Autumn statement: the main points and what it means for you

Hannah Langworth outlines the provisions you need to know about

In his recent autumn statement to parliament chancellor George Osborne set out the current state of the UK economy and the government's economic policy plans for the coming months.

The chancellor is obliged by law to make two statements to parliament on behalf of the Treasury every year - which usually comprise 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 in between them.

Here are some of the main points of the 2012 autumn statement, made by the chancellor to parliament on Wednesday 5 December.

Economic predictions

Economic growth: The British economy has shrunk by 0.1 per cent in 2012, keeping the UK just in recession. However, the economy is currently expected to start growing again soon, with growth forecast to be 1.2 per cent in 2013, 2 per cent in 2014, 2.3 per cent in 2015, 2.7 per cent in 2016 and 2.8 per cent in 2017.

Austerity: The government expects to have to stick to its "austerity" low-spending policy until the 2017/18 financial year.

Employment: Unemployment is lower than forecast in the spring budget. The OBR predicts it will peak at 8.3 per cent rather than the forecasted 8.7 per cent, and then start to rise.

Government debt and deficit: Both government debt (the amount of money it borrows) and its deficit (any shortfall between its budgeted incomings and outgoings) are predicted to fall in the coming years, but partly due to a transfer of cash from the Bank of England.

Business

Corporation tax: The main rate of corporation tax is to be reduced by 1 per cent, from 22 per cent to 21 per cent, from April 2014.

Tax evasion: A number of measures to combat tax evasion were announced, including details of steps to co-operate with the US and Switzerland and steps to tackle to use of offshore tax havens to evade tax. The chancellor also announced that prosecutions for tax evasion have risen by 80 per cent.

Tax reliefs for creative sector: From April 2013, they'll be new tax reliefs for the video games, animation and high-end television industries.

Business bank: The government confirmed its intention to launch a business bank to invest in small and medium private sector businesses. It will invest at least £300 million over the next two years and will also offer business advice.

Personal income

Tax thresholds: The threshold sums for the higher rate of income tax and for inheritance tax will both rise by 1 per cent.

State pension: The basic state pension will rise by 2.5 per cent to £110.15 a week in 2013.

Tax relief on pensions savings: The government will reduce the lifetime tax relief allowance for pensions savings from £1.5 million to £1.25 million and the annual allowance from £50,000 to £40,000.

Energy and environment

Fuel duty: The government decided to cancel a 3.02p per litre increase in fuel duty originally planned for August 2012 which had already been deferred until January 2013.

Flood defences: The government decided to increase spending on these by £120 million.

Gas: The government gave more details of already announced tax breaks for the gas industry.

Education

Public sector pay: The government announced that local authorities should make greater use of existing flexibilities when determining salaries. The pay of teachers is to be more closely related to performance.

Schools: An additional £980 million is to be invested in schools before the next general election, which will be partly used to fund 100 new free schools and academies.

Aid

Overseas development assistance: The proportion of government income spent on aid will increase from 0.56 per cent to 0.7 per cent in 2013, as promised in the budget.

Good news for students and graduates in the autumn statement

  • Ultrafast broadband is due to reach a number of key university cities. The government has decided that Cambridge, Coventry, Oxford and York will be among a clutch of cities set to receive a portion of the £50 million set aside in the spring 2012 budget to create further "super-connected" metropolitan hubs.
  • Extra money to support academic research has been set aside. The government will invest £600 million in facilities for technological research and £300 million in general research infrastructure.
  • An increase in the personal tax-free allowance is good news for employed recent graduates and those hoping to join their ranks soon. The amount of their income individuals can keep free from tax will rise by £235 to £9440, a not insignificant sum for those on starter salaries.
  • More help will be provided to first-time home buyers. The government confirmed that an extra £280 million will go into a scheme to provide loans for them and that it will invest £300 million in providing affordable homes.

Comments