Hunt sets out plan to boost economy and cut taxes

Jeremy Hunt cut national insurance for 27 million people in a highly political autumn statement ahead of a general election expected next year.

The two percentage point reduction in the main rate will save someone earning £35,000 more than £450.

The Chancellor also confirmed that a tax break allowing firms to cut their tax bills if the invest in new equipment will be made permanent in what he claimed was the “biggest business tax cut in modern history”.

He said his plan will “raise business investment, get more people into work, reduce inflation” and increase the size of the economy.

Growth forecast

The Office for Budget Responsibility (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.

Mr Hunt said universal credit and other benefits will increase by 6.7%, in line with September’s inflation figure, ending speculation the Government could have used the cheaper October figure.

Mr Hunt also confirmed the triple-lock formula for state pension rises would be implemented as usual, meaning the state pension will rise by 8.5% in line with average earnings, worth up to £900 more a year.

Welfare

But he confirmed plans for a tougher welfare regime, saying it was “wrong economically and wrong morally” that every year more than 100,000 people were signed onto benefits with no requirement to look for work because of sickness or disability.

The Chancellor said: “We will reform the fit note process so that treatment rather than time off work becomes the default.

“We will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic. And we will spend £1.3 billion over the next five years to help nearly 700,000 people with health conditions find jobs.”

Mr Hunt said the OBR projected these reforms will “more than halve the net flow of people who are signed off work with no work search requirements”.

There will also be £1.3 billion of funding to offer “extra help” to 300,000 people who have been unemployed for more than a year.

He said: “After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track.

“We have supported families with rising bills, cut borrowing and halved inflation.

“Rather than a recession, the economy has grown. Rather than falling as predicted, real incomes have risen.

“Our plan for the British economy is working. But the work is not done.”

In other announcements, Mr Hunt:

– Promised £7 million over three years for organisations to tackle antisemitism.

– Said national debt was forecast by the Office for Budget Responsibility to be lower than previously expected in every year of the forecast through to 2028-29.

– Cut national insurance by an average £350 a year for around two million self-employed people.

– Committed to explore options for a NatWest retail share offer in the next 12 months, potentially offering investors the chance to buy some of the Government’s stake in the bank.

– Froze alcohol duties until August 2024.

– Extended 75% business rates relief for retail, hospitality and leisure until 2025.