On Wednesday 22nd November, the Chancellor gave the annual Autumn Statement in Parliament. I wanted to write this article to give my constituents a bit more of an idea on what that means for you. Since Covid and the global rise of inflation, it has been a tough few years but with the improvement of the economy under this Government, here are some exciting new headlines.
The Government has placed its focus on five key areas, these are: reducing debt, cutting tax and rewarding hard work, backing British businesses, building domestic and sustainable energy, and delivering world class education.
Key terms:
OBR – Office for Budget Responsibility
Pensioners
By April 2024, pensions will rise by 8.5% having also risen 10.1% this year. With next years rate of inflation set to be almost half of what the rate is now (4.6%), this pension rise will benefit many and rightly allow people who have worked hard all their lives, to be looked after properly. This equates to an extra £900 per year for pensioners on a full state pension.
Businesses
This year’s Autumn Statement saw the biggest business tax cuts in modern British History. The UK is already the leading country with the lowest headline rate of corporation tax in the G7. This has been taken even further with the Government introducing full expensing allowing businesses to immediately deduct the full cost of certain investments. The OBR expect this to unlock an additional £14 billion of investment over the next five years. This encourages businesses to invest and in turn will create more jobs and money.
Workers
National Insurance tax is being cut by 2%, which is the largest cut to NI ever. This is coming into effect on the 6th of January and will ensure that workers keep more of their pay. This tax cut will be benefited by those who earn between £12,500 and £50,000 a year. A worker on a salary of £35,400 would save around £450 a year.
Workers on minimum wage
National minimum wage is being raised by 9.8%, going from £10.48 to £11.44 and the age threshold being lowered from 23 to 21. This should benefit £2.7 million low paid workers.
The self-employed.
A tax cut for over £2 million self-employed individuals is going to come into effect from April 2024. Class 4 self-employed national insurance contributions are dropping 1% and Class 2 national insurance contributions for the self-employed are being completely abolished.
Employment
When Labour left Government in 2010, unemployment was at 7.9% and thanks to our Conservative Government, the percentage of unemployed people is now 4%. The new Back to Work Plan has launched to help over 1 million people with long term health problems, disabilities or long-term unemployment to get into work and stay in work. This plan is supported by over £2.5 million worth of funding.
Those receiving benefits.
It has been announced that the Restart Scheme is being extended in England and Wales for another two years. This scheme is aimed at helping those whose jobs have been directly impacted by Covid 19. The scheme is also being tailored to help those who have been on universal credit for 6 months rather than 9 months.
Having already gone up by 10.1% this April, working age and disability benefits will also go up next April by 6.7%.
Public services
Funding for NHS, the Police and Education is at a record high with all three sectors having record levels of more staff then under previous Labour governments. The decisions being made for the Autumn Statement has made an extra £14.1 billion available for funding into the NHS. Wages for those in the public services are rising between 6.5% and 7% which is higher than the current inflation rate of 4.6% which is also set to reduce by nearly half next year.
Inflation
Inflation has taken a massive fall due to responsible decisions being made by this Conservative Government. This Government has met the Prime Minister’s pledge to halve inflation, bringing it down by more than 6% since last Autumn. Of course, there is still a lot more that we need to do, but combined with wage growth this is good news for local people. We need to continue to further reduce inflation but also tackle interest rates which are particularly affecting people’s mortgages and rent.
National Debt
Debt is forecast to fall as a proportion of GDP over the medium term with headroom to debt falling in the target year, doubling since spring.
Economic Growth
The economy is set to grow each year, especially after recovering more strongly from the Covid 19 pandemic than previously thought.
Welfare reforms
Over the last decade, the Conservatives have built a strong labour market, underpinned by a fairer welfare system focused on incentivising and supporting people into work. This approach has been extremely successful, bringing another 3.9 million more people into work.
The Government are developing the next generation of welfare reforms and ramping up support for disabled people and people with health conditions to overcome barriers to work.
‘Chance to Work Guarantee’
There are currently 2.6 million people who ae on inactivity benefits due to physical or mental health problems with no requirements to work and no easy route into employment. A great concern for these people is that they don’t have enough support or the fear of not being able to return to benefits. Therefore, the Government is making changes to the Chance to Work Guarantee which should address these concerns.
- Boosted Work Allowance – Universal Credit claimants will benefit from boosted Work Allowances meaning that long-term sick and disabled claimants can keep £404 of earnings every month without this affecting their welfare payments effectively ‘de-risking’ the journey into work.
- Targeted help as part of our £2.5 billion Back to Work Plan – including an expanded Universal Support scheme which places people into jobs and provided wraparound care to give them the best chance of success in a role.
- Overhauling the Work Capability Assessment – for those newly moving onto health benefits, work preparation requirements will better reflect the opportunities available in the modern world or work, whilst protecting those unable to work.
