Autumn Statement 2022: key points at a glance

Jeremy Hunt says the government will present a plan to tackle the cost of living crisis and rebuild the UK economy. The chancellor says his priorities are stability, growth and public services, and is delivering “fair solutions” despite taking “difficult decisions”.

Aubrey Allegretti, political correspondent: The chancellor opens his autumn statement, which has been dubbed the “Trussonomics memorial service”, by seeking to blame the cost of living crisis on “unprecedented global headwinds”.

In a nod to the market chaos that plagued the last government, Hunt says his declaration will offer stability but wants to make sure the Tories are not seen as just a party of managed decline, stressing he will also seek grow the economy.

growth

The chancellor says forecasts from the Office for Budget Responsibility show the economy will grow by 4.2% this year.
Hunt says the economy is already in recession, with higher energy prices accounting for most of the revision to growth forecasts.
GDP would then contract by 1.4% next year, before rising by 1.3% in 2024, 2.6% in 2025 and 2.7% in 2026.
In March, the OBR had forecast growth of 3.8% in 2022 and 1.8% in 2023.
The economy grew by 7.5% in 2021, after an 11% drop in 2020, the biggest drop in 300 years, during the first wave of the pandemic.

Aubrey Allegretti: Hunt relies on the OBR, saying it has adjudged that “higher energy prices” explain most of the lower-than-expected growth forecast.

And to calm nervousness among MPs over fears of another recession, he says the International Monetary Fund expects a third of the world economy to be in recession this year or next.

Mr Hunt drops his first mention of “difficult decisions”, laying the groundwork for tough measures, stressing that those who believe they are unnecessary “are not being honest with the British people”.

loan

Hunt says borrowing in the current financial year, 2022-23, will be 7.1% of GDP.
In cash terms, the OBR estimates the budget deficit (the gap between spending and revenue) to be £177bn in 2022-23.
In its previous forecasts in March, the OBR had estimated that borrowing would be 3.9% of GDP, or £99.1 billion in cash, in 2022-23.
Chancellor says debt is ‘more than halved’ by autumn statement actions.
Public sector net debt is projected to peak at 97.6% of GDP in 2025-26, then gradually decline to 97.3% of GDP in 2027-28.
Hunt announces two new fiscal rules: underlying debt must fall as a percentage of GDP within five years; and public sector debt must be less than 3% of GDP.

Aubrey Allegretti: One of the key audiences Hunt has to satisfy is the money markets, who will be hanging on his every word. Hunt’s new tax rules on borrowing are designed to be proof of his claim that the UK will “always pay its own way”.

Personal taxes

The chancellor announces a series of tax threshold freezes, including income tax and inheritance tax for a further two years, plus a four-year freeze, until April 2028.
Dividend subsidies will be reduced. The annual bonus exempt from capital gains tax will also be reduced.
Hunt says the changes still leave Britain with more generous subsidies than several other leading nations.
The 45p additional rate threshold will be reduced from £150,000 to £125,140.
Hunt says electric vehicles will no longer be exempt from vehicle excise duty from 2025.

Aubrey Allegretti: While the news has left the Conservative backbenches muted and looking sad, Hunt tries to lay out the positives so they have reason to leave the House of Commons with some defensive lines to take with the media and frustrated constituents.

It says the changes will still leave the UK with the most generous tax-free allowances of any G7 country, adding that the tax take will rise by just 1% over the next five years.

Commercial taxes

Extraordinary taxes will rise by £14bn, including a new temporary levy of 45% on electricity producers.
Hunt says the government will soften a blow to businesses on business rates with a tax cut of almost £14 billion on business rates, which will benefit around 700,000 businesses.
Employment Allowance will remain at a higher level of £5,000.

Aubrey Allegretti: Hunt distrusts the Tories’ cherished mantle of being ‘part of business’ and stresses that 40% of all businesses will continue to pay no National Insurance contributions.

Seeking to head off a possible Labor line of attack, he says the government will continue to pursue tax avoidance and evasion.

