Chancellor Jeremy Hunt delivered the Autumn Statement to the House of Commons this morning, opening his speech by telling MPs that the government's three financial priorities are: stability, growth and public services.
Acknowledging that the UK is now in a recession, Hunt blamed global factors – including the long-lasting impacts of the COVID-19 pandemic as well as Russia's war on Ukraine – for the country's current economic climate and cost-of-living crisis.
"There is a global energy, inflation and economic crisis," Hunt said. "But the British people are tough, inventive and resourceful. We aren't immune to the headwinds, but with this plan for stability, growth and public services we will face into the storm."
He continued: "There may be a recession made in Russia, but there is a recovery made in Britain."
As for how he plans to turn things around for the UK's economy, Hunt announced a series of fiscal changes. These include lowering the threshold at which the highest earners start paying the top rate of tax (brought down from £150,000 to £125,140), as well as hitting energy firms with an expanded windfall tax (tax levied on an unforeseen or unexpectedly large profit).
But what about the changes for the average Brit? Here's how Hunt's Autumn Statement will impact you...
Autumn Statement impacts
Hunt confirmed today that help with energy bills will be extended, but it will be less generous.
"Finally we have some future commitments about the horrendous costs of heating our homes," Holly Mackay, the founder of Boring Money, tells Cosmopolitan UK. "The energy price guarantee will be set at £3,000 for average households for another year – this will work out at about a £500 subsidy for the average household, depending on how much you use."
Nevertheless, Mackay adds that energy is "still going to feel hugely expensive".
"This is a year when 'not as bad as it could have been' is as good as it gets," she points out.
Addressing the Commons, the chancellor announced there will be targeted support with the cost-of-living for those on low incomes, disability benefits and pensioners. Additional payments of £900 will be paid to those on means-tested benefits, £300 to pensioner households and £150 to people on disability benefits.
From April next year, the National Living Wage will be increased from £9.50 an hour for over-23s to £10.42, Hunt confirmed this morning.
As well as upping the National Living Wage, the chancellor revealed that means-tested benefits, including Universal Credit, will also rise in line with September’s inflation figure of 10.1% from next April, in-keeping with previous promises by Rishi Sunak when he was chancellor.
Commenting on Hunt's announcement that Income Tax (the tax you pay on your earnings) will be frozen until 2028, money expert Mackay said: "It will hurt us all over the years to come."
"Imagine your salary being poured into a wine glass," she explains. "Anything over the half way mark is taxed at 20%. And anything over the three quarters mark is taxed at 40%. High inflation will see wages grow, to keep pace with the cost of living – so more of us will have a fuller glass in the years to come, and be dragged into paying more tax."
Labour's response to the Autumn Statement
After Hunt gave his speech to the Commons, it was time for the shadow chancellor to respond. "Here we are at the end of 2022, three prime ministers, four chancellors and four budgets later," Rachel Reeves said. "And where do we find ourselves? In a worse place than we started the year."
"What does the chancellor have to offer today?" Reeves went on. "More of the same – with working people paying the price for his failure. The chancellor should have come today to ask for forgiveness, at the very least he could've offered an apology."
In her speech, Reeves claimed that "all the country got today was an invoice for the economic carnage that this government has created", adding: "This isn't a game, this is people's lives."
She says at the next election, people will ask themselves if they are "better off with this Conservative government, and the answer is no."
If you're struggling with your bills, you can speak to a number of charities – including Turn2us and the Independent Food Aid Network – set up to help those during the cost-of-living crisis, as well as debt-management charities like Step Change.
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