Autumn Statement 2013: the main points and what it means for you

Hannah Langworth outlines the provisions that you need to know about

This week Chancellor George Osborne set out how he sees the current state of the UK economy and revealed the government's latest economic policy plans in his 2013 Autumn Statement.

The chancellor is obliged by law to make two statements to parliament on behalf of the Treasury every year, usually the Budget and another report. The timing and names of these reports have varied over the years, but the current government has chosen to make their main budget announcements in spring, supplemented by Autumn Statements six months later.

Here is a summary of the main points of the 2013 Autumn Statement, plus our pick of the announcements most likely to affect you.

The economy

Economic growth: The OBR has revised its last forecasts for GDP growth upwards from 0.6 per cent to 1.4 per cent for 2013, and from 1.8 per cent to 2.4 per cent for 2014.

Employment: The OBR expects the unemployment rate for the UK in 2013 to be 7.6 per cent.

Inflation: The OBR expects inflation to slow between 2013 and 2016, returning to the targeted 2 per cent in the second half of 2016.

Public debt: Public debt is forecast to peak at 80 per cent of GDP in 2015-16, a year earlier than predicted in the 2013 Budget, before falling each year and reaching 75.9 per cent of GDP in 2018-19.

Deficit: The deficit is due to fall to 6.8 per cent of GDP this year, then to 5.6 per cent in 2014, then to 4.4 per cent, 2.7 per cent and 1.2 per cent in 2015, 2016 and 2017 respectively. By 2018-19, claims Osborne, there will be no deficit and perhaps even a small surplus.

Austerity: Osborne remains committed to austerity, claiming that economic growth alone cannot be relied upon to eliminate the deficit, so cuts to government spending still need to be made.

Business

Creative industries: Measures to support these include the consideration of new tax breaks for theatres, continued tax relief for the film industry, and investment in the National Film and Television School's Digital Village.

Business rates: Several changes to the business rates tax system were announced, including a cap on increases, extension of an existing relief scheme, and new reliefs for certain retail businesses.

Energy and environment

Infrastructure: Osborne set out various measures to improve the UK's infrastructure, including plans for a range of new public and private infrastructure projects, details of new nuclear power facilities, and a commitment from UK insurers to invest at least £25 billion in UK infrastructure over the next 5 years.

Fuel duty: Rates of tax on petrol will be frozen until the next election.

Energy bills: The government will reduce the impact of government policies on energy bills, which should make them cheaper.

Fracking: Fracking companies will benefit from a new tax break.

Personal tax and benefits

Tax avoidance: Osborne announced a variety of measures to clamp down on tax avoidance, including crackdowns on aggressive tax planning and smuggling, and steps to reduce fraud, error and debt in the benefit and tax credit systems.

Welfare: Further details of the cap on welfare spending announced in the 2013 Budget were revealed.

How will I be affected?

Provisions relevant to students and graduates

The bad news...

State pensions: Osborne confirmed that the state pension age will be reviewed every Parliament to take account of increased life expectancy, with the first review occurring shortly after the next election. People should expect, he said, to spend no more than one third of their adult lives as state pensioners. An increase in the state pension age to 68 is likely to happen in the mid 2030s, and it's likely to increase to 69 by the late 2040s.

Student loans: Osborne confirmed that existing student loans will be sold to the private sector, potentially putting graduates at risk of interest rate increases.

The good news...

National insurance: From April 2015, employers will no longer have to make National Insurance contributions for under-21 year olds on earnings of up to £813 per week, which should make it easier for employers to offer jobs to students.

Tax allowance: The income tax personal allowance, the amount of your annual earnings that isn't taxed, will be increased to £10,000 from April 2015. Basic rate taxpayers, a group which is likely to include most students and graduates, will pay £705 less income tax per year than they would have done in 2010-11.

Rail fares: The average increase in regulated rail fares for 2014 will be no higher than inflation.

Housing: Further steps will be taken to increase housing supply and support home ownership, including opening up new housing sites, increasing the funding available for new affordable homes, and making vacant high-value social housing available to buy.

Entrepreneurship: The current Enterprise Allowance loan scheme will be extended and an additional £160 million will be put into the Start Up Loans scheme over six years.

Comments