For further comment or to arrange an interview please get in touch with Emily Taylor: emily@brightblue.org.uk or 07841 419316.
Responding to the Autumn Statement 2023, Ryan Shorthouse, Executive Chair of Bright Blue, said:
“The Chancellor is rightly focussing fiscal policy on incentivising and rewarding effort, entrepreneurialism and enterprise – the engines of prosperity. The Government is showing it wants to prioritise support and investment in working people.
“Of all the tax cuts under consideration, cutting employees’ and self-employed National Insurance was the right choice, since it is well-targeted and gives more money to those who derive their income from work. The significant and welcome increases in the wage floor and the value of benefits will also help the lowest-paid workers. Conservatism is at its best when it focuses on those striving to achieve the good life, rather than those who have already achieved it.
“However, it remains the case that the tax burden and public debt are at historically high levels. Average individual living standards have declined markedly in recent years. Spending on public services and capital investment is being cut in real terms very significantly. Growth forecasts for the years ahead are measly. In essence, this is a very gloomy economy for households, with private income and public services continuing to decline.
“Only bold strides from the Government can reverse the decline in both our country’s and the Conservative Party’s fortunes. The Government could be much bolder on reforming taxation, public services and benefits to give a much better deal for those working day in, day out to feed their families and start and scale businesses.”
The 2023 Autumn Statement adopted three of Bright Blue’s policies:
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Full capital expensing against Corporation Tax made permanent.
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Upgrading the electricity network to ease the connection of renewable energy projects.
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Increased funding to encourage greater use of Local Development Orders.
Supporting workers
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The main rate of Class 1 employee National Insurance contributions (NICs) will be cut from 12% to 10% from 6 January 2024.
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Reducing the main rate of Class 4 self-employed NICs from 9% to 8% from 6th April 2024.
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Abolishing Class 2 self-employed NICs from April 2024.
Thomas Nurcombe, Researcher at Bright Blue, commented:
“The Chancellor’s decision to lower employees’ and the self-employed National Insurance rate, alongside raising the National Living Wage, is very promising. It rewards hard work, especially for those on modest incomes.
“Nevertheless, this action should mark just the initial stage of reducing the disproportionate weight of tax on working-aged people. The Chancellor needs to be braver in ensuring those that derive their income from non-work sources – such as rent, pensions and dividends – face more similar rates of taxation to those who derive it from work.”
Pension reforms
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Uprating the Basic State pension in line with average earnings growth of 8.5%.
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A Call for Evidence on a Lifetime Provider Model to allow employees the right to have pension contributions paid into an existing pension scheme when changing employer.
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Introduction of the multiple default consolidator model to enable a small number of schemes to act as a consolidator for eligible pension pots under £1,000.
Thomas Nurcombe, Researcher at Bright Blue, commented:
“Maintaining the triple lock on the value of the State Pension is neither sustainable nor fair. It is unjustifiable that working-aged people using benefits are receiving a lower rise than those who are retired.”
“There is a need for change to our pension regime; the first step should be to raise the State Pension Age to encourage older individuals to be net contributors to the public purse for longer. This is the great gift older generations can give to younger generations.
“Giving employees the right to ask their employer to contribute into a single pension pot of their choosing is, however, a good move for younger generations. In an era where individuals frequently change jobs and accumulate multiple but small pension pots, it will ensure that money is not left dormant. However, it needs to be coupled with measures to mitigate higher pension provider fees – as individuals are in a weaker negotiation position than employers to keep costs down.”
Supporting businesses
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Permanent full expensing of plant and machinery against Corporation Tax from 2026-27.
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75% Business Rates relief for Retail, Hospitality and Leisure sectors in 2024-25, up to £110,000 cash cap.
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Freezing the small business multiplier in Business Rates in 2024-25.
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£4.5 billion to unlock investment in strategic manufacturing sectors.
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Announcing new Investment Zones in Greater Manchester, the West Midlands and the East Midlands.
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Government Procurement and Prompt Payment whereby firms bidding for government contracts over £5 million will have to demonstrate they pay their own invoices within an average of 55 days, tightening to 30 days in the coming years.
Thomas Nurcombe, Researcher at Bright Blue, commented:
“Full expensing is a bold and expensive measure to boost investment for productive means. This is necessary considering the UK’s low private investment rates relative to our international competitors.
“Late payment is indeed a scourge on small businesses. Insisting public contracts only go to those with a track record of timely payments is in theory smart, but it remains uncertain how this can be properly monitored and enforced.
“The mounting pressure that many small businesses face highlights the urgent need for more radical reform of Business Rates.”
