Following the Autumn Statement 2022 the Finance Bill 2022-23 was published on 22 November 2022.
The Chancellor presented Autumn Statement 2022 to Parliament on 17 November. The Office for Budget Responsibility (OBR) also published their forecasts for the economy and public finances. The Library briefing Autumn Statement 2022: A summary explains what was in the Autumn Statement and summarises the OBR’s forecasts.
The Chancellor’s statement was delivered in the context of weak economic growth, high inflation, and rising interest rates. Russia’s invasion of Ukraine has resulted in global energy and food supply shocks. The Chancellor said that the Autumn Statement is a “plan to tackle the cost-of-living crisis and rebuild our economy” and a “balanced plan for stability, a plan for growth and a plan for public services”.
MPs gave their immediate reaction in the debate that followed the Chancellor’s statement to the House of Commons.
The Treasury produced distributional analysis to accompany the Autumn Statement. The Treasury’s analysis says that “households in the poorest income deciles are gaining the most in cash terms and as a percentage of net income in 2023-24 as a result of government policies announced at Autumn Statement 2022.”
Below we provide links to analysis and reaction from selected think tanks and others. We suggest using the links to see each organisation’s full reaction, but in most cases we provide a quote to give a flavour of their view.
The Institute for Fiscal Studies (IFS) published an initial response to the Autumn Statement by Paul Johnson, director of the IFS. In this response, Johnson states that “surging global energy prices have made the UK a poorer country” and the “next two years will see the biggest fall in household incomes in generations.”
The IFS analysis states that the “vast bulk” of spending cuts announced will not take effect until after April 2025, with the IFS arguing this is “probably the right choice” given “the profound uncertainty around the outlook”, though “delaying all of the difficult decisions until after the next general election does cast doubt on the credibility of these plans.”
During introductory remarks to an IFS event held on the morning of Friday 18th November, Johnson stated that the Chancellor is “erring on the side of caution in terms of protecting spending and the economy in the short run, rather than erring on the side of prioritising shoring up the public finances.”
The Institute for Government (IfG) published an analysis of the contents of the Autumn Statement. This argues that the new set of fiscal rules are “in historical terms… a permissive set of rules”, although they leave the Chancellor with “a small margin for error against the rules, meaning any further deterioration of the forecast could necessitate additional action next year.”
On tax reform the IfG say that it is difficult to “discern much in the way of a vision for the tax system” and that policies chosen “seem to have been mainly because they are likely to be easy to sell to the public.”
The Resolution Foundation’s analysis of the Autumn Statement, Help Today, Squeeze Tomorrow, argues the Autumn Statement will result in “huge stealth tax rises for the middle and top of the income distribution” and that households will face “higher energy bills, higher taxes, and worse public services than previously expected.”
The National Institute of Economic and Social Research (NIESR) response states the Chancellor “should have provided more support to UK households”, although increases in the living wage along with Universal Credit and pensions rising with inflation presents “a positive direction of travel for the households hardest hit by inflation.”
The British Chamber of Commerce praises the Chancellor’s focus on “financial stability and targeting support for the most vulnerable”, though argues the Autumn Statement is “unlikely to boost business confidence” and that the Government “must do more to improve conditions for businesses to invest and grow, otherwise we will be starting from a weak base to power our recovery once global economic conditions stabilise.”
Similarly, the CBI’s response to the Autumn Statement praised the Chancellor for “delivering stability, as well as protecting the most vulnerable”, before arguing that “businesses will think there’s more to be done on growth.”
The Women’s Budget Group argue the Autumn Statement is “a mistaken response to the economic challenges we are facing,” saying that “investment in public services that is needed to strengthen the economy now”, such as investment in services to help the most vulnerable and greater measures to address the energy and climate crises.
The Joseph Rowntree Foundation praised the Government’s acknowledgement “that people cannot withstand benefits being eroded any further” going on to argue that “even with [benefits] uprating, rates are at historic lows and households facing difficult times are increasingly not able to cover the essentials.”
The Local Government Association’s response states the “financial outlook for councils is better than we feared next year”, with the LGA “pleased that government will provide extra funding for adult social care”, though expressed concern that revised social rent cap “is higher than anticipated”, even though councils will “still have to cope with the additional financial burden as a result of lost income.”
