By Lyndsey Hall
Debt is expected to increase to 90.2% in 2017-18, with borrowing forecast to be £122bn higher in the period until 2021 than forecast in the Spring Budget, before the EU referendum. The government no longer expects to create a surplus by 2020, instead focusing on paying off the national debt “as soon as practicable”.
The Office for Budget Responsibility (OBR) had forecast growth of 2.0% in 2016, which has been upgraded to 2.1%. However, growth was previously forecast of 2.2% in 2017, and this has now been downgraded to 1.4%. Further forecasts are 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021.
Positive announcements were few and far between, with expectations shattered in many cases. Earlier in the year, it was expected that the National Living Wage would increase to £7.64, but the chancellor revealed this lunchtime that it would only rise to £7.50 from next April. This is still a considerable increase from £7.20, resulting in a salary increase of around £500 a year for many of the lowest earners.
The income tax threshold will rise to £11,500 in April 2017, and the government still expect to hit their target of £12,500 by the end of this Parliament. The higher rate income tax threshold is also expected to rise to £50,000 by the end of Parliament.
Tax savings on salary sacrifice and benefits in kind will be scrapped as they have been found to be primarily used to avoid tax, with exceptions for ultra-low emissions cars, pensions, childcare and cycling.
Employee and employer National Insurance thresholds are to be equalised at £157 per week from April 2017.
Universal Credit taper rate will be cut from 65% to 63% from April 2017, at a cost of £700m.
Fuel duty was frozen, as expected, allegedly costing £850m and providing a saving of £130 per year to car drives and £350 per year to van drivers on average.
Compensation for whiplash claims will be reformed, cutting the cost of motor insurance. However, insurance premium tax will rise from 10% to 12% from next June.
An extra investment of £1.1bn will be put into English local transport networks, and £220m will be spent on reducing traffic pinch points.
£110m will be given to East West Rail, which will be committed to delivering an Oxford to Cambridge Expressway
A new National Productivity Investment Fund (NPIF) will receive £23bn of additional spending to fund five years of research and development, infrastructure, housing and digital communications, with the intention of boosting productivity.
The new Housing Infrastructure Fund will be given £2.3bn to spend on projects such as roads and water connections that will support the construction of up to 100,000 homes in the areas where they are needed most.
In addition, £1.4bn will be used to build 40,000 new affordable homes, including some for shared ownership and some for affordable renting. Another £1.7bn will be used to speed up the construction of new homes on public sector land.
Letting agency fees have been banned, saving tenants from upfront fees which should be charged to landlords.
£400m has been put into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms.
The UK export funding capacity will be doubled to help firms that would like to begin exporting abroad.
Over £1bn will be dedicated to digital infrastructure, and there will be 100% business rates relief on new fibre infrastructure.
£1.8bn from the Local Growth Fund will be divided between English regions. Rural Rate Relief will be increased to 100%, “giving small business a tax break worth up to £2,900”.
There was also a shout out to Yorkshire in the Autumn Statement, with Wentworth Woodhouse near Rotherham receiving £7.6m for repairs to the collection of historic buildings, thought to be the inspiration for Pemberley in Jane Austen’s Pride and Prejudice.
At the end of what was one of the most negative Autumn Statements in years, the chancellor announced that from autumn 2017 the Budget would replace the Autumn Statement, and from spring 2018 there will be a Spring Statement. This is so that changes for the following April can be prepared for and implemented in plenty of time, rather than coming as a shock to tax payers and business owners with no notice period.
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