Jeremy Hunt has delivered his Autumn Statement today as the Chancellor looks to tackle the cost of living crisis and undo the economic uncertainty exacerbated by Truss and Kwarteng’s mini budget.
The statement comes at a time when inflation is soaring and the Bank of England has warned that the UK is facing the longest recession on record.
The Chancellor outlined that stability, growth and public services were the three priorities in his budget before unveiling his plans to save £55billion over the coming years, divided almost equally between tax rises and spending cuts.
He stated that the Office for Budget Responsibility (OBR) confirmed that global factors are the primary cause of current inflation, citing “unprecedented global headwinds” and a “made in Russia energy crisis”, but that the OBR predicts inflation will start to fall sharply from the middle of next year due to the measures put in place in his budget.
Hunt went on to say that the OBR expects housing activity to slow over the next two years, so the Stamp Duty cuts outlined in the mini budget will remain in place until 31st March 2025. After this time, Hunt said that a new incentive will be introduced to support the housing market and the jobs it creates by boosting transactions.
The Chancellor’s statement also confirmed that social housing rents will be capped at 7% next year, increasing from 5% which was believed to be the government’s preferred option previously.
Other key points from the budget:
- GDP will shrink by 1.4% in 2023, before rising by 1.3% in 2024, 2.6% in 2025 and 2.7% in 2026, according to OBR forecasts
- The threshold for the 45p additional rate of tax will be cut from £150,000 to £125,140.
- The energy industry will be targeted with an expanded windfall tax of 35%, up from 25%, which will raise an additional £14billion
- Dividend allowances will be cut, as will the annual exempt allowance for capital gains tax
- A £14billion tax cut on business rates was announced, expected to benefit around 700,000 businesses, while employment allowance will be retained at a higher level of £5,000
- The chancellor says he will double investment in the energy efficiency of homes and industry by £6billion from 2025
- There will be a £3.3billion increase in NHS funding as well as investment in social care, with £1billion more allocated next year and £1.7billion the year after
- The energy price guarantee will be kept in place for a further 12 months but rise to an average of £3,000 for a typical household from £2,500
- The “national living wage” will rise by 9.7% next year to £10.42 an hour and benefits will rise in line with September’s inflation rate, by 10.1%
- Plans for the Sizewell C nuclear plant in Suffolk will progress in the coming weeks
The Chancellor stated that energy, infrastructure and innovation were key to growth, and subsequently announced that he will not cut capital budgets for the next two years, stating that there will be £600billion in investment over the next five years. This will include safeguarding funding for plans such as HS2, Northern Powerhouse Rail, East-West Rail and the New Hospitals Programme.
Following the delivery of the budget, Paul Breen, managing director of affordable housing specialist, Living Space, said: “The months ahead are going to be incredibly challenging for consumers which means additional pressure on affordable housing providers to support their customers more than ever before. The extension of the windfall tax will provide some respite – as will the social rent increases being capped to 7% in 2023.”
“There’s no doubt that the new government needed to intervene in a big way today to protect the most vulnerable in our society. There was a fine balance to be struck here to not only shield tenants from the forecasted 11% hike, but to not cut providers’ income streams so drastically that new development would grind to a halt. I believe the Chancellor has largely got this balance right to ensure much-needed investments in new, affordable homes continue next year.”
“To support the industry, I urge the government to expedite any plans it has in the works to speed up the planning process for affordable homes. Either way, this remains a time for the industry to collaborate, pool resources and find further solutions to weather the storm.”
Andy Morris, managing director of Hayfield, said: “The extension of Stamp Duty cuts until 2025 will provide a degree of continuity in the medium term, but that was where the good news ended for housing.”
“I sympathise with the local authorities that wasted resources on submitting applications for Liz Truss and Kwasi Kwarteng’s proposed investment zones, but I am not sorry they’ve been scrapped as they were only ever going to cover specific parts of the country, doing little for development in other areas.”
“What we and other developers have needed is a clear, transparent and sensible planning application system across the board that avoids valuable time and money being wasted on all sides.”
“Housebuilders, like all businesses, need rules that are applied consistently across the country. As it is, our planning system – which features under-resourced local planning teams and rejections that go against local framework criteria – continues to hamper the development of thousands of new homes each year.”
More reaction and coverage to follow
