Press release: Chancellor backs business and rewards workers to get Wales growing
Plan for stronger economy will reward hard work, with 1. 2 million
workers in Wales to benefit from £324 back into their pocket thanks to
National Insurance tax cut from January.
Biggest permanent tax
cut in modern British history for businesses will help them invest for
less and boost investment by £20 billion per year over the next
decade.
Triple lock maintained for pensioners, benefits to rise
in line with inflation and Local Housing Allowance increased to
continue supporting families with the cost-of-
living.
Government is making work pay. National Living Wage
rise to benefit 130,000 in Wales, representing boost of £1,800 to the
average annual earnings of a full-time worker, and the Back to Work
Plan will help over a million people start, stay, and succeed in work
while ensuring tougher consequences for those choosing not
to.
Great British pubs, breweries and distillers backed by
freezing alcohol duty for six months to August 2024.
Public
finances in a better position than in March thanks to government
action, with borrowing and debt as a share of the economy down on
average across the next five years.
Autumn Statement gets the
economy growing, debt falling and helps return inflation to its 2%
target – long-term decisions to build a brighter future.
Tax
cuts for working people and British business headlined Chancellor
Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22
November.
Aimed at building a stronger and more resilient
economy, the Chancellor set out a plan to unlock growth and
productivity by boosting business investment by £20 billion a year,
getting more people into work, and cutting tax for 29 million workers
across the UK – the biggest tax cut on work since the 1980s.
Welsh Secretary David TC Davies said:
This is a hugely
ambitious Autumn Statement which puts more money in the pockets of
over a million working people across Wales with cuts to National
Insurance and another increase to the National Living Wage.
As
we grow the economy, I’m delighted to see substantial direct UK
Government investment in Wales. The two new £160 million Investment
Zones in north-east and south-east Wales and an ambitious commitment
to floating offshore wind will encourage business and create jobs,
while £5 million for transport links in Monmouthshire and £500,000 to
support the Hay Festival are important investments in those
communities.
There will also be an additional £305 million in
Barnett Consequentials for the Welsh Government, on top of its record
block grant, to spend on devolved responsibilities like health and
education.
This all comes on top of £111 million in levelling
up funding announced earlier this week seven Welsh projects which will
transform local areas and shows that the UK Government is delivering
for people across Wales.
With higher revenues resulting from
stronger growth than previously projected and the pledge to halve
inflation having been met, the government has stabilised the economy
through taking sound decisions. As set out by the Prime Minister this
week, the stronger outlook means taxes can now be cut in a serious,
responsible way.
To that end, Mr Hunt announced that a 2
percentage cut to Employee National Insurance from 12% to 10% will
come into effect from January 2024.
Taxes for the self-
employed in Wales will also be cut and reformed. From April 2024,
Class 4 NICs for the self-employed will be reduced from 9% to 8% and
no self-employed person will have to pay Class 2 NICs.
Taken
together, this is the largest ever cut to employee and self-employed
National Insurance – a UK-wide tax cut of £9 billion per year that
amounts to a £324 average annual tax cut for 1. 2 million workers in
Wales, almost immediately improving living standards for over a
million people and rewarding hard-work as the government builds an
economy for the future.
Businesses will also benefit from the
biggest business tax cut in modern British history. As signalled at
Spring Budget, the Chancellor announced permanent Full Expensing:
Invest for Less for those investing in IT equipment, plant, and
machinery.
Full Expensing: Invest for Less is an effective
permanent tax cut of £11 billion a year, boosting business investment
by £14 billion across the forecast period and helping to grow the
economy. With the tax cut now permanent, the UK will continue to have
both the lowest headline corporation tax rate in the G7 and the most
generous capital allowances in the OECD group of major advanced
economies, such as the United States, Japan, South Korea and Germany.
Since the introduction of the super deduction – the predecessor to
full expensing – in 2021, investment in the UK has grown the fastest
in the G7.
