GOOD AFTERNOON & welcome to my weekly update no.244: Autumn Statement Special.
Having finished my final prep with my trusty adviser at my side (my labrador Poppy!), on Wednesday I delivered the Autumn Statement which is my focus for this week’s newsletter. It was a big moment for the country and government because with inflation halved it was possible to turn my attention to the long term growth of the British economy. I focused on two elements to that: backing British business with reforms to encourage and facilitate investment and rewarding effort and work. I also announced help for families with cost of living pressures.
BACKING BRITISH BUSINESSES
BIGGEST EVER BUSINESS TAX CUT In the Spring I announced a three year tax relief for companies called ‘full expensing’, which allows businesses to reduce their tax bill by 25% of everything they invest. This week I announced that full expensing was going to become permanent – a change which amounts to the biggest business tax in modern British history and makes us the only G7 nation to have full expensing. This may sound really technical but it is really important (as I also explain in this thread). We have the biggest life sciences sector and technology sector in Europe, and we recently overtook France to become the 8th biggest advanced manufacturing economy in the world, as I saw for myself when I was at Airbus’s factory in North Wales yesterday. Despite that, Germany remains Europe’s richest country overall, partly because they have a higher productivity than us. The biggest reason for this is higher business investment e.g more invested into machinery, IT, and tools which makes their workers more productive. Full expensing will help us to catch up by incentivising much more investment in automation– I was persuaded to do so because more than 200 CEOs wrote to me saying it was the “single most transformational” thing I could do. The OBR say that it will increase annual investment by around £3bn each year, so it really is a significant announcement.
BUSINESS RATES RELIEF Despite the fact that we have brought inflation down,there are still lots of pressures on small businesses, including energy bills. I therefore protected over one million small businesses from an increase in business rates, which will save an average shop £1,650 next year. I also extended the Retail, Hospital and Leisure relief which will benefit 230,000 properties. That means a typical independent pub will get around £11,800 off their final business rates bill which will, I hope, be a big boost to high streets in Godalming, Farnham, Haslemere, Cranleigh and Ash.
ALCOHOL DUTY And on the important topic of pubs, following very persuasive chats with Councillor Jane Austin (a big fan of the Jolly Farmer pub in Bramley), I decided to freeze all alcohol duty, which means no increase in duty paid on beer, wine, cider, or spirits. That comes on top of our Brexit Pubs Guarantee, which ensures a duty on a pint is always lower than in shops.
INFRASTRUCTURE AND PLANNING We need to ensure that our planning system does not delay businesses that want to build vital infrastructure. I therefore announced several reforms to help, including enabling faster decisions in exchange for a fee, with refunds where this is not met. We will also prioritise more nationally significant low-carbon energy projects.
LEVELLING UP I often write in these newsletters about the Investment Zones I announced in the Spring Budget, so it was great to support new investments in three of those and announce a new Investment Zone in Wrexham, which is what I was visiting when I went to Airbus this week.
REWARDING WORKERS
CUTTING TAXES One of the most important measures I announced (and the one that stole the headlines) was a cut in the main rate of National Insurance from 12% to 10%. That means that 27 million working people across the country will pay on average £450 less tax next year. Usually these taxes come in at the start of financial years in April, but I wanted people to benefit as soon as possible so we are bringing in urgent legislation so that it applies from 6th January next year. Self-employed people are also so important to our economy and indeed kept it going during the pandemic, so I also abolished a class of national insurance that only they pay. The main focus of my media interviews was on this tax and the extent to which it reduced a tax burden that has gone up considerably to pay for pandemic and cost of living support. Probably the best one was this interview with Nick Robinson on Today (at 2hrs 15min), but I also did interviews on Sky, BBC Breakfast and GB News.
NATIONAL LIVING WAGE I am incredibly proud that since 2010 those on the minimum wage have had their hourly wage increased from £5.80 to £10.42 per hour, which amounts to a real terms increase of more than 20%. When you factor in that we have also doubled the threshold at which you pay tax or national insurance, their after-tax income has increased by 25%, which is more than any other income group. We have already halved low pay (as defined by less than two thirds of median pay) but we promised to eliminate it so it was a genuinely wonderful moment to announce that the National Living Wage will go up to £11.44 per hour. That means that the incomes of those on the lowest legally payable wage will have gone up by 30% in real terms after tax compared to 2010.
BACK TO WORK PLAN In the Spring Budget I also announced the biggest expansion to childcare in a generation, which will begin to be rolled out in April and will help tens of thousands of parents, particularly mothers, who want to work. But we still have almost 3 million people who are assessed as not being able to work due to sickness or disability, which is a huge waste of our potential. So I announced together with the Secretary of State for Work and Pensions, Mel Stride, that we will reform the Work Capability Assessment to reflect the fact that since the pandemic it is much easier (and common) to work from home. We will also spend £1.3bn over the next five years to help 700,000 people with health conditions find jobs, including nearly 500,000 more people being offered treatment for mental health conditions and employment support. I outline lots of these measures in this video with Mel Stride. The bottom line is that our current system is making it too hard for those who can and want to work, and I am determined to change that, not least to help fill the almost 1 million vacancies we have in the economy.
COST OF LIVING
PROTECTING THE TRIPLE LOCK It is only fair that those who spent their entire lives working are guaranteed dignity in older age. So it is right that we keep the Triple Lock, and on Wednesday I confirmed that pensions would be boosted by 8.5 from April 2024. That comes on top of the support we also provide for those struggling with energy costs through schemes like Winter Fuel payments.
LOCAL HOUSING ALLOWANCE Local Housing Allowance is so important for the most vulnerable, so I increased the rates which will mean 1.6 million families will on average be £800 better off in the next financial year. The rate will cover the lower 30% of local rents.
WORKING AGE BENEFITS These were also increased in full by 6.7%, which will help the 5.5 million households who receive Universal Credit. It amounts to an average increase of £470 per year and will be essential to support the most vulnerable as inflation continues to fall.
AUTUMN STATEMENT FOR GROWTH
These measures will boost business investment by about £20 bn a year closing about half the productivity gap with countries like Germany and America. In total there were 110 measures targeted at growth – too many to risk listing individually to restless MPs! They also covered things like regulations for medicines research, reforms to pension funds to ensure we get more investment in the economy, and how to ensure that we are investing in visual effects so that we can continue making huge global blockbusters like Barbie.
The OBR says that the combined impact of these measures will increase business investment, get more people into work, continue to reduce inflation, and increase GDP. I really do think each of these measures are so important in working towards our future economic growth, supporting families, and backing businesses.
I hope you agree! You can let me know what you thought of it here.
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