“Here we are at the end of 2022, three prime ministers, four chancellors and four budgets later,” remarked Shadow Chancellor, Rachel Reeves.
Following the exit of Liz Truss as PM, and Kwasi Kwarteng as Chancellor, the UK has been anxiously awaiting Jeremy Hunt’s Autumn Statement after the disaster of the infamous “mini-budget.
For weeks, there has been speculation about how the Chancellor would plug the “black hole” (of a speculated “£35bn to £60bn”) in the British economy. Thursday’s address at 11:30am, outlined just how the Chancellor plans to transform Britain into “the world’s next Silicon Valley”.
The UK’s Inflation rate is set to drop by 1.7% by next year, but we are officially in a recession according to the OBR. So, how will this new budget affect young Londoners?
Firstly, let’s start with the good news: if you’re 23 or over, your National Living Wage will increase from £9.50 to £10.42 from April of next year. Rental price rises will be capped at 7% over the next financial year, which will hopefully help private renters to stay in their tenancies, and ease the current rental crisis in London.
Hunt also reconfirmed the government’s commitment to the 2030 emissions reduction (of 68%) agreed to at COP26, a win for climate change activists. Windfall taxes for energy companies have been raised from 25% to 35%, incentivising providers to stop burning fossil fuels and seek out alternative energy sources. Another win is a planned investment of £6.6bn in energy efficiency from 2025.
Additionally, there will be a 10.1% increase for “means-tested benefits” such as Universal Credit, from April 2023: inline with September’s inflation rate. This may help young Londoners who face challenges to working to be able to still put food on the table during this recession. Furthermore, there will be extra payments to help support people through the cost-of-living crisis: £900 for those on benefits, and £150 for those with disability benefits.
The bad news?
Your wage may be rising, but the personal income tax allowance threshold has been frozen until 2028. This means that even if you start earning more, you may be taxed more as your wages move you up in tax bracket. The tax threshold for “higher earners” (those earning £150k and above) has been lowered to start taxing those earning £125,140+ at 45%. So the good news is that the rich will now be taxed more.
In a further hit to household bills, whilst the government will continue to support households in tackling the energy crisis; energy bills will rise from April 2023. Where bills were previously capped at £2500 per annum, they will now be capped at £3000 per year. An extra £500 for renters to cover.
Council tax will also increase up to 5% – this would mean an additional £100 for Band D (now costing £2000 per year for the first time ever). No longer may living in Wandsworth mean that you will be paying the lowest council tax in London. Whilst the rent cap may help, the council tax rises may balance it out, saving private tenants little-to-no money.
And in case you thought that the renewed commitment to COP26 goals was a win, Hunt plans to push plans ahead for Sizewell C – a nuclear plant on the east coast of England, in Suffolk. Although it would help cover 7% of Britain’s electricity needs, it will also only start producing energy in the next decade (2030). Climate activists in 2021 protested on the coastline, raising concerns about the safety of the eroding coastline, and the ruination of natural habitats. If you were planning a weekend away from London to enjoy this coastline, now might be the time to visit before its natural beauty is ruined forever.
The UK is now the only G7 country poorer than it was pre-pandemic. The Institute for Fiscal Studies reacted to the Autumn Statement and highlighted its effect on living standards, “This year we are set to see the largest fall in real household disposable income per head (4.3%) since the late 1940s”. With a predicted drop of 7% per-head, your takeaway oat flat white may have to be sacrificed.
With more cons than pros, does Hunt’s Autumn statement meet the Tories’ goal of “stability, growth, and public services”? Let us know what you think on Twitter @thevoiceoflondon and check out our explainer on Instagram.
Words: Nadya Salie | Subbing: Yana Trup