Social Justice

Pensions, taxes and benefits: What does Autumn Statement 2023 mean for you and your bank balance?

Chancellor Jeremy Hunt has just delivered 2023's Autumn Statement. The Big Issue analysed what it means for you and your bank balance

Hunt with Autumn Statement

Jeremy Hunt set to deliver the Spring Statement. Image: Flickr/ HM Treasury

The chancellor Jeremy Hunt said “the best way to tackle poverty is through work” as he announced his Autumn Statement, with a big focus on pushing people into jobs to grow the economy.

But there are fears among campaigners that his plans will once again benefit the richest, while there is little help for the poorest households who have been hit the hardest by the cost of living crisis.

Disability charities and campaigners have also expressed serious concern that the plans to drive people into work could be “potentially very dangerous” for people who are ill and disabled, who could be forced to look for unsuitable work.

“Waste of potential is wrong economically and wrong morally,” Hunt said in his statement.

Inflation might be falling, but the impact of the cost of living crisis continues to take its toll on families across the country. Prices are still rising and people who have spent two years making sacrifices have “nothing left”, and debt is continuing to rise.

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This Autumn Statement was one of the Conservative government’s last chances to convince the British public that they have plans to strengthen the economy and help struggling families. 

Here’s everything you need to know about the Autumn Statement 2023 and what it means for you.

Is the economy really back on track? Are we nearing the end of the cost of living crisis? 

The chancellor has repeatedly boasted that inflation has been halved (this was down to the Bank of England increasing interest rates to slow inflation, encouraging people to spend rather than save).

Hunt posted on X, formerly known as Twitter: “Now inflation has halved, we can move on to the next stage of our economic plan – unleashing it.”

But even though inflation is down, prices are still rising. Food inflation rates remain stubbornly high, with costs up by more than 10% in October in comparison to the previous year.

People face debt which has built up as they have struggled to cover soaring costs.

Around 7.8 million people borrowed money to pay their energy bills in the first six months of 2023, and Citizens Advice says it’s helping record numbers of people with energy debts. And the cost of living crisis has hit the poorest the hardest.

Prices are rising even faster for poorer households. This is because the costs of essentials like food are soaring at higher rates, and low-income families typically spend a greater proportion of their income on these items. And benefits aren’t stretching far enough.

Read more about whether the cost of living crisis is coming to an end.

Read more of our analysis and hear from the people most affected by the cost of living crisis by signing up to The Big Issue’s newsletter, Survival Guide.

How much is the national living wage increasing?

The national living wage is set to rise to £11.44 from April 2024, and it will also be extended to 21 and 22 year olds for the first time. 

The government says it’s a pay boost worth more than £1,800 a year for a full time worker. 

This move has been expected. The Big Issue reported last month that it would be raised to at least £11, following announcements by Hunt at the Conservative Party Conference. 

But it is still lower than the real living wage – that’s a rate calculated by the Living Wage Foundation based on up-to-date costs, taking into account the prices of food, bills and other daily costs. That now stands at £12, and it’s higher in London at £13.15. 

Research from the Living Wage Foundation found 60% of people earning below the real living wage had used a food bank in the past year and nearly 40% were regularly skipping meals.

Katherine Chapman, the director of the Living Wage Foundation, said: “A rise in the statutory national living wage from next April is welcome news for low paid workers but it still falls short of the voluntary real living wage. 

“There are now 14,000 Living Wage accredited employers across the UK who are committed to always paying everyone in their organisation, including contractors like cleaners and security guards, a real living wage based on the cost of living.”

Has the local housing allowance been unfreezed in the Autumn Statement?

Yes, it’s good news. The local housing allowance has been unfreezed in the chancellor’s Autumn Statement. This is a big boost for those receiving housing benefit.

The chancellor announced the government would invest £1bn to ensure that local housing allowance rates would cover the bottom 30% of market rents for the first time since 2020.

It is crucial support for low-income renters. The Big Issue has been calling for local housing allowance rates to be unfrozen to protect millions of people as part of our End Housing Insecurity Now campaign.

Big Issue founder Lord John Bird welcomed the plans: “The change to the local housing allowance is great news and will make a huge difference in keeping a roof over many people’s heads. The Big Issue has been campaigning for this and are pleased to see the chancellor listen to the voices of the thousands of people that recently signed the Big Issue petition.”

What did Hunt say about housing and planning in the Autumn Statement?

Hunt announced local authorities will be allowed to charge businesses to fast-track planning applications and £32m to “unblock the planning backlog” and build homes, targeting Cambridge, London and Leeds.

The chancellor said £450m would be allocated to the local authority housing fund to build an estimated 2,400 homes and announced a new permitted development right to convert any house into two flats as long as the exterior remains untouched.

But the nutrient neutrality debate is likely to be stoked once again following the Tories’ defeat in its bid to water down environmental regulations to boost housebuilding.

Hunt announced £110m for nutrient mitigation schemes in his statement. The Tories had previously argued scrapping nutrient neutrality laws would deliver 100,000 extra homes by 2030 but their plans to amend the Levelling Up and Regeneration Bill were voted down in the House of Lords in September.

How much are benefits increasing by in April 2024?

The chancellor announced in the Autumn Statement that benefits are going to be increased by the September rate of inflation of 6.7%, after he reportedly considered lowering it to the October rate of inflation of 4.6%.

This measure would have saved the government £3bn between 2024 and 2025, but it would have come at a cost for the poorest in the country.

