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  • Writer's pictureLotty Feuilherade

Key takeaways from the Autumn Statement


UK Parliament/Getty

On the 22nd of November, Chancellor Jeremy Hunt announced the government's updated financial plans in his autumn statement, which reflects his priorities of maintaining moderate government expenditure, and cutting tax to reward hard work and stimulate business growth. With Britain facing a chronic cost-of-living crisis and high inflation, the new measures introduced could be pivotal to the nation’s economic trajectory, and the outcome of the imminent general election.

Here are some of the key takeaways from the statement:

Tax


  • In addition, Hunt announced the cut of Class 4 National Insurance (the main rate for the self-employed) from 9% to 8%.


  • However, because tax thresholds have not been modified and are thus frozen until 2028, the Treasury’s income tax revenues will in fact continue to rise. This has been labelled a ‘stealth tax’ by BBC News Reporter Michael Race and means that truthfully these NI cuts will only offset some of the long-term tax rises already in action.

Public Expenditure

  • An extra £2 billion has been allocated for schools for both 2023-24 and 2024-25, and the government has pledged to maintain last year's funding of £14.1 billion for the NHS and adult social care in England.


  • Defence and overseas aid spending are to remain the same, at 2% and 0.5% of national income respectively.


  • £1.3 billion shall be devoted to the provision of assistance in the job-searching process for the unemployed with health conditions, and another £1.3 billion for those who have been unemployed for over a year.




Wages, Benefits and Pensions

  • In April 2024, the national living wage will be extended to apply to those aged 21 and 22 and increased from the current rate of £10.42 an hour to £11.44. The minimum wage for those aged between 18 and 20 will increase from £7.49 to £8.60, and £5.28 to £6.40 for under 18s and apprentices.


  • To match inflation rates, universal credit and most benefits will be increased by 6.7% in England and Wales. However, the qualification criteria for benefits are changing, with the implementation of a new rule that recipients will be assigned compulsory work placements if they are still unemployed after 18 months of benefits payments.


  • The state pension will increase by 8.5%, to £221.20 each week for the newer, flat-rate state pension for those who reached state pension age after April 2016. For those who reached this age after April 2016, it will now be £169.50 a week.

Cost of living

  • The Local Housing Allowance rates, which dictate who is eligible for housing benefit and universal credit, are no longer fixed and will rise to 30% of local rents from April.



Other measures

  • Until August 2024, duty for alcohol will remain fixed, but will rise by 10% for hand-rolling tobacco products.


  • In the fight to eradicate antisemitism in schools and higher education, funding of up to £7 million will be allocated to charities such as the Holocaust Educational Trust over the next 3 years.


  • An additional £4.5 billion will be invested in manufacturing 2025-2030.


  • A package of initiatives will raise business spending by approximately 1% of GDP. For instance, Hunt has made full expensing a permanent measure which will allow businesses to claim back investments in qualifying technology and machinery.



EPA/Shutterstock


The reaction to the 2023 autumn statement has been ambivalent; the disregard for public services may leave the Conservatives susceptible to criticism over their consistent underfunding. Nevertheless, Shadow Chancellor Rachel Reeves was reluctant to criticise it, instead claiming the Tories had swiped policies which had been long supported by Labour, which highlights how the two main parties’ economic policy projects have come to resemble each other.


In October, Hunt voiced his reluctance to implement tax cuts, despite this they have in fact characterised his autumn statement, with the exception of the ‘hidden’ tax rise. His backtracking is likely due to his mindfulness of the imminent general election. Hunt may have felt compelled by other Conservatives to incorporate the cuts as a display of the party’s sensitivity to the electorate’s financial difficulties. While Tory MPs will be relieved that their constituents will benefit from these financial relief measures, will it be enough to guarantee their re-election?


Evidently, this autumn statement is conscious of a need to balance the high inflation rates with the appeasement of the British public, and it forecasts an interesting election outcome.

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Jan 04

Could the party pressure to cut taxes be more Due to the increasing pressure of liberal economists within the right of the party having increasing influence, rather than GE appeasement? Or atleast something to mention

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