Chancellor’s Autumn Budget prioritises stability, growth and public services

The Chancellor of the Exchequer, Jeremy Hunt, delivered the Autumn Budget 2022 on Thursday 17 November. Mr Hunt outlined his plans at a time of significant economic challenge for the UK and the global economy as he attempts to fill the black hole in the government’s finances says Newport-based Kymin Financial Planners Managing Director Robin Hall.

Mr Hall, commenting after the Chancellor, Jeremy Hunt, delivered his Autumn statement, said the Chancellor’s priorities are stability, growth, and public services, and he is providing “fair solutions” despite taking “difficult decisions.”

Economic stability, Mr Hunt announced, relies on fiscal sustainability – and the Autumn Statement sets out the government’s plan to ensure that national debt falls as a proportion of the economy over the medium term.

By reducing debt servicing costs and leaving more money to invest in public services, supporting the Bank of England’s action to control inflation, and giving businesses the stability and confidence they need to invest and grow in the UK, Mr Hunt said this is a “very balanced package,” insisting that decisions were made in a “fair way.”

The chancellor says the government’s approach to delivering fiscal sustainability is underpinned by fairness, with those on the highest incomes and making the highest profits paying a larger share. The UK minimum wage for people aged over 23 will increase from £9.50 to £10.42 an hour and the income tax additional rate threshold will reduce from £150,000 to £125,140, increasing taxes for those on higher incomes.

Income tax, national insurance and inheritance tax thresholds will be maintained at their current levels for a further two years, to April 2028. The government will also reduce the Dividend Allowance to £1,000 from April 2023 and then to £500 from April 2024 along with the annual exempt allowance for capital gains tax which will be cut from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.

The chancellor announced that businesses must also pay their fair share. The Autumn Statement fixes the National Insurance Secondary Threshold at £9,100 until April 2028. Reforms have also been set out to ensure businesses in the energy sector that are making extraordinary profits contribute more. The Energy Profits Levy will be increased by 10 percentage points to 35% and extended to the end of March 2028.

Scheduled public spending will be maintained until 2025 but then grow more slowly than previously expected, in England, the NHS budget will increase by £3.3bn a year for the next two years, and spending on schools by £2.3bn. Defence spending will be maintained at 2% of national income – a NATO target.

There is a raft of cost-of-living support measures, including the energy price guarantee which will be kept for a further 12 months at a higher average of £3,000 for a typical household up from the £2,5000 at present. The Pension Triple Lock is to be upheld and set to rise in line with September’s inflation rate of £10.1%, meaning that the weekly payment will increase from £185.15 to £203.85 from April 2023.

Other measures included electric vehicles paying road tax for the first time from April 2025 and the lifetime cap on social care costs in England that were due in October 2023, will be delayed by two years.

Mr Hunt commented that the Autumn Statement balanced revenue raising and spending restraint whilst protecting vital public services. He said the Autumn Statement confirms that total departmental spending will grow in real terms at 3.7% a year on average over the current Spending Review period.

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