I have summarised the Statement as I listened and pulled out the important bits that affect our personal finance. I have created a summary of what will cost us more money and what will cost us less. Red and Green for hurt or help.
On digestion and looking at the numbers in more detail, this is going to hugely hurt middle England, those people working hard earning 30k, 40k, 50k a year. Personal allowances are frozen, energy bills go up, and inflation is still high next year expected to be 7.4% in 2023. Mortgage payments will increase as interest rates rise. Council tax will rise above 3% limit. It feels like middle England is being hit from many sides.
I am pleased to see support for the more vulnerable with inflation level increases to minimum wage, benefits, and state pension, but come on what about the people in the middle? Personally, I will be hugely impacted by these changes, as a middle earner, running a small business, my tax payments will increase, and my bills will go up by FAR more than £1000 per year. Not good enough.
MAIN POINTS What will cost more money
Energy Price cap to rise to £3000 or £250 PER MONTH from April 2023 ( real term increase of £900 from the current £2500 less £400 universal help = £2100)
Tax-free allowance, 20% rate 40% rates all remain frozen meaning less money in real money our pockets for lower to middle earners. AKA Stealth TAX
Councils can increase council tax by more than previous cap of 3% per year
Electric cars to pay vehicle tax from 2025
45% rate threshold reduces from 150,000k to 125,140k
Dividend tax free allowances reduce to £500 from £2000 by 2024
Capital Gains tax allowance reduce to £3k from £12k by 2024
MAIN POINTS Help for Lower Earners
An additional cost of living payment of £900 to those on benefits, plus more for pensioners and disability payments
4m people live in social rented housing, rent is set to rise by 11%, caped rent to a max of 7%.
National Living wage, increase next year by 9.7% hourly rate to £10.42 benefit 2m of lowest paid workers.
Increase of 10.1% to benefits meaning 11bn extra funding
Pensioners..pension credit up by 10.1% for vulnerable pensioners. Triple lock stays..apr pension increase of £870 a year.
The detail of the Budget, my highlights and takes as I listened.
We are worried about the future, stability, growth, public services
Protect the vulnerable. Compassionate conservative government.
Honest and fair
Inflation and mortgage rate. leading to a shallower downturn, lower energy bills
Stability
High inflation is a high issue. hurts the poorest the most
OBR says global factors are the cause of inflation. Most countries are still dealing with covid fallout
Wholesale gas/elec prices are eight times higher
IMF expects 1/3rd of the world to be in recession
must defeat inflation by working closely with Bank of England
Government and Bank working in lockstep
Emphasis on paying back debts.
Must focus on growth
Inflation at 11.1% 16th Sept concerning
OBR predicts inflation of 7.4% to fall next year
Unemployment is expected to rise
Borrowing is more than half over the next 5 years
55 billion worth of changes
Short-term fiscal policy
As conservatives, we do not leave our debts to the next generation!
50% from tax, 50% from spending
Personal Tax
Tried to be fair
Those with more contribute more
Avoid tax rises that damage growth
Personal Tax – reduce the threshold of 45% rate tax from 150k to 125k
Tax-free allowances – maintain the current level of tax-free allowance, inheritance tax
Dividend allowance from 2k to 1k to £500 by 2024
£12.3k to 6k to 3k by 2024 Capital gain tax reductions
From 2025 electric vehicles to pay vehicle road tax
The stamp duty cut remains until 2025 to support the slowing housing market
Business Tax
Freeze employers National Insurance
VAT threshold..maintain until March 2026
Big companies pay tax in the countries Expected to generate £2.8bn by 2027/28
Windfall Taxes
No objection to windfall taxes from unexpected increases in energy prices, like wind, and nuclear.
Energy profit levy from 25 to 35%, Jan 1st new temporary 45% on electricity generators £14bn raised here
Bus Rates
Bills reflect market values, 14bn tax cut over next 5 years..2/3of properties will not pay more next year 700k business to benefit
Public Services
Health and Education are protected as much as possible
Grow spending but not in line with inflation
DWP state 630k less job than at start of covid. Investigation into why
600k additional people on universal credit to meet with work coach with aim to increase hours and increase income.
Crack down on benefit fraud and errors
State pension age to be reviewed 2023
Defense
Increase defense spending, at least 2% of GDP
Overseas aid will reduce
Climate change. confirm remain fully committed to the global pact from COP 26
Education
Pro-education is pro-growth
Want every young person to leave the education system with the skills they would get going to school in Japan, Switzerland, or Germany.
Increase school budget by £2.3bn over next two years.
Health
7bn extra to social care next 2 years, extra funding combined with changes to council tax, more to go into social care. NHS increase its budget by 6.6bn
You cannot borrow your way to growth, an attack on the labour government
150bn extra this year spent on energy bills. 1/3rd of global emissions come from the energy supply. Must stop ourselves from being at mercy of international energy policy and prices.
Renewable energy 40% of our energy usage comes from renewable, we are world leaders
Must accelerate this with nuclear, wind, sun, and water-generated electricity.
New nuclear power plant at Sizewell C. EDF owned, 10k jobs, low carbon power station.
Energy efficiency, by 2030 businesses to reduce energy consumption by 30%. Increase funding for renewable energy.
Protection of the Vulnerable
Energy Bills This winter government is helping with energy bills. But from April 2023 energy price cap rises to £3000 from April. This is from £2,500 now, but in real terms £2,100 as we are all getting a universal £400 to help with bills. In reality a £900 a year increase to bills!
An additional cost of living payment of £900 to those on benefits, plus pensions and disability payments
Bring forward approach to support businesses on energy bills
4m people live in social rented housing, rent is set to rise by 11%, caped rent to a max of 7%.
National Living wage, increase next year by 9.7% hourly rate to £10.42 benefit 2m of lowest paid workers.
Increase of 10.1% to benefits meaning 11bn extra funding
Pensioners..pension credit up by 10.1% for vulnerable pensioners. Triple lock stays..apr pension increase of £870 a year.
