Autumn Statement resolutions passed without enthusiasm by MPs

The Resolutions

The resolutions passed (or ‘resolved’ to use the parliamentary term) by MPs covered these Autumn Statement announcements:

1. Energy (oil and gas) profits levy (relates to the announcement that the windfall tax rate increasing from 25 per cent to 35 per cent; will continue to March 2028; also new temporary 45 per cent levy on older renewable and nuclear electricity generators)
2. Amount of corporation tax relief for expenditure on research and development (RDEC rate used by large businesses increases, SME additional deduction and credit rate decreases)
3. Basic rate limit and personal allowance for tax years 2026-27 and 2027-28 (income tax thresholds frozen until 2028)
4. Threshold at which additional rate of income tax is charged (reducing the threshold for 45p rate from £150K to £125,140)
5. Dividend nil rate (relates to announcement that dividend allowance cut from £2,000 to £1,000 (2023) then £500 (2024))
6. Capital gains tax (annual exempt amount) (relates to Hunt’s decision to let CGT allowance down to £6,000 (2023) then £3,000 (2024))
7. Inheritance tax (nil rate band etc for tax years 2026-27 and 2027-28) (IHT threshold unchanged to April 2028 in the Autumn Statement)
8. Removal of vehicle excise duty exemptions and reliefs (Hunt said from 2025 electric vehicles no longer exempt from VED. Company car tax rates will remain lower for electric vehicles)
9. Taxable benefits (appropriate percentage for cars with a CO2 emissions figure)

All tax measures and other charges (new taxes/charges and increases to existing ones) require a ‘ways and means resolutions’ of this kind to authorise them before they can be legislated for.

Resolution 3 was the only one pressed to a vote. It was passed 318-223.

A Finance Bill has now been introduced to legislate for these measures. Second reading debate will be Monday 28 November and committee stage Wednesday 30 November.

Conservative front bench speeches – ‘We are helping those on the lowest incomes and things are not that bad compared to other countries’

The Chief Secretary to the Treasury John Glen said the Government is providing a shelter for those most at risk from the economic winds such as by uprating pensions and benefits in line with inflation next year, protecting the pensions triple lock, increasing the national living wage by 9.7 per cent to £10.42 and levying a new tax on electricity generators and an even higher tax rate on oil and gas companies to help households.

Caroline Lucas, Green Party, intervened on the Chief Secretary to complain that the changes to tax reliefs from January of next year will mean that a company spending £100 on upstream decarbonisation will be able to deduct £109.25 when calculating its levy, but Glen replied we must provide an incentive for capital investment.

Closing the day one debate, the Economic Secretary to the Treasury Andrew Griffith said we need to be better at turning world-class innovation into world-class companies, but the capital to invest in opportunities cannot come solely from the taxpayer. Griffith said: “This Autumn Statement was for doctors, nurses and those working in the NHS. It was for teachers and schools. It was for pensioners and those on benefits. It was, above all else, for those on the lowest wages.”

On day two of the debate, the Exchequer Secretary to the Treasury James Cartlidge claimed Chancellor Hunt’s plan leads to lower energy bills, higher long-term growth and a stronger NHS and education system. The OBR says that higher energy prices explain the majority of the downward revision in cumulative growth since March, claimed Cartlidge, adding that the OBR has said that actions taken as part of the Autumn Statement will help inflation to fall sharply from the middle of next year.

The Exchequer Secretary highlighted that the Chancellor confirmed two new fiscal rules. The first is that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period. The second is that public sector borrowing over the same period must be below three per cent of GDP. The MP said the Treasury has not raised headline rates of taxation and tax as a percentage of GDP will increase by just one per cent over the next five years.

After the Autumn Statement the UK still has more generous core personal allowances than countries such as Germany, Ireland, France and Canada, Cartlidge claimed. Retaining the employment allowance means the smallest 40 per cent of all businesses will still pay no NICs at all. The windfall tax is temporary and will not deter investment and recognises the cyclical nature of many energy businesses – and he claimed bringing it in earlier this year was ‘swift’ when you consider the timeline relative to the invasion of Ukraine. He believes that bills for business rates should accurately reflect market values, so the Government will proceed with the revaluation of business properties from April 2023.

