Chancellor Jeremy Hunt has announced an extra £1.2bn for the Welsh Government in his autumn statement as part of several measures to "restore stability, bring inflation down and balance the nation's books". At the Commons, the chancellor said that the Office for Budget Responsibility believed the UK was already in recession and said that the government would "asking more from those who have more" as they moved to raise more money through tax.
Some of the biggest announcements came in the form of additional cost of living payments for the vulnerable, a rise in state pension, and a new minimum wage set to be introduced next year.
In other changes, electric cars will no longer be exempt from road tax. Tax free allowances for dividends and capital gains tax will also be cut. But infrastructure projects like HS2, the Sizewell C nuclear plant and Northern Powerhouse rail will go ahead. The chancellor also said that the government would support the advanced technology research centre in Wales.
Read more: Higher taxes for the wealthiest announced in Jeremy Hunt's Autumn Statement - live updates
This financial statement outlining Rishi Sunak's Government's economic plans comes just eight weeks after former Chancellor Kwasi Kwarteng's now scrapped mini-budget, which promised to cut some taxes but led to the Pound collapsing against the Dollar and contributed to Liz Truss stepping down as Prime Minister.
Today's announcement was a bid to fill the economic gap the country faces which The Treasury estimates is around £54 billion. The majority of measures announced will apply to Wales, aside from the extra spending allocated to health and education as these are devolved to the Welsh Government and will be absorbed by the additional £1.2bn allocation.
This is exactly what the Chancellor announced as part of the autumn statement and how it affects Wales:
Taxation
Mr Hunt said he would be "asking more from those who have more" but said it would mean difficult decisions. The plans he announced will see:
- More people paying the top rate, 45%, of income tax. People who earn more than £125,140 will start paying the higher rate instead of only those on £150,000.
- The 40% tax threshold will be frozen until 2028, meaning that in the coming years as wages rise more people will pay the higher rate of tax. The 20% threshold will also be frozen.
- Huge increase in windfall taxes on oil and gas companies and the profits of renewable and nuclear power generators. It will raise £14bn next year.
Wages
- The UK minimum wage for people over 23 will increase from £9.50 to £10.42 an hour from April 2023.
Benefits and Pensions
- Benefits will also rise by 10.1% from April. On average a family on Universal Credit will benefit by around £600.
- The pensions triple lock will also be retained meaning that pensions will rise in line with inflation at 10.1%. The chancellor said this was "biggest ever cash increase in the state pension".
Energy
- Energy bill support will be extended after April but it will be less generous than this winter.
- More than eight million households on means-tested benefits will receive a cost-of-living payment of £900 in instalments, with £300 to pensioners and £150 for people on disability benefits.
- The Energy Price Guarantee, which is protecting households throughout this winter by capping typical energy bills at £2,500, will continue to provide support from April 2023 with the cap rising to £3,000. With prices forecast to remain elevated throughout next year, this equates to an average of £500 support for households in 2023-24.
- The Chancellor announced a package of targeted support which the Treasury says is worth £26 billion, which includes continued support for rising energy bills.
Tax on energy companies
- The Chancellor has said he will increase the Energy Profits Levy from 25% to 35%.
- Jeremy Hunt told the Commons: "I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices.
- This would only be temporary. "But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses. Taking account of this, I have decided that from January 1st until March 2028 we will increase the Energy Profits Levy from 25% to 35%."
On a windfall tax on electricity generators, he said: "The structure of our energy market also creates windfall profits for low-carbon electricity generation so, from January 1st, we have also decided to introduce a new, temporary 45% levy on electricity generators. Together these taxes raise £14bn next year."
The economy and public finances
- the chancellor said that the Office for Budget Responsibility believed the UK was already in recession
- It predicts growth for this year overall of 4.2%, but size of the economy will shrink by 1.4% in 2023
- UK's inflation rate predicted to be 9.1% this year and 7.4% next year
- Unemployment expected to rise from 3.6% to 4.9% in 2024
The NHS and Education
There will be extra funding for the NHS and for education in England - which will mean an extra £1.2bn for the Welsh Government next year as health is devolved and will be absorbed in this allocation.
Government spending
- Defence spending to be maintained at 2% of national income - a Nato target
- Overseas aid spending kept at 0.5% for the next five years, below the official 0.7% target
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