Tag: Treasury

The press release issued by HM Treasury on 30 November 2023.

The National Insurance Contributions (Reduction in Rates) Bill is being debated in the Commons today (November 11).

• 27 million employees to receive largest ever cut to National Insurance on 6 January 2024
• Today, the House of Commons will debate the National Insurance Contributions (Reduction in Rates) Bill, with the average employee and self-employed set to get an extra £450 a year and £350 a year
• £9 billion a year tax cut means that personal taxes on the average salary are set to be lower in the UK than every other major economy

The National Insurance Contributions (Reduction in Rates) Bill will be debated in the Commons today (November 11) to implement the largest ever cut to National Insurance from 6 January 2024 – less than six weeks’ time from today.

The Bill will be debated throughout the day with Members voting on the Bill this evening. It will then go to the Lords in the middle of December before receiving Royal Assent thereafter.

Reducing Class 1 National Insurance from 12 per cent to 10 per cent will reward work, meaning 27 million employees will effectively pay over 15 per cent less on National Insurance.

To the average employee on a salary of £35,400 this will be worth £450 a year, improving living standards and reducing the current combined tax rate of 32% for employees paying the basic rate of tax to 30% – the lowest since the 1980s.

Chancellor of the Exchequer, Jeremy Hunt, said:

“I’ve been clear from the start that I want to cut taxes. Now, having met our pledge to halve inflation, taxes can be cut in a responsible way that rewards work and helps grow our economy.”

These changes will mean that, for those on average salaries, personal taxes would be lower in the UK than every other G7 country, based on the most recent OECD data.

Taxes for the self-employed will also be cut and reformed. From 6 April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, simplifying the tax system and saving the average self-employed person on £28,200 a year £350 in 2024/25.

The changes will see an average full-time nurse on £38,900 receive an annual gain of over £520; an average teacher on £44,300 would receive an additional £630 a year; and a typical self-employed plumber on £34,400 would be £410 better off as a result of these cuts.

Further information

• Those self-employed people with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs, as they do currently.
• Those self-employed individuals with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so. The weekly rate they pay will be frozen at £3.45 for 2024-25, rather than rising by CPI to £3.70.
• Other individuals will continue to be able to pay voluntary Class 3 NICs to help fill gaps in their National Insurance record to qualify for the State Pension, exactly as before. The Class 3 rate will also be frozen at £17.45 per week for 2024-25.
• Further information can be found in the National Insurance Factsheet.

The press release issued by HM Treasury on 30 November 2023.

The Chancellor has welcomed Microsoft’s £2.5 billion investment over the next 3 years to expand its next generation AI datacentre infrastructure.

The Chancellor has today hailed Microsoft’s major investment in AI infrastructure and skills as critical for future growth and innovation, boosting the country as a science and technology superpower.

Microsoft is committing to more than doubling its datacentre footprint in the UK and training more than one million people for the AI economy. It’s also supporting the UK’s growing AI safety and research efforts through partnerships with the government and leading universities.

As part of this, Microsoft will spend £2.5 billion over the next three years to expand its next generation AI datacentre infrastructure, bringing more than 20,000 of the most advanced Graphics Processing Units (GPUs) – which are crucial for machine learning and the development of AI models – to the UK by 2026.

This is the single largest investment in its 40-year history in the country which will see Microsoft grow its UK AI infrastructure across sites in London and Cardiff and potential expansion into northern England, helping to meet the exploding demand for efficient, scalable and sustainable AI specific compute power. Datacentres process, host and store the massive amounts of digital information that is critical for developing AI models.

This £2.5 billion commitment was confirmed on Monday as the Prime Minister Rishi Sunak unveiled £29.5 billion of investment in our most innovative sectors, including tech, life sciences, renewables, housing and infrastructure at the Global Investment Summit.

The UK is already the leading European tech ecosystem, which last year was worth more than double Germany’s and three times as much as France’s. The UK’s AI sector also contributes £3.7 billion to the UK economy and employs 50,000 people across the country.

The Chancellor welcomed Microsoft’s investment on a visit to one of its new, next generation datacentre facilities under construction in North London – which will run fully on renewable energy – where he was joined by Microsoft Vice Chair and President Brad Smith, and Microsoft UK CEO, Clare Barclay.

Prime Minister Rishi Sunak said:

“Microsoft are one of the founding fathers of modern technology and today’s announcement is a turning point for the future of AI infrastructure and development in the UK.

“The UK started the global conversation on AI earlier this month, and Microsoft’s historic investment is further evidence of the leading role we continue to play in expanding the frontiers of AI to harness it’s economic and scientific benefits.

Chancellor of the Exchequer Jeremy Hunt said:

“The UK is the tech hub of Europe with an ecosystem worth more than that of Germany and France combined – and this investment is another vote of confidence in us as a science superpower.

“And it follows the £500m investment in Compute that I committed to in my Autumn Statement last week, taking our investment in advanced computing for AI to £1.5bn – a down payment on the jobs and economic growth it will bring to the UK.”

Secretary of State for Science, Innovation and Technology Michelle Donelan said:

“This is a huge vote of confidence in the strength of the UK’s technology sector, showing Microsoft’s support for the UK to reach superpower heights and cementing our global AI safety leadership.

“This investment not only bolsters critical infrastructure but also ensures that the UK remains at the forefront of driving economic growth and innovation.”

Microsoft vice chair and President Brad Smith said:

“Microsoft is committed as a company to ensuring that the UK as a country has world-leading AI infrastructure, easy access to the skills people need, and broad protections for safety and security.”

Microsoft UK CEO, Clare Barclay, said:

“The pace of change in AI demands action today to build a prosperous future for the UK tomorrow.  Today marks the single largest investment in our more than 40-year history in the UK.

“As business and the public sector embrace the AI opportunity, we are building the infrastructure that will support the growth they need, training the people who can deliver it responsibly and securing our society against emergent threats”.

