MILLIONS of Brits will suffer the highest tax burden since World War Two, while the most hard-up households are in for a pay day, Jeremy Hunt confirmed today.
The Chancellor announced the major news in his cash-grabbing Autumn Statement, which was delivered in the Commons this morning.
The tough financial plan outlined how the Treasury will fill a £50bn hole in the public purse.
The package of measures are eye-wateringly tough, with millions forced to give up more money to fill government coffers.
But theres also major new help for vulnerable Brits struggling with the crippling cost of living crisis.
Read more about Jeremy Hunt‘s plans on the Autumn Statement live blog.
The Chancellor said his plan puts the needs of the poorest first, because to be British is to be compassionate.
But he added that tough measures for the better-off are included too, because “the United Kingdom will always pay its way”.
The Autumn Statement came as inflation this week hit a staggering 11.1 per cent.
And today the Office for Budget Responsibility confirmed the worst – the UK is officially in a recession.
The OBR revealed it expects unemployment to rise from 3.6 per cent today to 4.9 per cent in 2024, before falling to 4.1 per cent.
And GDP is predicted to fall in 2023 by 1.4 per cent, before rising by 1.3 per cent, 2.6 per cent, and 2.7 per cent in the following three years.
In more record-breaking bleak news, household income per person will probably fall more than 7 per cent over next two years.
The drop would drag income down to 2013 levels.
Today’s tax hikes mean that Brits face the biggest tax burden since the Second World War – again.
The tax take will soar to more than £1trillion next year for the first time – as tax receipts bounce back after the pandemic.
The OBR said: “The tax burden (i.e. the ratio of National Accounts taxes to GDP) now peaks at 37.5 per cent of GDP in 2024-25, which would be its highest level since the end of the Second World War.
“From there, it falls gradually to 37.1 per cent of GDP by 2027-28, but remains 4.1 percentage points above its pre-pandemic level, and at its highest sustained level for seven decades.”
Following today’s statement, 55 per cent of households will be worse off.
Mr Hunt said: In the face of unprecedented global headwinds, families, pensioners, businesses, teachers, nurses and many others are worried about the future.
“So today we deliver a plan to tackle the cost of living crisis and rebuild our economy.
“Our priorities are stability, growth, and public services. We also protect the vulnerable because to be British is to be compassionate and this is a compassionate Conservative government.”
The Chancellor added that the Autumn Statement will eventually cause inflation and interest rates to calm down.
New policies confirmed in the Autumn Statement:
- Energy Price Guarantee to be cut – average household bill will climb from £2,500 to £3000
- Triple lock to stay and pensions to rise in line with inflation
- Benefits to rise in line with inflation
- Council tax rates to rise by up to 5 per cent
- Households on means tested benefits to receive a £900 cost of living payment, alongside a £300 payment for pensioners and £150 disability payment
- National living wage to rise by 10 per cent to £10.40/hr
- Minimum wage for 21-22 year olds rises to £10.18/hr
- Minimum wage for 18-20 year olds rises to £7.49/hr
- Freeze on income tax thresholds until 2028
- Extended windfall tax on oil and gas companies raking in mega profits
- £150,000 threshold for the additional rate of income tax lowered to £125,140
- From 2025 electric vehicles will no longer be exempt from vehicle excise duty
- An extra £2.3bn per year will be invested into schools
- An extra £2.7bn for social care over the next two years
- An extra £6.6bn for the NHS over the next two years
- £600bn of investment in the Sizewell C nuclear plant, Northern Powerhouse Rail, HS2 to Manchester, gigabit broadband rollout and a new hospitals programme
In good news for millions of Brits, the Autumn Statement confirmed that pensions and benefits will rise in line with inflation next year.
Minimum and national living wage brackets will also be hiked.
Those aged 23 and over will have to be paid at least £10.40 per hour by employers.
The threshold for 21-22 year olds will rise to £10.18 an hour, while 18-20 year olds will get at least £7.49.
Meanwhile, pension payments and benefits will be hiked by 10.1 per cent from April 2023 – September’s inflation rate.
In a major win for those struggling, the Chancellor announced that households on means tested benefits will receive a £900 cost of living payment next year.
There will also be £300 for pensioners and a £150 disability cost of living payment.
Rent increases in social housing will be capped at 7 per cent in 2023-24.
The move will save the average tenant around £200 next year.
And to encourage more Brits into work and to lift incomes across the UK, over 600,000 people on Universal Credit will be made to meet with a work coach to work on ways to increase their hours.
Alongside major handouts, huge tax rises were also announced in the Autumn Statement.
The Chancellor clobbered millions of workers with stealth tax rises by freezing income thresholds for six years.
Those earning the average salary of £33,000 this year will pay an extra £2,500 in tax by 2027, said analysts AJ Bell.
And those earning £50,000 will pay an additional £6,500.
Meanwhile, the Energy Price Guarantee will be cut back.
Currently average household bills are capped at £2,500, but that will rise to £3000 in April 2023.
But the Chancellor revealed that by 2030 he aims for the UK to have reduced energy consumption from buildings and industry by 15 per cent.
The reduction should lead to £28bn of savings from the national energy bill, the equivalent of £450 off the average household bill.
In a major blow to homes around Britain, the Chancellor ripped up rules limiting the minimum rate local authorities can charge council tax.
Currently town halls are not allowed to increase council tax above 2 per cent per cent – plus a one per cent social care levy – without holding a local referendum.
But Mr Hunt increased this to 5 per cent to help pay for stretched services being squeezed by central government cuts.
To keep Britain safe from deranged tyrants like Mad Vlad Putin, defence spending will be maintained at 2 per cent of GDP.
The figure is a blow to Defence Secretary Ben Wallace, who has long called for an increase to 3 per cent.
In good news for the education sector, schools will receive an extra £2.3bn per year.
“Our message to heads and teachers today is thank you for your brilliant work, we need it to continue,” Mr Hunt said.
“And in difficult economic circumstances, a Conservative government is investing more in the public service that defines all of our futures.”
Meanwhile, social care will receive an extra £2.7bn funding over the next two years.
And the NHS will get an extra £6.6bn across 2023 and 2024.
Responding to the Autumn Statement, Shadow Chancellor Rachel Reeves blasted: The mess we are in is not just a result of 12 weeks of Conservative chaos but 12 years of Conservative economic failure.
And all they offer today is more of the same – with working people paying the price for their failure.
Labour knows that there are fairer choices to make, and that what our country needs is a serious long-term plan to get our economy growing again – powered by the talent and effort of millions of working people and thousands of businesses.
More optimistically the centre-right Onward think tank described the Autumn Statement as a route to restoring credibility.
Director Adam Hawksbee said: The Chancellors main job today was to begin restoring political stability and economic credibility.
“He has taken tough decisions in a difficult environment to achieve that goal. And he seems to have done so in a way which limits the impact on the most vulnerable, protecting benefits while taxing high earners and energy companies.
“Today was not a return to austerity.”
The Federation for Small Businesses was more critical, commenting: Todays Budget is high on stealth-creation and low on wealth-creation, piling more pressure on the UKs 5.5 million small businesses, their employees and customers.
While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise. Today is a missed opportunity to avoid further economic slowdown.”