National insurance to be cut from 12% to 10% – but tax burden to remain at record high
National insurance is to be cut by two percentage points, the chancellor has announced.
In a boost to employee’s pay packets, Jeremy Hunt told the Commons that the main 12% national insurance rate would fall to 10% from 6 January – saving those on an average salary of £35,000 over £450 a year.
In his autumn statement, he also abolished NI payments for the self-employed, known as class two national insurance, to recognise the government “values their work”.
Politics latest: Chancellor delivers autumn statement amid pressure in the polls
The tax cuts follow long-standing pressure from the Tory backbenches to reduce the burden on both the public and business, which has been sat at a 70-year high.
But it also comes as a general election looms, with the Conservatives still lagging behind Labour in the polls.
Delivering his autumn statement in the Commons, the chancellor said: “If we want people to get up early in the morning, if we want people to work nights, if we want an economy where people go the extra mile and work hard then we need to recognise that their hard work benefits all of us.”
However, Sky News’ economics editor Ed Conway said the overall tax burden on the public would still remain at a record high as the government continued its freeze on tax thresholds.
Forecasts from the Office for Budget Responsibility (OBR) showed taxes were still trending upwards, with a post-war high of 37.7% set to be reached by 2028/29 under the current government plans.
They put this down to so-called “fiscal drag”, as while people’s wages may increase, the level at which they start paying tax remains unchanged, and that leads to more people being moved into the higher tax rates – four million more, if the OBR’s prediction is correct.
Labour’s shadow chancellor, Rachel Reeves, said Mr Hunts announcements owed “more to the cynicism of a party desperate to cling onto power than the real priorities of this high tax, low growth Conservative government”, adding: “So I think we can forgive taxpayers for not celebrating when they see the truth behind today’s announcements.”
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Shadow chancellor Rachel Reeves responds to Jeremy Hunt’s autumn statement
Elsewhere in his speech, Mr Hunt confirmed Universal Credit would be increased by inflation next April in line with September’s inflation figure of 6.7% – an average increase of £470 for 5.5 million households – despite rumours the government was planning a smaller rise.
And he said the full state pension would go up by 8.5% to £220 per week – worth up to £900 more a year, honouring the Tories’ commitment to the triple lock.
But the chancellor also announced new tougher measures for job seekers, saying those who fail to find work after 18 months of “intensive support” will be given mandatory work placements.
Those who do not engage with the process for six months will lose their benefits altogether.
Mr Hunt also confirmed the much trailed plans to reform the benefits process for those who are signed off work because of sickness or disability.
He called the over 100,000 people signed off each year a “waste of potential” that was “wrong economically and wrong morally”.
As a result, the chancellor said the government would reform the Work Capability Assessment to “reflect greater flexibility and availability of home working after the pandemic”.
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Key announcements from chancellor at a glance
Mr Hunt said: “Our choice is not big government, high spending and high tax because we know that leads to less growth, not more.
“Instead we reduce debt, cut taxes and reward work. We deliver world class education. We build domestic sustainable energy and we back British business”.
He added: “Conservatives say we should unlock the potential we have right here at home, which we do with the biggest set of welfare reforms in a decade.”
Other announcements in the autumn statement included:
• Freezing all alcohol duty until 1 August 2024
• Extend 75% business rates discount for retail, hospitality and leisure businesses for another year
• Increasing the local housing allowance rate, giving 1.6 million households an average of £800 of support next year
• Consult on giving savers a legal right to have one pension pot for life that employers pay into
• Make the super deduction tax break for large businesses investing in the UK permanent
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The chancellor insisted the government’s plan for the British economy was “working” as ministers had “taken difficult decisions to put our economy back on track”.
He celebrated a reduction in government borrowing and the halving of inflation since last autumn’s record high after Liz Truss’ disastrous mini budget, saying that gave him the room to make tax cuts.
However, inflation still sits at 4.6% – double the target of the Bank of England.
Labour’s Ms Reeves said: “The chancellor claims the economy has ‘turned a corner’, yet the truth is that under the Conservatives growth has hit a dead end.
“What has been laid bare today is the full scale of the damage that this government has done to our economy over thirteen years, and nothing that has been announced today will remotely compensate.”
She added: “As the sun begins to set on this divided, out of touch, weak government, the only conclusion the British people will reach is this – after thirteen years of the Conservatives, the economy simply isn’t working.
“And, despite all the promises today, working people are still worse off.”
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Sky’s Ed Conway crunches through the numbers following the Chancellor’s autumn statement
The OBR has upgraded its growth forecast for gross domestic product – a measure of the size of the economy – this year, but downgraded the figure for subsequent years.
The budget watchdog’s forecast in March was for the economy to shrink by 0.2% in 2023, but that has now been revised up to 0.6%.