But even though benefits have gone up by the higher rate, they are not expected to catch up to their pre-pandemic levels until 2026. It comes at a time when benefits claimants are struggling to afford the basic essentials they need to survive.

Universal credit claimants are £35 short of the money they need to live each week, according to conservative estimates from the Trussell Trust and Joseph Rowntree Foundation.

The charities wanted the government to introduce an ‘essentials guarantee’, meaning benefits claimants can afford the basics they need to live, in a campaign backed by The Big Issue. 

The government is also expected to end cost of living payments in spring 2024, meaning a further hit for low-income households. 

The Big Issue’s Bird added: “It’s good news that the chancellor will be increasing universal credit by 6.7% – while this still doesn’t touch the sides of the difficulties many households are feeling, a little more cash in pockets can only be a good thing. However, it still doesn’t go far enough and I urge the chancellor to look at this closer and encourage the Treasury to engage in more creative thinking.

“At the very least, they should be implementing the call, backed by the signatories to the Big Issue’s End Housing Insecurity Now petition, to uplift universal credit to £120 a week for a single adult, or £200 for a couple, to provide an ‘essentials guarantee’.”

What sanctions will benefits claimants face?

The government has announced that there will be more sanctions for benefits claimants who refuse to look for work.

People could be denied free NHS prescriptions and legal aid. The government has also said it will take people’s benefits away if they are deemed to be disengaged with the Jobcentre’s plans to get them into work. 

The government’s tightening the idea of what “fit for work” looks like. This means more disabled and ill people could be forced into looking for work and take unsuitable jobs for fear of sanctions.

Campaigners are concerned this could lead to “more avoidable deaths” and “destitution” at a time when people are already struggling to survive. Read more here.

Shak Dean, at Big Issue Recruit, says there are many reasons why people struggle to engage with a job coach. This includes the time limits with job coaches – appointments usually only last 10 to 15 minutes, meaning they don’t have the time to get to the bottom of people’s needs.

People who have childcare or caring responsibilities might find it hard to find a job with suitable hours and flexible working patterns.

Work capability assessments can be “very tough”, as The Big Issue has extensively reported, and people might be deemed fit to work when they feel unable to. The assessments are currently being tightened to take into account increased flexibility following the pandemic.

But not all jobs can be done remotely – and low-paid workers who are least likely to have the chance to work remotely. Only 23% of the population are mainly working from home in the UK, and it’s the same proportion of disabled people. 

Dean also said it can be difficult for people with English as a second language to find work. All these people could be subject to further benefit sanctions.

How much is state pension being increased in April 2024?

The chancellor has announced in the Autumn Statement that pensions are going to be increased by 8.5% in April, according to the rules of the triple lock and wage growth.

It means older generations will see a nice boost to their bank balance. 

There was speculation that it would be increased by a lower rate, but the chancellor has opted to keep pensioners happy and has gone with the higher rate of 8.5%. 

This is much higher than the increase in other benefits, which charities and campaigners previously told The Big Issue would be “wholly unfair” on low-income households. 

Will there be a tax cut? Is Jeremy Hunt cutting national insurance and income tax?

The chancellor has decided to cut the combined rate of income tax and national insurance. Hunt has announced that he will cut national insurance for both employees and those who are self-employed. The move is estimated to benefit 28 million people.

The government has cut national insurance by 2%, from 12% to 10%. It was originally reported that Hunt was planning a 1% cut, but it seems he has gone for an additional rise.

He says the change will help 27 million people and means someone on a salary of £35,000 will save over £450 a year. But it comes at a cost and will disproportionately benefit people with higher incomes.

A 1% cut would have cost the government £5bn and be worth up to £380 a year per person – but according to the Resolution Foundation, you would have needed an income of at least £50,270 to receive the maximum benefit of £380.

The think tank said that most people would actually pay more national insurance overall because of the impact of the decision to freeze the threshold at which people pay it. Big Issue previously reported on the tax rises which are on their way, known as a “stealth tax”. 

Taxes aren’t going up exactly, but through a mechanism called fiscal drag people will end up paying a bit more. Here’s how it works.

The personal tax allowance is the amount you can earn before you pay tax, and tax rate thresholds are the point at which the percentage of your income you pay in tax goes up. Both are being frozen until 2028, meaning as people’s incomes rise through inflation, the government is able to collect more money from tax.

The Resolution Foundation says you’d only be a winner in April if you happen to earn between £40,000 and £51,000. Someone on the median salary (£27,000) will be around £120 worse off, and the biggest loss – in both cash and proportional terms – will be for someone earning around £13,500.

The foundation found that cutting the basic rate of income tax while going ahead with freezing the personal allowance is a tax cut for the top fifth of households, being paid for directly by the bottom four fifths. 

Shadow chancellor Rachel Reeves said said: “I think we can forgive taxpayers for not celebrating when they see the truth of today’s announcement.”

What energy bill help is in the Autumn Statement?

There is much less support for energy bills than last year, with the energy rebate not being repeated. This means households will face higher energy bills despite falls in the cost of energy, the Resolution Foundation has warned. 

Around 11% of families face energy bills rising by more than £100 this winter, a figure that rises to 20% among the poorest households.

The chancellor reportedly plans to offer households £1,000 for agreeing to have pylons installed in their area.

Matt Copeland, head of policy and public affairs at National Energy Action, described the support as “unconscionable”.

He said: “To give support based on geography, rather than need, would create a huge postcode lottery and leave millions of households cold at home this winter.”

Do you have a story to tell or opinions to share about this? We want to hear from you. Get in touch and tell us more.

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