Autumn Statement Predictions: Will the Chancellor tamper with the triple lock?
As the Autumn Statement draws closer, speculation about its contents continues to swirl. Chancellor Jeremy Hunt has so far kept his cards close to his chest but that hasn’t stopped theories from emerging or business groups and others from making the case for action they would like to see on 22 November.
In this blog, we take a look at what the Autumn Statement may bring.
Tampering with the triple lock
Consensus is growing that the Autumn Statement will see an overhaul of the pensions triple lock. The Chancellor is expected by many to announce that announcing that the state pension will rise in line with regular wages at 7.8%, rather than the 8.5% surge in total pay when bonuses are considered.
This would mean the basic pension will go up by around £837 next year, not the £902 which would be expected if bonuses were included. This move is expected to save the Treasury £900 million a year with the Prime Minister and Chancellor under pressure to reduce the cost of the triple lock because of successive years of high inflation and wage growth.
It is easy to see why the Chancellor would take this action with reports from the Institute for Fiscal Studies (IFS) revealing that reinstating the triple lock could cost the government an additional £45 billion by 2050.
Farewell to full expensing?
Mr Hunt looks set to reject calls from business groups to make Full Expensing permanent.
Introduced in March’s Budget, Full Expensing allows companies to deduct the cost of qualifying plant and machinery from their profits straight away with no expenditure limit. It is scheduled to end on 1 April 2026.
The Confederation of British Industry (CBI) has led calls to make full expensing permanent beyond the current three-year window, which it says would unlock business investment across the economy. The CBI’s analysis shows that this move could lead to a permanent boost of 21% to business investment and a 2% increase to GDP by 2030/31.
However, the Chancellor is expected to say that constraints on the public finances mean he is unable to change course after a sharp rise in government borrowing costs in recent months.
Renewing rates relief
The night-time economy adviser for Greater Manchester has called for the government to renew business rates relief in the Autumn Statement.
Sacha Lord warned that the government will not meet its growth objectives before the next General Election if the discount is removed as planned next April. He added that unless Chancellor Jeremy Hunt decides to extend the relief, the growth of the sector ‘will falter, leaving a significant black hole’ in the UK's economy.
Mr Lord also called on the Chancellor to review VAT tax breaks and ‘create parity’ between retail and service sectors.
The Autumn Statement
Whatever happens on 22 November, Mercia’s tax experts will be watching and will provide detailed analysis of the government’s fiscal announcements. Keep your clients up to date with our range of digital products.
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