Published: 18 November 2022
By Suzanne Evans, Director, Political Insight
“Stability, growth and public services,” were his top priorities, Chancellor Jeremy Hunt said yesterday as he presented his Autumn budget. He announced that:
· From April 2023 the threshold at which people pay the additional rate of income tax, currently charged at 45%, will change from £150k to those earning over £125,140.
· Personal tax thresholds will be maintained at current levels for a further 2 years, until April 2028
· There will be a time limit to the £250,000 nil rate Stamp Duty announced in former PM Liz Truss’s Growth Plan. It will now end on 31st March 2025 (when, presumably, the intention is for the threshold to reduce back to £125,000)
· The tax free dividend allowance will be reduced to £1,000 in 2023-24, and then to £500 in 2024-25
· The tax free allowance for capital gains will reduce in 2023-24 from £12,300 to 6,000 and again to 3,000 in 2024-25
· Working age benefits will rise by the rate of inflation at 10.1% and the household benefit cap will be increased from April 2023.
· The national living wage will rise to £10.42
· The Pensions Triple Lock and Pension Credit will be protected and rise in April 2023 by 10.1%. This means the state pension will increase by £870 next year
· The Energy Profits Levy is being increased to 35% and there will be a temporary tax on proceeds from electricity generators.
· From 2025, road tax will be introduced for electric vehicles
· Local authorities in England can increase council tax by up to 5% without a referendum. 95% are expected to raise payments by the full amount permitted, according to Treasury analysis
· A £13.6bn package of business rates support will “help businesses through these tough times”
· The budget for schools will be increasing by £2.3bn next year & £2.3bn the year after - taking the core schools budget to a total of £58.8bn.
· An extra £2.8bn in 23-24 and £4.7 billion in 24-25 would be allocated to Adult Social Care.
· An extra £3.3bn in 23-24 and a further £3.3bn in 24-25 will “improve the performance of the NHS”
· Social rent increases will be capped at 7% next year.
It later emerged that fuel duty is to go up 12p a litre from March next year, a hike of 23%, however this was not announced in the Chancellor’s Commons’ speech yesterday.
The front pages of this morning’s newspapers are unanimously damning about yesterday’s budget. The usually Conservative-leaning Daily Mail has run with Tories Soak the Strivers and features an opinion column headlined: And there was me thinking we’d voted in the Conservatives! by Sarah Vine, the ex-wife of Michael Gove, Secretary of State for Levelling Up. Carnage is the single headline in the Daily Mirror, which highlights how six million people will be forced into higher tax bands as we go into recession, and that we face the worst drop in living standards since 1956. “Years of Pain Ahead” is the lead headline in Times, similar to the FT’s “Hunt Paves Way for Years of Pain,” while the Telegraph quotes unnamed economists in its headline: “The Rhetoric of Osborne…with the policies of Brown.” “You’ve never had it so bad” dominates both the London Metro and Daily Record front page, a theme echoed by the Guardian’s “From bad to worse.” The i Paper talks of “Britain’s Lost Decade” and focusses on how real household income is set to drop 7% and take earnings back to 2013. Both The Scotsman and City AM run with “Nightmare Before Christmas.”
Rating agency Moody’s has responded to the Autumn budget saying it goes some way to restoring the country's economic credibility, but risks remained due to the tough outlook. "The ambitious fiscal consolidation outlined today by the UK chancellor is a further step towards demonstrating the UK's commitment to fiscal prudence after the UK’s policy credibility weakened following September's fiscal statement," Moody’s Vice President - Senior Credit Officer Evan Wohlmann said, adding: "However, the polarised domestic political environment and heightened policy unpredictability may undermine efforts to deliver on fiscal consolidation, particularly in light of strong social and political pressures on government spending."
The bill to taxpayers for bailing out failed energy supplier Bulb has surged to £6.5bn, according to official documents released in yesterday’s Autumn budget. When Bulb was placed into administration and handed to the government after collapsing last November, with around 1.5 million customers, the Office for Budget Responsibility said the rescue would cost £2.2bn over two years. Last month, Bulb was bought by rival firm Octopus in a deal that is currently delayed, as it is being contested in the High Court by Scottish Power, British Gas and Eon over a lack of transparency: Octopus and the government both refuse to say how much Bulb was sold for, or give other details about the deal. The National Audit Office has said that excluding Bulb, consumers will pay an additional £2.7bn to cover the costs of 28 other energy suppliers that have failed since June 2021.