To support research on AI, Microsoft will extend its Accelerating Foundation Models Research (AFMR) programme to include prioritised access to GPUs for the UK’s science and research community.  AFMR drives interdisciplinary research on AI alignment and safety, beneficial applications of AI, and AI-driven scientific discovery in the natural and life sciences. This new UK effort will aim at harnessing the power of AI to accelerate scientific discovery via multiscale multimodal data generation through prioritised access to Microsoft’s AI tools. This programme includes researchers from the UK’s world leading participating universities including Cambridge, Oxford, Imperial College, UCL, Bath and Nottingham.

To support UK workers across the AI economy, Microsoft will make a multi-million pound investment to train one million people with the skills they need to build and work with AI, including expanded training for people looking to start, or move into, a career in AI.

Working in partnership with multiple learning and non-profit partners, the programme will focus on building AI fluency, developing AI technical skills, supporting AI business transformation, and promoting safe and responsible AI development and use including the first Professional Certificate on Generative AI.

Today’s news comes as the government has agreed a new Online Fraud Charter with tech companies, including Microsoft – the first agreement of its kind in the world – to clamp down on fraud taking place on their platforms.

Under the agreement, platforms will verify new advertisers and promptly remove fraudulent content. Individuals selling items on peer-to-peer platforms such as Facebook Marketplace will also be verified, and there will also be a function for people using online dating services to confirm who they are.

Today’s announcement also comes as the Chancellor announced a further £500 million investment in advanced computing for AI at the Autumn Statement, bringing the government’s total planned public investment in compute to more than £1.5 billion.

These investments will help provide the UK with the infrastructure we need to create a world-leading AI ecosystem where our scientists and researchers continue to make extraordinary new discoveries, benefitting all of society, and making the UK is the best place in the world to start and grow an AI start-up.

The press release issued by HM Treasury on 29 November 2023.

The Autumn Finance Bill 2023 has been published to enshrine a raft of landmark tax changes into law.

Following last week’s Autumn Statement for Growth, the Autumn Finance Bill 2023 has been published today (Wednesday 29 November 2023) to enshrine a raft of landmark tax changes into law.

Measures in the Bill back British business by cutting and simplifying tax to help them invest for less, making full expensing permanent – an effective £11 billion a year corporate tax cut.

It also simplifies R&D and extends the Enterprise Investment Scheme and Venture Capital Trust schemes by an extra ten years each to 2035, ensuring younger companies can attract the finance they need today to become the unicorns of tomorrow.

The majority of tax changes in the Bill will take effect from April 2024.

Financial Secretary to the Treasury, Nigel Huddleston, said:

“This Bill marks our next step in making the UK into the best place in the world to do business – and that’s the way we grow our economy and drive up living standards for all.

“We have the lowest rate of corporation tax in the G7, and full expensing effectively cuts it further by £11 billion a year – the biggest British business tax cut in modern British history to help firms invest for less.”

Permanent full expensing effectively cuts corporation tax by £11 billion per year and ensures that the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, including the United States, Japan, South Korea and Germany. The Autumn Statement is expected to result in an extra £20 billion of investment per year by the end of the decade.

Permanent full expensing helps companies to continuously invest for less by allowing them to deduct 100% of the cost of a wide range of plant and machinery – such as lorries, drills and office chairs – from their profits before tax. For every pound a company invests in plant or machinery, their taxes are cut by up to 25p.

Since the introduction of the super deduction – the predecessor to full expensing introduced in 2021 – investment in the UK has grown the fastest in the G7.

As well as reforms to capital allowances, the Chancellor Jeremy Hunt announced other measures that are also featured in today’s Bill to cut and simplify tax to boost investment and get the economy growing. These include:

• Changes worth £280 million a year to simplify and improve R&D tax reliefs. The government will merge the current R&D Expenditure Credit and SME schemes.
• Legislating for more generous support for loss-making R&D intensive SMEs as announced in spring.
• Extending the sunset clause for the Enterprise Investment Scheme and the Venture Capital Trust scheme to 6 April 2035. -For the creative sector, reforming the film, TV and video games tax reliefs to refundable expenditure credits.
• Expanding the ‘cash basis’ – a simplified way for over four million smaller, growing traders to use a simpler method of calculating their profits and pay their income tax.

The Bill received its first reading in Parliament on Monday 27 November 2023. It will now follow the normal passage through Parliament.

Further information

• Read the Autumn Finance Bill 2023.
• The Bill also legislates for several tax changes which have been previously announced and consulted upon.
• In March 2021, the former Chancellor announced the super-deduction, the biggest two-year business tax cut in modern British history, under which companies saved up to 25p in each pound they invested. Then at Spring Budget 2023, the now Chancellor introduced temporary full expensing, a three-year capital allowances policy which also delivered up to a 25p saving for every £1 invested.
• To provide certainty, when announcing full expensing, the Chancellor was clear that his ambition was to make it permanent when fiscal conditions allowed. At the Autumn Statement, the Chancellor has delivered on this by confirming he will make full expensing permanent. The biggest business tax cut in modern British history over a five year period.
• The changes to National Insurance, which will take effect on 6 January 2024 for employees and 6 April for self-employed people, is being legislated through a separate Bill to the Autumn Finance Bill 2023.

The press release issued by HM Treasury on 24 November 2023.

The City Minister’s forum for examining the impact of technology on the UK’s investment management sector publishes its first report.

Following its re-establishment in April 2023,  the Economic Secretary to the Treasury’s Asset Management Taskforce established a Technology Working Group –  chaired by Michelle Scrimgeour, CEO of Legal and General Investment Management – to examine the impact of new technology on the asset management sector.

This group of industry experts – working closely with the Financial Conduct Authority and HM Treasury – have focused the first phase of their work on creating a blueprint for implementing fund tokenisation in the UK, recognising the revolutionary potential of this technology to propel the asset management sector forward.

