Autumn Statement Response

The Chancellor delivered his Autumn Statement this afternoon, during which he outlined his latest tax and spending plans and reaffirmed the Government’s commitment to eliminating the structural deficit – ie ensuring that spending does not exceed tax revenue. Public spending will exceed tax revenues by £120,000,000,000 this year which shows the size of the task.

Despite the difficult economic climate in the UK and elsewhere in the world the Chancellor was able to announce some good news:

Fuel Duty increase scrapped
The 3p increase has now been cancelled (not deferred). Petrol will now be 13p a litre cheaper than if we had stuck to
Labour’s plans. This will help my constituents and local businesses with the cost of living.
Personal allowances increased 
From April 2013 the personal allowance will now be increased to £9,440. This will benefit 1.8 million people in the East Midlands.
State Pension increase
Basic state pension will increase 2.5% in April, taking it up to £110.15. This rise is higher than inflation or earnings increases thanks to the Government’s triple lock.
Corporation Tax cut
Corporation Tax cut to 21% helping businesses across Amber Valley. This rate is the lowest in the G7. The annual investment allowance will also be increased to £250,000 for 2 years to encourage capital investment and boost manufacturing.
Small Business rate relief extended until April 2014
This will help many small businesses locally including small shops and pubs.

These measures will be paid for by the following measures – these ensure the pain of dealing with our current deficit is spread fairly:

• Tax relief on pensions will be reduced to a lifetime amount of £1.25m and to an annual maximum of £40,000 meaning that those earning significant amounts cannot reduce their tax bill though pension contributions.
• Extra measures will be taken to tackle tax avoidance and more money given to HMRC to do this including £77 million to tackle multi-national corporates.
• Out of work benefits will only increase by 1% for the rest of this parliament reflecting the fact that earnings have been increasing much slower than benefits in recent years. This will not affect the state pension or disability and carer benefits.

The economic situation is tough. We’re dealing with the debt problems in the middle of a recession in the Eurozone, a lack of global confidence and a struggling US economy. This has meant that our growth forecasts have been downgraded. As a result of this, it will take four years, not three to get out debt falling – but we are making progress with the deficit now 25% lower than we inherited.

It’s taking time, but the Government has ensured Britain is on the right track. Despite challenges, the Chancellor has managed to scrap the Fuel Duty Delay, speed up the increase in the personal allowance, increase the state pension and help businesses in my constituency.