Fairness underpins the Government's plans to protect, rebalance and strengthen the economy. The measures in the Autumn Statement will ensure that businesses and families continue to benefit from low interest rates, that future generations are not burdened with unsustainable debt, and that the country remains protected from the worst of the global crisis.
The Government is taking further action to help households and businesses cope with higher inflation; to ensure deficit reduction is implemented fairly, with the financial sector paying a fair share; and to support young people in the labour market.
The Government will:
• defer the 3.02 pence per litre (ppl) fuel duty increase that was due to take effect on 1 January 2012 to 1 August 2012, and will cancel the inflation increase that was planned for 1 August 2012, currently expected to be worth 1.92ppl;3
• limit the increase to Transport for London fares and regulated rail fares to the Retail Prices Index (RPI) plus one per cent for one year from 2012;
• increase the rate of the Bank Levy to 0.088 per cent from 1 January 2012, to offset the forecast shortfall in receipts for 2011 and future years. This is consistent with the Government's intention, set out in Budget 2011, that the Bank Levy should raise at least £2½ billion each year;
• proceed with the extension of Air Passenger Duty to fights taken aboard business jets, effective from 1 April 2013;
• ensure the amount of tax relief given to employers making asset-backed pension contributions to registered pension schemes accurately reflects the amount of payments made, and does not give rise to unintended excess relief; and
• introduce a Youth Contract worth a total of £940 million over the Spending Review 2010 period. The Government will fund wage incentives for 160,000 young people to make it easier for private sector employers to take them on, at least 40,000 incentive payments for small firms to take on young apprentices, extra support from Jobcentre Plus for unemployed 18-24 year olds, an offer of a work experience or a Sector Based Work Academy place for every unemployed 18-24 year old who wants one after three months on Jobseeker's Allowance, and a new £50 million a year programme to support some of the most disadvantaged 16-17 year olds into education, an apprenticeship or a job with training.
In line with the approach to child poverty set out in the child poverty strategy, the Government will take action to tackle the causes of child poverty rather than simply funding extra welfare payments.4 The Government will invest a further £380 million a year by 2014-15 to extend its new offer of 15 hours free education and care a week for disadvantaged two year olds to cover an extra 130,000 children.
The third section of Chapter 1 sets out further information on these announcements. Further information on the estimated distributional impact of the Autumn Statement is available in Impact on households: distributional analysis to accompany the Autumn Statement 2011.5
Annex B presents financing information.
Annex C presents selected tables from the OBR's November 2011 Economic and fiscal outlook.
_________________________________________________________________________________
3 The estimate is based on the latest OBR RPI forecast for 2012-13 Q3.
4 A New Approach to Child Poverty: Tackling the Causes of Disadvantage and Transforming Families' Lives, Department for Work and Pensions and Department for Education, April 2011.
5 Available on the HM Treasury website at www.hm-treasury.gov.uk.