But in 2024 growth is forecast to be 0.7% rather than the 1.8% expected at the time of the Budget, 2025 is expected to see 1.4% rather than 2.5% and 2026 could be 1.9% instead of 2.1%.
Growth is then expected to go beyond the previous forecast, with 2% in 2027, slightly above the 1.9% predicted in March, with 1.7% in 2028.
“If we want those numbers to be higher, we need higher productivity,” the chancellor said.
On the eve of the autumn statement, the Treasury confirmed it would be increasing the national living wage, rising from £10.42 to £11.44 from April, and that it will benefit workers aged 21 and over, rather than 23 and over.
It will mean an £1,800 annual pay rise next year for a full-time worker on the living wage, while 18 to 20-year-olds will receive a £1.11 hourly rise to £8.60.
The changes are expected to impact about two million people.
Britain loves chocolate.
We’re estimated to consume 8.2kg each every year, a good chunk of it at Christmas, but the cost of that everyday luxury habit has been rising fast.
Whitakers have been making chocolate in Skipton in North Yorkshire for 135 years, but they have never experienced price pressures as extreme as those in the last five.
“We buy liquid chocolate and since 2023, the price of our chocolate has doubled,” explains William Whitaker, the real-life Willy Wonka and the fourth generation of the family to run the business.
William Whitaker, managing director of the company
“It could have been worse. If we hadn’t been contracted [with a supplier], it would have trebled.
“That represents a £5,000 per-tonne increase, and we use a thousand tonnes a year. And we only sell £12-£13m of product, so it’s a massive effect.”
Whitakers makes 10 million pieces of chocolate a week in a factory on the much-expanded site of the original bakery where the business began.
Automated production lines snake through the site moulding, cutting, cooling, coating and wrapping a relentless procession of fondants, cremes, crisps and pure chocolate products for customers, including own-brand retail, supermarkets, and the catering trade.
Steepest inflation in the business
All of them have faced price increases as Whitakers has grappled with some of the steepest inflation in the food business.
Cocoa prices have soared in the last two years, largely because of a succession of poor cocoa harvests in West Africa, where Ghana and the Ivory Coast produce around two-thirds of global supply.
A combination of drought and crop disease cut global output by around 14% last year, pushing consumer prices in the other direction, with chocolate inflation passing 17% in the UK in October.
Skimpflation and shrinkflation
Some major brands have responded by cutting the chocolate content of products – “skimpflation” – or charging more for less – “shrinkflation”.
Household-name brands including Penguin and Club have cut the cocoa and milk solid content so far they can no longer be classified as chocolate, and are marketed instead as “chocolate-flavour”.
Whitakers have stuck to their recipes and product sizes, choosing to pass price increases on to customers while adapting products to the new market conditions.
“Not only are major brands putting up prices over 20%, sometimes 40%, they’ve also reduced the size of their pieces and sometimes the ingredients,” says William Whitaker.
“We haven’t done any of that. We knew that long-term, the market will fall again, and that happier days will return.
“We’ve introduced new products where we’ve used chocolate as a coating rather than a solid chocolate because the centre, which is sugar-based, is cheaper than the chocolate.
“We’ve got a big product range of fondant creams, and others like gingers and Brazil nuts, where we’re using that chocolate as a coating.”
The costs are adding up
A deluge of price rises
Brazil nuts have enjoyed their own spike in price, more than doubling to £15,000 a tonne at one stage.
On top of commodity prices determined by markets beyond their control, Whitakers face the same inflationary pressures as other UK businesses.
“We’ve had the minimum wage increasing every year, we had the national insurance rise last year, and sort of hidden a little bit in this budget is a business rate increase.
“This is a small business, we turn over £12m, but our rates will go up nearly £100,000 next year before any other costs.
“If you add up all the cocoa and all the other cost increases in 2024 and 2025, it’s nearly £3m of cost increases we’ve had to bear. Some of that is returning to a little normality. It does test the relevance of what you do.”
The UK is to rejoin the European Union’s Erasmus student exchange scheme, according to reports.
The popular programme allowed Britons to spend a year studying at European universities as part of their degree, without paying extra fees, and vice versa for their European counterparts.
It ended for British students after Brexit on 1 January 2021 and was replaced by the Turing scheme.
But ministers could announce the UK will rejoin Erasmus from January 2027 as soon today, The Times and The Guardian have reported.
How did we get here?
Sir Keir Starmer promised a post-Brexit reset deal with Brussels and announced the government was working on rejoining the programme in May.
Negotiations have included work on “mutually agreed financial terms” for the UK and the EU.
The UK had pushed for a discount on membership fees, which are calculated on the basis of a country’s gross domestic product (GDP), The Times reported.
It said the EU is understood to have offered the government a 30% reduction of fees in the first year of membership.
