Jeremy Hunt has unveiled an autumn statement budget designed to plug a £55billion hole in the UK economy by raising taxes and cutting spending. The budget has left average families in the UK 3.7% worse off, according to economists - despite rises in pensions, benefits and minimum wage.
But there are also 'hidden details' in the budget, according to The Mirror, which will mean even more bad news for people across the UK.
£250 council tax bombshell
Families face a £250 council tax rise in a single year after Jeremy Hunt approved 5% annual rises. The Chancellor axed the 3% limit on hikes without holding a referendum, and instead will let town halls raise council tax by 5% a year indefinitely.
Treasury officials are expecting 95% of town halls to use the full 5% to reduce their cuts. It is expected to net an extra £3.3bn a year by 2026/27 and £4.8bn a year by 2027-28.
The average Band D bill is already almost £2,000 a year. The Office for Budget Responsibility (OBR) says the expected windfall is the equivalent of raising the average Band D bill by £250 in 2027/28.
Massive cuts coming after 2025
Spending across government will rise to 2025. But after that Jeremy Hunt will unleash cuts of £11.6bn in 2025/26, £23.2bn in 2026/27, and £36.3bn in 2027/28, compared to what was planned previously.
He will do this by raising day-to-day spending in real terms by only 1% a year, and slashing capital spending - on big infrastructure projects - by freezing it at the 2025 rate.
Even though spending rises overall, the IFS think tank predicts “unprotected” departments like councils, prisons, police, HMRC and courts will be cut back to make up for bigger rises in the NHS and defence.
Stealth raid drags 2.6million into paying 40p tax
Jeremy Hunt will drag 3.2million more people into paying 20p income tax - and 2.6million more people into paying the 40p rate - thanks to six years of stealth rises.
The Chancellor is freezing the £12,570 threshold for paying Income Tax and National Insurance and the £50,270 threshold for paying the 40p rate up to April 2028.
That’ll mean the number of people paying higher-rate tax rises from 11% to 15%, its highest since the current tax regime began in 1990.
Fuel duty could be hiked by 23% next year
Buried on page 53 of the OBR's document is the startling admission that forecasts assume a 23% increase in fuel duty from March 2023.
That would put around 12p a litre on petrol and diesel - which would raise £5.7billion for the Treasury.
It seems unlikely though, given fuel duty has been frozen since January 2011 - and Tory MPs are already furiously demanding a temporary 5p cut is extended.
House prices set to fall by 9% next year
House prices are expected to fall 9% between the winter 2022 and late summer 2024 as the cost of paying a mortgage soars.
And average interest rates on the stock of outstanding mortgages are expected to peak at 5% in the second half of 2024, the highest level since 2008, the OBR added.
As the economy recovers, house prices are expected to be around seven times earnings. The OBR said there is significant uncertainty over its forecast.
Living standards will fall by 7%
Household disposable income will drop 7.1% in real terms over this year and next year - the biggest drop since records began in 1956.
The grim conclusion was drawn by the OBR, which said disposable income will still be below pre-pandemic levels by 2028.
Unemployment will hit 4.9% by mid-2024, the watchdog added, up from 3.5%, with half a million jobs due to be lost over an 18-month recession.
£18billion ‘giveaway’ to banks
The budget secures an £18billion "giveaway" to big banks by cutting the Bank Surcharge from 8% to 3% from April.
Along with the bank levy, the two taxes will raise a combined £2.5 billion - down from £4.7billion in 2016-17 – a cut of 56%.
This means banks operating in the UK will pay £18billion less in these taxes over the next five years
Half of households to be worse off in cash terms
Half of all households - everyone in the highest 50% of earners - will be worse off in cash terms as a result of decisions announced in the budget.
The biggest impact is caused by the £500 cut in generosity of the Energy Price Guarantee, the Treasury’s own impact assessment shows.
Tax on electric cars will pull in £1.5bn
The Government plans to raise £1.5billion a year in tax from electric vehicles.
From 2025, electric car drivers will no longer be exempt from vehicle excise duty - something Jeremy Hunt said in his speech would make the system "fairer."
The AA said stripping electrics from their tax-exempt status would delay environmental benefits.
600,000 people face benefit sanctions
Universal Credit claimants who already work more than half the week will be told to increase their hours - and could have their benefits stopped if they don’t co-operate.
People whose income is equivalent to 15-35 hours a week “will be required to meet with a dedicated work coach in a Jobcentre Plus to increase their hours or earnings”, the small print of the Budget says.
That'll mean 600,000 working benefit claimants having to meet with their work coach.
It’s understood those who don’t co-operate can be sanctioned under the existing punishment regime. A phased rollout will begin in September 2023.
£1bn less to fix crumbling schools
The amount of money departments can spend on capital projects - like maintaining buildings - has been frozen in cash terms from 2025 to 2027.
When inflation is taken into account, that means the Department for Education will have £1 billion less to spend fixing crumbling schools in 2024-25.
More extra cash to tackle benefit fraud than tax avoidance
The Government plans to put an extra £280million into targeting benefit fraud and error next year.
That is three and a half times more than the £79million extra they’re investing in tackling serious tax fraud and avoidance by the super rich over the next five years.
They hope to claw back an additional £2.2billion in savings on the benefits bill every year by 27-28, compared to just £725million of prevented tax avoidance in five years.