The Technology Working Group have today published UK Fund Tokenisation – A Blueprint for Implementation.

The government warmly welcomes this publication. It will advance the wider conversation on the role of technology in asset management, and signals that the UK is welcoming of innovation and open for the exciting new business of the future.

Background

Tokenisation refers to the issuing of units that are recorded on a distributed ledger, as opposed to units that are recorded on more traditional systems of record-keeping. Transitioning the existing operational infrastructure underpinning investment funds onto a distributed ledger will drive further efficiency and transparency within the sector, and improve its competitiveness.

Technology Working Group members

• IA
• LGIM
• HMT
• FCA
• EY
• Legal & General Investment Management
• Fidelity International
• Baillie Gifford
• Blackrock
• JP Morgan Asset management
• M&G
• Schroders
• Archax
• Aquis Exchange
• Augmentum
• Calastone
• CMS
• Copperco
• Galaxy Digital
• Hargreaves Lansdown
• Innovate Finance
• London Stock Exchange Group
• NEST
• Northern Trust

The press release issued by HM Treasury on 24 November 2023.

A bold new vision for welfare backed by nearly £30 billion has been set out by Work and Pensions Secretary Mel Stride.

• Millions of people will benefit from next generation of welfare reforms and extra support for those most in need, announced at Autumn Statement
• Benefits increased by 6.7% and pensions by 8.5%, maintaining commitment to seeing the country through cost of living pressures
• DWP Secretary Mel Stride heralds new era offering a “brighter future for millions”

The plans offer unprecedented employment and health support to help over a million people, while protecting those in most need from cost of living pressures – including raising pensions and benefits and increasing help with housing costs.

Long term decisions to provide unprecedented help for people to move off welfare and into work were at the heart of the Government’s plan for growth set out at the Autumn Statement.

While unemployment has been almost halved since 2010, the £2.5bn Back to Work plan will help thousands of people with disabilities, long-term health conditions and the long-term unemployed, to move into jobs. This comes alongside new guarantees for those on the highest tier of health benefits around keeping benefit support to cushion those who try work.

The transformative employment programme comes as the Government continues to protect the most vulnerable, delivering a Triple Lock-protected boost for pensioners and raising benefits in line with inflation next year, worth £20bn taken together.

The changes mean the full rate of the new State Pension will go up by £17.35 per week, while families on Universal Credit will be on average £470 better off next year.

Around 1.6 million households will also benefit from an increase to the Local Housing Allowance – and will be around £800 a year better off on average. Worth more than £7bn over five years, this commitment will support low-income families in the private rented sector with rent costs and help prevent homelessness.

Secretary of State for Work and Pensions, Mel Stride MP said:

Work changes lives. With the next generation of welfare reforms, we will help thousands of people to realise their aspirations and move off benefits into work, while continuing to support the most in need.

We are taking long term decisions that will build a brighter future for millions, offering unprecedented support to open up opportunity and grow the economy, building on our record that has seen almost four million more people in work since 2010.

Our reforms will remove the barriers to work that we know some people still face, while we’re boosting benefits and pensions to help with cost of living pressures.

Welfare reforms announced at the Autumn Statement include:

• Uprating working age benefits in line with September’s CPI index figure of 6.7%.
• Uprating state pensions in line with September’s earnings figure of 8.5%.
• Increasing the Local Housing Allowance to cover the 30TH percentile – worth an average of £830 per year.
• Expanded jobcentre support including intensive help for those on Universal Credit
• Introducing the Chance to Work Guarantee, which will tear down barriers to work for millions of claimants to try work with no fear of reassessment or losing their health benefit top-ups.
• Increasing mental health support for jobseekers by expanding NHS Talking Therapies treatment and the Individual Placement and Support programme, supporting almost 500,000 over five years.
• Matching 100,000 people per year with existing vacancies and supporting them in that role through Universal Support.
• Rolling out WorkWell to support people at risk of falling into long-term unemployment due to sickness or disability.
• Reforming the Work Capability Assessment for new health benefit claimants to better reflect the opportunities available in the modern world of work.
• Stricter sanctions for people who should be looking for work but aren’t engaging with jobcentre support.
• Building on the Mansion House reforms with further steps to improve private pension returns and grow the economy.
• Introducing new Government powers to request data from organisations such as banks when accounts are showing signals of fraud and error.

The Government’s radical new plan will stem the flow people falling out of work and onto inactivity benefits due to physical or mental health problems, as it takes the long-term decisions to help people realise their dreams to find a job and build a better life.

With this unprecedented level of employment support comes tougher enforcement of sanctions for fit and able people who should be looking for work but aren’t.

Work coaches will use tools to track people’s attendance at jobs fairs and interviews, and close benefit claims of those able to work who have been sanctioned and no longer receiving money after six months.

Taken together, the package will make sure those who are vulnerable or on the lowest incomes are protected, with intensive support to get them back into work, while ensuring fairness to the taxpayer.

The press release issued by HM Treasury on 22 November 2023.

Tax cuts for working people and UK businesses headlined Chancellor Jeremy Hunt’s Autumn Statement.

• Plan for stronger economy will reward hard work, with 800,000 workers in Northern Ireland to benefit from £311 back into their pocket thanks to National Insurance tax cut from January.
• Biggest permanent tax cut in modern UK history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
• Government is making work pay with National Living Wage rise to benefit 140,000 in Northern Ireland, representing boost of £1,800 to the average annual earnings of a full-time worker.
• Pubs, breweries and distillers in Northern Ireland backed by freezing alcohol duty for six months to August 2024.
• Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
• Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.

Tax cuts for working people and UK businesses headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22 November.

Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers across the UK – the biggest tax cut on work since the 1980s.

