Autumn statement: Millions to pay more in tax as chancellor cuts top-rate threshold and lays out plan to plug ‘black hole’
Millions more Britons will pay more tax as Jeremy Hunt cut the top-rate threshold and announced freezes on several other taxes in his autumn statement.
The total amount of savings from the autumn statement has been costed at £55bn, through tax rises and cutting government spending.
However, in real-term costs, UK households’ disposable incomes will fall by 7.1% over the next two years – the lowest levels since records began in 1956/7, taking incomes down to 2013 levels, according to the independent Office for Budget Responsibility.
Britons face ‘staggering’ fall in disposable income – live autumn statement updates
Some of the main announcements:
• Higher rate of tax threshold reduced to £125,140
• Benefits and state pension to rise in line with inflation
• Windfall tax extended to March 2028 and increased to 35%
• Electric cars no longer exempt from road tax from April 2025
• An extra £2.4bn per year on schools
• NHS to get £3.3bn and adult social care £1bn next year and £1.7bn in 2024
• Freeze on income tax personal allowance, national insurance and inheritance tax thresholds
• Minimum wage increases to £10.42 an hour
• Social housing rent increases capped at 7% from next year.
Read more:
Key announcements from the autumn statement
Jaw-dropping change of tack by Jeremy Hunt – analysis
The chancellor said the government is introducing two new fiscal rules: that underlying debt must fall as a percentage of GDP by the fifth year in a rolling five-year period: and public sector borrowing over the same period must be below 3% of GDP.
He said he had “tried to be fair” in his decisions by asking those “with more to contribute more” and avoided tax rises that “most damage growth”.
Mr Hunt promised to “protect the vulnerable” and said his plan to plug what he previously called a fiscal “black hole” will lead to “a shallower downturn and lower energy bills”, while revealing his three priorities: “stability, growth and public services”.
But opposition parties and unions have accused the chancellor of holding the country back, with Labour saying the plan means “working people are paying the price” for the Tories’ “failure”.
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’12 weeks of Conservative chaos’
Higher tax rates for the wealthiest and energy companies
The chancellor said the 45p higher rate of tax will now be payable from £125,140, as opposed to the current £150,000.
He said those earning £150,000 or more will now pay just over £1,200 more a year.
Mr Hunt also expanded and increased the windfall tax, so from 1 January 2023 until March 2028 energy giants will have to pay 35%, instead of the current 25% on their profits.
And there will be a temporary new 45% levy on electricity generators, which is in addition to the tax on the companies that provide energy to households and businesses.
He also said electric car owners will no longer be exempt from vehicle excise duty from April 2025.
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And he announced the government, as expected, will proceed with the building of the new Sizewell C nuclear plant in Suffolk, which will create 10,000 highly skilled jobs and provide energy to the equivalent of six million homes over 50 years.
However, there was no mention of fuel duty in the statement, as the law means it goes up by the Retail Price Index – which is set to be 23% in March next year.
The OBR said that would add £5.7bn to the government coffers and would be a “record cash increase” and the “first time any government has raised fuel duty rates in cash terms since 1 January 2011, with an expected rise of around 12p a litre on petrol and diesel.
It is understood the government is not making a decision on fuel duty now but will in the spring budget next year.
Extra cash for schools and the NHS
Much of the chancellor’s statement had been pre-briefed following the economic turmoil the mini-budget created after his predecessor announced surprise unfunded tax cuts.
But Mr Hunt did pull a rabbit out of his hat as he announced an extra £2.3bn each year will be invested in schools for the next two years.
As was expected, he increased the NHS budget by £3.3bn and said he has asked former Labour health secretary Patricia Hewitt to advise on how to make sure the new Integrated Care Boards work properly. They were introduced in April and are aimed at bringing NHS services in local areas together.
Adult social care will get £1bn more next year and £1.7bn in 2024 and he said altogether, along with previous commitments, that means the government is committing to a “record £8bn” package for the health and social care system.
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‘£8bn package for health and social care’
‘Stealth taxes’
There will be a freeze on income tax personal allowance, the main National Insurance thresholds and inheritance tax thresholds for a further two years, until April 2028.
