mr Hunt announced extra funding for social care of up to £2.8bn next year and £4.7bn the year after, and would raise the NHS budget by £3.3bn in each of the next three years.
Defence spending: Mr Hunt said he will maintain the defence budget at at least 2% of GDP, but would not commit to a previously-pledged 3% by 2030.
Business
- Employer National Insurance: This has been frozen until 2028, meaning firms will pay 13.8% in contributions on all employees who earn more than £9,100 a year - a move that will net around £5billion a year
- Windfall tax: Jeremy Hunt announced a 35% levy on oil and gas company profits, a decision set to raise around £45 billion over five years. Electricity generators will also be hit by a temporary 45% levy, with the measures set to raise £14billion for the Treasury.
NHS and social care
Adult social care: The Chancellor announced £1bn of extra funding next year and an extra £1.7bn the year after.
Care home costs: Brits will pay more for social care for longer after the Government delayed a planned cap on costs. The government previously pledged an £86,000 lifetime cap on how much anyone would need to pay for care was due to kick in from October 2023 - but this was delayed for two years.
NHS: Mr Hunt said he has asked Patricia Hewitt to advise on how local NHS bodies operate with a view to making efficiency savings. But he said he would increase the NHS budget in each of the next two years to £3.3billion.
Transport and infrastructure
- Tax on electric cars: Currently drivers do not have to pay tax on electric cars, but this will change from 2025-26.
HS2 and Northern Powerhouse Rail: The Chancellor said that HS2 would be delivered to Manchester, and Northern Powerhouse would go ahead, as well as the East-West rail project. Mr Hunt pledged more than £600bn over capital investment over the next five years.
Education
- Schools funding: Mr Hunt said that a further £2.3 billion per year would be spent on schools over the next two years.
Environment
- Reduction in emissions: The Chancellor said that the government remains committed to a 68% reduction in emissions by 2030.
Energy efficiency: The Chancellor said he would add an extra £6 billion of investment in energy efficiency from 2025 - which he said would save £28 billion from the national energy bill or £450 from the average household bill.
Sizewell C: The Government will proceed with the new nuclear plant at Sizewell C, Mr Hunt said
Things not in the Autumn Statement
Some things are not in the Autumn Statement because they only turn up in a Budget:
- Crackdown on non-doms: The government has come under fire for not including a crackdown on people who save thousands a year by using non-dom status.
- Fuel duty: Currently temporarily cut by 5p a litre, from 57.95p to 52.95p, until March 2023. Tory MPs want him to extend this and go further.
- Cigarette duties: These are tipped to rise in the Budget, as they do every year.