To further ensure that work pays, Mr Hunt
confirmed that the National Living Wage will increase by nearly 10% to
£11. 44 an hour from April 2024, the largest ever cash increase. The
Chancellor also reinforced the new £2. 5 billion Back to Work Plan for
those with long-term health conditions, disabilities and difficulties
finding employment, which includes tough new sanctions for those who
can work but choose not to.
The Chancellor also announced
that the government will honour its commitment to the triple lock in
full, with the state pension to increase by 8. 5% in April in what is
the second biggest ever cash increase. Universal Credit and other
working age benefits will be boosted by 6. 7% in April, in line with
September’s inflation figure as is convention.
Further action
to help families includes increasing the Local Housing Allowance rate
to cover the lowest 30% of rents from April – benefiting 1. 6 million
households with an average gain of £800 in 2024/25 - and an alcohol
duty freeze to 1st August 2024, following common-sense changes of the
duty system made possible by Brexit. Measures today take the
government’s total support for the cost-of-living between 2022-25
beyond the £100 billion mark, to an average of £3,700 per household.
Many of today’s decisions on tax and spending apply in Wales.
As a result of decisions that do not apply UK-wide, the Welsh
Government will receive £305 million over the next two years.
Accompanying forecasts by the OBR confirm that today’s
measures will make the economy permanently bigger, with growth every
year of the forecast period. Borrowing and debt as a share of the
economy are lower than in Spring this year and next year, with
borrowing also lower on average across the forecast by comparison.
They also confirm that inflation is expected to return to target in
line with the Prime Minister’s economic priorities. Tax
With
inflation halved and debt forecast to fall, Mr Hunt delivered on the
government’s commitment to cut taxes – rewarding and incentivising
work as part of its long-term plan to grow the economy.
The
main rate of Employee National Insurance will be cut by 2 percentage
points from 12% to 10%, coming into effect from January 2024 -
delivering the benefit of a tax cut quickly for 27 million
workers.
The combined rate of income tax and National Insurance
for employees paying the basic rate of tax will therefore fall from
32% to 30% - the lowest combined basic rate since the
1980s.
The rate of Class 4 NICs on all earnings between £12,570
and £50,270 will be cut by 1p, from 9% to 8% from April
2024.
The weekly Class 2 NICs – the flat rate compulsory charge
which is currently £3. 45 paid by self-employed people earning more
than £12,570 - will effectively be abolished, with no-one required to
pay from April 2024. Access to contributory benefits will be
maintained and those currently paying voluntarily will still be able
to do so at the same rate.
The cuts to Class 4 and Class 2
together amount to a tax cut of £350 a year for the average self-
employed person on £28,200, with around 2 million individuals to
benefit.
Business
Measures to back British businesses
big and small will remove barriers to investment and help to bridge
the productivity gap between the UK and its G7 peers – unlocking £20
billion extra business investment per year over the next
decade.
Permanent Full Expensing will create the certainty that
businesses need to confidently invest for less. A company can now
permanently claim 100% capital allowances on qualifying main rate
plant and machinery investments, meaning that for every pound invested
its taxes are cut by up to 25p.
Pension reforms, including
through establishing a new Growth Fund within the British Business
Bank, will help unlock an extra £75 billion of financing for high-
growth companies by 2030 while providing an extra £1,000 a year in
retirement for the average earner saving from 18.
SMEs will be
supported with tougher regulation on late payers to improve prompt
payments and continued funding for Help to Grow. The UK government
will also work with the Welsh Government to explore the expansion of
the Made Smarter Adoption programme - which helps manufacturing SMEs
to reduce emissions and drive productivity - in Wales from
2026/27.
The existing R&D; Expenditure Credit and Small and
Medium Enterprise Scheme will be merged from April 2024, simplifying
the system and boosting innovation in the UK.
The rate at which
loss-making companies are taxed within the merged scheme will be
reduced from 25% to 19%, and the threshold for additional support for
R&D; intensive loss-making SMEs will be lowered to 30%, benefiting a
further 5,000 SMEs.