Many of the announcements he is making relate to years well after the next general election, so some of the pain won’t be felt for years to come. (Or even never, if the Tories end up being kicked out of government after 2025.)

Public spending

Hunt says government spending will continue to rise in real terms every year for the next five years, but at a slower pace.
The chancellor says “public spending discipline” must be demonstrated during a “challenging period”.
Existing departmental spending will be maintained through the 2021 spending round. Departmental spending will then grow by 1% per year for the next three years.
He says that the departments will have to make efficiency. However, overall spending will “continue to increase in real terms” over the next five years.

Aubrey Allegretti: Voters could bear higher taxes, but they’d probably expect better from languishing public services.

Hunt nods, saying he wants to “protect them as much as we can.”

Trying to dispel any claims that his autumn statement offers a return to austerity, Hunt insists that public spending will grow, albeit more slowly than the growth of the economy.

Foreign aid and climate

Hunt says the government will not be able to return foreign aid spending to 0.7% of GDP until economic conditions permit. It will remain at 0.5% for the remainder of the forecast period.
The chancellor says he confirms that, despite economic pressures, the government remains “fully committed” to Cop26, including cutting UK emissions by 68% by 2030.

Aubrey Allegretti: Hunt has not fully reduced two major concerns about more focused spending internationally. It says aid spending will not rise again to the 0.7% of GDP target and says defense spending will remain at a minimum of 2%.

education

Hunt says the Treasury will increase the schools budget, with an extra £2.3 billion a year.
He says that in difficult economic circumstances, a Conservative government is investing more in the public service that defines all our futures.

Aubrey Allegretti: After feeling the heat over the weekend from two dozen Tory MPs, including a former education secretary, demanding Hunt not cut education spending, he put out that particular fire by saying it will rise by £2.3bn next year and the year after. after.

But how much of that will be left to educate children after pay rises, energy bills and inflation may still worry some.

Health and social care

The chancellor says social care did an incredible job during the pandemic, but an aging population is putting massive pressure on its services.
Hunt says he wants to free up hospital beds by investing in social care and will commit a further £1bn next year and £1.7bn the year after, funded by savings from overdue reforms.
Patricia Hewitt, the former occupational health secretary, will advise the government on NHS efficiency. Says Hunt: “We want Scandinavian quality along with Singaporean efficiency.”
The chancellor says there will be a £3.3 billion increase in NHS funding. “This is a Conservative government that puts the NHS first,” he says.

Aubrey Allegretti: Hunt reminds MPs that he is a former health secretary, a role in which he was considered unpopular.

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It aims to address one of the biggest problems facing the NHS, saying a plan will be drawn up for the number of doctors and nurses needed up to 15 years into the future.

In a nod to the frustrations felt by many in the health service over the looming strikes, Mr Hunt says he will ensure there is “better retention and productivity improvements”.

Delaying the social care cap will disappoint Tories loyal to Boris Johnson, who promised to “fix the social care crisis once and for all with a clear plan that we have prepared” for three years.

economic development

The chancellor says the government will focus on economic growth, despite having to find budget savings. Energy, infrastructure and innovation will be priorities.
“If we want to avoid a fatal loop of ever-higher taxes and ever-lower dynamism, we need economic growth,” he says.
Hunt says the government will go ahead with a new nuclear power station at Sizewell C, helping to provide reliable, low-carbon power. “It represents the first step in our journey to energy independence,” he says.
The chancellor says he will double investment in energy efficiency in homes and industry by £6bn from 2025.

Aubrey Allegretti: “Growth” was the watchword of Liz Truss and Kwasi Kwarteng, and Hunt wants to show that he hasn’t abandoned that ambition, even if it’s being achieved in a distinctly different way.

To avoid a “vicious loop” of higher taxes and government spending, Hunt says growth remains a priority.

The only real joy in the statement comes when the chancellor fires a barb through the inbox saying Labor has never been interested in growth.

However, his follow-up that “sound money is the bedrock upon which long-term prosperity…