Retail sales volumes rose by 0.6% in October 2022 following a fall of 1.5% in September, the Office for National Statistics says. However retail still remains 0.6% below its pre-covid lockdown level, and the rise is partly attributed to a rebound after closures for the funeral of Queen Elizabeth II caused the September dip. ONS director of economic statistics Darren Morgan said: “Looking at the broader picture, retail sales continue their downward trend seen since summer 2021.”
Consumer confidence rose higher this month but remained close to record-low levels, with soaring inflation and the spectre of recession making a sustained improvement unlikely, market research firm GfK said this morning. GfK's monthly consumer confidence index, which dates back to 1974, rose in November to -44 from -47 in October, having struck an all-time low of -49 in September.
Some 115,000 members of the Communication Workers Union working at Royal Mail are to take further strike action on 9, 11, 14, 15,23 and 24 December, after extended talks to end a long-running industrial dispute over pay and operational changes failed. The strikes are in addition to walkouts scheduled for three days later this month and on 1st December. “Our preference is for an agreement with the CWU, but the change we need is not optional," a Royal Mail spokesperson said. "They should be focussed on a resolution to this dispute for their members and the long-term health of the business, rather than damaging strike action.”
About 350 ground handlers working for aviation services firm Menzies at London's Heathrow airport will begin a 72-hour strike from Friday in a pay dispute, the Unite union has said. The strike will affect a range of airlines and disrupt leaving terminals 2, 3 and 4.
Chinese tech giant Nexperia has been ordered to dispose of its majority stake in Newport Wafer Fab, based in Wales, as part of an effort to "mitigate the risk to national security". Downing Street has told Nexperia it must reduce its stake in the British silicon chip manufacturer by 86%, cutting back to its previous holding of just 14%. Nexperia responded saying it will challenge Westminster's decision, warning it has put as many as 500 jobs and £100m of taxpayer’s money “completely unnecessarily at risk."
Discount grocer Lidl claimed yesterday that British shoppers had switched £58m worth of spending to them from the 'big four' supermarkets - Tesco, J Sainsbury, Asda and Wm Morrison. Sharecast News says the company, part of the Germany-based Lidl group, privately owned by the billionaire Schwarz family, cited Kantar data for its claim that "nearly 60%" of households were choosing to shop at the chain, which now has 935 stores across the UK employing some 200,000 people.
Just Eat Takeaway.com has struck a Europe-wide partnership deal with Turkey's Getir, the grocery delivery firm. The Amsterdam-based, London-listed firm said on Thursday that Getir's entire product portfolio would be integrated into Just Eat's marketplace, to be delivered by Getir's couriers. The partnership will launch in Germany next week, with around 2,000 items made available, before being rolled out to the UK, Spain, Italy and France before the end of the year. No financial details were disclosed.
The new CEO hired to steer FTX Group through bankruptcy yesterday highlighted his initial findings of improper fund transfers and poor accounting at the collapsed crypto exchange, describing it as a "complete failure" of controls. John Ray said in a court filing that the lapses in oversight, security and corporate governance he identified were greater than in any other process he has managed in his 40 years as a bankruptcy specialist, including when he oversaw the liquidation of Enron. "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray said in the filing, with the District of Delaware bankruptcy court. FTX collapsed after founder Sam Bankman-Fried used $10 billion in client funds to prop up his hedge fund Alameda Research, which had suffered losses when its bets on crypto ventures soured, leaving FTX with insufficient funds to cover withdrawals when a plunge in the value of one of its currencies, FTT, triggered a bank run.
Hundreds of Twitter employees are believed to be quitting their jobs following an ultimatum from new boss Elon Musk that they either sign up for "long hours at high intensity," or leave. A poll on workplace app Blind, which verifies users through their work email address, had 42% of 180 people choosing the answer for "Taking exit option, I'm free!" A quarter said they had chosen to stay "reluctantly," while just 7% clicked “yes to stay, I'm hardcore."
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