News Item: The Chancellor of the Exchequer Outlines Growth Plan for the UK

On Friday 23rd September Chancellor of the Exchequer, Kwasi Kwarteng, announced a 'Growth Plan', which aims to tackle high energy costs and inflation, and increase productivity and wages. The full speech can be read here.

The proposals are extensive, covering improvements to living standards, public services, energy savings for homeowners, and new Stamp Duty exemptions. There are also measures to help businesses and boost construction that will, directly and indirectly, benefit equipment hire companies.

These include:

  • the basic rate of Income Tax reduced 19% in April 2023 so 31 million people will earn on average £170 more per annum
  • the zero-rate band of Stamp Duty rising from £125,000 to £250,000, meaning 200,000 more homebuyers per year will be exempt. This will save people around £2,500 and is expected to generate a boost in construction work on home improvement projects.
  • further increases in construction work as more surplus government land is given over for new homes
  • Corporation Tax will remain at 19%, and the 1.25% rise in National Insurance contributions will be reversed generating savings of up to £10,000 for more than 900,000 businesses in 2023, encouraging recruitment and boosts to productivity
  • the Annual Investment Allowance set permanently at £1 million, rather than returning to £200,000 so, businesses investing in plant and machinery will continue to receive 100% tax relief up to this increased amount
  • 38 local authorities in England to create Investment Zones at certain locations in their territories, releasing more land for the construction of new homes and businesses including offices, retail, and leisure centres
  • removing time-consuming restrictions on new energy, road, and rail construction projects; consent for major infrastructure projects currently takes 65% longer to be granted than it did in 2012. The new legislation will mean new roads and offshore wind farms will be faster to plan and build

In addition to these UK-wide announcements, the change to Income Tax and Stamp duty will mean over £600 million in funding for the Scottish Government and approximately £70 million received by the government of Wales.

The Government’s 'Growth Plan' overview:

  • the plan set out a target for 2.5% trend of growth, improving living standards and ensuring funding for public services
  • changes to Stamp Duty Land Tax meaning a standard buyer in England will save about £4,200
    • a typical family in a semi-detached home:
      • £2,500 on stamp duty
      • £1,150 on energy bills
      • around £560 on tax (if combined income is £50,000 or more)
    • for first-time buyers:
      • properties up to £425,000 are exempt from Stamp Duty
      • tax relief can be claimed on properties valued at £625,000 (previously £500,000)
  • the typical household will save around £1,000 a year on their energy bills because of the Energy Price Guarantee
  • sector specific support for hospitality venues including a freeze on alcohol duty for another year
  • a 1p cut to the basic rate of Income Tax to be introduced one year earlier than planned, meaning a full-time worker on the current National Living Wage will save over £100
  • the additional rate of Income Tax is abolished, to be replaced by a single higher rate of 40%
  • new regulations will increase investment by pension funds into UK assets which will:
    • benefit savers
    • boost economic growth
    • encourage investment in science and technology
  • Universal Credit Claimants earning less than the equivalent of 15 hours a week will receive help from Work Coaches to increase their earnings and hours worked, enabling an an extra 120,000 people to take on more intensive roles
    • over 50’s that are out of work will also spend more time with Work Coaches to aid them in returning to employment
  • 4.3 million people in Scotland, Wales and Northern Ireland will save, on average, £230 in 2023, with the reversal of the Health and Social Care Levy
  • in the coming weeks the Government will expand on plans to:
    • speed up digital infrastructure
    • reform business regulation
    • increase the supply of housing
    • enhance the UK immigration
    • make childcare more affordable
    • increase productivity from farms
    • support financial services

On Wednesday 23rd November the Chancellor will make a follow-up statement about the Medium Term Fiscal Plan and outline a forecast from the Office of Budget Responsibility. A HAE EHA news report will cover this, disseminating the relevant points.

The Growth Plan 2022

If you have questions or concerns about the Chancellor's Growth Plan you can contact HAE EHA Public Affairs Manager Mark Bradshaw on 0121 380 4621.