Chancellor Jeremy Hunt has detailed his plans for economic recovery in his Autumn Statement yesterday in a bid to tackle inflation and restore the UK’s reputation on the international stage.
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As the cost of living continues to rise the statement that a tough winter lies ahead comes as no surprise to many. Hunt argues that the measures taken however are put in place in order to protect the most vulnerable in society, according to the BBC:
Over the next two years it is going to be challenging.But I think people want a government that is taking difficult decisions, has a plan that will bring down inflation, stop those big rises in the cost of energy bills and the weekly shop, and at the same time is taking measures to get through this difficult period.
Here’s how you can expect it to affect you.
Overview
The statement is a long and highly detailed document of stealth taxes and spending cuts but here is an overview of the pros and cons of what it says, as per The Sun:
- Up to £1,350 in cost of living payments
- Pension triple lock to stay in £870 boost for seniors
- Benefits including Universal Credit and pension credit to rise with inflation
- New work coach requirements for Universal Credit
- Social housing rents to rise 7%
- Freeze on income tax and National Insurance thresholds
- Stamp duty cut to end in 2025
- Typical energy bills to be capped at £3,000
- Minimum wage to rise to £10.42 an hour
More income tax
Perhaps the most significant issue for many is that income tax band freezes mean that lots of people will be pushed into higher tax brackets and be paying more tax than before. Income tax is paid at a basic rate on earnings over £12,570, starting at 20% and then at a higher rate of 40% for earnings over £50,270. There is then an additional higher rate for those earning over £125,140 of 45%. These are the figures for England, Wales and Northern Ireland, as Scotland sets their own rates.
These bands had already been frozen until 2026 but now the chancellor has extended that by two years until April 2028. Originally there had been statements in March and September to cut the basic rate of income tax so these changes represent something of a u-turn as expected, as per the BBC.
Benefits
It’s not all doom and gloom as there are benefits for people who are most in need. The pension triple lock means that pensions should go up with inflation but there was uncertainty about it this year, however the chancellor confirmed that the state pension would go up by 10.1%, to match inflation.
The National Living Wage will see an increase that will please many as it goes up from £9.50 per hour to £10.42 for those aged over 23. Whilst this is a positive for workers, it is the businesses who will need to cover the costs so expect some fallout from this decision, as per Sky News.
Sources used:
- BBC 'What the Autumn Statement means for you and the cost of living'
- Sky News 'Next two years will be 'challenging', says Chancellor Jeremy Hunt - as disposable incomes are set to fall to record lowest level'
- The Sun 'Autumn Statement – what is happening to booze and cigarette prices after Jeremy Hunt’s statement'
