Chancellor of the Exchequer’s Growth Plan

On 23 September, the Chancellor of the Exchequer set out a series of
announcements as part of the Government’s Growth Plan. The announcements
mainly focussed on the wider UK economy and on cutting tax rather than support specifically related to local government. The Government’s Growth Plan is said to “release the huge potential in the British economy by tackling high energy costs and inflation and delivering higher productivity and wages”.
The announcement was not accompanied by an update of the Office for Budget Responsibility (OBR’s) forecasts. A full budget, with accompanying forecasts, is likely to be announced by the end of the year.

National Insurance
- National Insurance to return to 2021 levels from 6 November 2022 with the
reversal of the 1.25 per cent uplift.

- The new 1.25 per cent Health and Social Care Levy to pay for the NHS due
for introduction in April 2023 has been cancelled but the commitment to
additional spend on the NHS and Social Care remains, funded through
general taxation and borrowing.

Energy
- Confirmation of the previously announced energy package which is estimated to cost £60 billion in 2022-23.

- The energy package will freeze energy bills, capping the typical household
energy bill at £2,500 for the next two years as well as a similar measure for
business users for six months. This is in addition to the previously announced
£400 discount on household bills. The Government claims this will reduce
inflation by 5 percentage points.

- Confirmation of the scrapping of Green Levies which is estimated to save
households around £150 each.

- To make homes cheaper to heat, the Government will bring forward
legislation to implement new obligations on energy suppliers to help
customers take action to reduce their energy bills (an estimated average
saving of around £200 a year). This help is said to be worth £1 billion over the
next three years.

- Applications will open soon for up to £2.1 billion over the next two years to support councils, housing associations, schools and hospitals to invest in energy efficiency and renewable heating. 

Infrastructure and Investment zones
- Announcement of the creation of Investment Zones which are being
discussed with 30 local areas, including Cheshire West and Chester.

- Investment Zones aim to drive growth and unlock housing. Areas with
Investment Zones will benefit from tax incentives, planning liberalisation, and
wider support for the local economy. They will benefit from a range of timelimited tax incentives over 10 years. (see separate Member Briefing 2247
issued on 23 September)

Income tax
- A reduction in the basic rate of income tax to 19 per cent from April 2023, a
year earlier than planned.

- An abolition of the 45 per cent higher rate of income tax with one single higher
rate of income tax of 40 per cent from April 2023.

Benefits
- Rules around Universal Credit are being tightened, by reducing benefits if
people don't fulfil job search commitments.

- Jobseekers over 50 are to be given extra time with work coaches to help them return to the job market.

Stamp duty
- An immediate reduction in stamp duty payable in England and Northern
Ireland. There will be no stamp duty on the first £250,000 and for first time
buyers that rises to £425,000.

Corporation tax
- Cancellation of the planned rise in corporation tax which was due to increase from 19 per cent to 25 per cent in April 2023.

Adult Social Care
- Announcement of a new £500 million Winter Discharge Fund for the social
care sector to assist in discharging hospital patients. The fund – created from
existing budgets - aims to get healthy patients out of hospital to free up beds
and ease the crisis in the NHS

Interest Rates Rise
- The Bank of England has raised interest rates from 1.75 per cent to 2.25 per
cent, taking borrowing costs to their highest level since 2008.

Real Living Wage
- The hourly rates for the Real Living Wage are increasing by £1 to £10.90
(10.1 per cent); the biggest in the scheme’s 10-year history.

For further information and support visit: Cheshire West and Chester

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