Jeremy Hunt has announced a larger-than-expected National Insurance cut in a desperate attempt to win back voters - but experts aren't convinced.
The Chancellor was accused of a "cynical ploy" after failing to raise income tax thresholds in his Autumn Statement. This means more than three million workers face being dragged into a higher tax bracket, cancelling any benefits of the National Insurance cut, economists warn.
Mr Hunt told MPs he was reducing the National Insurance rate from 12% to 10%, alongside a string of other measures aimed at wooing workers who have been battered by high rates. He was criticised by disability rights groups today over a "morally wrong" sanctions regime for benefits claimants.
In the days before today's announcement Mr Hunt and Rishi Sunak were forced to shelve their plan to cut inheritance tax for mega-wealthy families - but refused to rule the move out in future. Among the measures that survived the chop was a heavily-criticised clampdown on disability benefits and sanctions for people entitled to Universal Credit. In a scathing assessment, Labour's Shadow Chancellor Rachel Reeves said: "Today the chancellor has lifted the lid on 13 years of economic failure. The Chancellor claims that the economy has turned a corner, yet the truth is under the Conservatives growth has hit a dead end."
And Lib Dem Treasury spokeswoman Sarah Olney accused Mr Hunt of a "deafening silence" on healthcare investment. Meanwhile Unison boss Christina McAnea said: “It’s a cynical ploy ahead of an early election. The government is on the ropes and wants to shift attention from its dire poll ratings.
“The chancellor is simply giving back what he and his inept predecessors have already snatched from working people. No one will be fooled. They will still be worse off."
Here we look at some of the key measures unveiled by the Chancellor.
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National Insurance rate slashed by 2p - but there's a catch
Jeremy Hunt has gone further than expected on National Insurance tax cuts. He told MPs that the rate would go down from 12% to 10% for around 27 million workers.
This will be worth around £450 a year for the average worker, Mr Hunt said. In another break from convention, he announced this new rate would come into effect on January 6. Mr Hunt said: "It means someone on the average salary of £35,000 will save over £450. For the average nurse, it is a saving of over £520 and for the typical police officer it is a saving of over £630 every single year."
While this sounds like good news, a cursory glance suggests not everyone will be celebrating. Income tax thresholds, frozen since 2021, remain unchanged. As a result it is estimated that three million could find themselves in a higher bracket by 2029.
The Institute for Fiscal Studies (IFS) said: "The 2p cut to National Insurance means £449 less tax paid by an average full-time employee, but this is almost entirely offset by frozen thresholds and other changes since 2021. For others, these freezes will more than cancel out the 2p cut."
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New benefit sanctions anger disability rights groups
This morning Mr Hunt told the cabinet it is "economically and morally wrong" that 100,000 people were on benefits with no requirement to look for work. He claimed this is a "waste of potential" as he outlined plans to make people with long-term health conditions go back to work.
The Chancellor said the work capability assessment will be reformed "to reflect greater flexibility and availability of home-working after the pandemic". But the Disability Benefits Consortium, a national coalition of more than 100 charities, described the Government's plan as a "cynical attack on disability benefits (which) will have a devastating impact on those on the lowest incomes".
Welfare recipients who do not find a job within 18 months will be forced to undertake work experience under plans to get more people into employment, the Government announced. People sanctioned for more than six months face losing their benefits altogether along with free NHS prescriptions and legal aid.
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Benefits including Universal Credit to go up by 6.7%
Mr Hunt had been tipped to turn his back on the convention that benefits go up by September's inflation figure. However he poured water on that, announcing these payments would go up by 6.7%.
He said this would be an "average increase of £470 for 5.5 million households next year". In the build-up to today's Autumn Statement, the Chancellor was considering increasing it by 4.6% - the inflation rate last month - to save money.
Honouring pension triple lock
There was also speculation that the Government would scrimp on the pensions triple lock by stripping out the impact of NHS pay rises.
However Mr Hunt said he would not be doing this. The triple lock ensures state pensions rise each year in line with the highest out of 2.5%, wage rises or inflation. This year wage growth was 8.5% - a figure largely inflated by one-off bonuses awarded to NHS workers.
This will mean an uplift of around £900 a year, the Chancellor said. He told MPs: "That is one of the largest ever cash increases to the state pension - showing a Conservative government will always back our pensioners."
Self employed National Insurance cuts
Tory MPs have been clamouring for tax cuts in a desperate bid to turn around the party's dire poll ratings. Wary of a bitter backlash, Mr Hunt has slashed National Insurance for around 28 million employed and self employed people.
The Conservatives vowed at the last election that they would not raise income tax, National Insurance or VAT but as Chancellor, Mr Sunak last year increased National Insurance as he took the country to its highest tax burden in 70 years.
