Rishi Sunak Overhauls Business Rates And Universal Credit In His Autumn Budget
Rishi Sunak has claimed the UK's economic recovery from the pandemic is faster than our "major competitors" as he sets out an Autumn Budget that he said included the highest departmental spending in a century.
The Chancellor insisted his economic plan was "working" as he claimed wages were growing and unemployment was coming down.
Setting out his plan to MPs on Wednesday, Sunak said: "Today’s Budget delivers a stronger economy for the British people: Stronger growth, with the UK recovering faster than our major competitors.
"Stronger public finances, with our debt under control. Stronger employment, with fewer people out of work and more people in work. Growth up, jobs up, and debt down: Let there be no doubt – our plan is working."
Among his major pledges, Sunak announced:
- A lower Air Passenger Duty rate for internal UK flights
- A major overhaul of Alcohol Duty
- Corporate tax on banks will increase from 27% to 28% in 2023
- National Living Wage to rise to £9.50 per hour from next year
The Chancellor also announced a major package of business rates reform that will cut the tax by around £7bn.
He said the system will become "fairer" for firms with rates revalued every three years from 2023, while the retail, hospitality and leisure will be given a one-year 50% discount up to a maximum of £110,000, to help them recover from the pandemic.
He announced the Universal Credit taper would be reduced from 63p to 55p, meaning those working longer hours will keep more of their wages, a victory for campaigners who had warned that the cost of living crisis would represent a serious blow to low-income working people.
Sunak claimed this would mean a single parent of two working full time on the National Living Wage would be expected to keep an extra £1,200 per year.
Sunak also revealed the Office for Budget Responsibility expected inflation to rise to an average 4% over the next year as a result of "shared global problems" such as supply chain disruption and higher energy costs.
The Chancellor said revealed total departmental spending would increase by £150bn through this Parliament, in what he described as "the largest increase this century".
"With spending growing by 3.8% a year in real terms, as a result of this Spending Review, and contrary to speculation… there will be a real terms rise in overall spending for every single department," he said.
Sunak confirmed a cut to the foreign aid budget from 0.5% to 0.7% was expected to be reversed in 2024/25 as the economy recovers.
"As well as helping people at home, our improving fiscal position means we will meet our obligations to the world’s poorest. I told the House that when we met our fiscal tests, we would return to spending 0.7 per cent of our national income on overseas aid," he said.
"Some people said this was a trick or a device. I told this House – it was no such thing."
But shadow chancellor Rachel Reeves, who was delivering Labour's response on behalf of leader Keir Starmer who has tested positive for Covid, said the “smoke and mirrors” briefings included a number of previously announced policies as she claimed Sunak’s plans would fail to tackle the cost of living “crisis”.
She said the government had "done nothing" to help families with rising fuel bills, and said Sunak was "loading the burden" of paying down the UK's debt on working people.
"In the long story of this parliament, never has a chancellor asked the British people to pay so much for so little," Reeves added.
"Time and again today the chancellor compared the investments that he is making to the last decade - but who was in charge? They were."
She added: "Working people have been left out in the cold while the government hammers them with tax rises."
Speaking ahead of the budget, Sunak said his fiscal set piece “begins the work of preparing for a new economy post Covid” and would deliver an “economy of higher wage, higher skills and rising productivity.”
With both of his previous budgets dominated by emergency Covid spending and increased borrowing, Sunak said he hoped his latest policy plan would make the economy “fit for a new age of optimism” with a focus on strong public services, infrastructure innovation and further support for working families.
In a substantial departure from tradition, the Treasury has heavily pre-briefed major proposals ahead of his speech amounting to almost £26bn in spending, including an end to the public sector pay freeze and a 6.6% rise in the National Living Wage.
A further £14bn is also expected to be announced to help the NHS tackle growing waiting lists in the wake of the pandemic, while England’s city regions will be handed £6.9bn to boost transport networks.
The pre-briefing of the measures media has triggered anger among some MPs who claimed the move undermined parliamentary scrutiny, while Commons Speaker Lindsay Hoyle said earlier this week that unveiling the measures ahead of the Budget was historically a resigning matter.
On Tuesday, two former finance ministers told PoliticsHome the chancellor was attempting to “camouflage” bad news by releasing policy without the context of the wider spending plans.
Former chief secretary to the Treasury, Labour’s Liam Byrne, said: “Generally speaking there are a couple or rules on Budget briefing; the number of leaks in advance generally has an inverse relationship to good news in the Budget.
“So, the more leaks in advance the worse the news is in the budget that needs the camouflage.
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