The Chancellor have given a national insurance tax cut and a boost to the state pension but there was a warning over growth as he gave his autumn statement in the House of Commons
The Office of Budget Responsibility has revised down their estimate of potential growth to 1.6% from 1.8% after the Autumn Statement.
Real wages are now not likely to get back to 2008 levels until 2028 – It was 2026 from previous March statement.
Living standards are forecast to be 3½ per cent lower in 2024-25 than pre-pandemic.
“This would be the largest reduction in living standards since records began in the 1950s, but only half the fall we expected in March.”
Among the main measures,the main rate of National Insurance cut from 12% to 10% from 6 January, affecting 27 million people
Class 2 National Insurance – paid by self-employed people earning more than £12,570 Will be abolished from April and Class Four National Insurance for self employed – paid on profits between £12,570 and £50,270 – cut from 9% to 8% from April
Universal Credit and other working-age benefits to increase by 6.7% from April, in line with September’s inflation rate
The Government announced that Funding of £1.3bn over the next five years to help people with health conditions find jobs
Claimants deemed able to work but refuse to seek employment to lose access to their benefits and extras like free prescriptions
Meanwhile State pension payments will to increase by 8.5% from April, in line with average earnings
The Chancellor said his plan will “raise business investment, get more people into work, reduce inflation” and increase the size of the economy.
The Shadow Chancellor Rachel Reeves said
“Today the Chancellor has lifted the lid on thirteen years of economic failure.We were told to expect an Autumn Statement for growth.But the economy is now forecast to be £40bn smaller by 2027 than the Chancellor said back in March.”
The Institute for Fiscal Studies said
“Despite the reductions to tax announced in today’s #AutumnStatement, total tax revenue as a share of GDP remains on track to reach its highest level since the 1940s.”
Devolution settlements that have been announced are for Hull & East Riding (L3), Greater Lincolnshire (L3), Lancashire (L2) and Cornwall (L2).
Angela Cross, tax partner and Head of BDO LLP in the North West, comments:
“In the lead up to this Statement, the chancellor had warned that tax cuts were ‘virtually impossible’ but the mood music changed significantly in the last week or so, and for business, this has arguably been a more upbeat announcement than anticipated.
“The “giveaways for growth”, such as extending full expensing on investments in IT, machinery and infrastructure, have responded to demand from businesses for a greater focus on creating economic certainty over the long-term. However, with a General Election looming, it remains to be seen whether today’s announcements will be enough to create widespread confidence and incentivise business investment.
“Beyond the headline tax changes, businesses were calling for wider support to ease their day-to-day burdens including further investment in HMRC to improve service levels and measures designed to simplify the tax system. Many may be disappointed that the chancellor didn’t go far enough in this regard.”
“The confirmation of an Investment Zone in Greater Manchester, and the decision to extend the time period for their associated tax breaks, will be a boost for the region and are expected to create jobs and unlock investment in the coming years.”
“Those businesses investing in freeports will also be buoyed by the news that the related tax breaks will be extended until 2031.”
Katie Gallagher, managing director of Manchester Digital, said:
“There are quite a few positives to come out of today’s Autumn Statement announcements which will support our regional tech sector. These include a further £500m committed to fund more innovation centres for AI and simplified R&D Credits, as well as making full expensing permanent for all businesses.
“We also welcome the extra £50m funding over two years for apprentices in engineering and other high growth sectors. However, we believe that this must be accompanied by Apprenticeship Levy reform if we are to ensure that apprenticeships are successful, scalable and attractive to companies at all stages of growth.
“Overall, we would have liked to have seen more policies which enable all businesses and all workers to adopt digital technologies and opportunities for upskilling. Our region has a very strong tech sector, which with the right policies, can deliver an important boost to the local economy and create levers and opportunities to lift up the whole region.”
Simon Hobbs, chief executive of Kinaxia Logistics based in Macclesfield said:
“Our economy needs a lift in sales, so the increase of 9.8 per cent in the National Living Wage to £11.44 an hour, and the two per cent reduction in national insurance, will hopefully generate more disposable income and aid the retail recovery – which in turn will create more and much-needed volume for our transport and warehousing sector.
“Through government and industry-funded initiatives such as Generation Logistics, we are trying to raise the sector’s profile and attract more entrants to our important industry. The commitment to ‘bust the planning backlog’ and reform the planning system will hopefully speed up necessary improvements in the UK’s transport infrastructure and the building of secure driver roadside facilities.”