Changes to benefits
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From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 per hour.
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Uprating all working age benefits for 2024-25 in full, by September 2023 CPI inflation of 6.7%.
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Closing the Universal Credit claims of individuals who have been on an open-ended sanction for over six months.
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Legislating to increase the DWP’s access to data on benefit claimants that is held by third parties.
Bartek Staniszewski, Senior Researcher at Bright Blue, commented:
“At the start of this year, Bright Blue ambitiously called for the introduction of a ‘minimum living’ income to help low-income households. While this is not quite there, an increase in the National Living Wage is a step in the right direction. It is politically popular and morally right to ensure that everybody can meet basic living needs – an illustration of compassionate conservatism.
“It is also good to see benefits uprated in line with inflation, maintaining their efficacy in light of increasing costs of living, but it is worth mentioning that this amounts to only a 6.7% increase this year – less than the uprate to the State Pension, which is unjustified and inequitable.
“This increase in the value of benefits came with more conditionality for those who have been long-term unemployed. This is broadly the right direction of travel, as Bright Blue has consistently argued.”
Housing
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Raising Local Housing Allowance rates to the 30th percentile of local market rents in April 2024.
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New premium planning services across England with guaranteed accelerated decision dates for major applications and fee refunds wherever these are not met.
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Expanding the Affordable Homes Guarantee Scheme by a further £3 billion to support housing associations to access cheaper loans for quality and energy efficiency works as well as new homes.
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Investing £5 million to incentivise greater use of Local Development Orders in England.
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A consultation on a new Permitted Development Right for subdividing houses into two flats without changing the façade.
Bartek Staniszewski, Senior Researcher at Bright Blue, commented:
“This has been a good month for renters, following on from the introduction of the Renters Reform Bill. The costs of housing for UC claimants in the private rental market are inevitably a very high proportion of their income, and are a major contributor to this country’s homelessness problem. That said, the uplift merely restores Local Housing Allowance to the same level of market rents it had back in 2020. Rates will also be frozen from 2025-26 onwards, so, if rents continue to rise beyond then, poorer renters will be in significant trouble.
“The introduction of a premium planning service is promising. The fees paid by applicants in exchange for faster decisions will help with funding for Local Planning Authorities, and the threat of a refund will incentivise efficiency. The threat is that, when low on time, Local Planning Authorities will not exercise due diligence and err on the side of rejecting development. The service is also limited to major developments, and so will be of no help to small- and medium-sized developers, who are the most disadvantaged by the current planning system.”
“The other housing measures announced are disappointing and lacking in ambition. The most significant of them – a £3 billion extension to the Affordable Homes Guarantee Scheme – is only projected to deliver 20,000 new homes; nowhere near enough to address this country’s backlog of over four million homes. Extra money for Local Planning Authorities to incentivise the production of Local Development Orders and target planning backlogs is also welcome, but £5 million is a drop in the ocean, and will have negligible effect in reality. The Government had an opportunity to better support first-time buyers through a new scheme to aid first-time buyers, but it failed to do so.”
Energy and the environment
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Setting out an Action Plan to halve the time to build new grid infrastructure to seven years and cut grid access delays by 90%.
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£960 million for a ‘Green Industries Growth Accelerator’ to support clean energy manufacturing.
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New Permitted Development Rights (PDR) to end the blanket restriction on heat pumps one metre from a property boundary in England.
Will Prescott, Researcher at Bright Blue, commented:
“The Government’s announcement that it would work to reduce grid connection times for new sources of low-carbon electricity by up to 90% is certainly very welcome. However, UK consumers will not enjoy the benefits of this investment for some time.”
“While simplifying the planning rules around the installation of heat pumps certainly makes sense, there are bigger deterrents to their installation, not least the high cost, especially in older houses. As such, the Government’s announcement is unlikely to dramatically increase the UK’s disappointing heat pump uptake. The Government needs now to be bolder with both carrots and sticks to ensure we decarbonise our existing housing stock.”
ENDS
Notes to editors
To arrange an interview with a Bright Blue spokesperson or for further media enquiries, please contact Emily Taylor at emily@brightblue.org.uk or on 07850 684474.
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Bright Blue is the independent think tank and pressure group for liberal conservatism.
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Bright Blue’s Board includes Diane Banks, Philip Clarke, Alexandra Jezeph, Richard Mabey and Ryan Shorthouse.
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Our advisory council can be found here. We also have 211 parliamentary supporters. Members of our advisory council and our parliamentary supporters do not necessarily endorse all our policy recommendations, including those included in this press release.