Secretary of State for Northern Ireland, Chris Heaton-Harris, said:

“Today’s Autumn Statement provides welcome support for Northern Ireland people on the cost of living, measures for businesses to promote growth, and exciting plans to foster further innovation.

“The National Insurance cut combined with the increase in the National Living Wage will mean a pay boost for nearly one million people in Northern Ireland, while tax measures such as full expensing will benefit local businesses.

“There’s also exciting news that the Belfast region has secured £3.8 million wireless innovation funding to become one of the UK’s 10 5G Innovation Regions.

“Since the 2021 Spending Review, the UK Government has provided an average of £15 billion per year for Northern Ireland public services.

“We will work with the Northern Ireland Executive once power sharing is restored to determine how the UK government can continue supporting Northern Ireland going forward.”

With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.

To that end, Mr Hunt announced that a 2 percentage cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.

Taxes for the self-employed in Northern Ireland will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs.

Taken together, this is the largest ever cut to employee and self-employed National Insurance – a UK-wide tax cut of £9 billion per year that amounts to a £311 average annual tax cut for 800,000 workers in Northern Ireland, almost immediately improving living standards for hundreds of thousands of people and rewarding hard-work as the government builds an economy for the future.

Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.

Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy. With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany. Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.

To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase.

Measures to help families and businesses include an alcohol duty freeze to 1st August 2024, benefitting pub-goers and industry following common-sense changes of the duty system. Actions today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.

As a result of decisions taken today that do not apply UK-wide, the Barnett Formula will provide £185 million to the Northern Ireland Executive over the next two years. Recognising the unique challenges Northern Ireland faces, the UK Government has provided around £7 billion in additional funding to Northern Ireland since 2014, on top of the Barnett-based block grant. The Northern Ireland Budget per person remains around 20% higher than equivalent UK Government spending in other parts of the UK.

Decisions on how the £185 million will be allocated with regard to repaying Reserve claims will be set out in due course, as is routine.

Earlier this year, the UK government agreed the Windsor Framework delivering the smooth flow of trade and protecting Northern Ireland’s place in the Union, providing a good basis for the return of a restored Executive.

The UK government remains attentive to the needs of the people of Northern Ireland in the absence of the Executive, with the Chief Secretary to the Treasury recently granting a request to make available £15 million of reallocated funding to support communities hit by flooding. It was also confirmed today that £3 million of funding will be delivered for the Tackling Paramilitarism Programme, as was announced at Spring Budget.

Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.

Tax

With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.

• The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
• The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
• The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
• The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate.
• The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.

Business

Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.

• Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
• Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
• SMEs will be supported with tougher regulation on late payers to improve prompt payments and continued funding for Help to Grow.
• The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
• The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
• The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.

Pay

Mr Hunt set out steps to reward work and help make work pay in recognition of the need to expand the workforce and get those out of work back into work to deliver growth.

• From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit 140,000 low paid workers in Northern Ireland.
• The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.

Infrastructure and levelling up

The Chancellor unveiled supply-side measures and funding packages to benefit businesses and local communities across Northern Ireland.

• £4.5 billion of funding for UK manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
• £3.8 million wireless innovation funding confirmed for Belfast region to become one of the UK’s 5G Innovation Regions.
• To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
• The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.

The press release issued by HM Treasury on 22 November 2023.

Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22 November.

• Plan for stronger economy will reward hard work, putting £450 back into the pocket of the average worker earning £35,400 a year thanks to National Insurance tax cut from 12% to 10% for 27 million working people from January.
• Tax to be cut and simplified for 2 million of the self-employed, abolishing an entire class of NICs and cutting the rate of the NICs top rate from 9% to 8% – with an average total saving of around £350 for someone earning £28,000 a year.
• Biggest permanent tax cut in modern British history for businesses will help them invest for less and boost investment by £20 billion per year over the next decade.
• Triple lock maintained for pensioners, benefits to rise in line with inflation and Local Housing Allowance increased to continue supporting families with the cost-of-living.
• Government is making work pay. National Living Wage rise represents boost of £1,800 to the average annual earnings of a full-time worker, and the Back to Work Plan will help over a million people start, stay, and succeed in work while ensuring tougher consequences for those choosing not to.
• Great British pubs, breweries and distillers backed by freezing alcohol duty for six months to August.
• Public finances in a better position than in March thanks to government action, with borrowing and debt as a share of the economy down on average across the next five years.
• Autumn Statement gets the economy growing, debt falling and helps return inflation to its 2% target – long-term decisions to build a brighter future.

Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22 November.

Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers – the biggest tax cut on work since the 1980s.

With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.

To that end, Mr Hunt announced that a 2 percentage point cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.

For the average worker earning £35,400 a year, that amounts to an over £450 annual tax cut – almost immediately improving living standards for millions of people and rewarding hard-work as the government builds an economy for the future.

Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25.

Taken together, this is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) says these reductions will lead to an additional 28,000 people entering work.

Cutting National Insurance will not lead to any change in NHS funding or pension payments. Services will remain unchanged and continue to be funded as they are now.

Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.

Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy. With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany.  Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.

To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase. The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.

The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will also be boosted by 6.7% in April, in line with September’s inflation figure as is convention.

Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit. Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.

Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.

Tax

With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.

• The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
• The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
• The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
• The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate.
• The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.

Business

Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.

• Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
• A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities. This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
• Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
• SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.
• The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
• The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
• The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.

Work and welfare reform

Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth. The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.

• From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 2.7 million low paid workers.
• The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
• The government is reforming the Work Capability Assessment to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
• The boosting of four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – will benefit up to 1.1 million people over the next five years.
• The government is exploring reforms of the fit note process to provide individuals whose health affects their ability to work with easy and rapid access to specialised work and health support.
• Mandatory work placements will boost skills and employability for those who have not found a job after 18 months of intensive support. Those who choose not to engage with the work search process for six months will have their claims closed and benefits stopped.

Infrastructure and levelling up

The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities.

