Jeremy Hunt shared his initiatives in the autumn statement aimed at boosting business investment by £20 billion annually for the next ten years.
The chancellor introduced 110 measures, encompassing substantial tax reductions, adjustments to benefits, initiatives to enhance housing availability, and policies focused on advancing skills, research, and development.
Hunt referred to these announcements as an “autumn statement for growth” expressing the goal of narrowing the "productivity" disparity between the UK and nations like the US, Germany, and France, known for their higher levels of investment.
“The 110 measures I take today help close that gap by boosting business investment by £20bn a year. They do not involve borrowing more and ramping up debt as some advocate. Instead they unlock investment with supply-side reforms,” he added.
Nevertheless, the Office for Budget Responsibility adjusted its projection of the economy's medium-term potential growth rate, lowering it from 1.8% to 1.6%.
This revision was attributed to a diminished forecast for average hours per worker, influenced by demographic shifts, as well as a less optimistic short-term outlook for productivity growth.
Key takeaways:
The key measures outlined in the autumn statement include a £110 million investment in nutrient mitigation schemes to facilitate the construction of 40,000 new homes. The commitment to ensuring that the growth in public spending remains lower than the economic growth over time is emphasized. Additionally, there's a £50 million allocation for a two-year apprenticeship pilot in engineering and key growth sectors, while local authorities can recover full planning application costs in exchange for meeting faster timelines.
Other initiatives involve allocating £32 million for new homes to address planning backlogs, funding for housing quarters in Cambridge, London, and Leeds, and £450 million for the local authority housing fund to deliver 2,400 new homes. The introduction of a new permitted development right allows any house to be converted into two flats. Social benefits, including universal credit, are set to increase by 6.7%, and the Local Housing Allowance rate will rise to the 30th percentile of local market rents, benefiting 1.6 million households.
To accelerate grid access, measures aim to cut delays by 90% and offer up to £10,000 off electricity bills over 10 years for those close to transmission infrastructure. The plan includes a £500 million investment over two years for innovation centers to establish the UK as an "AI powerhouse." Tax incentives and relief are introduced for investment zones and freeports, with three new investment zones in the West Midlands, East Midlands, and Greater Manchester, along with a second investment zone in Wrexham and Flintshire in Wales.
Devolution deals are set to be published in four areas, including Hull and East Yorkshire, and £50 million is designated for high-quality regeneration projects. Starting April 2024, companies bidding for large government contracts must demonstrate payment of invoices within an average of 55 days, later reduced to 30 days. Tax reforms for the self-employed, including scrapping class 2 national insurance, are proposed. A significant business tax cut of £11 billion annually is planned, and a mandatory work program for jobseekers is introduced after 18 months of unemployment. The living wage is set to increase by 9.8% to £11.44, and the main rate of national insurance will be cut by two percentage points to 10% from January 6.
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