Chancellor Jeremy Hunt’s Autumn Statement, with one eye on the upcoming election, has outlined significant financial decisions impacting individuals across the UK.
Here’s an overview on how key policies affect personal finances, alongside the previously discussed £1.3 billion funding for employment support for those with health conditions.
National Insurance (NI) Rate Cut
The Chancellor announced a reduction in NI rates, effective from 6 January. For employees earning between £12,570 and £50,268, the NI rate will drop from 12% to 10%, potentially saving £450 for someone with an average salary of £35,000. This cut only partially offsets the impact of frozen NI and income tax bands until 2028. The self-employed will also see a reduction in NI contributions, with the abolition of the class 2 flat-rate weekly contributions and a decrease in class 4 contributions on earnings between £12,570 and £50,270 from 9% to 8%.
Inflation and Price Rises
The Office for Budget Responsibility (OBR) forecasts a decrease in the inflation rate to 2.8% by the end of next year, with a target of 2% set for 2025.
Despite this, consumers can expect continued price rises, particularly in essentials like food, which have already seen a 30% increase over two years.
- Cost of living: financial strain is steering families to processed foods
- Obesity epidemic drives NHS prescription cost past £10 billion
- Cost of Living Guide
Minimum Wage Increase
From April, there will be a significant increase in minimum wages:
- The National Living Wage for over-23s will rise from £10.42 to £11.44 an hour.
- 21 to 22-year-olds will receive the National Living Wage for the first time, increasing their hourly rate from £10.18 to £11.44.
- The National Minimum Wage for 18 to 20-year-olds and under-18s will rise to £8.60 and £6.40 an hour, respectively.
- The apprentice rate will also increase to £6.40 an hour.
Benefits to Rise by 6.7%
In April, a range of benefits, including universal credit, will increase by 6.7%, in line with September’s inflation rate. This adjustment is expected to provide an average increase of £470 for 5.5 million households next year.
Local Housing Allowance Rates Adjustment
To address the soaring cost of renting, the government will adjust the Local Housing Allowance rates to cover 30% of local market rents, providing increased support for private renters.
State Pension Increase
Adhering to the triple-lock promise, the state pension will rise by 8.5% in April 2024, in line with pay increases. This means the full, new flat-rate state pension will be £221.20 a week, and the full, old basic state pension will be £169.50 a week.
Tobacco and Alcohol Duty
Duty on hand-rolling tobacco will increase by an additional 10%, while duty on beer, cider, wine, and spirits will remain frozen until August next year.
Work experience requirement for long-term unemployed
From late next year, individuals failing to find work for more than 18 months will be required to undertake work experience placements.
Those refusing work or failing to engage with job centre staff could lose access to benefits for a period.
These comprehensive measures, including the previously discussed £1.3 billion funding for health condition-related employment support, reflect the government’s multifaceted approach to addressing economic challenges and improving living standards across the UK.
The Office for Budget Responsibility (OBR) also announced that it expects the economy to grow slower than expected at a rate of 0.7%; rather than the rate of 1.8% forecast previously.
