Those on working age and disability benefits will see payments rise 10.1% in line with inflation at a cost of £11 billion, the government has announced.

This will come into effect from April next year, and is based on the UK’s inflation figure for the year to September.

Delivering his Autumn Statement today, Jeremy Hunt also said that the ‘triple lock’ for pensions would remain, meaning pensions will also rise in line with inflation.

The Chancellor said there would also be additional cost-of-living payments for the ‘most vulnerable’ with £900 for those on benefits, £300 for pensioners and £150 for those on a disability benefit.

Mr Hunt has also accepted a recommendation to increase the national living wage by slightly less than inflation at 9.7%, making the hourly rate £10.42 from April 2023.

Much of the extra costs for benefits and pensions will be funded by increased taxes, with the rate at which the 45p highest rate of tax kicks in to be reduced from £150,000 to £125,140.

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‘The flat-rate support for energy costs means families with kids will have to spend more but get proportionately less support. As a result, children will go without and government will have to accept responsibility for the consequences.’

The measures announced today

• The threshold at which the 45p top rate of income tax is paid will be reduced from £150,000 to £125,140, although different rates apply in Scotland.
• The income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds will be frozen until April 2028, something which will result in more people paying more tax as a result of ‘fiscal drag’ as wages increase.
• The windfall tax on oil and gas giants will increase from 25% to 35% and a 45% levy on electricity generators will help raise an estimated £14 billion next year.
• Tax-free allowance for capital gains will reduce in 2023-24 from £12,300 to £6,000 and again to £3,000 in 2024-25.
• Electric cars will no longer be exempt from vehicle excise duty from April 2025, to make the motoring tax system ‘fairer’.
• Government spending will continue to increase in real terms every year for the next five years, but at a slower rate than previously planned.
• Stamp duty cuts announced in Mr Kwarteng’s mini-budget will now be time-limited, ending on March 31 2025.
• The Government would protect the increases in departmental budgets already set out in cash terms for the next two years, meaning real-terms cuts due to inflation and pressure on public sector wages.
• The defence budget will keep meeting the Nato target of 2% of GDP but the overseas aid budget will not be returned to its goal of 0.7% of national income ‘until the fiscal system allows’.
• An extra £2.3 billion per year will be invested in schools in England over the next two years.
• The implementation of social care reforms will be delayed for two years.
• The NHS budget in England will increase by an extra £3.3 billion in each of the next two years.

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