Closing the day two debate, the Financial Secretary to the Treasury Victoria Atkins said even after these tax threshold freezes, we will still have the most generous set of tax-free allowances of any G7 country. At the increased rate of 25 per cent, corporation tax will still be the lowest rate of corporation tax in the G7, the frozen the employer national insurance contribution threshold until still means 40 per cent of businesses will still pay no NICs at all. The VAT registration threshold will stay which, incidentally, is almost twice as high as EU and OECD averages, she charged.

Labour frontbench – ‘Those with the broadest shoulders should take more of the strain and things are that bad compared to other countries’

Shadow Secretary of State for Work and Pensions Jonathan Ashworth called the Truss/Kwarteng Budget of two months ago ‘reckless and irresponsible’ which ‘led to markets taking fright, borrowing costs spiking, and the pound under pressure, which sparked a run on pension funds and sent mortgage costs soaring’. Ashworth said that had UK enjoyed the average growth rate of OECD countries over the past decade, British households would be £10,000 a year better off.

Ashworth said the freeze to income tax thresholds means that millions more are being pulled into paying higher tax over the coming years. (It is predicted that, because of the freeze on the personal allowance, two million extra pensioners will be pulled into paying tax.) He pointed out that people are paying more council tax and that the OBR says that fuel duty is predicted to rise by 23 per cent.

Ashworth welcomed the triple lock and that the Chancellor uprated benefits in line with inflation (although he wanted confirmation that the different allowances and reliefs within universal credit will be uprated in line with inflation) but criticised the freezing of the childcare payment in universal credit saying it deters people from working extra hours. He complained that the Government has underspent by £2 billion on their own employment schemes and suggested that Access to Work should be made more flexible.

James Murray, Shadow Financial Secretary, said the Conservatives have left us uniquely exposed to the inflationary shock of oil and gas prices rising. They took misguided, short-sighted and damaging decisions to shut down our gas storage, stall on nuclear power and ban renewable technologies such as onshore wind. Murray also lambasted the Conservatives for choosing in their Autumn Statement to raise ‘stealth taxes’ on working people and to ‘hike’ council tax.

Murray said the Conservatives had not gone far enough on the windfall tax. Also, “[t]hey could have stopped private equity fund managers who earn millions benefiting from a tax break on their bonuses. They could have closed the non-dom tax loophole to make sure people who make the UK their home pay tax on all their income here.”

Shadow Chief Secretary to the Treasury Pat McFadden condemned the Government for closing down the unit that is supposed to recover as much as possible of the estimated £6.7 billion lost to fraud and waste in the covid loan schemes. He said the Autumn Statement ‘it was an admission that not only have the Conservatives failed in the past but they now have nothing to offer for the future’.

Shadow Treasury Minister Tulip Siddiq was disappointed that the Government will still not impose a ‘proper windfall tax’ saying Labour would have raised over £10 billion more over the next three years than the Government’s proposal by closing the ‘unfair’ loophole that gives a tax break to companies drilling for new polluting fossil fuels, taxing oil and gas at the same level as other countries such as Norway and backdating the tax to January of this year. Siddiq was also upset that the Government did not abolish non-dom status or end the VAT exemption for private schools. The MP said Labour will replace business rates with a ‘fairer system’ that is fit for the digital economy and does not put our high street businesses at an ‘unfair disadvantage’.

Other speeches

Inflation and the state of the economy

Harriett Baldwin (Conservative), the newly elected Chair of the Treasury Committee, is glad that the Government is focusing on inflation control because inflation is ‘the most insidious tax’, particularly on the poorest.

Simon Clarke regretted that the Truss/Kwarteng mini Budget (when he was Chief Secretary to Treasury) was not accompanied by a full spending review because it would have allowed government to have shown that tax and spending were going to be set in alignment, and ministers would have been able to set out a plan for lower tax and also a smaller state.

Clarke was one of a number of Conservatives who regretted the introduction of so many tax rises. He said he wanted capital spending reductions in the Autumn Statement rather than tax rises, noting that the OBR says that the tax burden will now rise to its highest sustained level since the second world war, hitting 37.1 per cent of GDP by 2027-28. Dr Liam Fox said that if we must see temporary rises in taxation, the necessary corollary is that, as soon as inflation starts to be controlled, we will see those taxes coming down again.

Growth and productivity were at the centre of a number of Conservative contributions. Rachel Maclean, wants a greater push for growth, low taxation and wealth creation once the immediate issues of stability and inflation have been rightly addressed. John Redwood said we can do a lot more on growing revenues, particularly in energy, where we are still not getting on with the licences, permits and encouragements and incentives to invest. Sir Robert Syms said there must be a phase 2, phase 3 and phase 4, after the Autumn Statement, which will involve increasing productivity and incentives.

