Jeremy Hunt's Autumn Budget: What we know and announcements to look for - including council tax rise, energy bills support and 'stealth' taxes
Chancellor Jeremy Hunt is preparing to deliver his Autumn budget statement on Thursday after warning the public that everyone will need to pay “a bit more tax” under new plans to stabilise the economy.
CPI inflation rose to a staggering 11.1 per cent in October according to figures released on Wednesday, after hitting a 40-year high of 10.1 per cent in September. Mr Hunt insisted the “number one thing” he can do is help tackle the sky-high rate of inflation. However, Mr Hunt has since decided to slash the scheme from two years to just six months, bringing it to an end at the end of March next year. An announcement on what support will be available after this date will be made as part of the Autumn statement, he has confirmed.
James Smith, developed markets economist at ING, said: “The sharp fall in wholesale gas prices could see most households paying £3,300 on average during the 2023 financial year, compared to £2,500 annually under the Government guarantee. That would equate to roughly 9 per cent of household disposable income and would add a further drag to overall economic activity next summer.”
Benefit rises are usually calculated to come into effect in April the following year based on what the inflation figure was in September - this year, that figure was 10.1 per cent. Plans are reportedly being drawn up to repeat the three cost of living payments sent to the most vulnerable this year - £650 for people on eligible benefits, £150 to disabled people and £300 to pensioners. It would mean that someone eligible for all three payments would get £1,100 from the government.
Mr Hunt could announce a rise of just under 10 per cent, according to a report in The Times, which could push the minimum wage for over-23s to around £10.40 an hour. He said: "Many of the poorest areas in the country have the highest level of need and the fewest number of people who can afford to make additional contributions, so that will be entirely counterproductive and the ratchet effect could actually make local authorities even more unsustainable.” The chancellor replied: “I do hear what the right honourable gentleman says and it is going to be a very difficult announcement on Thursday because we are going to be asking everyone to contribute more.
In addition, the threshold for when the 45 per cent rate of income tax kicks in for the highest earners could be decreased from £150,000 to £125,000. This would essentially turn the previous chancellor’s approach to taxing the wealthy on its head, extending the reach of the 45p top rate after the former chancellor tried to scrap it altogether.
Runaway oil and gas prices, exacerbated by the war in Ukraine, are one of the key drivers of soaring inflation and the government is now under pressure to extend its windfall tax further. Mr Sunak and Mr Hunt are thought to be considering changes to the levy which could raise £40 billion over five years.
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