In his announcement yesterday (Thursday 17 November), Chancellor Hunt confirmed a 9.7% rise in the National Living Wage (NLW) to £10.42.
The increase of almost 10% is the largest hike in the country’s NLW amount ever, Jeremy Hunt told the House of Commons.
This followed recommendations of the Low Pay Commission and the Government also accepted its recommendations on other rates.
Wage rise
It included increasing the rate for 21- to 22-year-olds by 10.9% to £10.18 per hour, for 18- to 20-year-olds by 9.7% to £7.49 an hour and for 16- to 17-year-olds by 9.7% to £5.28 an hour. Furthermore, the apprentice rate will also rise by 9.7% to £5.28 an hour.
In addition, the Chancellor announced the 20% VAT rate would remain until March 2026, despite repeated calls from the sector for a reduction.
During the statement, Hunt even acknowledged the VAT rate was more than double what businesses in other European countries pay but has chosen to maintain the tax as it currently stands – the 20% rate was reintroduced in April 2022 after a limited period of businesses paying 12.5% post-Covid.
Meanwhile, a number of trade bodies reacted to the Chancellor’s Autumn Statement, which said there would be a “targeted approach” to help businesses with energy costs later in the year.
Clarity needed
For businesses, he mentioned there would be help coming on energy in 2023 but didn’t not clarify exactly what that would entail.
However, Hunt also revealed business rate relief would be extended from 50% to 75% up to £110,000 per business as part of a support package.
Additionally, Hunt detailed the business rates support package, worth £13.6bn, would also include freezing the business rates multiplier for another year (2023-2024) to protect businesses from inflation.
The freeze will keep the small business multiplier and standard multiplier at 49.9p and 51.2p respectively, rather than rising to 52.9p and 54.2p, saving ratepayers £9.3bn over the next five years, the Government estimated.
While many welcomed the extension and increased relief, there were also calls for an urgent reform of the business rates system.