These have been branded “stealth taxes”, with the freeze on income tax to bring in £6.8bn for the government as more people will be pushed into a higher tax bracket.
On personal income allowances, he said the dividend allowance will be cut from £2,000 to £1,000 next year then to £500 from April 2024.
The annual exempt amount for capital gains tax, which is paid on the profit of selling an asset that has increased in value such as property, will also be cut from £12,300 to £6,000 next year then to £3,000 from April 2024. It means people will have to pay tax at a lower threshold than before.
Cost of living and minimum wage help
On help for energy bills, Mr Hunt said the Energy Price Guarantee will continue for a further 12 months from April 2023 at a higher level of £3,000 per year for the average household. It is currently capped at an average of £2,500.
There will also be additional cost of living payments next year for the most vulnerable, with £900 for households on means-tested benefits, £300 for pensioner households and £150 for those on disability benefits.
Social housing rents will have their increases capped at a maximum of 7% in 2023-24, he added.
And the hourly minimum wage will increase by 9.7% from April next year to £10.42 from the current £9.50.
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Energy price cap to rise again in 2023
Pensions and benefits rise
Mr Hunt committed to maintaining the triple lock on pensions, which promises to increase the state pension each year in line with the highest of inflation, average earnings or 2.5%. At the moment, that is inflation which reached a 41-year high on Wednesday of 11.1%.
From April, pensions will rise in line with inflation of 10.1%, meaning an £870 annual increase.
Benefits will also rise in line with inflation while a further 600,000 people on Universal Credit will be made to meet with a work coach to get more people into the workforce and in better-paid jobs.
Defence and overseas aid
Defence Secretary Ben Wallace had previously said he would quit if the government did not stick to spending 3% of GDP on defence by 2030.
He has tempered his tone since as the economy dived but will have been disappointed by Mr Hunt announcing he is committing to “at least 2%”.
On overseas aid, the chancellor said it will remain at 0.5% as he said the “significant shock to public finances” means it will not be possible to return to the 0.7% target.
The last blast furnaces left operating in Britain could see their fate sealed within days, after their Chinese owners took the decision to cut off the crucial supply of ingredients keeping them running.
Jingye, the owner of British Steel in Scunthorpe, has, according to union representatives, cancelled future orders for the iron ore, coal and other raw materials needed to keep the furnaces running.
The upshot is that they may have to close next month – even sooner than the earliest date suggested for its closure.
Read more: Thousands of jobs at risk as British Steel consults unions over closure
The fate of the blast furnaces – the last two domestic sources of virgin steel, made from iron ore rather than recycled – is likely to be determined in a matter of days, with the Department for Business and Trade now actively pondering nationalisation.
The upshot is that even as Britain contends with a trade war across the Atlantic, it is now working against the clock to secure the future of steelmaking at Scunthorpe.
The talks between the government and Jingye broke down last week after the Chinese company, which bought British Steel out of receivership in 2020, rejected a £500m offer of public money to replace the existing furnaces with electric arc furnaces.
The sum is the same one it offered to Tata Steel, which has shut down the other remaining UK blast furnaces in Port Talbot and is planning to build electric furnaces – which have far lower carbon emissions.
These steel workers could soon be out of work
However, the owners argue that the amount is too little to justify extra investment at Scunthorpe, and said last week they were now consulting on the date of shutting both the blast furnaces and the attached steelworks.
Since British Steel is the main provider of steel rails to Network Rail – as well as other construction steels available from only a few sites in the world – the closure would leave the UK more reliant on imports for critical infrastructure sites.
However, since the site belongs to its Chinese owners, a decision to nationalise the site would involve radical steps government officials are wary of taking.
They also fear leaving taxpayers exposed to a potentially loss-making business for the long run.
The dilemma has been heightened by the sharp turn in geopolitical sentiment following Donald Trump’s return to the White House.
The incipient trade war and threatened cut in American support to Europe have sparked fresh calls for countries to act urgently to secure their own supplies of critical materials, especially those used for defence and infrastructure.
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Gareth Stace, head of UK Steel, the industry lobby group, said: “Talks seem to have broken down between government and British Steel.
