Jeremy Hunt’s autumn statement was not an easy listen for many households, but there could be more bad news hiding around the corner.
Despite rises in pensions, benefits and minimum wage, the average family will be 3.7% worse off after the Chancellor’s measures, according to economists. But there are also hidden cutbacks hidden deep in the budget that have not grabbed the headlines, which will mean even more bad news for struggling Brits.
The measures announced by the Chancellor on Thursday were designed to plug a £55bn hole in the UK economy by raising taxes and cutting spending, but did you spot these in the detail?
Read more: Petrol could go up 12p a liter in spring fuel hike Jeremy Hunt didn’t mention
Cuts coming after 2025
Spending will rise up to 2025, but after that – and after the next election – Jeremy Hunt will unleash cuts of £11.6bn in 2025/26, £23.2bn in 2026/27, and £36.3bn in 2027/28, compared to what was planned previously. He will do this by raising day-to-day spending in real terms by only one per cent a year, and slashing capital spending.
Fuel duty hikes on the cards
Buried on page 53 of the OBR ‘s document is the facts that forecasts assume a 23% increase in fuel duty from March 2023. That would put around 12p a liter on petrol and diesel. However, experts think the hike is unlikely, as fuel duty has been frozen since January 2011 and Tory MPs are already demanding a temporary 5p cut is extended.
Council tax set to rise five per cent in April
More than 24 million families pay council tax, and they could face a £250 council tax rise in a single year after Jeremy Hunt approved five per cent annual rises. He axed the three per cent limit that councils could increase the tax without holding a referendum, and instead will let town halls raise council tax by five per cent from April.
Electric cars will be taxed
From 2025, the UK’s 477,000 electric car drivers will no longer be exempt from vehicle excise duty. Jeremy Hunt said this would make the system “fairer” but the AA said stripping electrics from their tax-exempt status would delay environmental benefits.
2.6 million more people will pay 40p tax rate
The freezing on tax thresholds up to 2028 will drag more people into paying tax, as their salaries rise but their tax-free allowance stays the same. It is thought 3.2 million more people will pay 20p income tax and 2.6 million more people into paying the 40p rate. The £12,570 threshold for paying Income Tax and National Insurance and the £50,270 threshold for paying the 40p rate remains in force up to April 2028.
More benefit sanctions
Universal Credit claimants who work more than half the week will be told to increase their hours – and could have their benefits stopped if they don’t co-operate. Workers whose income is equivalent to 15-35 hours a week “will be required to meet with a dedicated work coach in a Jobcentre Plus to increase their hours or earnings”, the small print of the budget says. A phased rollout will begin in September 2023.
£1bn less to fix schools
The amount of money departments can spend on capital projects such as maintaining buildings has been frozen from 2025 to 2027. Taking inflation is taken into account, that means the Department for Education will have £1bn less to spend fixing crumbling schools in 2024-25.
More extra cash to tackle benefit fraud than tax avoidance
The Government plans to put an extra £280m into targeting benefit fraud and error next year, and hope to claw back an additional £2.2bi in savings on the benefits bill every year by 2027-28, compared to just £725m of prevented tax avoidance in five years.
The Treasury’s own impact assessment watchdog, the Office for Budget Responsibility (OBR) shows that half of all households will be worse off in cash terms as a result of decisions announced in the budget. This includes everyone in the highest 50% of earners. The biggest impact is caused by the £500 cut in the Energy Price Guarantee.
In addition, the OBR predicts that house prices will fall nine per cent between the winter of 2022 and late summer of 2024 as the cost of paying a mortgage soars. Average interest rates on the stock of outstanding mortgages are expected to peak at five per cent in the second half of 2024, the highest level since 2008
Living standards will fall by seven per cent over this and next year, according to the OBR, which will be the biggest drop since records began in 1956. Unemployment will hit 4.9% by mid-2024, the watchdog added, up from 3.5%, with half a million jobs due to being lost over an 18-month recession.
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