The Autumn Statement, the second major fiscal announcement by the government in the last two months, has now finished, with the chancellor, Jeremy Hunt, attempting to paint a positive picture of tax rises and spending cuts.
The latest update is at the top of the list. We will be back later with industry reaction and comment.
The Office for Budget Responsibility has released its economic and fiscal outlook. “Over £100bn of additional fiscal support over the next two years cushions the blow of higher energy prices – but the economy still falls into recession and living standards fall 7% over two years, wiping out eight years’ growth.”
For more information on the changes to business rates, there is this fact sheet
The Treasury has just issued this: “Plans for the second round of the Levelling Up Fund were confirmed, with at least £1.7bn to be allocated to priority local infrastructure projects around the UK before the end of the year.”
“When the global storm hits, we are uniquely exposed because of the choices the Conservative government has made,” Reeves says. “We are the only G7 economy that is still poorer than before the pandemic… We aren’t recovering, we are heading into recession.”
And that’s it. The shadow chancellor, Rachel Reeves, is responding.
“We will face into the storm,” Hunt proclaims. “There may be a recession made in Russia, but there is a recovery made in Britain.”
Social rented sector now: Hunt is making a big deal of the fact that rents have not gone up by the whopping 11.1% they could have gone up by. However, he will raise rents by 7%, as opposed to the 3% recommended by former levelling up secretary Greg Clark.
The change for investment zones confirms that the Truss/Kwarteng flagship has been sunk. The new concept only appears to share the name.
INVESTMENT ZONES will be altered to “leverage our research strengths by being focused on universities” in “left-behind areas” to help growth in digital, life sciences, green industry, financial services and advanced manufacturing.
“Infrastructure is our second growth priority,” says Hunt. “When looking for cuts, capital is sometimes seen as an easy option. But doing so limits not our budgets but our future.” Hunt confirms he will not cut a penny from capital budgets for the next two years – but will freeze them for three years after that.
A new energy efficiency taskforce will be launched by the business secretary.
“A new national ambition: by 2030 we want to reduce energy consumption from buildings and industry by 15%.” Will result in a £28bn saving from national energy bill.
“Our national mission is to level up economic opportunity across the country. And that too, needs investment in infrastructure. So I will proceed with round two of the Levelling Up Fund, at least matching the £1.7bn value of round one.”
The government will proceed with the Sizewell C nuclear power plant, with a £700m investment.
“Three growth priorities: energy, infrastructure and innovation.”
“We need economic growth” to “avoid a doom loop”. “They have never been interested in growth,” Hunt responds to hecklers from the opposition benches. “You cannot borrow your way to growth.”
There is a lot of money being promised in this supposedly “harsh” Budget – the supplementary guidance will show where it will come from.
“We want Scandinavian quality alongside Singaporean efficiency.” That means reforming “all public services for the better”. A new review launched into the NHS alongside added money.
The OBR has confirmed that the UK is now in recession. GDP is forecast to shrink by 1.4% next year, before returning to growth in 2024.
The new forecasts are:
2022: GDP growth of 4.2% compared with 3.8% growth predicted in March
2023: GDP falls by 1.4% compared with +1.8% growth predicted in March
2024: GDP rises by 1.3% compared with 2.1% growth predicted in March
2025: GDP rises by 2.6% compared with 1.8% growth predicted in March
2026: GDP rises by 2.7% compared with 1.7% growth predicted in March.
There is a heavy emphasis on skills and education now, suggesting that the pivot from infrastructure investment to skills investment will be at the heart of the new levelling-up agenda.
A cry from the chamber: “Is that it?”
“Departments will have to make efficiencies… but overall spending will continue to rise in real terms for the next five years.”
“We are going to grow public spending, but we are going to grow it more slowly than the growth in the economy.” That’s the fiscal drag, and a real-terms cut.
And we are on to the cuts…
BUSINESS RATES: “However I will soften the impact with a nearly £14bn tax cut over the five years. Nearly two-thirds will not pay a penny.”
Will include a transitional relief scheme.
BUSINESS RATES: “Bills should accurately reflect market values, so we will precede with the revaluation of business properties from April 2023.”
“I have no objection to windfall taxes,” but “any such tax should be temporary and not deter investment.” From 1 January to 28 March, profit levy increased to 35%.
Hunt is on to business taxes now.
Annual exempt amount for CGT will be halved to just over £6,000.
Inheritance tax threshold will be frozen until 2028.
“We want low taxes and sound money… but sound money has to come first.”
Hunt has confirmed that savings of £55bn will be targeted. He has also confirmed that “the pace of consolidation” – ie cuts – will be left until after the next general election.
“Today’s decisions mean that borrowing is more than halved.”
“Credibility cannot be taken for granted.” Hunt says: “I understand the motivation of my predecessor’s mini-Budget.”
The chancellor, Jeremy Hunt, has taken to the dispatch box to give his Autumn Statement. Hunt has begun his “Budget in all but name” saying that “in the face of unprecedented headwinds”. To laughter from the opposition benches he said his priorities were “stability, growth and public services”.
Referring to it as “a plan for a stronger economy”, the chancellor has refuted claims this will be Austerity 2.0. However, he is insisting he will seek to close a black hole in the nation’s finances, estimated at £45bn, while creating additional headroom of £10bn to £12bn. “We will face into the storm,” he told MPs.
Start your free trial today
Your trusted daily source of commercial real estate news and analysis. Register now for unlimited digital access throughout April.
Including:
Breaking news, interviews and market updates
Expert legal commentary, market trends and case law
