Autumn Statement 2023
On 22 November 2023, chancellor Jeremy Hunt delivered the Autumn Statement against a backdrop of a cost of living crisis and a looming general election.
It’s been a challenging year with inflation dominating headlines. While inflation has fallen, it’s still higher than the Bank of England’s 2% target at 4.6% in the 12 months to October 2023.
Autumn Statement - Key Highlights Blog
• The government is reducing debt and borrowing, with borrowing forecast to be lower this year, next year, and on average over the forecast period compared to the OBR's March forecast.
• Underlying debt is also lower as a percentage of GDP, by an average of 2.1 percentage points across the forecast.
• The government is on track to meet its debt and borrowing fiscal rules with greater headroom against both rules compared to spring.
• The government has made available up to £14.1 billion for the NHS and adult social care and an additional £2 billion for schools in both 2023-24 and 2024-25.
• Total departmental spending will be £85 billion higher in real terms by 2028-29 than at the start of this Parliament (2019-20).
• Households on the lowest incomes have benefited the most from government decisions on tax, welfare, and public spending since Autumn Statement 2022.
• The government is introducing the largest package of measures to tackle tax non-compliance since 2016, which is forecast to raise an additional £5 billion of tax revenue over the next five years.
• The government is continuing to drive forward the Public Sector Productivity Programme to reimagine the way public services are delivered.
Tax Cuts for Workers
• The main rate of Class 1 NICs will be cut from 12% to 10% from 6 January 2024, benefiting over 29 million workers.
• The average worker will receive a tax cut of over £450 in 2024-25.
• Class 4 NICs for self-employed will be reduced from 9% to 8%, and Class 2 NICs will be abolished.
National Living Wage Increase
• The National Living Wage will increase by 9.8% to £11.44 from 1 April 2024.
• The age threshold will be lowered from 23 to 21 years old.
• This will benefit over 2.7 million low-paid workers.
• The government is launching a Back to Work Plan, with over £2.5 billion in funding, to help people find and stay in work.
• The Fit Note process will be reformed to support returning to work after illness.
• The Universal Support programme will be expanded to match people with disabilities to jobs.
• The Work Capability Assessment will be reformed to provide better support.
• Additional Jobcentre Support will be expanded.
Changes to the benefit system
• All working-age benefits will be uprated by 6.7% in line with inflation for 2024-25.
• Pensioner incomes will be protected by maintaining the Triple Lock.
Support for High Cost of Living
• Local Housing Allowance rates will be raised to the 30th percentile of local market rents.
• This will benefit 1.6 million low-income households.
• The government has provided £104 billion in support to households to help with the cost of living.
Backing British business
The government is taking action to boost business investment and drive long-term economic growth.
Key measures include:
• Making full expensing of plant and machinery investment permanent, worth over £10 billion a year.
• Simplifying and improving R&D tax reliefs, worth £280 million a year.
• Removing barriers to investment in critical infrastructure.
• Providing £4.3 billion of business rates support over the next five years.
• Reforming the pensions market to unlock investment into high growth sectors.
• Announcing further targeted support for digital technology, green industries, life sciences, advanced manufacturing, and creative industries.
• Investing £4.5 billion to unlock investment in strategic manufacturing sectors.
• Confirming the next set of investment zones in Greater Manchester, the West Midlands, and the East Midlands.
• Doubling the flexible funding envelope for each investment zone from £80 million to £160 million.
• These measures are expected to raise business investment by around £20 billion per year in a decade's time.
Changes to ISAs
The government is making changes to simplify ISAs and provide more choice, meaning it will be easier for people to choose the best ISA accounts for their needs and move money between them. This involves digitalising the ISA reporting system to make it more effective, as well as expanding the investment opportunities available in ISAs to include Long-Term Asset Funds and open-ended property funds with extended notice periods.
• Allowing multiple ISA subscriptions – The government will allow multiple subscriptions to ISAs of the same type every year from April 2024.
• Allowing partial transfers between providers – The government will allow partial transfers of ISA funds in-year between providers from April 2024.
• Removing the requirement to reapply for an existing ISA annually – The government will remove the requirement to reapply for an existing dormant ISA from April 2024.
• Expanding the Innovative Finance ISA to include Long-Term Asset Funds – The government will allow Long-Term Asset Funds to be permitted investments in the Innovative Finance ISA from April 2024.
• Expanding the Innovative Finance ISA to include open-ended property funds with extended notice periods – The government will allow open-ended property funds with extended notice periods to be permitted investments in the Innovative Finance ISA from April 2024.
• Allowing certain fractional shares contracts as a permitted investment The government intends to permit certain fractional shares contracts as eligible ISA investments and will engage with stakeholders on implementation.
• Digitalise the ISA reporting system – The government is announcing the digitalisation of the ISA reporting system to enable the development of digital tools to support investors.
• Harmonise ISAs to those over 18 years of age – The government will harmonise the account opening age for any adult ISAs to 18 from April 2024.
• The government is freezing the Individual Savings Account (£20,000), Junior Individual Savings Account (£9,000) Lifetime Individual Savings Account (£4,000 excluding government bonus) and Child Trust Fund (£9,000) limits at their current levels for 2024-25.