Chancellor, Jeremy Hunt’s Autumn Budget Statement 2023 – What Level Of Satisfied Are You?

Another season of the year, another Budget Statement – this time, the Autumn Statement.

Employers around the UK will have been watching to see what was announced in the hope that those announcements benefit businesses and the economy in some way.

The combination of Brexit, the pandemic and the cost of living crisis has had a detrimental effect on many businesses, especially small and medium enterprises operating in particular sectors such as the hospitality sector, for example.

Since the last Budget Statement in April, Chancellor, Jeremy Hunt has said inflation has fallen – it has halved – and borrowing has been reduced.

The economy is improving and back on track as a result of measures taken, he said.

So what was announced in the Autumn Statement that will continue to improve the economy and also make life easier for those businesses that have been struggling along for some time?

The Autumn Budget Statement 2023

Let’s take a look at some of the main takeaways from the Autumn Statement with regards the economy and also how businesses and employers might be affected…

The British Economy

Although the economy is said to be improving, we are not quite out of the woods yet.

It is predicted that living standards are not expected to return to pre-pandemic levels until 2027-28. 

However, the Britşsh economy is growing, albeit slower than expected. 

The Independent Office for Budget Responsibility (the OBR) predicts the economy will grow by 0.6% this year. Next year, it will grow by 0.7%.

In 2025, it will grow by 1.4% and then 1.9% in 2026. 2027 will see growth of 2% and then a further 1.7% in 2028.

The reason for the slower than originally forecast growth is that inflation is set to last higher for longer. Interest rates will also remain higher for longer. 

Are You Self Employed?

Let’s start off with those of you who are self employed.

The good news for you is that your life has just been made a bit easier than it was previously.

Self employed people previously had to pay Class 2 National Insurance contributions once they were earnşng more than £12,570 per year. This payment has now been abolished and this will come into effect in April 2024.

With regards to your Class 4 National Insurance contributions – if you are making profits between £12,570 and £50,270  – there is a little bit of relief here, too. These contributions have been cut from 9% to 8% and this will also come into effect in April 2024. 

Increase In The National Living Wage

If you are employing staff who are earning the National Living Wage, this wage has now been increased. 

Previously, the hourly rate was £10.42 per hour and this rate will remain in place until April 2024. After that date, the hourly rate will increase £11.44 per hour.

Employers need to note that this increase in the hourly rate to £11,44 per hour is no longer only applicable to those aged 23 and over.

The increase also applies to any members of your team of staff who are aged 21 and 22. 

For many small business owners, they have already highlighted this as a concern as they will need to find the extra money from somewhere to pay their staff that minimum wage.

On top of this, they say they will need to increase salaries for their more experienced staff to make sure they continue to feel valued. 

Naturally, many small business owners have said that they will need to increase their prices for the services they offer and / or employ fewer staff to make sure they can pay their existing staff the salaries they are entitled to. 

Depending on the sector, many small businesses have had to cut prices due to the cost of living crisis so that their customers can afford to buy products or use their services. 

So, whilst an increase in the Living Wage is good news for employees earning in this pay bracket, it could prove to be a headache for some employers. 

A Pension Pot For Life

Chancellor, Jeremy Hunt, announced that consultation would begin on the possibility of having one pension pot for life.

As an employer, your staff will be paying into their company pension along with the contributions made by your company. 

For people who have worked at multiple places throughout their career, this can become confusing and some pension pots are even forgotten about.

Especially for young people starting out in the world of work, they might decide it is more beneficial to simplify the process by taking their pension pot with them when they move on to their next role.

If you have worked in numerous roles, yourself, you may also see the benefits of having just one pension pot.

Critics, however, say such a scheme would prove to be a big headache for employers. 

The idea is only at the consultation phase for the moment so it remains to be seen when – and if – a single pension pot for life situation can become a reality. 

For Businesses

Will your business benefit in any way following the Autumn Budget Statement?

Let’s take a look at some of the main points:

A Change Made Permanent

At the Spring Budget Statement, it was announced that there would be a ‘full expensing’ tax break which would allow companies to deduct spending on new machinery and equipment from profits.

In the recent Autumn Budget Statement, he went on to announce that this move has now been made permanent and declared it as the ‘biggest business tax cut in modern history.’ 

Depending on the nature of your business, you could already be benefiting from this measure.

Business Rates Discount For Some Sectors

The hospitality and leisure sector has made headlines in the recent past as one of the sectors that has been hit hardest by the pandemic and cost of living crisis.

If you are an employer in the hospitality, leisure or retail sector in England, you have been benefiting from a 75% discount in business rates.

It was announced in the Autumn Budget Statement that this discount would be extended for another year in England.

No Increase In Fuel Duty

Many businesses rely on vehicles of some description. In the Spring Budget Statement, the Chancellor announced a 5 pence per litre cut that would last for 12 months.

Fuel Duty wasn’t addressed in this recent Autumn Statement so the duty remains at 52.59 pence per litre for both petrol and diesel.

Premium Planning Services

If you are an employer in the construction industry, the Chancellor announced the introduction of premium planning services.

This means there will need to be faster decisions made by planning authorities for major business applications. 

If no decision is made by the deadline, the planning application fee paid by the business will need to be refunded. 

The Strategic Manufacturing Sector

If you work in the strategic manufacturing sector, the Chancellor announced a funding package worth 4.5 billion pounds to attract investment to areas such as zero-emission vehicles, life sciences and green energy. 

The Investment Zones (IZ) Programme

Investment Zones are designed to boost the innovation potential of the United Kingdom, to grow strengths in key industries that will then drive growth and to level up communities across the country. 

These are operated at a local level where leaders are given autonomy and flexibility to use the tools provided to achieve that aim.

The financial incentives for Investment Zones have been extended from 5 years to 10 years in the Autumn Statement and new Investment Zones have also been announced: West Midşands, East Midlands, Greater Manchester, Wrexham and Flintshire.

Freeports have also had tax reliefs extended from 5 years to 10 years.

If you are an employer in Scotland, a further £80 million has been pledged for new Levelling Up partnerships that will fund regeneration projects. 

A Spring 2024 General Election?

Critics and opposition MPs have criticised many of the announcements made in the 2023 Autumn Statement saying the announcements won’t even touch the sides when it comes to financial relief for British working families.

Many people, for example, will soon fall into the tax bracket when their wage goes above the personal allowance – an increase in the hourly rate for the Living Wage, a cut in National Insurance contributions and a freeze in the personal allowance limit could see some families worse off.

However, with the announcements made in a positive light, some are predicting that it was a Budget Statement made with a Spring 2024 General Election in mind.

It remains to be seen whether or not this is the case and who – and with which political party – the Chancellor of the Exchequer will be when we next take a look at the main points of the future Budget Statements.