• £4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
• The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
• Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.
• The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
• Four new devolution deals across England have been agreed. Mayoral deals with Greater Lincolnshire and Hull and East Yorkshire, and non-mayoral deals with Lancashire and Cornwall, will boost investment right across the country and deliver on the Prime Minister’s commitment to levelling-up.
• £500 million of funding over the next two years will help establish two more Compute innovation centres, supporting the development of artificial intelligence as a growth opportunity for Britain.
• The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
• To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.

Further information

• The Chancellor’s speech can be found later this afternoon here.
• Other documents published alongside the Autumn Statement today can be found here.
• The OBR’s Economic and Fiscal Outlook verifies that the two fiscal rules outlined by the Chancellor at last year’s Autumn Statement are met. Underlying debt falling as a percentage of GDP is met in the target year with £13 billion of headroom. The rule that public sector borrowing must be below 3% of GDP is met three years early.

The press release issued by HM Treasury on 22 November 2023.

Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22 November.

Tax cuts for working people and British business headlined Chancellor Jeremy Hunt’s ‘Autumn Statement for Growth’ today, Wednesday 22 November.

Aimed at building a stronger and more resilient economy, the Chancellor set out a plan to unlock growth and productivity by boosting business investment by £20 billion a year, getting more people into work, and cutting tax for 29 million workers across the UK – the biggest tax cut on work since the 1980s.

Welsh Secretary David TC Davies said:

This is a hugely ambitious Autumn Statement which puts more money in the pockets of over a million working people across Wales with cuts to National Insurance and another increase to the National Living Wage.

As we grow the economy, I’m delighted to see substantial direct UK Government investment in Wales. The two new £160 million Investment Zones in north-east and south-east Wales and an ambitious commitment to floating offshore wind will encourage business and create jobs, while £5 million for transport links in Monmouthshire and £500,000 to support the Hay Festival are important investments in those communities.

There will also be an additional £305 million in Barnett Consequentials for the Welsh Government, on top of its record block grant, to spend on devolved responsibilities like health and education.

This all comes on top of £111 million in levelling up funding announced earlier this week seven Welsh projects which will transform local areas and shows that the UK Government is delivering for people across Wales.

With higher revenues resulting from stronger growth than previously projected and the pledge to halve inflation having been met, the government has stabilised the economy through taking sound decisions. As set out by the Prime Minister this week, the stronger outlook means taxes can now be cut in a serious, responsible way.

To that end, Mr Hunt announced that a 2 percentage cut to Employee National Insurance from 12% to 10% will come into effect from January 2024.

Taxes for the self-employed in Wales will also be cut and reformed. From April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs.

Taken together, this is the largest ever cut to employee and self-employed National Insurance – a UK-wide tax cut of £9 billion per year that amounts to a £324 average annual tax cut for 1.2 million workers in Wales, almost immediately improving living standards for over a million people and rewarding hard-work as the government builds an economy for the future.

Businesses will also benefit from the biggest business tax cut in modern British history. As signalled at Spring Budget, the Chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.

Full Expensing: Invest for Less is an effective permanent tax cut of £11 billion a year, boosting business investment by £14 billion across the forecast period and helping to grow the economy. With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the United States, Japan, South Korea and Germany. Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.

To further ensure that work pays, Mr Hunt confirmed that the National Living Wage will increase by nearly 10% to £11.44 an hour from April 2024, the largest ever cash increase. The Chancellor also reinforced the new £2.5 billion Back to Work Plan for those with long-term health conditions, disabilities and difficulties finding employment, which includes tough new sanctions for those who can work but choose not to.

The Chancellor also announced that the government will honour its commitment to the triple lock in full, with the state pension to increase by 8.5% in April in what is the second biggest ever cash increase. Universal Credit and other working age benefits will be boosted by 6.7% in April, in line with September’s inflation figure as is convention.

Further action to help families includes increasing the Local Housing Allowance rate to cover the lowest 30% of rents from April – benefiting 1.6 million households with an average gain of £800 in 2024/25 – and an alcohol duty freeze to 1st August 2024, following common-sense changes of the duty system made possible by Brexit. Measures today take the government’s total support for the cost-of-living between 2022-25 beyond the £100 billion mark, to an average of £3,700 per household.

Many of today’s decisions on tax and spending apply in Wales. As a result of decisions that do not apply UK-wide, the Welsh Government will receive £305 million over the next two years.

Accompanying forecasts by the OBR confirm that today’s measures will make the economy permanently bigger, with growth every year of the forecast period. Borrowing and debt as a share of the economy are lower than in Spring this year and next year, with borrowing also lower on average across the forecast by comparison. They also confirm that inflation is expected to return to target in line with the Prime Minister’s economic priorities.

Tax

With inflation halved and debt forecast to fall, Mr Hunt delivered on the government’s commitment to cut taxes – rewarding and incentivising work as part of its long-term plan to grow the economy.

• The main rate of Employee National Insurance will be cut by 2 percentage points from 12% to 10%, coming into effect from January 2024 – delivering the benefit of a tax cut quickly for 27 million workers.
• The combined rate of income tax and National Insurance for employees paying the basic rate of tax will therefore fall from 32% to 30% – the lowest combined basic rate since the 1980s.
• The rate of Class 4 NICs on all earnings between £12,570 and £50,270 will be cut by 1p, from 9% to 8% from April 2024.
• The weekly Class 2 NICs – the flat rate compulsory charge which is currently £3.45 paid by self-employed people earning more than £12,570 – will effectively be abolished, with no-one required to pay from April 2024. Access to contributory benefits will be maintained and those currently paying voluntarily will still be able to do so at the same rate.
• The cuts to Class 4 and Class 2 together amount to a tax cut of £350 a year for the average self-employed person on £28,200, with around 2 million individuals to benefit.

