Jeremy Hunt (opens in new tab), Chancellor of the Exchequer, will soon announce this year's Autumn Statement, and many are starting to ask when is the budget?
The cost of living crisis and a turbulent few months in politics means that Mr Hunt has quite the task on his hands, and only a few days to go until he reveals how he plans to restore Britain's finances. Just like the public wanted to know when was the mini budget (opens in new tab) and what was announced in the mini budget (opens in new tab) a mere two months ago, many are now asking the same of the upcoming autumn statement.
Speaking on the BBC’s Sunday with Laura Kuenssberg (opens in new tab) programme, the Chancellor said: "We are going to see everyone paying more tax. We’re going to see spending cuts," and political forecasters are expecting changes to income tax, council tax and public spending among other things. We've taken a look at what else is predicted and what both the Chancellor and the Prime Minister have said, to answer your questions about when is the budget and what could be announced.
When is the budget?
The new budget is set to be announced in the House of Commons on Thursday 17 November. Originally, the announcement was due to take place on 31st October, but it was postponed after Rishi Sunak was appointed as PM on the 25th, to give the Chancellor more time to prepare.
The Autumn Statement will lay out how Chancellor Jeremy Hunt plans to manage Britain's finances, and will also outline the state of the economy. It is widely expected that the budget will include around £35bn of spending cuts and £25bn of tax rises, in order to fill a £60bn funding hole. The timing of the statement is yet to be confirmed, but it usually happens around lunchtime.
Prime Minister @RishiSunak and Chancellor @Jeremy_Hunt met today to discuss the Autumn Statement on 17 November.They acknowledged that while tough decisions will need to be taken, this government will work to support the most vulnerable in society. pic.twitter.com/cblBWS6uFpOctober 31, 2022
Cabinet Office Minister Oliver Dowden (opens in new tab) told Sky News: "We are going to have to face difficult decisions both on the tax side - we haven’t got to the end of the difficult decisions there - and difficult decisions on the spending side.
"Now, of course, in terms of the specific decisions that will be made, that conversation is ongoing between the Prime Minister and the Chancellor.
"We need to bear down on spending first and eliminate waste, excessive spending and only go to tax rises if it’s the last resort but given the difficulty of the public finances, there is likely to be a mix of the two."
Budget predictions 2022
According to multiple sources, it's likely that income tax bands will be frozen for a further two years. This means that as wages grow in line with inflation, more people could find themselves paying higher tax brackets for the first time.
While it had already been decided that the threshold to start paying 20p Income Tax and 12p National Insurance (£12,570), and the threshold to pay 40p Income Tax (£50,270) are both frozen until 2026, it's expected that Hunt will extend the freeze until April 2028.
This is known as a stealth tax, and according to the the Institute for Fiscal Studies (opens in new tab) (IFS) will net the Treasury £35bn a year.
Though this change is not officially confirmed, Jeremy Hunt has told the BBC (opens in new tab) "I've been explicit that taxes are going to go up," leaving little room for doubt about this measure. Meanwhile, Shadow chancellor Rachel Reeves (opens in new tab) has criticised Mr Hunt, saying that he is choosing to tax working people, while doing "little to close tax loopholes which mean some of the wealthiest don't pay their fair share".
Plans for Corporation Tax, however, are unlikely to change, as it has already been confirmed that it will rise to 25% from April 2023.
It is widely expected that Jeremy Hunt will raise pensions and benefits in line with inflation, though it is one of the bigger decisions that the Chancellor will have to weigh up.
According to the Mirror (opens in new tab), sources suggest the state pension will rise by 10.1% in April 2023, to protect pensioners from the rising cost of living. This is known as the triple lock - part of the 2019 Conservative manifesto - which promises to raise the state pension each year in line with whichever is highest out of earnings (5.5%), inflation (10.1%), or 2.5%.
Rishi Sunak has spoken a lot about the triple lock in the past, and when he himself was Chancellor promised that the benefits increase would be in line with inflation. In addition, the triple lock is popular with Conservative voters, and if the prime minister decided not to follow it, he might be risking rebellion from Tory MPs.
On his way to the G20 summit in Bali, Rishi Sunak dropped heavy hints that his government will protect the triple lock, saying: "My track record as chancellor shows I care very much about those pensioners, particularly when it comes to things like energy and heating because they are especially vulnerable to cold weather."
He added: "Conservative governments have got a good track record of protecting pensioners and, in fact, the state pension today is about £700 higher than it otherwise would be as a result of the triple lock."
When Liz Truss was PM she had promised to deliver the Energy Prince Guarantee, which meant that typical households would have its energy bills capped at £2,500 annually. However, Jeremy Hunt has already said that this will be scaled back from April 2023.
There will be a Treasury review to decide how the scheme will continue beyond this point, with the help to be more targeted toward those who need it most.
It is expected that a cap of some sort will be announced in the upcoming statement, and according to the The Times (opens in new tab) average bills are expected to rise to between £2,850 and £3,100.
Jeremy Hunt told the publication: "In the end, if we want to be a low-tax economy we’ve got to find a way of not ending up with an entire second NHS in terms of the cost of our energy bills." He added that there would be no "rabbits" pulled out of hats in Thursday’s budget, and added it was "not possible" to support people’s energy bills indefinitely.
At the moment England’s town, county and city halls aren't able to increase council tax by 3% or more without holding a referendum. However, it is now thought that the government plans to either raise this threshold or remove it entirely.
Average Band D council tax bills are already £1,966, but increasing the bill by the current rate of inflation would add £198 to properties in this band - meaning the bill for the average household will rise to over £2,000 for the first time. The money raised would go towards the council's costs, and therefore cut the funding provided by central government.
A recent briefing by the Local Government Association (opens in new tab) warned that for authorities to meet cost pressures "income from council tax would have to increase by well over 10 per cent next year," adding that this is "neither sustainable nor desirable given the current cost of living crisis."
An LGA spokesperson said: “While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils.”
As Chancellor, Rishi Sunak passed the Energy Profit Levy - also known as windfall tax - which increased the rate of tax on oil and gas companies' profits to 25%, unless oil goes under $70 per barrel or by the end of 2025.
Ever since it was introduced, there have been calls for it to be extended and such options include extending the temporary 25% levy to 2027/28, raising it to 30% or 35%, and extending it to electricity suppliers.
Critics of the government have previously said the current windfall tax does not go far enough, with Shadow Secretary of State for Net Zero and Climate Change Ed Miliband (opens in new tab) saying: "Rishi Sunak should be hanging his head in shame that he has left billions of windfall profits in the pockets of oil and gas companies, while the British people face a cost of living crisis."
Meanwhile, Liberal Democrat Treasury spokesperson Sarah Olney (opens in new tab) said: "These sums are an embarrassingly small fraction of oil and gas profits, and show just how weak and inadequate the government’s energy levy is. The sad truth is that while people across Britain struggle to make ends meet this out of touch government is refusing to make oil and gas giants pay their fair share."
Jeremy Hunt has warned no government department will be exempt from cuts - with even health and defence likely to be told they won't see any increase in their budgets - in an attempt to raise roughly £35bn.
The BBC (opens in new tab) reports that government departments are expected to be told on Thursday that they'll have to stick to the budgets they were allocated in 2021, to last up until 2025 - so while the amount of money will stay the same, it might not go as far, thanks to inflation.
The Chancellor has also warned that not even NHS spending will be exempt from cuts.
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