Autumn Statement 2023 - 110 Growth Measures for the UK Economy
Chancellor of the Exchequer - The Rt Hon Jeremy Hunt - Delivered 22/11/2023
Money is at the forefront of most people’s minds at the moment, probably more so than in previous years with the nation working through a cost of living crisis. Prior to the Chancellor’s statement, there was much media speculation about what his plans were especially with previous reports stating that the Government were considering an alternative inflation figure for the triple lock increase in the State Pension and other Benefits. This was due to the September 2022 CPI figure being 10.1% and the September 2023 CPI figure landing at 6.7%.
However, under the triple lock guarantee introduced by the Conservative Party, the increase would use the higher of 2.5%, CPI or earnings. The latter in this instance being 8.5%. Another relatively large increase. Which would mean the State Pension would have increased from £185.15 per week to £221.20 in two years. Just short of £1,900 a year. (Spoiler: He did!) ‘After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track’. This was Jeremy Hunt’s opening comment to the house reminding us all of seemingly never ending economic issues the country and world have faced in recent years.
Mr Hunt explained that his measures are designed not only to remove barriers to investment but to reward efforts and work. These were broken down into three categories.
Updated OBR forecasts.
Growth Measures to Back British Business.
Make Work Pay.
Updated OBR Forecasts
Inflation - down to 4.6% and headline inflation due to drop to 2.8% by the end of 2024 before falling to the 2% target in 2025.
Increase to Universal Credit and other benefits from April 2024 by 6.7% using September’s CPI figure.
Increase the local housing allowance rate to the 30th percentile of local market rates.
Freeze all alcohol duty until August 1st 2024
Triple lock upheld and State Pension to grow 8.5% - £221.20 per week from April 2024 - one of the largest ever cash increases to the State Pension
Reducing Debt
Deadline debt predicted to be 94% of GDP by the end of the forecast.
Underlying debt forecast to be 91.6% of GDP next year, 92.7% in 2024/25, 93.2% in 2026/27 before declining to 92.8% in 2028/29
Borrowing
According to the OBR Borrowing is lower this year and next on average across the forecast £0.7b every year compared to the spring forecast.
Falls from 4.5% GDP in 2023/24 to 3%, 2.7%, 1.6% and 1.1% in 2028/2029
The OBR have stated the economy is 1.8% larger than it was pre-pandemic and it is expected to grow 0.6% this year and 0.7% next year. Following this growth rises to 1.4% in 2025 1.9%, 2%, and 1.7% in 2028.
Back British Businesses
110 measures to boost business investment by £20billion a year.
£50m of funding over the next two years to increase the number of apprentices in engineering and other key growth sectors where there are shortages.
Reform the system to allow local authorities to recover the full costs of major business planning applications in return for being required to meet guaranteed faster timelines. If they fail, fees will be refunded automatically with the application being processed free of charge.
Invest £110m over this year and next, to deliver high quality nutrient mitigation schemes unlocking 40,000 homes
Invest £32m to bust the planing backlog and develop new housing quarters in Cambridge, London and Leeds.
Allocate £450m to the local authority housing fund to deliver 2400 new homes
Consult on a new permitted development right to allow any house to be converted into two flats provided the exterior remains unaffected.
Measures to cut grid access delays by 90% and offer up to £10k off electricity bills over 10 years for those living to new transmission infrastructure.
Estimated £90b of additional business investment over the next 10 years.
Pension Funds
By 2030, majority of workplace DC savers will have their Pension Pots managed in schemes over £30b
By 2040 all local government pension funds invested in pools of £200b or more
The government is going to consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose. ‘One Pension Pot for Life’
These reforms could unlock an extra £75b of financing for high growth companies by 2030.
Capital Market Reforms
A NatWest Retail Share Offer in the next 12 months subject to market conditions and achieving value for money.
Invest a further £500m over the next two years, to fund further innovation centres to make the UK an ‘AI Powerhouse’.
Advanced manufacturing and green energy sectors
Publishing plans and making available £4.5b of support over the five years to 2030 to attract investors into strategic manufacturing sectors.
Extend financial incentives for investment zones and the tax reliefs for freeports from 5 years to 10 years.
Announcing three further investment zones focused on advanced manufacturing in the West Midlands, East Midlands and Greater Manchester. This is expected to help catalyse over £3b of private investment and 65,000 new jobs.
Government confirmed two investment zones in Wales, one located across the Cardiff and Newport area, and another focusing on the Wrexham and Flintshire region
£80m for the new levelling up partnerships in Scotland.
Small Business
From April 2024, any company bidding for large government contracts should demonstrate they pay their own invoices within an average of 55 days which will reduce progressively to 30 days.
Freeze the small business multiplier on business rates for a further year as opposed to the standard one which rises with inflation.
Extending the 75% business rates discount for retail, hospitality and leisure.
The Self-Employed
Class 2 National Insurance Contributions abolished.
Class 4 National Insurance reduced from 9% to 8% between £12,570 and £50,270 from April 2024.
Back British Business
In 2021 Rishi Sunak introduced the super deduction for large businesses. Jeremy Hunt is now making this permanent. The ‘Largest Business Tax Cut in British History’.
OBR say this will increase annual investment by £3b a year and a total of £14b over the forecast period.
Incentives to Work
7m adults of working age in the UK not in work (excluding students) despite 1 million job vacancies.
Reforms on disability working to help people with disabilities find jobs.
£1.3b of funding to offer extra help to the 300,000 people who have been unemployed for over a year, without any sickness or disability.
If after 18 months of intensive support, jobseekers still haven’t found a job, the UK Government will role out a plan requiring them to take part in Mandatory work placement to increase their skills and employability.
Increase to national living wage by 9.8% to £11.44 an hour
Cut the main rate of employee National Insurance Contributions from 12% to 10% - From January 6th 2024
Autumn Statement Policy Paper URL - https://www.gov.uk/government/publications/autumn-statement-2023/autumn-statement-2023-html
Please Note: These proposals within the statement have been put forward for consideration and are open to changes within their details during the passage of the Finance Bill through Parliament.
Information is accurate at date of writing and is not financial advice.
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