Business

Measures to back British businesses big and small will remove barriers to investment and help to bridge the productivity gap between the UK and its G7 peers – unlocking £20 billion extra business investment per year over the next decade.

• Permanent Full Expensing will create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.
• Pension reforms, including through establishing a new Growth Fund within the British Business Bank, will help unlock an extra £75 billion of financing for high-growth companies by 2030 while providing an extra £1,000 a year in retirement for the average earner saving from 18.
• SMEs will be supported with tougher regulation on late payers to improve prompt payments and continued funding for Help to Grow. The UK government will also work with the Welsh Government to explore the expansion of the Made Smarter Adoption programme – which helps manufacturing SMEs to reduce emissions and drive productivity – in Wales from 2026/27.
• The existing R&D Expenditure Credit and Small and Medium Enterprise Scheme will be merged from April 2024, simplifying the system and boosting innovation in the UK.
• The rate at which loss-making companies are taxed within the merged scheme will be reduced from 25% to 19%, and the threshold for additional support for R&D intensive loss-making SMEs will be lowered to 30%, benefiting a further 5,000 SMEs.
• The Climate Change Agreement Scheme will be extended, giving energy intensive businesses like steel, ceramics and breweries around £300 million of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.

Work and welfare reform

Mr Hunt set out steps to reward work, help make work pay, and reform welfare in recognition of the need to expand the workforce and get those out of work back into work to deliver growth. The OBR expect that the measures announced at Autumn Statement will support a further 78,000 people into work by 2028-29, on top of the 110,000 resulting from action taken at Spring Budget.

• From 1 April 2024, the National Living Wage will increase by 9.8% to £11.44 an hour for eligible workers. For the first time this will include 21- and 22-year-olds. This represents an increase of over £1,800 to the annual earnings of a full-time worker on the NLW and is expected to benefit 130,000 low paid workers in Wales.
• The government will also substantially increase the National Minimum Wage rates for young people and apprentices: for people aged 18-20 by 14.8% to £8.60 an hour, for 16-17 year olds and apprentices by 21.2% to £6.40 an hour.
• The government is reforming the Work Capability Assessment, to ensure that people who can work are supported to do so via the welfare system. Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.
• As part of the Back to Work Plan, the government is extending and expanding the Restart scheme until June 2026 – providing tailored, intensive support such as coaching and CV and interview skills for those who have been on Universal Credit for more than six months rather than nine. An expansion to the flagship Universal Support programme will also help place and support more people with disabilities and from vulnerable groups into existing vacancies. Strengthened sanctions will apply in Wales.
• A new voluntary Occupational Health standard providing guidance on workplace health and disability will be developed, alongside creating a new digital marketplace to support smaller Welsh businesses procure Occupational Health services.

Infrastructure and levelling up

The Chancellor unveiled a raft of supply-side measures and funding packages to benefit businesses and local communities across Wales.

• £4.5 billion of funding for British manufacturers in the high-growth industries of the future, including £960 million earmarked for the Green Industries Growth Accelerator to support clean energy.
• Two new Investment Zones will be established in Cardiff & Newport and Wrexham & Flintshire, to boost economic growth across Wales. The extension of the Investment Zones and Freeport programmes in England will be replicated in Wales, subject to Welsh Government agreement. The governments will also work together to deliver a share of the funding from a flexible £150 million Investment Opportunity Fund, to support the securing of specific business investment opportunities.
• The government has published its full response to the Winser review and Connections Action Plan, which will cut grid access times for larger projects by half, halve the time to build major grid upgrades and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure.
• The government is working with The Crown Estate to bring forward additional floating wind in the Celtic Sea through the 2030s, with the potential to deliver £20 billion of direct investment from deployment in the area.
• To prioritise those who want to invest in the UK’s future, the government has accepted in principle the headline recommendations of Lord Harrington’s review into increasing foreign direct investment. This includes additional resource for the Office for Investment, allowing it to deepen its world-class concierge offer to strategically important investors.
• The life sciences will also be supported as one of the Chancellor’s key-growth sectors, with £20 million to speed up the development of new dementia treatments coming as part of the government’s full response to the O’Shaughnessy Review of commercial clinical trials in the UK.
• The government will ensure greater connectivity for Wales, through £1 billion to fund the electrification of the North Wales Main Line.
• £5.2m of funding for transport in Monmouthshire will deliver significant improvements to the local bus network, walkways, cycleways and shared use paths within Chepstow.
• £800,000 of funding for the Space Technology Test Centre in North Wales, providing a flight test range for rocket-powered test vehicles, near-space scientific flights, microgravity research and trials of re-entry vehicles and payload recovery systems.
• The government is also providing £500,000 to support the well-loved Hay Festival in Wales.

The press release issued by HM Treasury on 21 November 2023.

Biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfils manifesto pledge to end low pay.

• Biggest ever increase to the National Living Wage, worth over £1,800 a year for a full-time worker, fulfils manifesto pledge to end low pay.
• Since 2010 the National Living Wage will have doubled in cash terms from around £10,500 to nearly £21,000 a year for a full-time worker.
• For the first time, 21-year-olds on the National Living Wage will always earn two-thirds of average earnings.

The Chancellor will deliver a pay rise of more than £1,800 a year for a full-time worker, as he confirms that the National Living Wage will increase by over a pound an hour from April.

The almost 10% pay boost, from £10.42 to £11.44 an hour, is the biggest cash increase in the National Living Wage in more than a decade and fulfils the government’s manifesto pledge to end low pay for those on the National Living Wage.

Eligibility for the National Living Wage will also be extended by reducing the age threshold to 21-year-olds for the first time.  A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker.

National Minimum wage rates for younger workers will also increase. 18-20-year-olds will also get a wage boost to £8.60 per hour – a £1.11 hourly pay bump.

The Department for Business and Trade estimate 2.7 million workers will directly benefit from the 2024 National Living Wage increase.