Today Mr Hunt announced he is abolishing Class 2 National Insurance contributions for the self-employed. He also told the Commons he is cutting the rate of Class 4 national insurance by 1%. This, he claimed, will save people an average of £350.
Housing allowance to go up
The Chancellor told MPs that he is raising housing allowance, meaning around 1.6million people will gain an extra £800 a year.
It brings a three-year freeze to an end, Mr Hunt said. Talking about private rents, the Chancellor said he'd been warned about the need to unfreeze local housing allowance to help struggling families.
He said: "I will therefore increase the local housing allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year."
Business rates for pubs and shops
The Chancellor said that the 75% business rate discount would be extended for a further year, saving the average independent pub or shop £12,800 a year. But he admitted: "It's not possible to continue with temporary support forever."
Refunds for councils to speed up housing
Mr Hunt said that from next year, councils will be able to recover the full cost of planning applications. However, they will only be able to do this if strict deadlines are met.
He also said that a new law will be consulted on allowing houses to be converted into two flats, as long as the outside of the building isn't changed.
Alcohol duty to be frozen
The Chancellor has confirmed that alcohol duty will be frozen until August next year.
Mr Hunt told the Commons: "As well as confirming our Brexit Pubs Guarantee, which means duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until August 1st next year. That means no increase in duty on beer, cider, wine or spirits."
£10million for veteran mental health schemes
The Autumn Statement includes an additional £10million of funding for veterans. This will go towards mental health support, the Government stated.
The Treasury said: "Members of the armed forces put their lives on the line to safeguard British freedoms every day. This is why we’re confirming an additional £10m to support veterans - helping to fund vital mental health services for veterans in their communities across the United Kingdom."
'Pot for life' pensions
Under sweeping changes unveiled by the Chancellor, workers will be able to pick their own pension scheme. At the moment these are picked by employers, but it's created a mess where tens of millions of pensions are kept in small pots because people have changed jobs.
However the shake-up isn't without its critics, with some experts worried that people could end up picking worse schemes than they would have otherwise been enrolled in.
He said: "I will also consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose, meaning people can move to having one pension pot for life.
"These reforms could help unlock an extra £75 billion of financing for high-growth companies by 2030 and provide an extra £1,000 a year in retirement for an average earner saving from 18."
£7million to tackle anti-Semitism
The Chancellor announced that £7million would be awarded to organisations such as the Holocaust Memorial Trust to tackle anti-Semitism.
Expressing his horror at a rise in reported cases following the October 7 attack, he said: "We must never allow the clock to be turned back."
Minimum wage increases
Almost three million workers will see their wages rise with increases in both the National Living Wage and the National Minimum Wage. Mr Hunt confirmed on Tuesday that wage rates for the lowest-paid workers will change from next April. The National Living Wage will be increased to £11.44 per hour - up from the current £10.42. Eligibility for the rate will be extended by reducing the age threshold from all those over-23 to all those over-21 for the first time.
The Government said it is the biggest cash increase in the legal minimum that businesses have to pay workers in more than a decade. A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker.
The National Minimum Wage for younger workers will also increase. Those between the ages of 18 and 20-years-old will see their minimum pay increase to £8.60 per hour – a £1.11 hike.
More 'mini Canary Wharfs'
The Chancellor says there are plans for 12 more investment zones. He wants to create the areas – what he called mini Canary Wharfs – in the spring.
He is keen on more investment zones in the West Midlands, the East Midlands and Manchester.
VAT removed from period pants
Campaigners say the removal of VAT from period pants is a "real victory" for consumers and reflects their role as an essential product rather than a fashion item or a luxury.
HM Treasury posted on X, formerly known as Twitter, shortly after the Chancellor's autumn statement, that: "Women should be able to choose period products that work for them. Following the scrapping of tampon tax, we're expanding the 0% rate of VAT on women's period products to include period underwear. This means better access to period products for women & girls across our country."
Tax breaks for firms
The Chancellor bragged he was making the "largest business tax cut in modern British history". Mr Hunt announced a scheme allowing companies to offset spending on machinery and equipment against their tax bills.
The move, known as "expensing", will cost £11billion a year, with Mr Hunt claiming it will be a "huge boost to British competitiveness".
NatWest shares could be sold
The Government is considering selling shares in NatWest to the general public in the coming year as it moves to offload its stake in the bank. The Government currently owns a 38.69% stake in the lender after selling £1.26 billion worth of shares back to the firm in May, taking it down from around 41%.
It has been gradually whittling down its shareholding following its near £46 billion bailout of Royal Bank of Scotland during the 2008 financial crisis. It rebranded to NatWest Group in 2020 under the leadership of former chief executive Alison Rose.
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