Before we start - here are some things that don't normally get talked of in the regular budget coverage.
The word budget is usually thought to derive from ‘bougette’, old French for ‘little bag’. In the mid-18th century, the Chancellor of the Exchequer, in presenting his annual statement, was said ‘to open the budget’, meaning to open the bag in which he kept his notes. In the late 19th century the use of the term was extended from governmental to other finances.
The Dog Ate My Homework
Chancellor George Ward Hunt arrived at the Commons in 1869 and opened the budget box only to find he had left his speech at home.
Lloyd George lost his voice after the first three-and-a-half hours of his 1909 budget speech and he was given 30 minutes to get his voice back.
Nigel Lawson once stopped as he got his pages in the wrong order and had to stop the budget to sort out the speech.
And so to the Autumn Statement
What Is It?
It started as a kind of mid-term spending report but has transformed into a mini-budget.
Budgets have been traditionally in March and occasionally in April but for a few years in the 1990s the Budget joined up with the Autumn statement and was done in November – the argument being that gave more time to prepare things before the next tax year.
When Gordon Brown became Chancellor he reverted to the Spring budget but uprated the Autumn statement into what was termed a ‘Green Budget’ and was officially called the Pre-Budget Report. The first was delivered on 25th November 1997. It made a lot of sense in that it gave clear indications of where the government was going with their policies and so the actual budget announcements were less of a shock. This made for less excitement in the newsroom, as we tended to have a good idea of what the budget was going to do - but pleasing journalists wasn't the main preoccupation of the Chancellor. The advantage is that businesses had more certainty about the tax and spending regime and could better plan around it - which seemed sensible.
Chancellor George Osborne reverted to the Autumn Statement.
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The Budget remains the main money event of the year, where the most significant tax and spending changes are usually included. However, the Chancellor can and does announce changes to taxes and spending during the Autumn Statement.
Key Measures
The Chancellor described the event as “an autumn statement for a country that has turned a corner." He cut national insurance by 2p and offered businesses investment tax breaks worth £10 billion. He said “difficult decisions” to control spending and inflation were paying off.
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However, the Office for Budget Responsibility estimates that four million people will be dragged into paying the 20p basic rate, with a further three million pulled into paying 40p tax and 400,000 more paying the top rate of 45p.
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State Pensions
The state pension triple lock will remain in place. This means that pension payments increase each year in line with either inflation, average wage growth, or 2.5 per cent — whichever is highest. This means that the state pension will rise by 8.5% from £203.85 a week to £221.20 from April — an increase of £902 a year.
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Benefits
Benefits will rise by 6.7%, in line with inflation figures from September. There were rumours that the rise in benefits would be smaller than inflation.
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Company Pensions
New rules will allow employees to choose a pension scheme for their employer to pay into. That way, instead of having lots of pension pots - you have one pot that you take from job to job.
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National Insurance
The main rate of national insurance has been cut from 12 per cent to 10 per cent. The Chancellor said this would save someone on an average salary of £35,000 more than £450 a year. Hunt said the cut in the national insurance rate will start on January 6th - which is quicker than would normally be expected.
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National insurance contributions for the self-employed known as Class 2 contributions, have been abolished. Hunt said that scrapping these would save the average self-employed person £192 a year.
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​While the Chancellor announced a cut in National Insurance rates, he left NI and income tax thresholds untouched, meaning they remain frozen until 2028. That means people will be pulled into higher tax rates when their wages rise due to inflation. In that way, the budget also included so-called 'hidden' tax increases.
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Minimum Wage/Living Wage
The Minimum Living Wage will rise by 9.8 per cent from April, raising the rate from £10.42 to £11.44 an hour, That means a pay rise of around £1,800 a year.
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Capital Allowances for Businesses
The 100% upfront tax deduction for UK capital expenditure on plant and machinery will become permanent. This means companies can deduct in one go, the full cost of specific investments from their profit to reduce their tax. Previously company ies had to deduct the cost over a number of years. Being able to deduct the full amount in one year - is hoped will increase business investments.
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