Another Conservative, Anthony Browne, highlighted that almost everything in the mini-Budget has been ditched. Browne said Andrew Bailey, the Governor of the Bank of England, went before the Treasury Committee and both the Chair and him grilled him on whether the mini-Budget had pushed interest rates up higher than they would otherwise be and whether there were any long-term consequences for the economy. He said, ‘Absolutely not’.

Liberal Democrat Treasury Spokesperson Sarah Olney complained the Government has presided over years of low growth, low investment and declining productivity, and now they are eroding our public services and hiking taxes on ordinary people, all while slashing taxes on the big banks and refusing to close the windfall tax loophole that has allowed Shell to avoid paying a single penny.

From the Labour benches, Kate Osborne said the Autumn Statement failed to address UK’s major economic problems, does nothing for local government services or to protect the lowest paid and most vulnerable in our communities. After 12 years of ‘failure, carnage and chaos’, it is even more apparent than ever that the Tory Government have run out of ideas and run out of road, said Imran Hussain.

Sammy Wilson, DUP Treasury Spokesman, welcomed the uprating of benefits, the triple lock on pensions and support for people’s energy bills. But he said little in the statement points to achieving the economic growth that we require, which would increase production, increase tax revenues and reduce the burden of debt in the economy. Many of the tax rises have been designed not to encourage growth, but to make growth much more difficult, he said, adding: “Corporation tax on profits will be kept at a high level, allowances will be reduced, dividend taxes will be frozen and so on. All of that will militate against economic growth.”

Plaid Cymru’s Treasury spokesperson Ben Lake also welcomed protection of pensions and benefits. But he said the balance between addressing the immediate inflationary pressures that everyone is facing and the longer-term productivity problems that have afflicted the economy for several years was ‘not quite right’.

Personal taxation

Labour MP Zarah Sultana wanted the Autumn Statement to ‘squeeze the rich’ suggesting ending the non-dom tax status, introducing a new 50p tax rate, introducing a one per cent tax on wealth of more than £5 million and equalising dividend and capital gains tax with income tax would raise £21 billion.

Beth Winter, also Labour, cited the TUC as saying that the hit from freezing the income tax threshold will earn the Treasury £6 billion a year compared with less than £1 billion from lowering the threshold for paying the top rate. She added: “As with austerity, that punishes those on low and middle incomes to fill a self-imposed and questionable ‘fiscal black hole’.” The Budget introduced only meagre measures to levy funds from sources of wealth, and vast untaxed wealth is still being accumulated, she said, suggesting abolishing non-dom status, equalising capital gains tax with income tax rates, and introducing a financial transactions tax, a one-off tax or even a new wealth tax.

Another Labour MP, Nick Brown, said it would have been possible to take more from those who, corporately and individually, have more to give, and to have been a lot more restrained in what we are putting on the shoulders of our fellow citizens.

Janet Daby, also Labour, said the Autumn Statement failed to put forward a serious plan for growth. Instead, the Government have put the cost of their economic mismanagement on to families, and those who will suffer the most will be the middle and lower wage earners.

How about altering the pensions situation so that we make sure we make best use of doctors, maximising the time they have available and not pushing them into early retirement when they would happily be working to clear that backlog and save lives, said former Lib Dem Leader Tim Farron.

Drew Hendry, SNP, also thought it would be the people in the middle who will be squeezed by the tax changes, by a near four per cent hit on their income which is a bigger hit than high earners will experience. Many companies are still avoiding their tax responsibilities and public services are facing their most brutal cuts, said Hendry.

Richard Thomson, SNP Shadow Financial Secretary, regretted the decision not to close the non-dom ‘loophole’ which would have raised an extra £3.2 billion.

SNP Spokesperson on Fair Work and Employment, Chris Stephens, pointed out that the OBR says that HMRC compliance measures and chasing social security fraud against the DWP will bring in £2.8 billion, but the Green Book says that showing social security fraud is £2.2 billion, which suggests only £0.6 billion coming in from tackling tax avoidance and evasion. The Tax Justice Network and the Public and Commercial Services Union estimate tax avoidance and evasion to be worth £70 billion, he observed.

