Autumn Statement: In Brief

WHAT are the key points of this year’s Autumn Statement. Here is a brief summary of what has been outlined by Chancellor George Osborne.

Growth:

•    This is forecast to increase from 0.6% to 1.4%, with next year’s prediction revised up from 1.8% to 2.4%. For the following four years rates are forecast to be 2.2%, 2.6%, 2.7% and 2.7%.
•    The depth of the economic crisis was said to be worse than first thought with new figures from the Office for National Statistics showing GDP declined by 7.2% in 2008/09 and not 6.3% as originally outlined. This wiped £112bn off the value of the economy but there was no double-dip recession.

Government Borrowing:

•    Deficit levels revised down by the Office for Budget Responsibility to 6.8% this year, and to 5.6% next year. This is then expected to fall to 4.4%, 2.7% and 1.2% in the subsequent financial years.
•    The OBR predicts a small cash surplus by 2018-19.
•    Borrowing falls to £111bn this year, then £96bn in 2014/15, then down to £79bn, £51bn and £23bn in subsequent years.
•    Government departmental budgets will be cut by £1bn for each of the next two years although a £7bn underspend has helped relieve this.

Welfare:

•    State pension age, as expected, increases to 68 in the mid-2030s in line with predicted life expectancy levels, and to 69 in the late 2040s. The pension will rise by £2.95 a week from next April.
•    To encourage more young people into work, anyone aged 18 to 21 and claiming benefits but without basic English or Maths will be required to undertake training from day one or lose their entitlement. Those unemployed for more than six months will be required to undertake a training scheme, do work experience or carry out voluntary work.

Tax:

•    Capital gains tax will be imposed from April 2015 on future gains made by non-residents who sell residential property in the UK.
•    From January 1, 2014, the rate of the bank levy will rise to 0.156%, and is estimated to raise £2.7bn in 2014/15 and £2.9bn in each year from 2015/16.
•    Employer National Insurance contributions will be scrapped on 1.5m for young people.
•    Stamp duty on shares purchased in exchange traded funds will be abolished.
•    The personal income tax allowance will rise to £10,000 from April next year, and then from 2015/16 in line with the CPI measure of inflation.
•    Married couples and civil partners will enjoy a tax break of £700m a year from April 2015.
•    Business rates in England and Wales to be capped at 2% with retailers whose premises have a rateable value of less than £50,000 receiving a £1,000 discount on their bills.
•    From April, a new tax relief will be introduced to encourage new social enterprises.

Employment:

•    Unemployment forecasts to fall from 7.6% this year to 7% in 2015. The rate is expected to decline to 5.6% by 2018.
•    400,000 new jobs created this year with 3.1m by 2019, wiping out public sector job losses.
•    An in loans to 50,000 start-up businesses
•    Export finance capacity doubled to £50bn to encourage overseas trade, especially in emerging markets.

Transport:

•    Fuel duty rise scrapped for next year.
•    Regulated train fares to rise in line with inflation, not at 1% above as planned.
•    The paper tax disc is being replaced by an electronic system.
Education and Training:
•    An extra 30,000 student places will be created in 2014/15, with the cap on numbers being scrapped in 2015.
•    There will be increased funding for science, technology and engineering courses.
•    An extra 20,000 higher apprenticeships to be funded directly through HMRC over the next two years.
•    Free school meals to children in reception classes and Years 1 and 2.

Housing:

•    £1bn of loans to unlock housing developments in Manchester and Leeds, among other sites.
•    The Housing Revenue Account borrowing limit will rise by £300m.
•    Local authorities are given the right to sell off their most expensive social housing to help regenerate rundown housing estates.

Infrastructure:

•    NIP to be implemented as planned.
•    Tax allowances introduced to encourage investment in shale gas.

TheBusinessDesk.com’s coverage of the Autumn Statement is brought to you in conjunction with EY.