The Autumn Statement is the largest political event on the cards for Westminster this week (for now, at least ) – but just what is it?
What is the Autumn Statement?
This is an annual opportunity for the chancellor – that’s Jeremy Hunt at the moment – to update MPs about the state of the economy.
Seen as the government’s “minor” fiscal update, this ministerial statement does not usually include any major tax or spending decisions.
That’s reserved for the Spring Budget, which is seen as the main fiscal event of the year. The government uses it to announce its most significant tax and spending changes.
But Rishi Sunak strongly suggested on Monday that tax cuts would be announced.
When he was chancellor, Sunak also did go against convention and made policy announcements in both September 2020 and October 2020.
The Autumn Statement is also not normally followed by a bill, although 2022 was another exception because of the chaos triggered by Liz Truss’s mini-budget.
The Office for Budget Responsibility, the independent public finances forecaster, will publish its economic and fiscal outlook on the same day.
Hunt’s plans will based on those forecasts. The OBR will then release its own assessment of the Autumn Statement.
When is the Autumn Statement this year?
The statement is delivered by the chancellor in either of the October or November of every year.
This year it will be delivered on Wednesday, November 22, at around 12.30pm.
What factors will influence the Autumn Statement?
It is typically based on the latest headline news about the economy.
Inflation, the rate at which the price of goods and products increase, dropped to 4.6% in October, following 14 consecutive interest rate rises from the Bank of England.
The economy has not really grown though, possibly as a consequence of those steep rates – and the Bank of England has suggested the UK won’t see any economic growth until 2025.
Government borrowing has climbed significantly too, meaning it may have to pay more back in debt interest. This raises questions about how much extra cash the Treasury will actually be able to spare.
What might be in the Autumn Statement?
The government has remained tight-lipped over the contents of the Autumn Statement – which is pretty standard practice.
Hunt has been pressed to cut income tax by those inside his own party, as the UK still faces a historically high tax burden.
The chancellor said in September that tax cuts were “virtually impossible” – but Sunak suggested on Monday that taxes may be cut.
It has been variously reported Hunt could cut inheritance tax, income taxes or national insurance.
Hunt is also expected to make a decision about the increase to pensions from April 2024.
Pensions usually rise in line with the triple lock. That’s a policy where pensions have to increase yearly in line whichever one of these threes values is the highest: average earnings, inflation or 2.5%.
If the government sticks by the triple lock, pensions could increase by as much as 8.5%. There have been reports that Hunt is looking to overhaul the system, though.
The BBC has already reported that the Treasury plans to crack down on benefit claimants through the statement.
Anyone who still can’t find work after more than 18 months may end up losing access to their benefits for a period unless they agree to do a work experience placement.
The BBC has also claimed the chancellor is considering cutting inheritance tax.
The building society Nationwide called for more government support for first-time buyers, too.
There’s a chance the government may expand its mortgage guarantee scheme – it was already extended for 12 months last December, but is scheduled to wrap up at the end of this year.
The Financial Times suggested Hunt could introduce changes to ISAs – individual saving accounts – to encourage investment in the UK stock.
A cut to stamp duty may also be on the cards, according to The Telegraph. It reports a partial stamp duty rebate may be made available to those who improve the energy efficiency of their home within two years of purchase.
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