The chancellor has announced tens of billions in tax rises and spending cuts in the Autumn Statement – watch live reaction at the top of this page.
Jeremy Hunt acknowledged that the UK was in recession but said his plan would help rebuild the economy and reduce debt.
He announced a freeze on income tax thresholds, meaning millions of people will pay more in tax as their wages rise.
Help with energy bills will be cut back, with typical bills rising from £2,500 a year to £3,000 from April.
But extra payments are coming: £900 for those on means-tested benefits, £300 for pensioner households and £150 for those on disability benefits.
The state pension, benefits and tax credits will rise in line with inflation – 10.1%.
And the National Living Wage will increase from £9.50 an hour for over-23s to £10.42 from April.
The point at which the highest earners start paying the top rate of tax will be lowered from £150,000 to £125,140.
Energy firms will pay an expanded windfall tax of 35%, up from the 25% already levied.
And electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
Let’s rewind a bit and take a look back at what we’ve heard from Jeremy Hunt today:
Taxation and wages:
– The threshold for when the highest earners start paying the top rate of income tax will be brought down from £150,000 to £125,140
– Income tax, personal allowance and higher rate thresholds will be frozen for a further two years, until April 2028 – this means that millions of people will pay more in tax when their incomes rise
– The main National Insurance and inheritance tax thresholds will be frozen for a further two years, until April 2028
– The National Living Wage will be increased from £9.50 an hour for over-23s to £10.42 from April next year
– Tax-free allowances for dividend and capital gains tax is due to be cut next year and in 2024
Government spending:
– Defence spending to be maintained at 2% of national income – a Nato target
– Overseas aid spending to be kept at 0.5% for next five years, below the official target of 0.7%
– NHS budget will increase in each of the next two years by an extra £3.3bn
– Schools will get an extra £2.3bn next year and the year after
As Jeremy Hunt sat down, the Office for Budget Responsibility (OBR) released its latest forecasts for the UK economy and government spending. Living standards to fall by largest amount on record.
It has said that the soaring prices will hit household’s disposable income – after accounting for inflation – by the largest amount since official records began in 1956-57.
While MPs cheered announcements like extra support with energy bills today, other parts of the OBR’s latest report suggested there could be tough times ahead. It says:
- Britain’s economy is already in recession and set to shrink by 1.4% next year, largely because of the soaring cost of living
- More than half a million people will lose their jobs as a result
- The UK national debt will be £400bn higher than forecast in March
- It has, however, also slightly boosted the total growth expected for the UK economy this year to 4.2%, up from 3.8% in its last statement in March.