UK Chancellor Unveils New Budget to Tackle Soaring Inflation, Cost of Living Crisis
Britain’s Chancellor Jeremy Hunt leaves 11 Downing Street to deliver his autumn financial statement to Parliament
Being updatedJeremy Hunt returned from the back bench wilderness in October after a revolt by the City of London forced short-live prime minister Liz Truss to sack Kwasi Kwarteng. Hunt immediately reversed the tax cuts in his predecessor’s mini-budget, and announced a six-month review of the aid scheme for soaring household bills.The British chancellor of the exchequer has announced a swathe of tax rises to fill a £54 billion “black hole” in the government budget.Jeremy Hunt delivered his autumn statement to Parliament on Thursday, announcing more austerity measures following his reversal of predecessor Kwasi Kwarteng’s September mini-budget — this time targeting businesses and high earners.He said the Office of Budget Responsibility (OBR) had reported that “global” factors were to blame for soaring inflation, now running at over 11 per cent — and again tried to blame the crisis on Moscow.Other nations were suffering “the fallout from a once-in-a-century pandemic,” Hunt said, along with a “Made in Russia energy crisis.”
Tax the Rich — and Everyone Else
The chancellor announced that the threshold for paying the 45 per cent Additional Rate of income tax would be lowered from £150,000 to £125,140, saying those earning over £150,000 will pay £1,200 more per year.And he announced a rise in the windfall tax on energy-producing firms which have profited from the energy crisis from 25 to 35 per cent from January 1 until March 28 — with a special 45 per cent levy on electricity generators. Hunt claimed that would raise an extra £14 billion in 2023.The threshold for paying capital gains tax on the sale of property and other assets will be cut from £12,00 to £6,000 in 2023, then to £3,000 in 2024. And the tax-free allowances for the levy on share dividend earnings will also be cut next year and again the year after, grabbing more cash from investors.But lower earners will also be hit, as Hunt extended Prime Minister Rishi Sunak’s freeze on the Personal Allowance threshold for paying income tax until 2028. The point at which the 40 per cent Higher Rate kicks in will also stay at £50,271 until then — meaning millions of ordinary workers will end up paying more.Business owners will be relieved after the budgetary chief announced that the employment allowance — a discount from employers’ National Insurance social security tax contributions — would stay at £5,000.”This means 40% of all businesses will pay no NICS at all,” Hunt said, adding that businesses also benefitted as “the VAT threshold is already more than twice as high as the EU average”.But he insisted that the overall tax burden would increase by just one per cent of Gross Domestic Product (GDP) over the next five years.
Spending Plan
While boasting that the UK had spent more than £2 billion arming Ukraine in support of its its conflict with Russia, Hunt said defence spending would be kept at a minimum of two per cent of GDP. Defence Secretary Ben Wallace has demanded that it rise to three per cent, hinting that he would resign otherwise.Claiming that the ruling Conservatives were the party of “compassion”, he pledged a total of £8 billion increase in health spending, including £2.8 million on social care for the elderly. But he insisted that “Scandinavian quality” in the National Health Service would come with “Singaporean efficiency”. Education will get an extra 2.3 million, with Hunt saying he wanted school leavers to have the same skills as those in Germany, Japan and Switzerland.The Sizewell C nuclear power plant project, announced by former prime minister Boris Johnson just before he left office, will go ahead as Hunt said “energy independence” was vital in the face of Russian President Vladimir Putin’s “weaponisation” of gas prices.
EconomyHunt Goes for a Hunt on a Black Hole in British Public Finance13 November, 09:56 GMTHunt said £6 billion would be budgeted for improving energy efficiency — although that was short on details of whether grant schemes to households for insulation or replacing old boilers would be revived.But the Green lobby will be disappointed as the chancellor ended the vehicle tax exemption for electric cars from 2025 — although he said that after listening to businesses with company car fleets, the new rate would still be lower than for petrol and diesel equivalents.Turning to the unemployed and low-paid, Hunt said the National Living Wage — the minimum hourly rate for ovber-25s — would be raised from £9.50 to £10.42 — higher than the opposition labour Party’s previous demand of £10.And state benefits, including the old age pension, will go up by 10.1 per cent from April 2023 to keep pace with inflation.