“My advice to government is: please, Jonathan Reynolds, Business Secretary, get back round that negotiating table, thrash out a deal, and if a deal can’t be found in the next few days, then I fear for the very future of the sector, but also here for Scunthorpe steelworks.”
British Steel declined to comment.
UK
Prince Andrew’s Pitch@Palace branded ‘crude attempt to enrich himself’ as Chinese spy documents set to be released
Prince Andrew’s efforts to make money from his Pitch@Palace project have been branded as a “crude attempt to enrich himself” at the expense of “unsuspecting tech founders”, as new documents may shed more light on what he and his team have been attempting to sell.
Today is the deadline for documents to be released relating to Prince Andrew‘s former senior adviser Dominic Hampshire and his interactions with the alleged Chinese spy Yang Tengbo.
In February, an immigration tribunal heard how the intelligence services had contacted Mr Hampshire about Mr Yang back in 2022. Mr Yang helped set up Pitch@Palace China, a branch of the duke’s scheme to help young entrepreneurs.
The alleged Chinese spy, Yang Tengbo, has links with Prince Andrew
Yang Tengbo. Pic: Pitch@Palace
Judges banned Mr Yang from the UK, saying his association with a senior royal had made Prince Andrew “vulnerable” and posed a threat to national security. Mr Yang challenged that decision at the Special Immigration Appeals Commission (SIAC).
Since that hearing, media organisations have applied for certain documents relating to the case and Mr Hampshire’s support for Mr Yang to be made public. SIAC agreed to release some information of public interest. It is hoped they may include more details on deals that he was trying to do on behalf of Prince Andrew.
So what do we know about potential deals for Pitch@Palace so far?
In February, Sky News confirmed that palace officials had a meeting last summer with tech funding company StartupBootcamp to discuss a potential tie-up between them and Prince Andrew relating to his Pitch@Palace project.
The palace wasn’t involved in the fine details of a deal but wanted guarantees to make sure it wouldn’t impact the Royal Family in the future. Sky News understands from one source that the price being discussed for Pitch was around £750,000 – there are, however, reports that a deal may have stalled.
Photos we found on the Chinese Chamber of Commerce website show an event held in Asia between StartupBootcamp and Innovate Global, believed to be an offshoot of Pitch.
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Who is alleged Chinese spy, Yang Tengbo?
Documents, released in relation to the investigations into Mr Tengbo, have also shown how much the duke has always seen Pitch as a way of potentially making money. One document from 21 August 2021 clearly states “the duke needed money at the time, and saw the relationships with China through Pitch as one possible source of funding”.
But Prince Andrew’s apparent intention to use Pitch to make money has led to concerns about whether he is unfairly using the contacts and information he gained when he was a working royal.
Norman Baker, former MP and author of books on royal finances, believes it is “a crude attempt to enrich himself” and goes against what the tech entrepreneurs thought they were signing up for.
Read more:
Who is Yang Tenbo?
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Emails between Andrew and Epstein revealed
He told Sky News: “The data given by these business people was given on the basis it was an official operation and not something for Prince Andrew, and so in my view, Prince Andrew had no right legally or morally to take the data which has been collected, a huge amount of data, and sell it…
“And quite clearly if you’re going to sell it off to StartupBootcamp, that is not what people had in mind. The entrepreneurs who joined Pitch@Palace did not do so to enrich Prince Andrew,” he said.
Rich Wilson was one tech entrepreneur who was approached at the start of Pitch@Palace to sign up, but he stepped away when he spotted a clause in the contract saying they’d be entitled to 2% equity in any funding he secured.
He feels Prince Andrew is continuing to use those he made a show of supporting.
He said: “It makes me feel sick. I think it’s terrible – that he is continuing to exploit unsuspecting tech founders in this way. A lot of them, I’m quite grey and old in the tooth now, I saw it coming, but clearly most didn’t. And a lot of them were quite young.
“It’ll be their first venture and you’re learning on the trot, so to speak. So to take advantage of people in such a major way – that’s an awful, sickening thing to do.”
We approached StartupBootcamp who said they had no comment to make, and the Duke of York’s office did not respond.
With reports that a deal may have stalled, it could be a big setback for the duke – especially with questions still about how he’ll continue to pay for his home on the Windsor estate now that the King no longer gives him financial support.
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