I was pleased to attend the Chancellor’s Autumn Statement on Wednesday, in which he announced the biggest collection of tax cuts since the 1980s. The wellbeing of public finances affects everyone in Wycombe and across the UK, which is why three of the five promises made by the Prime Minister when he entered office were related to the economy —halving inflation, reducing government debt, and growing the economy.
While, as a low-tax Conservative, I am always concerned with making sure tax rates are as low as possible, the Government’s response to our economic circumstances has shown that it is willing to make unpopular decisions in order to bring our public finances under control while continuing to support families with rising bills. As a result of this Conservative Government’s decisions that have brought down inflation and improved our fiscal standing, we are now in the circumstances where we can cut taxes.
At the Autumn Statement, the Chancellor made the following headline announcements to ensure that our economy grows further and that individuals have more of their own money in their pockets.
National Insurance: The Chancellor announced that National Insurance for employees would be reduced from 12% to 10%, which works out as a £450 tax cut for the average worker earning £35,400 a year. The Chancellor also announced a National Insurance reduction for the self-employed, which will work out as a £250 tax cut for the average self-employed person earning £28,200 a year. National Living Wage: The Chancellor announced that the national living wage would increase to £11.44 for workers aged 21 & over.
Triple-lock Pensions: The Chancellor confirmed that the triple-lock will continue. Starting in April 2024, state pensions will increase by 8.5% to £221.80 a week, which represents one of the largest ever cash increases to the state pension.
Local Housing Allowance: Because of the huge burden rent places on millions of renters, the Chancellor announced that he would increase the local housing allowance to the thirtieth percentile of local market rents, giving 1.6 million households an average of £800 of support next year.
Alcohol Duty: The Chancellor announced that he would freeze all alcohol duty until 1st August next year, which means no increase in the duty on beer, cider, wine, or spirits until then.
Working-Age Benefits: The Chancellor announced that, instead of raising inflation-linked benefits by the lower October figure, the Treasury would increase Universal Credit and other benefits by 6.7%. This decision was made with the understanding that cost of living pressures remain at their most acute for the poorest families. This measure is intended to support those families, and represents an average increase of £450 for five and a half million households across the UK.
Energy Bills: In response to the Winser Review and the Connections Action Plan, the Chancellor announced measures that would cut grid access delays by 90% and offer up to £1,000 off electricity bills for those living closest to new transmission infrastructure.
Business Rates: Having already taken a third of properties out of rates completely through small business rates relief, frozen the tax rate for the last three years at a cost of £14.5 billion, removed downward caps from transitional relief, and for retail, hospitality, and leisure businesses, introduced a one-year 75% discount on business rates up to £110,000, the Chancellor announced that the Government would go further for small businesses. He announced that he would freeze the business-rate multiplier for small businesses, and continue the 75% discount for a further year, saving, on average, £12,800 for pubs next year, and demonstrating the Conservative’s commitment to the high street.
Full Expensing: The Chancellor recognized the need to grow investment further. In 2021, Rishi Sunak introduced the Super Deduction for large businesses to stimulate business investment, and this spring the Chancellor introduced full expensing. This means that, for every £1 million a company invests, the get £250,000 off their tax bill in the same year. This week, the Chancellor announced that he would make this scheme permanent, helping to boost investment by £20 billion a year. Over 200 business leaders across the UK have said that this measure would be the single most transformational thing the Chancellor could do for business, investment, and growth.
Manufacturing Support: The Chancellor announced that he will make available an additional £4.5 billion to attract strategic investment into manufacturing sectors of the economy. That includes £2 billion for zero emission investments in the automotive sector, £975 million for aerospace, and £520 million for life sciences. The Government will also provide £960 million for the new Green Industries Growth Accelerator, focused on offshore wind, electricity networks, nuclear, CCUS, and hydrogen. These investments will keep Britain competitive in sectors which it already dominates, and innovation in sectors where we are not.
At the start of the Statement, the Chancellor said Conservatives know that “a dynamic economy depends on the energy and enterprise of people, more than any dictates or decisions by ministers.” I have always believed this to be true, which is why I was pleased to hear the Chancellor confirm that the people-first measures outlined above will, according to the OBR, raise business investment, get more people into work, reduce inflation, and increase GDP as promised by the Prime Minister.
The full Autumn Statement can be found here: https://www.gov.uk/government/publications/autumn-statement-2023/autumn-statement-2023-html
