Chancellor George Osborne is due to give his Autumn Statement to Parliament on December 3, but many people have no idea what it is and why he has to make a report to MPs.
Everyone is aware the Chancellor has to deliver a Budget speech, generally in March, which outlines the government’s spending plans for the next financial year.
But over recent years, chancellors have started to up the ante with their Autumn Statements to give taxpayers and businesses a heads up on potential economic changes to expect in the next financial year.
Essentially, the Autumn Statement is an update or state of the nation speech which gives the Chancellor a chance to tell MPs how Britain’s economy is progressing.
The 2014 Autumn Statement is slightly different because a General Election is coming in May 2015. The statement gives the Chancellor a chance to lay out some election policies.
No tax cuts
After the Chancellor makes his speech, the Office of Budget Responsibility will release the results of research into the economy. The data is meant to provide an independent, non-political analysis of where Britain’s economy is heading supported by facts and figures.
With the election in the wings, everyone wants to know what Osborne is likely to say.
His problem is he will want to give some hope to taxpayers that their finances will free up a little.
Unfortunately, the coffers are empty at The Treasury despite Britain having one of the best growth rates in the West.
Despite the economy growing at around 3% – depending on whose report you follow – HM Revenue & Customs (HMRC) has collected less in tax than expected to the tune of around £9 billion.
Pensioner bonds
That’s because although the economy is expanding and more jobs are available, most are low-paid or part-time jobs that do not generate much in the way of tax receipts for the government.
One point to watch out for is David Cameron’s plan to up the 40% higher rate tax band to £50,000 during the next Parliament. The announcement garnered a lot of hype a few months ago, but has sat quietly on the back burner.
Many middle earners whose votes are crucial to the Tories winning the next election are in the higher rate tax net and will be listening for Osborne to pledge they will keep more of their cash.
Another Budget promise that has so far made no progress is pensioner bonds paying higher interest savings rates than banks and building societies. Many pensioners seeking a better return on their money will be eager to know more about Osborne’s plans to help them next year as well.
