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The Autumn 2023 Budget outlines the UK government’s comprehensive fiscal strategy, emphasizing key priorities such as debt reduction, tax cuts, business support, and sustainable energy. With a self-declared focus on responsible public spending, the budget aims to curb national debt while fostering economic growth.
Tax cuts form a pivotal component of the government’s approach, aiming to benefit over 29 million working individuals. Reductions in Class 1 employee National Insurance Contributions (NICs), and Class 4 self-employed NICs are set to stimulate economic activity. Additionally, the increase in the National Living Wage aims to alleviate income disparities for over 2.7 million low-paid workers. The budget underscores the government’s commitment to supporting businesses and boosting investments. Projections from the Office for Budget Responsibility (OBR) anticipate a substantial increase in and investment and employment, at an approximated £14 billion, contributing to the overall economic recovery.
Furthermore, Welfare system reforms, including the Back to Work Plan, seek to address long-term sickness and disability-related economic inactivity. The government aims to support individuals with health conditions through expanded programs, such as the NHS Talking Therapies initiative. However, the budget faces challenges, including the impact of high inflation on departmental budgets. The government acknowledges the need for efficiency measures to manage these pressures effectively.
Some reactions:
- Fiscal drag – tax thresholds are still frozen, and taxpayers’ wages are being pushed into higher tax thresholds. FT analysts say tax burdens are paying an all-time high since the war which significantly contradicts the headlines on tax cuts.
- No benefits for young people? – FT analysts also highlight that there are no significant new policies for young people (apart from rise in living wage) which is surprising given the low support for the Conservatives in this demographic with 1 percent of 18 to 24 years predicted to vote for them in the next General Election in a YouGov polling.
- The Institute of Government criticized the prioritization of private-sector growth over the public sector, leading to a significant pressure on budgets for public services given rising inflation and tax cuts. This is summarized by their statement, “Hunt spent a fiscal windfall in pursuit of growth at the expense of public services”
- Contributing to inequality? – Progressive Policy Think Tank (PPTT) analysts argue cuts to NICs will benefit London, the Southeast of England, and richer households the most. PPTT analysts predict “for every £100 Jeremy Hunt spent on personal tax cuts, £46 will benefit the richest fifth of households. Only £3 of every £100 of tax cuts will go to the worst-off families.”. There were also criticisms that the budget failed to sufficiently deal with the challenges posed by the cost of living and climate crises.
What did the public make of the 2023 Autumn Statement?:
- A majority of those polled said that increasing welfare benefits in line with inflation, 64%, National Insurance reduction,61%, and compulsory work placements for those who have been out of work for 18 months, 60%, are a good idea.
- Freezing tax on alcohol at current levels is less popular, with only 38% thinking it is a good idea 47% believing it is the wrong priority.
- 38% of Britons tend to consider the budget fair rather 23% who believe it than not fair, however 55% of people believe it will not make much difference to their household finances.
Comprehensive Summary of the Autumn Budget by BBC News
Overview of Political Parties, Think Tank and Interest Group reactions
Image: The Prime Minister meets with the Chancellor, Simon Walker, 2023 // CC BY-NC-ND 2.0 DEED
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