Today, Chancellor of the Exchequer, Jeremy Hunt, delivered the Government’s Autumn Statement. Jeremy Hunt says “Our plan for the British economy is working. But the work is not done”. Aimed at building a stronger and more resilient economy, the Chancellor has set out a plan to unlock growth and productivity by boosting business investment by £20 billion per year over the next decade.
Exemplas is pleased to see measures to back British business by removing barriers to investment and help bridge the productivity gap between the UK and its G7 peers.
David Moule, Exemplas CEO says:
“It is essential to create conditions for innovative and dynamic businesses to thrive, the Government has today set out an ambitious package of support for small and medium-sized businesses, announcing 110 measures to unlock investment in Britain, including making full expensing permanent, creating the certainty businesses need to confidently invest in IT, machinery, and equipment for less. Exemplas is pleased to see a pro-small business statement, addressing real concerns of the UK’s 5.6 million small business owners.”
We have summarised the main points outlined in today’s Autumn Statement:
- The UK economy is set to grow by 0.6% in the current year, according to forecasts from the Office for Budget Responsibility (OBR). It then expects the economy to grow by 0.7% next year.
- Inflation is expected to fall to 2.8% by the end of 2024 according to the spending watchdog, down from 11.1% last year.
- GDP is then expected to grow 1.4% in 2025, and 1.9% in 2026 and 2% in 2027 and 1.7% in 2028.
- The latest figure for consumer price inflation is 4.6% for October – down from a peak of over 11%.
- The OBR forecasts that underlying debt will be 91.6% of GDP next year, 92.7% in 2024-25, 93.2% in 2026-27, before declining in the final two years of the forecast to 92.8% in 2028-29
Business taxes and investment
- Commitment to an additional £4.5bn of support for strategic manufacturing between 2025 and 2030. This includes £975m for aerospace firms, £520m for life sciences like medical research companies, and £960m for the new green industry firms.
- Investment of £500m over the next two years to fund more “innovation centres” to help make the UK an “AI powerhouse”.
- The Chancellor has announced the decision to make permanent “full expensing” for businesses. For every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.
- The Government is removing barriers to investment in critical infrastructure by reforming the planning system to speed up approvals and setting out a plan to reduce the time it takes for new projects to connect to the grid.
- A business rates support package worth £4.3bn over the next five years will help high streets and protect small businesses. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier.
- Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75bn of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
- SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
- The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
- The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300m of tax relief every year until 2033.
- The Chancellor says he wants to reform taxes paid by self-employed people, and will abolish their “Class 2” national insurance contributions, which count towards their state pension entitlements. This will cut taxes for two million people. “Class 4” contributions will also be cut by one percentage point. Together these will be worth £350 a year.
Personal taxes and wages
- National Insurance rate will be cut by two percentage points from 12% to 10%. from 6 January. The Chancellor says the change will help 27 million people and means someone on the average salary of £35,000 will save over £450 a year.
- The minimum wage (known officially as the National Living Wage), will rise from £10.42 to £11.44 per hour in April next year. It will also be extended to 21-year-olds.
- The state pension will be increased by 8.5%.
Infrastructure and levelling up
- Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4bn of private investment and creating 65,000 high-quality jobs within the next decade.
- Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
- The Investment Zones programme and freeport tax reliefs will be extended from five years to 10 years, and a new £150m Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
- To prioritise those who want to invest in the UK’s future, the Government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment.
- Benefits will increase next year by 6.7%, the inflation rate for September. This applies to working-age benefits such as means-tested benefits such as Universal Credit, and disability benefits.
- From April 2024 the Government will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year.
- £50m in funding over the next two years to increase the number of apprentices in engineering and “other key growth sectors”.
- Tobacco duty has been put up by 10%, while alcohol taxes have been frozen until 1 August.
To read the full Autumn Statement, click here.