The Autumn Statement 2023 has been announced by Chancellor Jeremy Hunt, providing some key takeaways for HR and employees. With changes to the national insurance rate to investment to become an AI powerhouse, we explore the Chancellor’s Statement in more detail.
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Autumn Statement Overview
Last week, Chancellor Jeremy Hunt delivered the Autumn Statement 2023, with a focus on economic growth and increased productivity. He said the government would “reduce debt, cut taxes and reward work” with several measures introduced.
Cuts to the National Insurance Rate
Significantly, Jeremy Hunt’s Statement outlined changes to the national insurance rate for core earnings. This means a reduction in the current rate of 12% down to 10%, starting on 6 January 2024. As such, 27 million people will benefit, with the average worker saving £225 annually.
The Largest Cash Increase Ever
Calling it “the largest ever cash increase”, Jeremy Hunt also said the national living wage will be improved in his Autumn Statement. He explained the minimum wage would increase by 9.8%, from £10.42 to £11.44 per hour. This increase is equivalent to up to £1800 for a full-time worker. Furthermore, this wage bracket would be made available to those 21 and older, previously 23 and up.
As such, the measure aims to reduce the proportion of individuals on ‘low pay’. In fact, since 2010, Chancellor Hunt stated that 1.7 million people have been lifted from absolute poverty by these reforms.
The Government Backs its Pensioners
Moving on, the Chancellor’s Statement addressed the cost of living pressures many face, with the poorest families being hit hardest. Therefore, he announced that Universal Credit and other benefits would increase by 6.7% next April. On average, this means a £470 increase for 5.5 million people next year. Yet, these improvements come with stricter eligibility requirements to entitle individuals to such benefits (discussed in the next section).
Moreover, the chancellor addressed pensions. He stated that the government’s ‘triple lock’ policy has lifted 250,000 old people from poverty since 2011. However, with the current economic climate, the government would honour its commitment to the policy, increasing the state pension by 8.5%. Therefore, those entitled would receive £221.20 a week, worth up to £900 more annually.
Mandatory Work Placements
The Autumn Statement confirmed specifics about the government’s Back to Work plan. It will require certain benefit claimants to undertake mandatory work placements if they remain unemployed after 18 months. Failure to comply with these changes could result in such individuals having their benefits taken away from them.
The Back to Work plan hasn’t been without controversy, but Jeremy Hunt’s Statement tried to reason its implementation. He stated that despite there being nearly a million vacancies in the economy, over seven million adults of working age don’t work. He added that many can and want to work but struggle in the current system. As such, he hopes these measures help 200,000 find work.
The UK – an AI Powerhouse
Additionally, Jeremy Hunt’s Statement outlined that in the last ten years, the UK has become the third-largest technology sector in the world. This beats out some of the UK’s competitors, being double that of Germany and triple that of France.
He explained that the UK knows AI will be at the centre of future growth. As such, he said the government will invest an additional £500 million in innovation centres over the coming two years to make the UK an AI powerhouse. This builds on the current centres in Edinburgh and Bristol that he claims have been a success.
Autumn Statement Criticisms
Despite the positives claimed in the Autumn Statement, there have been many critics. Shadow Chancellor Rachel Reeves believes working people are worse off, with Labour leader Keir Starmer making his thoughts known, too.
But they weren’t the only ones, with TUC general secretary Paul Nowak claiming the measures don’t rebuild Britain post-pandemic but level the country down.
Conclusions About the Autumn Statement
Many conclusions can be drawn from the Autumn Statement released last week. The government claim they are addressing the cost of living crisis by cutting the national insurance rate, improving the minimum wage, and addressing issues with benefits and pensions.
However, there are several opponents to this Statement, with those believing it’s not enough to help working people. Either way, only time will tell to see what change the Autumn Statement will bring.
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