Autumn Budget 2022: What it means for you
14 November 2022, 15:18 | Updated: 17 November 2022, 09:25
Chancellor Jeremy Hunt is set to make his Autumn Statement today.
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It is his and Prime Minister Rishi Sunak's opportunity to lay out their financial plans for the country as they aim to plug a £50bn hole in Britain's finances.
Here's what we can expect from the statement.
What is the Autumn Statement?
The Autumn Statement is where Chancellor Jeremy Hunt will deliver his financial plans for the next few months.
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The UK is facing a worsening cost of living crisis because of a combination of factors, including Russia's invasion of Ukraine and the residual impacts of the coronavirus pandemic.
Prime Minister Rishi Sunak, speaking from Bali where he is attending the G20 summit, said Ukraine and Covid are the "primary [drivers] for energy prices and inflation" - which are two key components of rising costs.
What can we expect from Thursday’s autumn budget
When is it being announced?
The statement is due to take place on Thursday. A time hasn't been confirmed but it's usually around midday.
It was supposed to take place on October 31, but it was delayed by three weeks so it could be based on the most recent economic forecasts, as well as to give Prime Minister Rishi Sunak and his new Cabinet time to finalise it.
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What went wrong with the last one?
This is the second financial statement of the autumn.
Liz Truss and Kwasi Kwarteng's mini Budget sparked economic turmoil in the UK. It saw the then-Prime Minister and Chancellor having to row back on a number of controversial announcements, and ultimately led to the sacking of Mr Kwarteng and the resignation of Ms Truss.
Economists at the Resolution Foundation calculated that Ms Truss's remaining unfunded tax cuts, from national insurance and stamp duty cuts, cost nearly £20 billion.
They also said that higher interest rates sparked by her economic vision have cost the nation £10 billion, with higher costs of borrowing.
It puts the overall cost of Ms Truss' disastrous mini Budget at around £30 billion.
Mr Sunak tried not to blame his predecessor Liz Truss for making the UK's financial outlook even worse but did acknowledge she made "mistakes" ahead of Thursday's budget.
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What could be in the Autumn Statement?
The Autumn Statement is widely expected to be grim listening for already hard-pressed Brits.
Rishi Sunak has insisted that the budget's decisions will have "fairness and compassion at their heart".
But Chancellor Jeremy Hunt said "we're all going to be paying a bit more tax" as he looks to find up to £60 billion from a combination of hikes and spending cuts.
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Spending cuts
The government is expected to announce billions of pounds worth of cuts to public spending.
These cuts could affect services such as the NHS, schools and the police.
Income tax
The budget is widely expected to raise finances through stealth taxes, by freezing the rates in which workers begin paying higher rates of tax.
Inflation and resultant pay increases will mean more people being dragged into higher bands.
Energy bills
Mr Hunt is expected to make the support plan for energy bills less generous from April, instead switching to more targeted measures in order to save the Treasury billions.
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Windfall tax
The Chancellor is considering increasing the windfall tax on oil and gas giants from 25 per cent to 35 per cent, while also expanding the levy to electricity generators.
Energy companies have been seeing extremely high profits as a result of a sharp rise in oil and gas prices, and the government is under increasing pressure to tax them as a result.
Pensions and benefits
It is likely Mr Hunt will announce a decision on whether pensions will rise in line with inflation from April 2023.
It is something Ms Truss promised, but Mr Sunak has so far not committed to.
Mr Hunt will also likely decide whether benefits will rise with inflation too.
Social care
The cap on social care costs announced by Boris Johnson is expected to be delayed by at least two years.
It is currently due to come into effect in October 2023, and limits the amount people pay towards care in their lifetime to £86,000.
What might the reaction be?
Some Conservatives have warned that hiking taxes will not help grow the economy, with the UK teetering on the brink of recession after the economy contracted in the last quarter.
Mr Kwarteng argued that growth would not stem from "putting up our taxes".
There are also likely to be growing concerns from charities and members of the public about how poorer households will cope with the tightening financial squeeze.
Read more: Jeremy Hunt warned against 'alienating' voters over £10bn tax raid on pensions savings
But Mr Sunak said the decisions were "difficult but necessary" to bring inflation back to manageable levels.
He also said the financial stability the UK now has - in comparison to the weeks after Ms Truss and Mr Kwarteng's mini Budget - was only because of the expected financial measures.
"Stability has returned to the United Kingdom, but that's because the expectation is that the government will make those difficult but necessary decisions to ensure that we can get a grip of inflation, reduce it for people with the cost of living, also limit the increase in mortgage rates," he said.
