Introduction

• Priorities are stability, growth and public services
• Respond to an international crisis with “British values”
• OBR confirms global factors are primary cause of inflation
• “A made-in-Russia energy crisis”
• IMF expects 1/3 of world’s economy to be in recession this year or next
• Bank of England remit will not be changed, government to work in lockstep with the BoE
• UK “will always pay its way”
• Credibility will not be taken for granted

OBR

• Inflation – 9.1% this year and 7.4% next year
• Inflation will fall sharply from middle of next year
• UK is now in recession
• Unemployment to rise to 4.9% in 2024
• Borrowing – £177bn, next year £140bn then by 2027/28 falls to £69bn
• Underlying debt as a percentage of GDP starts to fall by 2027/28

Short term

• As growth slows and unemployment rises, fiscal interventions will be used
• As a result of these plans, the recession will be shallower – OBR

Longer term

• As growth returns they increase rate of consolidation, and take pressure off BoE to raise interest rates
• “A balanced path to stability”

Tax

• Tried to be fair following two principles – those with more should contribute more, and avoid tax rises that damage growth
• “substantial tax increase”
• Personal taxes:
  • Reduce threshold of 45p rate from £150k to £125k – an increase of £1200
  • Tax free allowances frozen until April 2028
  • Reforming allowances on unearned income, cutting dividend allowance from £2000 to £1000
  • Electric vehicles will no longer be exempt from vehicle excise duty
  • Stamp duty cuts announced in minibudget will only remain in place until 2025
• Business taxes:
  • 40% of all businesses will pay no NICs
  • £2.8bn by 27/28 from cracking down on tax avoidance
  • Cutting deduction rate for SMEs
• Windfall taxes:
  • Any tax should be temporary, not deter investment and recognise cyclical nature of energy businesses
  • Increase energy profits levy from 25% to 35%
  • Electricity generation to be levied on electricity generators at 45%

Public spending

• Public spending to grow spending lower than inflation
• Departmental budgets to be protected in cash terms
• Overall spending in public services will continue to rise in real terms for next five years
• Department for Work and Pensions will be asked to do a thorough review of issues holding back workforce participation
• Over 600,000 people on universal credit will have to meet with a work coach to increase hours’ earnings
• Review of state pension age to conclude in 2023

Defence:

• UK has given £2.3bn to Ukraine since the start of the invasion, second highest in the world after USA
• Defence spending needs to increase
• Integrated review needs updating, ahead of the next budget
• Will continue to maintain defence budget of at least 2% of GDP

Aid:

• Won’t be possible to return to 0.7% until fiscal situation allows
• Remain about 0.5% for the forecast period

Climate change:

• Now would be the wrong time to step back from climate responsibilities
• Remain fully committee to the Glasgow pact, including a 68% reduction in own emissions by 2030

Education:

• Concerns not all school leavers get the skills they need for a modern economy
• All young people need to leave the education system with the skills they’d get in Japan, Germany or Switzerland
• Rules out scrapping relief on private school fees
• Schools’ budget to be increased by £2.3 billion per annum this year and the next

NHS:

• On staff shortages, the NHS will publish and independent plan for the number of doctors, nurses and other professionals we’ll need in 5, 10 and 15 year’s time
• Social care sector, the implementation of Dilnot Reforms will be delayed by 2 years, re-allocating the funding to local authorities
• £1bn of new grant funding for social care this year, £1.7bn next year.
• A total increase of funding of £2.8bn this year and £4.7bn next year for social care
• Former Health Secretary Patricia Hewitt asked to advise on how to make sure local NHS bodies operate efficiently and with appropriate autonomy and accountability
• NHS budget increased by £3.3 billion in each of the next 2 years

Economic growth:

• You cannot borrow your way to growth
• Sound money is the rock upon which long term prosperity rests
• People, capital and ideas are needed
• Energy, infrastructure and innovation also needed
• Over the long term, we need energy independence and energy efficiency
• Nuclear! Sizewell C is going ahead, confirmed. Creating 10,000 highly-skilled jobs
• New national target: by 2030 energy consumption by buildings and industry should fall by 15%
  • New funding from 2025 of a further £6bn in investment to deliver this
• Rail, roads, broadband and 5G
  • Not cutting a penny from capital budgets for the next 2 years, and will remain in cash terms for a following 3 years
  • More than double what it was under the last Labour government
  • HS2, Northern Rail, gigabit broadband etc will all proceed
  • Levelling Up fund will be maintained
• Local leaders have to be able to make things happen
  • New devolution deals for Suffolk, Cornwall, Norfolk and an area in the North East
  • Soon over half of England will be covered by devolution deals
• Innovation:
  • Changes to EU regulations in our five growth industries
  • Patrick Vallance asked to lead this work
  • Legislate to give the digital markets unit new powers to challenge monopolies
  • Removing import tariffs on over 100 goods used by UK businesses used in their production
  • R&D budget protected
  • Solvency II reforms

Energy Bills/cost of living

• Price guarantee will continue from April at a higher level of £3000
• Additional cost of living payments for most vulnerable on means-tested benefits of £900 plus cash for pensioners and the disabled
• Social rented sector are currently set to see rents rise by 11%. Increase to be capped to a maximum of 7%
• Minimum wage to increase by 9.7%. Up to £10.42.
• Benefits will be uprated by inflation, 10.1%
• Benefit cap to increase by inflation also
• Pension credit to increase by 10.1%
• Triple lock protected