The Autumn Statement And How It Will Affect You
An update on the Autumn Statement of November 2016
The second of this year's economic statements by the government (the first, the Budget, took place back in April) was delivered by the Chancellor of the Exchequer, Philip Hammond, earlier today.
The statement included the government's upcoming plans on spending, amendments in legislation as well as their projections on the country's financial growth over the next few years.
Just a few hours after the announcement was made, we take a look at the Chancellor’s decisions for Britain’s spending and discuss how those decisions may affect you, whether that be welfare benefit cuts, travel improvements or insurance tax…
What is the autumn statement?
Back in 1975 the result of a Parliament act made it the Government’s duty to release two economic statements every year. First known as the Autumn Statement in 1982, the second annual statement was later known as Pre-Budget Report under the Labour government. However, the term “Autumn Statement” was re-instated by George Osborne in 2010.
The Autumn Statement is the opportunity for the Chancellor of the Exchange (currently Philip Hammond) to update MPs on the government’s upcoming plans for spending, cuts, and taxes, as well as inform them on the country’s projected economic status for the few years ahead.
The key points of the Autumn Statement 2016 and how it may affect you:
The Chancellor announced that the Government expects its finances to be £122bn worse from now until 2021 compared to what was forecast back in spring’s Budget. The country’s debt is set to rise from 87.3% GDP (Gross Domestic Product) this year to 90.2% in 2017-2018. As a result, public spending has been reduced to 40% GDP, which is down for 45% back in 2010.
Welfare and taxation
For those that work, the income tax threshold will be increased to £11,500 next April, (from £11,000), with the higher rate income tax threshold to increase to £50,000 by the end of the Parliament as well.
Employees earning the minimum wage will also be pleased to hear that it will increase to £7.50 per hour (from £7.20) from April 2017.
Sadly insurance premium tax is set to increase by 2% (from 10% to 12%) in June 2017. This will most likely affect the cost of renewing home, car and contents policies.
Pensions and savings
Disappointingly the Chancellor announced no amendments to the current pensions tax relief policy, however he has promised to tackle pension scams, notably those that involve cold calling – this will be outright banned.
Regarding savings, National Savings & Investments will offer a new, three-year investment bond scheme with an indicative rate of 2.2% as of next spring. The bond scheme will allow those aged over 16 years to save any amount between £100-£3000.
Understanding the importance of technology for both a thriving economy and society, the government has pledged to invest £1 billion in a full-fibre broadband internet infrastructure, as well as pledging to trial 5G communications networks. This should mean faster and more efficient internet connections in the future.
With no news on a change to stamp duty, the Chancellor announced an imminent ban on letting agent fees in England, £2.3bn of funding to go towards housing infrastructure helping provide 100,000 new homes in high-demand areas, and £1.4bn towards the delivery of 40,000 “extra” affordable homes in the near future.
Infrastructure and travel
The increase on fuel taxes has been scrapped for the seventh year running. Abolishing plans for fuel duty increases will cost the government £850m, but save the average car driver £130 per year and the average van driver £350 per year.
Public transport-wise, the Chancellor has promised £1.1bn extra investment for local transport networks in England, along with an extra £220m of spending on traffic-reducing measures in the country’s busiest areas.
£110m has been promised for the East West Rail Link, with a commitment to deliver Oxford to Cambridge Expressway by 2024. For those in the areas of Oxfordshire, Buckinghamshire and Bedfordshire that it will connect, its completion will dramatically reduce road traffic.
As for improving roads, buildings and local amenities, £23bn will be spent on “innovation and infrastructure” over the next five years. Exact locations and areas receiving funding have yet to be announced, however. £2bn per year by 2020 will have been spent on research and development funding across the country as well.
Very specifically, Philip Hammond confirmed that £7.6m would be given to Wentworth Woodhouse for repairs and maintenance work. The estate near Rotherham is said to be the inspiration for Pemberley in the Jane Austen novel ‘Pride and Prejudice’.
In response to the recent incident at some of England’s largest prisons, which included prisoner riots and two prisoner escapes, funding for 2,500 more prison officers roles has been granted.
The future of the Autumn Statement
A big surprise in his statement, which was welcomed with applauses and cheers of agreement in parliament, was that the Chancellor will abolish the Autumn Statement, with the Budget then to take place in the autumn and for a “Spring Statement” to take place from 2018 in its place. For more information on what was announced in the 2016 Autumn Statement, visit the Government’s dedicated announcement page.