Labour MP Darren Frith told Sky News’ Politics Hub he would “welcome” such a move.
The Guardian reported that, as well as university-based study exchanges, British students will be able to participate in vocational training placements under the scheme.
Cabinet Office minister Nick Thomas-Symonds held talks with Maros Sefcovic, the European Commission’s trade lead, in Brussels last week.
A Cabinet Office spokesman said: “We are not commenting on ongoing talks.”
‘Fantastic opportunities for students’
But the UK’s universities welcomed the apparent breakthrough.
Tim Bradshaw, chief executive of the Russell Group of leading universities, said: “We’re delighted at the UK’s association to Erasmus+.
“With an even greater scope than previous programmes, Erasmus+ opens up fantastic opportunities for students, adult learners and young people to all benefit from new experiences and learning.
“It will also renew the huge contributions that EU students and staff make to life on our university campuses.”
The Lib Dems, who have been campaigning to rejoin Erasmus, welcomed the news.
Leader Sir Ed Davey said: “This is a moment of real opportunity and a clear step towards repairing the disastrous Conservative Brexit deal.”
Resident doctors across England begin a five-day strike this morning over pay and jobs, marking the 14th walkout by them since March 2023.
It coincides with the record number of flu cases in England and NHS leaders warning of a “huge strain on hospitals” and strikes causing “further disruption and delays”.
Resident doctors are striking in England from 7am today until 7am on Monday 22 December.
Sir Keir Starmer called the action “irresponsible” while Health Secretary Wes Streeting has rejected the British Medical Association’s (BMA) pay demands, accusing the union of a “shocking disregard for patient safety”.
But the BMA insists its strike is “entirely avoidable” and has demanded a “credible offer” to avert “real-terms pay cuts”.
Why are resident doctors on strike?
The government says resident doctors have already received an average pay rise of 28.9% over the past three years (2023-24 to 2025-6).
But the BMA has been demanding an additional 26% pay uplift to restore what they say amounts to erosion in their earnings, once inflation is taken into account. Although there is some dispute about the extent of the real terms fall, because of the BMA’s use of the Retail Price Index (RPI) in its calculation.
Hopes that the strike could be averted were dashed on Monday when the BMA said 83% of resident doctors rejected a fresh proposal from the government.
While it did not include any extra pay, the offer included the fast expansion of specialist training posts; covering out-of-pocket expenses such as exam fees; and offering to extend the union’s strike mandate to enable any walkout to be rescheduled to January.
What if I need urgent medical care?
The Department of Health and Social Care says it is important people do not avoid seeking urgent care, and should use 999 if it is a serious or life-threatening emergency. For everything else, there is NHS 111 or the NHS App.
It adds that patients should turn up for planned appointments unless they have been told otherwise. Any appointments that need to be rescheduled will be given priority.
During strikes, there are exemptions or special arrangements, called derogations, which allow certain essential services to continue operating. It means critical services will be maintained to ensure patient safety and prevent serious harm.
How much do resident doctors earn?
There are many different types of resident doctor in England with different levels of pay. Full Fact, which has crunched the numbers, said they currently earn between £38,831 and £73,992 a year, but that does not take into account extra pay for unsociable hours.
Full Fact states that resident doctors typically get between a quarter and a third more than their basic salary from other sources.
This takes estimated average earnings (in the year ending August 2025) to between £45,846 and £81,061 (although the government claims the figures are more like £49,000 to £97,000).
Comparisons with other countries are difficult because of how doctors are categorised. Broadly, resident doctors in England earn about the same as those in Ireland and anything between 1% less and 26% more than in New Zealand.
But doctors in Australia earn somewhere between 23% and 48% more than their counterparts in England.
What has the reaction been?
The prime minister has said the strike comes “on the back of a very substantial pay increase in the last year or so”.
“I think it’s irresponsible action by the BMA,” he told MPs.
The health secretary called for doctors to ignore the strike and criticised what he called the “fantasy demand for another 26% pay rise,” adding that “it reveals the BMA’s shocking disregard for patient safety”.
Dr Jack Fletcher, chairman of the BMA’s resident doctors’ committee, said the strikes were “entirely avoidable”. He added that “we should start negotiating, and the government should stop game-playing”.
But organisations representing NHS trusts have been scathing about the walkouts. Daniel Elkeles, chief executive of NHS Providers, said: “Trust leaders and staff will be working now to minimise the impact of the strike, but sadly it will mean further disruption and delays.”
Meanwhile, Rory Deighton, acute and community care director at the NHS Confederation, said: “These strikes come at the worst possible time, with rapidly rising flu levels putting huge strain on hospitals.”
What about public support for strikes?
Public support for the strikes is low, according to a YouGov poll released last week.
The results showed 58% of those asked either somewhat or strongly opposed the industrial action, while 33% somewhat or strongly supported it.
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