Chancellor of the Exchequer Jeremy Hunt said:

Next April all full-time workers on the National Living Wage will get a pay rise of over £1,800 a year. That will end low pay in this country, delivering on our manifesto promise.

The National Living Wage has helped halve the number of people on low pay since 2010, making sure work always pays.

The minimum hourly wage for an apprentice is boosted next year, with an 18-year-old apprentice in an industry like construction seeing their minimum hourly pay increase by over 20%, going from £5.28 to £6.40 an hour.

The National Living Wage was introduced in 2016 and currently sets the minimum hourly pay a person over the age of 23 earns when working. The new rate will now apply to 21- and 22-year-olds, and means that the government has met its ambitious target of lifting the National Living Wage to two-thirds of median earnings by 2024, ending low hourly pay for those on the National Living Wage.

Since 2010, the proportion of workers on low hourly pay has more than halved from 21.3% to 8.9%, supported by increases to the National Living Wage. Personal tax thresholds have been doubled, meaning a working person can now earn £1,000 a month tax-free for the first time.

Getting more people into work and ensuring work pays is a priority for the government. The Chancellor will set out further measures in tomorrow’s Autumn Statement.

Notes to editors

• The OECD defines low pay as those earning less than two-thirds of average earnings.
• The National Minimum Wage rate for those aged 22+ was £5.80 from 1 October 2009 to 31st September 2010 . A worker working full-time would have received around £10,500 a year gross, whereas it will be almost £21,500 for a NLW worker from April 2024.

The press release issued by HM Treasury on 21 November 2023.

The Chancellor has announced a £320 million plan to drive innovation and unlock the first tranche of investment from his Mansion House Reforms.

• New investment vehicles tailored to the needs of pension schemes to support investment into the UK’s most promising high-growth companies.
• Latest step in delivering the Chancellor’s Mansion House Reforms unlocking £75 billion
• Expected to provide an extra £1,000 a year for the average earner that starts saving from 18

The Chancellor has announced a £320 million plan to drive innovation and unlock the first tranche of investment from his Mansion House Reforms.

A raft of measures – which are expected to provide an extra £1,000 for people’s pension pots every year – will help pension funds invest in high growth, innovative companies to deliver for savers and grow the economy.

The government is supporting new investment vehicles tailored to the needs of pension schemes, allowing investment into the UK’s innovative companies.

£250 million will be committed to two successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative, subject to contract. This will provide over a billion pounds of investment from pension funds and other sources into UK science and technology companies.

To complement private investment vehicles, a new Growth Fund will be established within the British Business Bank. The Growth Fund will draw on the BBB’s strong track record and a permanent capital base of over £7 billion to give pension schemes access to opportunities in the UK’s most promising businesses.  This has been welcomed by 8 pension schemes and fund managers as a potentially valuable addition to the market.

Building on the recent BVCA Venture Capital Investment Compact, the package also includes measures to further strengthen the UK’s renowned venture capital industry. A new Venture Capital Fellowship scheme will support the next generation of world-leading investors in our VC funds, similar to the successful US Kauffman Fellowship.

The Chancellor, Jeremy Hunt, said:

“Innovation is the key to our future success as a nation and its vital that we do all we can to help companies start, scale and grow in the UK.

“Tomorrow’s Autumn Statement will be a huge step towards delivering our Mansion House Reforms and unleashing the full potential of our pensions industry.

It comes as the Chancellor is convening representatives from several universities and investors at University College London (UCL) East where they will endorse a new set of ‘best-practice policies’ that are recommended by the independent review of spinouts.

The Chancellor is to inject £20 million to foster more ‘spin-out’ companies, firms created using research done in universities. He is also providing at least £50m additional funding for the British Business Bank’s successful ‘Future Fund: Breakthrough’ programme – that will provide direct investment to support these innovative companies to scale up.

Spin-out companies raised £5.3 billion in investment in 2021-22 alone. Today’s announcements are designed to increase investment for the future and help ensure researchers in our world-leading universities have the tools they need to start, scale, and grow innovative new businesses in the UK.

The independent review – led by Irene Tracey, Vice-Chancellor of Oxford University and Andrew Williamson, Managing Partner of Cambridge Innovation Capital – recommends innovation-friendly policies that universities and investors should adopt to make the UK the best place in the world to start a spin-out company.

In the past, many spin-outs deals were created from scratch, which is both inefficient and sometimes fails to learn the lessons from previous success stories. Today’s recommendations aim to speed up the process and build on TenU’s University Spin-out Investment Terms (USIT) Guide by recommending 10-25% university equity for life sciences spinouts, and 10% or less for less IP-intensive sectors, common in software.

The Chancellor has accepted all the recommendations and will set out his full response as part of the Autumn Statement tomorrow.

This move will help deliver the Prime Minister’s pledge to grow the economy by supporting our world-leading university research institutions, which generate around £10 billion a year for the economy.

Further information

Supportive statements for the Independent Review of Spin-outs

• Chancellor, Jeremy Hunt, said:

“Innovative, globally competitive businesses like Oxford Nanopore are making a huge contribution to our economy.

“It’s critical that we harness this potential and give universities the tools they need to translate cutting edge research into exciting UK businesses that start and grow in the UK.”

• Science and Technology Secretary, Michelle Donelan, said:

“Turning new ideas and innovations into blossoming businesses is the bedrock of a vibrant economy and our £20m investment will drive more successful UK spinout companies like Oxford Nanopore and Darktrace, ensuring world-class research translates into world-leading industries.

“At the same time, we need clear rules on the stakes held by universities which offer world class facilities and expertise to get those companies off the ground, so we can back future generations of innovators, in turn creating more local jobs and growing our economy.”

