Chancellor Kwasi Kwarteng told MPs that the Government is cutting household energy bills by an expected £1,400 this year while millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200. Mr Kwarteng said the cost to the Government of all the packages would be £60billion for six months.
Mr Kwarteng also confirmed changes to Univeral Credit rules which will mean people having to put more effort into finding work or earning if they want to keep receiving benefits.
A cut in the basic rate of income tax, to 19% instead of 20%, will happen in spring 2023 - meaning 31million people will keep more of their pay. The 45% higher rate of income tax will be “abolished”, the Chancellor has announced.
Planned increases in the duty people pay on beer, wine and cider will not go ahead. Mr Kwarteng confirmed the increase in National Insurance will be cancelled.
Stamp Duty will also be cut so no stamp duty is paid on homes under £250,000. There will also be an increase to the value of homes on which first-time buyers can claim relief to £625,000.
He also announced changes to the law to make striking harder for transport workers, and lifted the cap on how much bankers can be given as bonuses.
The Government will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down, the Chancellor said.
Mr Kwarteng began his mini-Budget this morning by insisting “help is coming” for people with their energy bills.
He told the Commons: “People will have seen the horrors of Putin’s illegal invasion of Ukraine. They will have heard reports that their already-expensive energy bills could reach as high as £6,500 next year. Mr Speaker, we were never going to let this happen.”
Mr Kwarteng added: “People need to know that help is coming. And help is indeed coming.”
He said the energy price guarantee will limit the unit price that consumers pay for electricity and gas, noting: “This means that for the next two years, the typical annual household bill will be £2,500. For a typical household, that is a saving of at least £1,000 a year, based on current prices.
“We are continuing our existing plans to give all households £400 off bills this winter. So taken together, we are cutting everyone’s energy bills by an expected £1,400 this year.”
Mr Kwarteng went on to outline the Government’s support for businesses.
The Chancellor told the Commons: “The Energy Bill Relief Scheme will reduce wholesale gas and electricity prices for all UK businesses, charities and the public sector like schools and hospitals. This will provide a price guarantee equivalent to the one provided for households, for all businesses across the country.”
He added that “energy prices are currently extremely volatile, erratically rising and falling every hour”.
Mr Kwarteng said: “This creates real risks to energy firms who are otherwise viable businesses. Those firms help supply the essential energy needed by households and businesses. So, to support them, we are announcing the Energy Markets Financing Scheme.
“Delivered with the Bank of England, this scheme will provide a 100% guarantee for commercial banks to offer emergency liquidity to energy firms.”
Mr Kwarteng also announced the creation of 'investment zones' around the country where rules on tax and development will be changed to encourage growth.
Next year's planned increase in corporation tax will not go ahead. The planned rise to corporation tax has been axed and it will remain at 19%, the Chancellor has told the Commons. Corporation tax is the tax companies pay on their profits.
