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Autumn Statement 2016 predictions: What to expect from Philip Hammond's first post-Brexit budget
Autumn Statement 2016: What it means for you and your money
(about 4 hours later)
Chancellor Philip Hammond will outline his priorities for taxes and spending in the wake of the UK's vote to leave in the EU in his Autumn Statement on Wednesday.
Chancellor Philip Hammond has given his first Autumn Statement aimed to help families who are ‘just about managing’.
It will be the Chancellor's first major economic speech since the Brexit vote in June.
In his first major economic speech since the UK voted to leave the EU, the Chancellor reiterated that “Britain is open for business” and pledged to “build an economy that works for everyone”.
The Office for Budget Responsibility (OBR), the government’s economic watchdog, will also reveal its latest forecast for growth, unemployment and inflation, as it gives its first official verdict on the outlook for post-Brexit Britain.
His statement including major announcement on housing, benefits and tax.
The Autumn Statement will be followed by an immediate response from the Shadow Chancellor John McDonnell in the House of Commons.
So what does it mean for you and your finances?
Here's what we know about the content so far:
Pay rises for minimum wage earners
Economists’ eyes will be on the updated forecasts from the OBR.
The minimum wage for over 25s will rise by 4 per cent from £7.20 to £7.50 in April 2017.
The independent OBR will predict where Mr Hammond’s plans to take the UK economy, after abandoning his predecessor George Osborne’s pledge to eliminate the budget deficit by 2019-2020.
This is a smaller rise than had been predicted earlier in the year.
The OBR will compare the March Budget forecasts for the size of the economy with the new ones to be published on Wednesday. It is likely to show the economy will be about 2 per cent smaller by 2019. It will also calculate the additional borrowing over the next five years.
However, it will still be the equivalent of a pay rise worth over £500 a year to a full-time worker.
The widely respected Institute for Fiscal Studies (IFS), has warned that the Government faces a £25bn black hole in the public finances by the end of the current parliament because of slower growth and higher inflation.
A new saving account
The IFS believes Mr Hammond should "prepare for more austerity" in the next parliament.
Savers will be happy to hear a new 2.2 per cent savings account is being launched through National Savings and Investments letting customers save up to £3,000.
Mr Hammond previously said: "We have eye-wateringly large debt. We still have a significant deficit in this country. We have to prepare the economy for the period that lies ahead. We have to make sure the economy is watertight."
The account is subject to a minimum investment limit of £100.
Theresa May, in her first statement as prime minister, said she would directly address people from “an ordinary working-class family” who “don’t always have job security”, and “just about manage but worry about the cost of living” – a group who are thought to have voted disproportionately in favour of leaving the EU.
The equivalent best-buy three-year bond on the market now pays interest of 1.62 per cent.
Rob Holdsworth of the Resolution Foundation think-tank said: “Just managing families have had a tough decade. Their incomes started to stagnate before the financial crisis, fell during the downturn and despite recent growth, typical household incomes are no higher than a decade ago.”
Mr Hammond said he expects two million people to benefit.
“These families have also faced an additional squeeze over the past two decades – higher housing costs.”
Ban on letting agent fees and more homes
The Autumn Statement is expected to free up some money to help families on modest income.
Tenants will no longer be required to pay upfront fees that average £337, in a change aimed at helping the 4.3 million households that are living in private rental housing.
Policies under consideration reportedly include reducing the burden of childcare. Mr Hammond’s Autumn Statement could also introduce a freeze in fuel duty, which would effectively scrap a planned 2p rise on a litre of petrol in another offer to motorists.
“Landlords appoint letting agents and landlords should meet their fees,” Hammond said.
Elsewhere, there have been widespread predictions of a cut in air passenger duty to reduce the cost of foreign holidays that have been sent spiralling higher due to the drop in the value of the pound.
The change should be introduced “as soon as possible”.
Economist from EY said the Chancellor should also claw some money back by halting a planned cut in corporation tax, already the lowest among major economies, from 20 per cent to 17 per cent.
Mr Hammond has also announced the Government is investing £1.4bn in an effort to deliver 40,000 of new affordable homes.
“The Chancellor has said he intends to stick with the initial plan to cut corporation tax to 17 per cent by 2020 rather than opt for the further reduction mooted by his predecessor. If he does have funds to spend, he could look beyond corporation tax to a reduction in the employment tax burden, such as reducing the rate of employer National Insurance (NI) contributions to offset the increase in the apprenticeship levy,” EY economists said.
Employee perks set to cost more
But Theresa May threw that into doubt earlier this week when she said the UK aspired to retain the lowest corporation tax rate in the G20. If Donald Trump cuts America's rate to 15 per cent - as he has said he will - that would imply further cuts to the UK rate below 17 per cent.
People who buy their gym memberships and mobile phone deals through a work benefit scheme are set to pay more.
Mr Hammond is expected to confirm £1.3bn of additional capital spending to upgrade Britain’s road network.
Salary perks allow some employees to give up some of their salary in exchange for goods and services, with both the company and worker paying less tax.
This will be made up of £1.1bn on local schemes and £220m on easing the pressure on “pinch points”.
Mr Hammond described the perks as “unfair” and has abolished many – excluding child care, ultra-low emission cars and cycling to work – from April next year.
The Treasury previously said investment in infrastructure and innovation to boost long-term economic growth would be “at the heart” of Wednesday's statement.
Fuel duty will be frozen, which means there will be no immediate rise in petrol and diesel prices.
The Chancellor, Philip Hammond, is expected to pledge £400m of public funds to extend the UK’s “full-fibre” broadband network.
Mr Hammond said this would save the average car driver £130 and the average van driver £350 a year.
The Treasury believes the funding will help at least two million more homes and business get full-fibre broadband, regarded as the future of high speed telecoms.
Environmental drivers will also have a boost with more charging point being put in.
However, insurance premium tax is set to rise from 10 to 12 per cent. That means a 2 per cent on the cost of vehicle insurance and possible increases on home and travel insurances.
Hannah Maundrell, of money.co.uk, said: "Yet another hike in Insurance Premium Tax seems crazy as it will add £51 to the average household's insurance bill. The cost of insurance is expected to rise anyway - this will make it so much worse."
The minimum wage for over 25s will rise by 4 per cent from £7.20 to £7.50 in April 2017. This is a smaller rise than had been predicted earlier in the year.
However, it will still be the equivalent of a pay rise worth over £500 a year to a full-time worker.
Almost 11 million pensioners are targeted by as many as 250 million cold call scams a year.
Under Mr Hammond’s plan, all calls where a business has no existing relationship with the individual will be forbidden.
The ban, which could be enforced with fines of up to £500,000, will not cover texts and emails.
