Chancellor Jeremy Hunt has said the government will bring forward a new targeted approach to support businesses with energy bills from next April, to before the end of this year.
In his Autumn Statement this morning, he also confirmed that help for households on energy costs would be extended but will not be as generous as the package of support that is in place until the end of March, with the average household likely to see their energy bills rise to £3,000 annually from April – an increase of £500.
The new Energy Price Guarantee will run for 12 months from April.
The Chancellor confirmed that the National Living Wage would rise from the current rate of £9.50 per hour for over-23s, to £10.42 from next April, which represents an annual pay rise with more than £1,600 to a full-time worker. The rate will rise to £10.18 for 21-22 year olds, £7.49 for 18-20 year olds, and to £5.28 for 16-17 year olds and apprentices
The income tax personal allowance threshold will be frozen for an additional two years, until 2028, as will the higher rate threshold for income tax, the main national insurance thresholds and inheritance tax thresholds.
Commenting on business rates, Hunt said the government would proceed with a revaluation of business properties from April 2023, in order that bills accurately reflect market values.
“But I will soften the blow on businesses with a nearly £14 billion tax cut over the next five years. Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit.”
Elsewhere, Hunt dropped the top rate of tax, from £150,000 to £125,140. He also announced that the energy industry would be hit with an expanded windfall tax of 35% - up from 25% currently.
Hunt acknowledged we are in a recession, with official forecasts predicting the economy will shrink by 1.4% next year. He said the Statement today was designed to “tackle the cost-of-living crisis and rebuild our economy”. “Our priorities are stability, growth, and public services,” he said.
The Office for Budget Responsibility (OBR) forecast the UK’s inflation rate will be 9.1% this year and 7.4% next year. They also expect unemployment to rise from 3.6% currently, to 4.9% in 2024, before fallowing back to 4.1%.
Responding to the Chancellor’s Autumn Statement, Kate Nicholls, chief executive, UKHospitality he painted “a grim picture of what we’re facing as a nation”.
“I’m pleased that the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a freeze in the multiplier, extended reliefs and no downward transition. This means those seeing their valuations decrease will see the benefit in their bills immediately, at the same time as increases are capped.
“It was also encouraging that the Chancellor confirmed that energy support will continue post-April for the most vulnerable sectors, of which hospitality has already been recognised.
However, Nicholls said that what we failed to hear today was any plan for economic growth.
“There is nothing to give firms confidence, let alone invest, and we need to see an urgent plan for economic growth and how business will be at the centre of that.”
Emma McClarkin, chief executive of the British Beer and Pub Association said it was right that the Chancellor acknowledged the need for changes to the business rates system and it welcomed the extended and increased relief to 75% for pubs.
“The failure to provide any further relief for our industry today will hit pubs, breweries and their customers extremely hard this winter, and will have a devastating, lasting impact on communities across the country.
“Without lower beer duty or detail on whether energy costs will dramatically increase early next year, pub and brewers will still be forced to continue to make incredibly difficult decisions.”
Michael Kill CEO NTIA the budget did not go far enough and “still lacks clarity”.
“When businesses should be preparing for the busiest period of the year, they are now having to consider their future, and will remember the fourth failed attempt to deliver a budget to safeguard businesses at the sharpest end of the crisis.”
