George Osborne’s Autumn Statement: read our quick run-down of all the key points.
“Mr Speaker, it’s taking time, but the British economy is healing,” was the opening sentence of Chancellor George Osborne’s ‘Autumn Statement’ yesterday, when he updated the MPs on the government’s plans for the economy.
Here is a quick summary of some of the key points of his speech.
- Brits told not to expect ‘miracle cures’, but Osborne insists “We’re on the right track”
- Plans announced to extend austerity measures by one year until 2017-18
- Economy weaker than expected; growth predicted to be down 0.1% in 2012.
Government borrowing and spending
- The point at which debt is predicted to begin falling is delayed by a year to 2016/17
- Deficit has however fallen by a quarter in the last two years
- Deficit is predicted to fall from 7.9% to 6.9% of GDP this year, and to continue falling to 1.6% by 2017/18
- Spending review to take place in the first half of next year
- Departments are to reduce their spending by 1% next year and 2% the year after.
No fuel hike
The 3p per litre increase in fuel duty which was planned for next January has been cancelled and the increase that was planned for the 1st of April 2013 will be deferred until the 1st of September 2013.
- From 2014/15, the tax relief on pension contributions will be cut:
- the annual allowance for pensions and tax-relieved savings will be reduced to £40,000, from £50,000
- the standard lifetime allowance for pensions and tax-relieved savings will be reduced from £1.5 million to £1.25 million from 2014/15
- The basic state pension is to rise next year to £110.15 a week – that’s an increase of 2.5%
Most working age benefits are to go up by 1%, less than the rate of inflation, every year for the next three years.
Taxes / allowances
- Basic income tax threshold to be raised to £9,440 next year – up £235 more than previously announced
- Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285
- The inheritance tax (IHT)’s nil rate band, frozen at £325,000 since 2009, will increase by 1% in 2015-16
- HM Revenue and Customs budget will not be cut
- There will be no new tax on property
- Prosecutions for tax evasions will go up 80%, with a new anti-abuse rule to come in next year
- Unemployment expected to peak at 8.3%, lower than the 8.7% previously predicted
- Unemployment set to reduce every year
- £1bn will go towards improving schools and building 100 new free schools and academies, while £270m will be set aside for further education colleges.