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Autumn Statement 2013

Overview
The Chancellor began his Autumn Statement by saying, “Britain’s economic plan is working. But the job is not done”. He announced the Office of Budget Responsibility has revised upwards growth forecasts for the years ahead. Growth for 2013 has been upgraded from 0.6pc to 1.4pc and 1.8pc to 2.4pc for 2014 and dips to 2.2pc in 2015. Unemployment is set to fall to 7pc by 2015 - two years earlier than expected in March Budget. He also had good news to report on the underlying deficit which falls to 6.8% this year – instead of the 7.5% forecasted in March. Borrowing is also going down and The Chancellor said that the country would have a small surplus by 2018/19.
The fiscally neutral Statement didn’t contain any surprises after sustained leaks in the press over the past two weeks. The Chancellor said a number of times that we wanted to “fix the roof while the sun is shining” and set up a neat political trap by announcing that Parliament would have to vote on an "updated charter for Budget responsibility". As expected the business rate increase will be capped at 2% next year, employers National Insurance contribution for employees under 21 will be scrapped from 2015 and small retailers are set to receive a £1,000 discount alongside the small business rate relief scheme being extended for another year. On welfare, the Chancellor confirmed the date for raising the state pension age to 68 will be during mid-2030s rather than 2046. The state pension is set to increase by £2.95 a week from next year. Overall welfare spending (except state pension and jobseekers benefits) will be capped from next year. There is also to be £1 billion of extra money to stimulate house building and green levies will be scaled back to reduce energy bills. The Chancellor finished his statement with, “Britain’s moving again, let’s keep going”. The message that the country is on the right path and electing Labour would endanger the recovery is the clear message he sent to the country today. Labour’s response is to concentrate on the cost of living crisis, claiming today that most people are £1,600 worse off since the Coalition came to office in 2015. With 18 months until the next general election and the polls continuing to show a soft lead for Labour, it’s all to play for.

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Autumn Statement 2013

Key announcements
Economic forecasts and borrowing
      The Office of Budget Responsibility forecasted growth of 1.4pc for 2013 upgraded from 0.6pc, 2014 is upgraded from 1.8pc to 2.4pc. 2015 2.2pc, 2016 2.6pc, 2017 2.7pc and 2.7pc in 2018. The UK's "underlying deficit" is revised down to 6.8% this year and 5.6% next year. Borrowing at £111bn for this year, falling in 2014-15 to £96bn, then down to £79bn in 2015-16, £51bn the year after and £23bn the year after that. In 2018-19, the Office for Budget Responsibility predicts a small surplus. Public debt this year due to total 75.5% of GDP - £18bn lower than forecast in March - rising to 78.3% next year, before peaking at 80% the next year. By 2017-18, debt is expected to be more than £80bn lower than forecast in March.

Business and general taxes
       The Chancellor confirmed that he would scrap employers’ national insurance contribution for employees under 21 years old. From April 2015, capital gains tax will be imposed on future gains made by non-residents who sell residential property in the UK. From 1 January 2014, the rate of the bank levy will rise to 0.156%, raising £2.7bn in 2014-15 and £2.9bn each year from 2015-16. Stamp duty on shares purchased in exchange traded funds abolished. A married couples tax break will be introduced in April 2015. Business rates in England and Wales to be capped at 2% rather than linked to RPI inflation, with some retail premises in England to get a discount on their business rates. From April, new tax relief to be introduced for investment in social enterprises and new social impact bonds.

Welfare
  State pension age to increase to 68 in the mid-2030s and to 69 in the late 2040s. In April 2014, the state pension will rise by £2.95 a week. An overall cap on welfare will be introduced next year.

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Autumn Statement 2013

Skills and education
  An extra 30,000 student places in 2014-15 and the cap on student numbers will abolished in 2016. An additional 20,000 apprenticeships over the next two years.

Housing and planning
   £1bn in loans to boost housing building. The Housing Revenue Account borrowing limit to rise by £300m. Councils to sell off the most expensive social housing and rundown urban housing estates to be regenerated.

Fuel and transport duties
   Next year’s planned rise in fuel duty has been scrapped. Regulated train fares to rise in line with inflation, not at 1% above RPI as planned. The vehicle tax disc is to be replaced with an electronic system.

Other points of note
 Non ring-fenced Whitehall departments to have budgets cut by 1 per cent next year.

Mind the gap Autumn Statements are famous for “gaps” – the hidden detail and stealth consultation that eventually emerge from the mass of paperwork released on the day. Over the next week, think tanks, MPs, academics, tax and economic experts will pick the Budget apart word by word and graph by graph. PSA will keep you on track over the coming days and weeks. Full Autumn Statement 2013 documents can be downloaded here.

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