Jeremy Hunt has laid out his financial plans for the UK with a package containing "difficult decisions".
In his Autumn Statement, delivered in the House of Commons on Thursday, the Chancellor announced tax increases. He said the measures would ensure a "shallower" recession.
The Office for Budget Responsibility (OBR) forecast the UK's inflation rate to be 9.1% this year and 7.4% next year, contributing to the squeeze on living standards. Mr Hunt said: "Today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy.
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"Our priorities are stability, growth, and public services. We also protect the vulnerable because to be British is to be compassionate and this is a compassionate government.
"We are not alone facing these problems but today our plan reflects British values as we respond to an international crisis. We are honest about the challenges and fair in our solutions.
"Yes, we take difficult decisions to tackle inflation and keep mortgage rises down. But our plan also leads to a shallower downturn, lower energy bills, higher long-term growth, and a stronger NHS and education system."
Here are the key measures announced in the Chancellor's Autumn Statement:
- The threshold at which the 45p top rate of income tax is paid will be reduced from £150,000 to £125,140, although different rates apply in Scotland.
- The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will be frozen until April 2028, something which will result in more people paying more tax as a result of "fiscal drag" as wages increase.
- The windfall tax on oil and gas giants will increase from 25% to 35% and a 45% levy on electricity generators will help raise an estimated £14 billion next year.
- UK national living wage for people over 23 to increase from £9.50 to £10.42 an hour from next April
- State pension payments and means-tested and disability benefits to increase by 10.1%, in line with inflation
- Tax-free allowance for capital gains will reduce in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25.
- Electric vehicles will no longer be exempt from vehicle excise duty from April 2025, to make the motoring tax system "fairer".
- Government spending will continue to increase in real terms every year for the next five years, but at a slower rate than previously planned.
- Stamp duty cuts announced in Kwasi Kwarteng's mini-budget will now be time-limited, ending on March 31 2025.
- The Government would protect the increases in departmental budgets already set out in cash terms for the next two years, meaning real-terms cuts due to inflation and pressure on public sector wages.
- The defence budget will keep meeting the Nato target of 2% of GDP but the overseas aid budget will not be returned to its goal of 0.7% of national income "until the fiscal system allows".
- An extra £2.3 billion per year will be invested in schools in England over the next two years.
- The implementation of social care reforms will be delayed for two years.
- The NHS budget in England will increase by an extra £3.3 billion in each of the next two years.
- Local councils in England will be able to hike council tax up to 5% a year without a local vote, instead of 3% currently
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