The Institute of Chartered Accountants in England and Wales have analysed the tax implications of the Autumn Statement, claiming “many of the tax rises are more in the nature of stealth taxes”, with the net impact that “many more people will be brought into higher rates of income tax over the next five years” which will “increase the complexity of the tax system for many taxpayers and make it much harder for HMRC to administer the tax system.”
The Federation of Small Businesses’ response states the Autumn Statement is “high on stealth-creation and low on wealth-creation” and will increase “pressure on the UK’s 5.5 million small businesses, their employees and customers.” The FSB claim reduction in dividend taxation allowances will be particularly burdensome on small businesses, as will freezing the threshold for employer National Insurance and the increase in the living wage, which they claim will “will ramp up the costs of employment without offsetting that with measures to reduce other business costs.”
The TUC argue the Autumn Statement “means that real-terms spending cuts are being inflicted on our public services” and that it provides the “bare minimum on the national minimum wage and universal credit”, calling for an increased minimum wage and a boost to universal credit and child benefits.
The Institute for Policy Research (IPPR) response states spending cuts set out in the Autumn Statement “are not necessary” and that the Chancellor “could have chosen to invest in the people and services that make up the economy, and taxed the wealthiest to stabilise the finances.” A further IPPR response, specifically on tax reform, argues that reforms to capital gains tax are inadequate and that capital gains should be taxed at the same rate as the income tax schedule. The response concludes that the Chancellor “chose stealth taxes over wealth taxes” with reforms leaving “those who earn income from wealth paying lower tax rates than working people.”
The Taxpayers’ Alliance response claims the Autumn Statement was “was even more painful for taxpayers than we anticipated”, and that delayed spending cuts will result in “austerity for taxpayers rather than chunks of the public sector.”
The Institute for Economic Affairs (IEA) response argues that the result of tax increases could be a “deeper and longer economic downturn – ultimately resulting in less taxpayer revenue over the long-term” and that the Chancellor has “chosen to protect pensioners and those on welfare” at the expense of those in employment.
The Adam Smith Institute response states the Autumn Statement was a return to “managed decline” and failed to “strike the right balance between fiscal credibility and growth.” While welcoming making support for vulnerable households more targeted, the Institute criticised the lack of “genuine pro-growth reform”, which it describes as “the only sustainable way of tackling debt, improving public services and giving people the chance of a better future.”
The Centre for Policy Studies describes the Autumn Statement as “a sensible and measured response to the fiscal challenges facing the country”, while warning the UK remains “on course to have a deeply uncompetitive business tax and investment regime in the years ahead.” The CPS praised freezing tax thresholds as the “least-worst option for raising the tax burden” before calling for a “comprehensive growth plan to be developed and implemented” in the coming months.
Similarly, Policy Exchange’s response argues that the Autumn Statement broadly managed to support the economy, stabilise the public finances and to try and deliver on the Government’s manifesto, but failed “with any conviction” to “lay out a roadmap for growth in the future, or to do more than offer hope for public sector reform.”
Shadow Chancellor Rachel Reeves, writing in the Daily Mirror, argues that the Government has “no plan to deliver growth”, criticising the reverse of the plan to lift the cap on bankers bonuses, as well as a lack of measures to close tax loopholes for non-domiciled residents.
Writing in the Daily Record, Scottish First Minister Nicola Sturgeon stated that the Autumn Statement “provides little respite to Scottish households and businesses” and gave no support to the Scottish Government to deal with inflationary pressures affecting its budget, despite “repeated requests.”
Liberal Democrat Treasury Spokesperson Sarah Olney argues that “everyone will be forced to pay for this cost of chaos budget with their public services being slashed more each year” and that the “accumulated impact” of spending cuts “will mean a bleak recession for years to come.”
Ben Lake, Plaid Cymru Treasury Spokesperson has stated “pressures on Welsh public services will continue to worsen after today’s statement due to inflation.”
International Inflation: Harmonised Index of Comsumer Prices data on international inflation rates.
This briefing looks at the proposal to introduce Vehicle Excise Duty on electric vehicles from 1 April 2025, included in the Finance Bill 2022-23