• Co-leads for the independent review Professor Irene Tracey CBE, FRS, FMedSci, Vice-Chancellor of the University of Oxford, and Dr Andrew Williamson, Chair of the Venture Capital Committee at the British Private Equity & Venture Capital Association (BVCA) and Managing Partner of Cambridge Innovation Capital, said:

“The UK’s world-class university sector is a crucial driver of economic growth and innovation. Over the past eight months, we have engaged extensively with the major stakeholders in the UK’s university spin-out ecosystem. Today’s publication of our review and its recommendations are the culmination of this extensive work. We propose a set of spin-out terms and practices designed to foster a more collaborative and sharing environment among academia, entrepreneurship, and investment.

“Our hope is that this will increase the number of spin-outs, reduce the time to negotiate licenses, and increase the spin-out’s success rate. It was a privilege to contribute to this report and we are extremely grateful to our colleagues for their willingness to engage in the review, and especially the advisory board. Across diverse sectors, including AI, quantum computing, advanced therapeutics, diagnostics, and climate tech, university spin-outs across the UK are rapidly generating economic growth, societal impact, and fulfilling career opportunities for the next generation.”

• Responding to the recommendations set out in the Independent Review of Spin-outs Anne Lane, CEO of UCL Business (UCLB), said:

“For 30 years, UCLB has created successful spinout businesses from UCL’s ground-breaking research, which have raised £2.75 billion investment in the last 5 years alone.  As well as creating jobs and economic impact, these spinouts scale up solutions to complex societal challenges, from reducing carbon emissions to therapies for rare hereditary diseases.

“The recommendations published in this review will help universities harmonise the creation of spinouts. We look forward to working even closer with fellow universities, government, and the investment community to ensure a healthy and sustained flow of investment back into academic research whilst supporting the emerging world-changing businesses of the next 30 years.”

• Professor Sir Anton Muscatelli, Principal and Vice-Chancellor of the University of Glasgow, said:

“I very much welcome the findings and recommendations of this Review and believe wholeheartedly in the untapped potential for innovation and entrepreneurship within our universities across the UK. Our institutions are at the forefront of the groundbreaking R&D which can drive productivity and economic growth across the country, and to be globally competitive we must ensure we are creating a framework which is investor-friendly, founder-friendly, nurtures university spinouts and unleashes this untapped potential.

“Universities like mine are developing the technologies needed to fuel the UK’s economy and tackle the greatest challenges facing the world, so it is very welcome to see the UK Government recognise the integral role our institutions can play in facilitating the creation of new ventures to bring new ideas and breakthrough innovations to market. As a sector we look forward to working together with the Government in the months ahead to deliver the ambitions set out in the Review.”

• Michael Moore, Chief Executive, British Private Equity and Venture Capital Association said:

“The independent university spin-out review is a hugely welcome statement of intent. Private capital has an important role to play by bringing both investment and expertise together to transform the world class research in UK universities into world class businesses. The recommendations in this review can help to generate ways to get more capital working together with the best ideas to achieve that.”

• Julia Hawkins, Partner at LocalGlobe said:

“Turning the UK’s world-leading science and innovation into viable global businesses takes so much more than just IP and investment. We applaud the recognition in this review that founders benefit from the support of experienced investors, who are also seasoned company builders. At Phoenix Court we co-founded the Newton Fellows program to help train the next generation of investors and entrepreneurs, and we especially welcome spinout founders and investors. We are also working with interns from PhD/Postdoc programs who are looking to gain experience of the investment and entrepreneurship worlds, and we want to do more in this area. And we have long argued that founders should not give up too much equity in their businesses and are delighted to have joined the TenU working group to recommend appropriate terms to help spinouts achieve market competitive terms that both incentivise and reward.”

• Steve Bates OBE, CEO of the UK BioIndustry Association (BIA), said:

“Spin-outs are the lifeblood of life science innovation ecosystem. This report shows that the UK university spin-out process is getting simpler, faster, and more repeatable. This is creating a virtuous circle of increased deal flow, more life science companies and investor confidence in the UK.

“People moving easily both ways between academia and industry is key to successful research translation. This report demonstrates practically just how highly-connected the UK’s unique life science innovation ecosystem is.  It’s because of this collaboration that I’m confident the report’s recommendations will be delivered.”

• Tim Bradshaw, CEO of the Russell Group, said:

“We’re pleased this review highlights the enormous value spin-outs have added to the UK economy and demonstrates the vital role universities play in commercialising research and enabling new enterprises across a range of industries to flourish.

“These businesses simply would not exist without the resource, skills, and investment of our world-leading universities as well as support from the investor community and Government.

“In turn, university spin outs have created thousands of high value jobs right across the country, and we are eager to do even more.

“We look forward to working closely with the Government and investors to build on the momentum from this review to ensure we can not only sustain but hopefully grow the already thriving UK spin-out eco-system.”

• Vivienne Stern, CEO of Universities UK, said:

“We welcome this review’s recognition of the positive impact and important role that university spin outs have on driving growth and supporting the national and local economy. We support the ambitions of the review for universities, investors and Government to come together and work collaboratively to maximise opportunities for university spinout activity. University spin outs create thousands of jobs across the UK and will play an important role in driving the economic growth and local regeneration that the country needs.”

British Business Bank

• The British Business Bank (BBB) has engaged widely with the market to explore the case for government to play a greater role in establishing investment vehicles to allow pension schemes to invest quickly and effectively in UK unlisted growth companies, building on the skills and expertise of the BBB’s commercial arm.
• The organisations, listed below, have confirmed that they are supportive of the government’s ambitions to encourage additional institutional investment into UK venture and growth assets, and that a government established vehicle run by the BBB could be a valuable addition to the market, alongside other vehicles that already exist or are in development.
• They have also confirmed their availability for continued engagement with the BBB to help design this vehicle to meet schemes’ needs, alongside the wider work of government and the market to establish suitable vehicles.
• Aviva, L&G, M&G, Smart Pension, Aegon, Phoenix, AON and USS