Rishi Sunak has begun setting out his plans to create an economy “fit for a new age of optimism” – revealing measures to boost wages, skills and productivity as the UK recovers from the Covid crisis.
The chancellor was under pressure to ease the cost-of-living concerns faced by families hit by rising bills, ease the burden on businesses and provide much-needed investment in the NHS and public services.
So what exactly has Mr Sunak had to offer in his Autumn Budget and Spending Review? The Independent takes a closer look at some the key announcements.
Growth, borrowing and spending
The chancellor said the forecasts from the Office for Budget Responsibility (OBR) shows the UK economy will grow by 6.5 per cent this year – followed by lower growth of 2.1 per cent in 2023, 1.3 per cent in 2024, 1.6 per cent in 2025.
But inflation is expected to spike to 4 per cent next year, Mr Sunak revealed – as the economy struggles to keep up with demand in the wake of Covid and Brexit.
Mr Sunak has also set out new fiscal rules: debt must fall as a percentage of GDP and the government should only borrow to invest in future growth during “normal times”.
Mr Sunak has promised an extra £4.7bn for schools by 2024-25, saying just under £2bn of new funding will go to help schools and colleges recover from the pandemic.
He said that funding plans will means spending for each pupil will be returned to 2010 levels, and also announced an extra £200m to continue the holiday activities scheme.
Minimum wage and public sector pay
The chancellor announced ahead of the Budget that has accepted a recommendation from the Low Pay Commission to increase the National Living wage from £8.91 to £9.50 an hour for workers aged 23 and over.
Sunak has announced he is ending the year-long public sector pay freeze, but did not reveal whether the pay rises would be above inflation (currently 3.1 per cent) – saying it would be up to the public sector pay review bodies.
In another pre-Budget announcement, there is an additional £5.9bn allocated to the NHS to tackle the huge backlog in care following the Covid crisis – with investment in diagnostic services, surgical hubs and boosting bed capacity.
Some £3.8bn of the extra spending to get the health service “back on track”, while £2.1bn will go on “digitising” the NHS – as the government attempts to push the health service into an efficiency drive.
This is on top of the £12bn expected to be raised from what will become the Health and Social Care Levy. That means it is technically investment, rather than so-called day-to-day spending.
The government has topped up a pledge to increase funding for trams, trains, buses and cycleways in a bid to improve local transport across England.
But only a small share of the £7bn touted by the Treasury before the Budget for transport is new money – only around £1.5bn is additional funding, with most of the sum being made in previous commitments.