Jeremy Hunt has set out his plans for almost £25 billion in tax increases and more than £30 billion in spending cuts to fill the UK’s financial blackhole – but some measures have received more attention than others.
While increasing the windfall tax on oil and gas giants and reducing the salary threshold at which workers begin paying the 45p top rate of income tax were highlighted by the chancellor, many striking moves were buried within the pages of autumn statement green book. Here are just five:
1. Fuel duty set to go up by 23% next year.
How motorists will be affected by a budget is typically one of the headline-grabbing announcements, and yet Hunt failed to mention fuel duty.
But based on a forecast from the Office for Budget Responsibility, which combines the forecast for RPI inflation next year and the assumption that the 5p cut to fuel duty will end, the chancellor could hike the tax for the first time since 2011.
As the Office for Budget Responsibility said: “The planned 23% increase in the fuel duty rate in late-March 2023, which adds £5.7 billion to receipts next year.
“This would be a record cash increase, and the first time any government has raised fuel duty rates in cash terms since January 1, 2011.
“It is expected to raise the price of petrol and diesel by around 12 pence a litre.”
Tory MPs are likely to continue their campaign urging the chancellor to keep prices at the pumps down.
2. Big win for banks.
The tax surcharge on banks is to be slashed to 3% from 8%.
The move aligns with the government’s decision to hike up corporation tax from 19% to 25% from April, which banks pay on top of the surcharge.
It means banks will still be paying a higher rate of tax than they were previously, but by just 1% rather than the 6% that they could have faced had the surcharge stayed the same.
3. Police and school building cuts.
Home Office spending is set to be slashed by £100m in real-terms by 2024-25, which is likely to affect frontline policing.
And while Hunt said the government will invest an extra £2.3 billion per year in schools, there will be a £1 billion (14%) real-terms cut in capital spending on education in 2024-25 – meaning crumbling schools left in disrepair.
4. Stealth taxes.
The now six-year freeze in income tax thresholds is a favourite “stealth tax” of the government – mainly because it avoids announcing a rise, and it tends to affect money people haven’t yet earned, so are less likely to notice the change.
Thursday’s change means a total of 3.2 million new income taxpayers and 2.6 million more people dragged into the higher 40p tax bracket, according to the OBR.
5. Cut to social housing investment.
The chancellor has said he will cap the increase in social housing rents at a maximum of 7% in 2023/24, saving the average tenant £200 next year. Hunt said that without the cap, families living in the social rented sector could face rent hikes of up to 11%
But with the government refusing to cover the shortfall, social housing providers will have to fill the gap somehow, and could lead to a reduction in investment in properties and building new homes by £630 million over five years.
Sarah Olney, Treasury spokesperson of the Liberal Democrats, which highlighted many of the little-mentioned changes, said: “Underneath the surface of this terrible ‘cost of chaos’ budget are yet more hidden horrors.
“Everything from police to social housing to our crumbling schools is being left in the dust by this Conservative government.
“Everyone will be forced to pay for this cost of chaos budget with their public services being slashed more each year.
“Banks are being given a huge tax giveaway while millions are dragged into a higher rate of tax.
“The accumulated impact of these cuts will mean a bleak recession for years to come caused by an out of touch Conservative government.”
