Autumn Statement: When is it and how will it affect me?

15

Couple looking at billsImage source, Getty Images

By Michael Race

Business reporter, BBC News

The government is set to announce tens of billions of pounds worth of spending cuts and tax rises.

The Autumn Statement will affect the take-home pay and household budgets of millions of people, as well as money for key public services.

When is the Autumn Statement?

Chancellor Jeremy Hunt will deliver the statement to MPs on Thursday 17 November. The timing is still to be confirmed, but it usually happens at lunchtime.

It had been expected on 31 October. However, Mr Hunt postponed it after taking over from Kwasi Kwarteng.

Why is the Autumn Statement important?

The UK’s economy faces a number of big challenges.

The cost of living is soaring. Inflation – the rate prices are increasing by – rose by 10.1% in September.

The Autumn Statement also takes place less than eight weeks after the tax-cutting mini-budget. That saw the pound tumble against the dollar, government borrowing costs soar and the Bank of England make an emergency intervention.

Mr Hunt has already reversed much of Mr Kwarteng’s mini-budget, but is looking to go further in order to cut the UK’s debt.

“Decisions of eye-watering difficulty” lie ahead, Mr Hunt has warned.

Mr Hunt argues tax rises are necessary to help tackle inflation. The government also wants to show financial markets that it is responsible.

Image source, Getty Images

Image caption,

Mr Hunt has largely reversed the policies set out by his predecessor in September

Some experts believe the public finances have a so-called “black hole” of around £55bn. This could be filled through tax rises and spending cuts.

However, some economists argue the black hole could actually disappear if government debts were calculated differently.

Others suggest there is a risk that the government could deepen the recession by going too far and too fast.

What could be in the Autumn Statement?

It’s thought the government will look to balance the books with a mixture of spending cuts and raising taxes.

For example, it could decide to freeze the amount people can earn before they have to pay a higher rate of income tax.

At present, people pay 40% income tax on earnings above £50,270 (the rate is different in Scotland). If it kept this level for several years – instead of increasing it in line with inflation – more people would become higher rate tax payers.

Any cuts to public spending could affect services including the NHS, schools and the police.

An announcement is likely on whether benefits and pensions will rise in line with inflation.

The chancellor is also expected to set out details about any further help for those struggling with energy bills.

Will the Autumn Statement affect all of the UK?

Some of the Autumn Statement will affect the whole of the UK.

However, the governments of Scotland, Wales and Northern Ireland also make some tax and spending decisions independently. (Although Northern Ireland doesn’t currently have a functioning executive).

Scotland’s finance secretary has unveiled £615m worth of spending cuts, on top of £560m of cuts announced in September.

If the Westminster government announces extra spending for England, the other nations get an equivalent extra sum of money.