The Climate Change Agreement Scheme will be
extended, giving energy intensive businesses like steel, ceramics and
breweries around £300 million of tax relief every year until 2033 to
encourage investment in energy efficiency and support the Net Zero
transition.
Work and welfare reform
Mr Hunt set out
steps to reward work, help make work pay, and reform welfare in
recognition of the need to expand the workforce and get those out of
work back into work to deliver growth. The OBR expect that the
measures announced at Autumn Statement will support a further 78,000
people into work by 2028-29, on top of the 110,000 resulting from
action taken at Spring Budget.
From 1 April 2024, the National
Living Wage will increase by 9. 8% to £11. 44 an hour for eligible
workers. For the first time this will include 21- and 22-year-olds.
This represents an increase of over £1,800 to the annual earnings of a
full-time worker on the NLW and is expected to benefit 130,000 low
paid workers in Wales.
The government will also substantially
increase the National Minimum Wage rates for young people and
apprentices: for people aged 18-20 by 14. 8% to £8. 60 an hour, for
16-17 year olds and apprentices by 21. 2% to £6. 40 an
hour.
The government is reforming the Work Capability
Assessment, to ensure that people who can work are supported to do so
via the welfare system. Changes to the activities and descriptors will
better reflect the greater flexibility and reasonable adjustments now
available in the world of work, preventing some individuals from being
deemed not fit for work and ensuring they will be better supported
into employment.
As part of the Back to Work Plan, the
government is extending and expanding the Restart scheme until June
2026 – providing tailored, intensive support such as coaching and CV
and interview skills for those who have been on Universal Credit for
more than six months rather than nine. An expansion to the flagship
Universal Support programme will also help place and support more
people with disabilities and from vulnerable groups into existing
vacancies. Strengthened sanctions will apply in Wales.
A new
voluntary Occupational Health standard providing guidance on workplace
health and disability will be developed, alongside creating a new
digital marketplace to support smaller Welsh businesses procure
Occupational Health services.
Infrastructure and levelling up
The Chancellor unveiled a raft of supply-side measures and
funding packages to benefit businesses and local communities across
Wales.
£4. 5 billion of funding for British manufacturers in
the high-growth industries of the future, including £960 million
earmarked for the Green Industries Growth Accelerator to support clean
energy.
Two new Investment Zones will be established in Cardiff
& Newport and Wrexham & Flintshire, to boost economic growth across
Wales. The extension of the Investment Zones and Freeport programmes
in England will be replicated in Wales, subject to Welsh Government
agreement. The governments will also work together to deliver a share
of the funding from a flexible £150 million Investment Opportunity
Fund, to support the securing of specific business investment
opportunities.
The government has published its full response
to the Winser review and Connections Action Plan, which will cut grid
access times for larger projects by half, halve the time to build
major grid upgrades and offer up to £10,000 off electricity bills over
10 years for those living closest to new transmission
infrastructure.
The government is working with The Crown Estate
to bring forward additional floating wind in the Celtic Sea through
the 2030s, with the potential to deliver £20 billion of direct
investment from deployment in the area.
To prioritise those who
want to invest in the UK’s future, the government has accepted in
principle the headline recommendations of Lord Harrington’s review
into increasing foreign direct investment. This includes additional
resource for the Office for Investment, allowing it to deepen its
world-class concierge offer to strategically important
investors.
The life sciences will also be supported as one of
the Chancellor’s key-growth sectors, with £20 million to speed up the
development of new dementia treatments coming as part of the
government’s full response to the O’Shaughnessy Review of commercial
clinical trials in the UK.
The government will ensure greater
connectivity for Wales, through £1 billion to fund the electrification
of the North Wales Main Line.
£5. 2m of funding for transport
in Monmouthshire will deliver significant improvements to the local
bus network, walkways, cycleways and shared use paths within
Chepstow.
£800,000 of funding for the Space Technology Test
Centre in North Wales, providing a flight test range for rocket-
powered test vehicles, near-space scientific flights, microgravity
research and trials of re-entry vehicles and payload recovery
systems.
The government is also providing £500,000 to support
the well-loved Hay Festival in Wales.