Eight weeks after the former Chancellor Kwasi Kwarteng’s chaotic mini-budget, the long-waited Autumn Statement was announced today. In the aftermath of weeks of financial turmoil and worsening economic projections, new Chancellor Jeremy Hunt was under pressure to fill a fiscal hole of over £50bn through a mix of tax rises and spending cuts.

The statement came at a time when the inflation is at its highest it has been since the records began, and a confirmation that Britain is in recession which represents an extremely tough task. In his own words, Hunt sought to position today’s measures as ‘balanced’ - raising taxes on ’those with the broadest shoulders’ (higher earners and businesses), providing support to those most vulnerable to the cost of living crisis and economic slowdown and setting out a prospectus to grow the economy in the future.

But did he deliver on this promise and who stands to benefit?

Today’s announcements included some big measures such as a rise in working-age benefits and pensions in line with the inflation and a package of cost-of-living support worth £26 billion. Such additional payments are welcome, alongside the plans to raise benefits in line with inflation in April next year, preventing a real-term cut.

However, there were concerning announcements around Universal Credit, suggesting more people who aren’t currently required to look for work will now be required to meet with Work Coaches at their Jobcentre and seek increased earnings or hours. Lower income workers will also be disproportionately impacted by extended freezes to the income tax bands, and potential rises in council tax.

The budget included the largest ever cash increase in the National Living Wage to £10.42 an hour. Around 2 million people are expected to benefit from this rise, which would see a full-time worker earn £1,600 more per year. welcome, this increase is lower than current rates of inflation.

Raising minimum wages is a key step in potentially raising living standards for some workers in the lowest-paid industries. Over recent months, we saw an increase in regular pay (excluding bonuses) of 5.7% which was largely driven by the private sector. However, this pay rise is also wiped out by the inflation.

With high energy prices, alongside high inflation rates, contributing to the ongoing cost of living crisis, it was positive to see several announcements around support for energy costs for households and businesses, totalling £26 billion overall. In addition, a relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year.

While the extent of measures to support people on low incomes is impressive, it is also important to note that some of the tax measures will reduce take home pay for all workers – for example, the changes in council tax will affect a large majority of working age people.

Other announcements included tax rises for higher earners, while existing freezes on tax allowances will be extended out to 2028, effectively amounting to an increase in taxable earnings.

To protect businesses from rising inflation the business rates multiplier will be frozen in 2023-24. Hunt also increased the Energy Profits Levy on oil and gas companies from 25% to 35% with the levy from 1 January 2023 until the end of March 2028.

The Government must pivot from short-term thinking and look to develop long-term investment plans capable of meeting the urgent labour market challenges we face

Economic inactivity has increased by around 700,000 people since before the pandemic and there are now 2.5 million people out of work and not looking for work due to ill health. We want to see employment support adapted to meet the needs of a wider group of people - including those living with a health condition to enter or stay in work.

The Work Foundation has been calling for a cross-Governmental Participation Taskforce to tackle inactivity, due to the multi-faceted nature of this challenge, and the need to coordinate actions needed to address this issue, which has been increasing since before the pandemic.

Sustained skills investment and the passing of an Employment Bill will also be needed to address insecurity gaps and the prevalence of severely insecure work amongst many workers.

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