WBG full response to Autumn Statement 2023

Background

In the Autumn Statement 2023, Chancellor Jeremy Hunt presented an optimistic outlook for the UK economy and declared that the country “has turned a corner”. However, the reality for millions of households – in particular women, disabled people, lone mothers, women from Black and minority ethnic backgrounds, and households with low incomes, could not be further from this positive description. Following the cumulative effect of a decade of austerity, stagnant incomes, COVID-19 pandemic and a devastating cost of living crisis, the situation remains bleak. Adult and child hunger is at unprecedented levels, millions of people are skipping meals and turning to food banks and our public services are in crisis.

Higher-than-expected tax revenue due to inflation has led the Chancellor to claim that he has an additional £27bn to spend in 2027/28 compared to March 2023. Instead of allocating those much-needed resources to the public sector to make up for the real terms loss to departmental budgets caused by inflation, the Chancellor chose to cut taxes. Both the tax relief for businesses and the cut to national insurance contributions benefit men over women, and private rather than public services. The Autumn Statement was a missed opportunity to reverse the trend of low growth, increasing ill-health, increasing inequality, and worsening living standards.

Key Policy Decisions and Recommendations

• Taxation: The Chancellor announced cuts in National Insurance Contributions (NICs) for employees and the self-employed. Among household types, lone mothers will gain the least from these cuts, only £76 per year. We call on the Chancellor to reform the NI system to make it more progressive and applicable to all income and also tax wealth. A 1%-2% tax on assets over £10 million would raise revenue for essential public services, reducing gender inequality.
• Social Security: Increasing working-age benefits in line with inflation is a welcome move that offers partial relief amid the ongoing cost-of-living crisis. However, the uprate won’t offset the rising living costs for low-income families spending a significant share of their incomes on essentials such as food, where inflation is still over 10%. Women, who are more reliant on benefits due to caregiving roles, have been disproportionately impacted by regressive social security changes since 2010. The Women’s Budget Group call for the abolition of the benefit cap and the two-child limit to prevent further destitution and poverty among women and children.
• The Back to Work Plan aims to support employment but fails to address barriers faced by those with caring responsibilities, mainly women. Proposals include mandatory work placements for those unemployed for over 18 months. Evidence suggests recent increases in benefit conditionality fail to incentivise employment. Instead of punitive measures, investing in health and social care would better support those unable to work due to illness or disability.
• Local Housing Allowance: The plan to realign Local Housing Allowance (LHA) rates with local rents brings hope for those struggling with housing costs, but the delayed start in April 2024 and a subsequent freeze in 2025 dampen this optimism. Over 100,000 households are in temporary accommodation, and 130,000 children are affected. Women, especially single mothers, face added challenges due to lower earnings and caring responsibilities.  In the long term, prioritising social housing creation over further adjustments to benefit private landlords is crucial for addressing the wider housing affordability issue.

Read the full response here