Autumn Statement 2023: National Insurance to be cut by two percentage points – as state pension and Universal Credit to rise
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National Insurance is to be cut by two percentage points, the chancellor has announced in his autumn statement – as he pledged to “honour the triple lock in full” and increase Universal Credit.
Jeremy Hunt said the main 12% National Insurance rate would fall to 10% from 6 January.
Announcing the measures in the Commons, Jeremy Hunt said the government will increase Universal Credit and other benefits from next April by 6.7%, in line with September’s inflation figure – an average increase of £470 for 5.5 million households next year.
Mr Hunt said the full state pension would go up by 8.5% to £220 per week from 24 April, worth up to £900 more a year.
The chancellor said he job-seekers out of work for 18 months will have to go on mandatory work placements – and will have their benefits stopped if they did not comply for six months.
“The best way to tackle poverty is through work”, he said.
The chancellor told MPs the government will also increase local housing allowance rate, giving 1.6 million households an average of £800 of support next year.
He said he wanted to “reform and simplify taxes paid by the self-employed”, saying the government was abolishing class 2 National Insurance altogether – saving the average self-employed person £192 a year.
He also announced all alcohol duty had been frozen until 1 August next year.
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More devolved powers were promised for areas including Hull and East Yorkshire and Surrey.
The chancellor insisted the government’s plan for the British economy was “working” but said the “work is not done”.
Mr Hunt said the measures announced in the autumn statement would reward “effort and work” – as well as “improve the incentive to work”.
The Office for Budget Responsibility (OBR) has upgraded its growth forecast for gross domestic product – a measure of the size of the economy – this year, but downgraded the figure for subsequent years.
The budget watchdog’s forecast in March was for the economy to shrink by 0.2% in 2023, but that has now been revised up to 0.6%.
But in 2024 growth is forecast to be 0.7% rather than the 1.8% expected at the time of the Budget, 2025 is expected to see 1.4% rather than 2.5% and 2026 could be 1.9% instead of 2.1%.
Growth is then expected to go beyond the previous forecast, with 2% in 2027, slightly above the 1.9% predicted in March, with 1.7% in 2028.
“If we want those numbers to be higher, we need higher productivity,” the chancellor said.
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Key announcements from chancellor at a glance
The statement follows long-standing pressure from the Tory backbenches to reduce the tax burden on both the public and business, which has been sat at a 70-year high – the highest taxes since records began.
But it also comes as a general election looms, with the Conservatives still lagging behind Labour in the polls.
Mr Hunt claimed the economy was now “back on track” following a reduction in government borrowing and the halving of inflation since last autumn’s record high after Liz Truss’ disastrous mini budget.
However, inflation still sits at 4.6% – double the target of the Bank of England.
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On the eve of the autumn statement, the Treasury confirmed it would be increasing the national living wage, rising from £10.42 to £11.44 from April, and that it will benefit workers aged 21 and over, rather than 23 and over.
It will mean an £1,800 annual pay rise next year for a full-time worker on the living wage, while 18 to 20-year-olds will receive a £1.11 hourly rise to £8.60.
The changes are expected to impact about two million people.
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