Business taxation

Conservative MP Simon Baynes was pleased by the Government’s fair approach to taxation, which shields small businesses from tax rises and maintains the lowest headline rate of corporation tax in the G7, after it has risen to 25 per cent. It is only fair that companies that have made genuine windfall profits as a result of the war in Ukraine make an additional contribution, said Baynes.

Conservative Kit Malthouse warned that in a tight labour market, tax rises can prolong inflation. He was dismayed at the proposed increase in capital taxes, ‘because that changes the risk-reward ratio, meaning that it is less likely that people will go out and start a business’.

The Conservatives introduced new stealth tax rises in the Autumn Statement, turning the screws on working people with 24 Tory tax rises during this Parliament and a rise in the tax burden to its highest in 70 years, said Ruth Jones. Jones said Labour will support entrepreneurs, and its start-up review will help to make Britain the best place to start and grow a new business.

A number of MPs commented on the changes to research and development reliefs. Wendy Morton, Conservative, said ‘raiding’ the R&D tax credit scheme would not do much to encourage businesses to keep going and to keep them growing. Alex Cunningham, Labour, said gutting the R&D tax credit scheme will ‘crush’ innovation and growth, resulting in tens of thousands fewer R&D-intensive small businesses and creating a ‘doom loop’ that makes a mockery of plans for growth.

However Aaron Bell (Conservative)was pleased that the Government had resisted the temptation to cut long-term capital budgets, such as Sizewell C, the levelling-up fund and our investment in R&D, ‘which is where we will get growth from in the future’. We are making sure that the burden falls on those who are most able to afford it, he added,.

Liberal Democrat Wendy Chamberlain complained that the decision to freeze the registration threshold for VAT means that businesses will have to charge their customers more or potentially reduce their already small profit margins.

Neale Hanvey, Alba, said that the Chancellor has failed to set out costed plans for how freeports will operate, be funded and be essential to regeneration, job creation and trade with European and other overseas markets.

Jim Shannon, DUP, welcomed that business properties will be revalued for business rates, that the business rates multiplier will be frozen, and that retail, hospitality and leisure relief will be extended and increased from 50 per cent to 75 per cent.

Taxing energy companies

Conservative Bim Afolami said we are seeing lower investment in new oil and gas by major energy companies, principally because the messages that we have been sending around the necessary green investment have made shareholders demand higher returns for shareholders rather than those profits going into investment.

Dame Andrea Leadsom, Conservative, said the Government have done a great job with the Autumn Statement—the balance was right—but where energy is concerned there is so much more to be done to provide nuance on how people can help themselves and how we can move much faster down the road to transition.

Although the Autumn Statement included the windfall tax, there was no move to scrap the investment allowance. Basically, that means that the Government are taking away with one hand and giving back with the other, said Kerry McCarthy (Labour).

Richard Thomson, SNP Shadow Financial Secretary, bemoaned the lack of a windfall tax beyond energy companies to hit big retailers and ensure that they pay a fair share of their current excess profits.

Benefits and pensions

Sir Edward Leigh, Conservative, wants the Government to encourage social insurance (instead of relying on NHS) and provide tax relief for those of pensionable age who take out private health insurance. Leigh said that, long-term, the triple lock is ‘utterly unaffordable’ and ‘will bankrupt the nation’. He added: “We cannot load a marginal tax rate of 60 per cent on the people who earn, say, between £100,000 and £125,000 - middle managers, consultants and young entrepreneurs - and say we are going to create wealth.”

A Conservative former Work and Pensions Secretary, Stephen Crabb, also thought there were long-term question marks as to the sustainability of the triple lock. But another Conservative, Jack Brereton, said the triple lock announcement was incredibly welcome because pensioners need support now.

On the £900 cost of living payment, Treasury Committee chair Harriett Baldwin worried that ‘we have spent the better part of the last 12 years introducing universal credit precisely so that it has a linear impact, yet next year we will entrench a different way of paying the lowest income households’.

Sir Stephen Timms, Chair of the Work and Pensions Committee, suggested that the benefit cap should be uprated every year. Timms sees little evidence that by keeping the local housing allowance down, the Government is restraining the increase in rents.

The continuation of pensioner housing benefit will decrease anxieties for the next few months, said Jim Shannon, DUP.

Day one (21 November 2022) debate: here

Day two (22 November 2022) debate: here

See also last week’s post-statement debate in the Commons.

By Hamant Verma, CIOT Senior External Relations Officer