Chancellor Jeremy Hunt has unveiled the government's tax and spending plans, and independent forecasts for the economy
National Insurance paid by employees will be cut from 12% to 10%, taking effect from 6 January
Hunt also made permanent a tax break for businesses that allows them to save on corporation tax by investing
But even with the cuts, the tax burden is still on track to reach a post-war high by 2028, says the Office for Budget Responsibility
The OBR also forecasts that the economy will grow slower than expected - 0.7% next year instead of the 1.8% previously forecast
NI is currently charged at 12% on earnings between £12,571 and £50,271 - and 2% on anything above that
Labour says the tax cut will not "remotely compensate" for hikes already in place
Separately, the state pension will increase by 8.5% from April 2024, while universal credit and disability benefits will rise by 6.7%
Welfare recipients who do not get a job within 18 months will have to do work experience - those who don't look for work for a six-month period will have benefits stopped
Shadow chancellor Rachel Reeves says today’s tax announcements will leave people "worse off".
Prior tax increases by the Tories and failure to update tax bands amount to an effective 10% hike, Reeves says.
Therefore, she argues, today's 2% cut in National Insurance will "not remotely" offset the earlier increases.
Image source, UK ParliamentReeves says there are "27 OECD economies that have grown faster" than the UK during the last 13 years of Conservative leadership.
She says Britain has become "world following" rather than "world beating" under the Tories.
Discussing GDP growth in the UK, Reeves says the economy grew on average by 2% a year under Labour's leadership, whereas under the Tories, she says, it has grown on average by 1.5% a year.
Chris Mason
Political editor
There was the flourish, right at the end.
The widely expected cut in National Insurance for millions of people.
But it is a bigger cut than some had thought - cutting NI by two percentage points.
And it will happen quicker than is conventional for these things when they’re announced in the autumn.
People won’t have to wait until April, instead it will happen in early January - a £450 saving every year if you earn £35,000.
Starting now though: not just the reaction in the House of Commons, but the beginnings of the numbers being pored over in the accompanying Treasury documents.
Stay with us to see what we find out.
Image source, UK ParliamentShadow chancellor Rachel Reeves is now up, responding to the chancellor's statement.
She says "growth has hit a dead end" under Conservative leadership.
Reeves focuses on the OBR forecast of a downgrade in economic growth - she says it's been "revised down, next year, the year after, and the year after that too".
Nothing that has been announced today "will remotely compensate" for the impact of mortgage rises and cost of living pressures, she says.
She says working people remain "worse off" after announcements made by Jeremy Hunt. Reeves adds that British people "will not be taken for fools".
Kevin Peachey
Cost of living correspondent
When judging this speech in terms of the effect on your personal finances, we must consider both sides of the coin.
The National Insurance cut will leave more in workers’ pay packets, but the ongoing freeze in income tax thresholds drags many into paying more tax.
A 6.7% rise in benefits is significant, as is the end of freezing the Local Housing Allowance (helping people pay rising rents), but millions face more stringent tests over entitlement.
And the rate of rising prices is much lower than it has been, but the effect of higher interest rates - particularly through mortgages - is pain yet to come for hundreds of thousands of households.
Finishing his speech with a flourish, Hunt says the government has delivered significant economic progress “in the face of global challenges”.
The Autumn Statement has delivered “the biggest business tax cut in modern British history” and will return tens of thousands more people into work, he says.
To cheers from the Conservative benches he says this was an “Autumn Statement for a country that has turned a corner. An Autumn Statement for growth”.
Image source, UK ParliamentEarlier, Hunt confirmed the increase in the national living wage.
He says the minimum wage - known officially as the National Living Wage - will rise from £10.42 to £11.44 per hour in April next year.
This is a rise of 9.8% and worth up to worth up to £1,800 for a full-time worker, Hunt says this decision is "the largest ever cash increase" in the National Living Wage.
The higher wage will also be paid to 21 and 22-year-olds for the first time. At the moment, only workers over 23 years-old receive £10.42 an hour.
He says the move delivers the Tory manifesto commitment to eliminate low pay.
Hunt says the main employee National Insurance rate will be cut by 2 percentage points from 12% to 10%, from 6 January.
He says the change will help 27 million people and mean someone on the average salary of £35,000 will save over £450 a year.
Hunt says: "I would normally bring in a measure like this for the start of the new tax year in April, but instead, tomorrow I’m introducing urgent legislation to bring it in from 6 January, so that people can see the benefit in their payslips at the start of the new year."
Dharshini David
Chief economics correspondent
Growth is better than expected this year according to the Office for Budget Responsibility, the independent watchdog.
But inflation has been more stubborn than expected and interest rates have had to rise further – that is all taking its toll.
So the OBR has downgraded its forecasts for growth for the next couple of years – although they are more optimistic than the Bank of England, which sees the economy basically stalling for a while.
Hunt follows through with a much-trailed clampdown on benefits.
He says that if, after seeking a job for 18 months, a claimant has still not found employment they will have to take part in a mandatory work placement "to increase their skills and improve their employability".
And if they "choose not to engage with the work search process for six months, we will close their case and stop their benefits", he says.
Chris Mason
Political editor
We are getting to the outer limits now of what has been trailed.
So what’s coming next?
Here's a bit more detail on the National Insurance changes Hunt has set out.
He says he will abolish the "Class 2" National Insurance charge for self-employed people earning more than £12,570.
That will get rid of a flat rate compulsory charge of £3.45 a week. He says that will save the average self-employed person £192 a year.
Meanwhile, self-employed people who pay "Class 4" National Insurance at 9% on all earnings between £12,570 and £50,270 will see that cut by 1 percentage point to 8% from April.
"Taken together with the abolition of the compulsory Class 2 charge, these reforms will save around two million self-employed people an average of £350 a year from April," says Hunt.
The chancellor has also spoken about business rates, noting the government has already taken a third of properties through small business rate relief.
Hunt says the government will freeze the small business multiplier for a further year.
He adds he will extend the 75% discount on business rates up to £110,000 discount for retail hospitality and leisure businesses for another year as well.
Hunt says these measures will save the average independent shop over £20,000 and the average independent pub over £12,800 next year.
Simon Jack
Business editor
The chancellor announces a freeze in the way business rates are calculated for an extra year and mantains a 75% discount on rates for hospitality for another year too.
The hospitality industry is doing well so far, with a freeze on alcohol duty too until next autumn.
These measures will help soothe their concerns over the rise in the national living wage.
Chris Mason
Political editor
I spot a bit of marginal seat bingo going on at the moment.
The chancellor is mentioning various MPs who have been lobbying him and who he is listening to, and plenty are in seats the Conservatives hope to hold on come the general election.
They include Ynys Mon, Wrexham, Clwyd South and Keighley to name just four.
Hunt has announced a widely anticipated decision to make permanent “full expensing” for businesses.
For every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.
Companies can do this in one go as opposed to having to offset the cost against corporation tax over a longer period.
It's a big benefit for companies which invest heavily in equipment, such as manufacturers.
But companies which aren't profitable, or which mainly invest in people and equipment, won't benefit as much.
Hunt says this will cost £11bn a year and represents the "largest business tax cut in modern British history".
"It means we have not just the lowest headline corporation tax rate in the G7 but its most generous capital allowances," he adds.
"We are abolishing Class 2 National Insurance altogether, saving the average self-employed person £192 a year," Hunt says.
Simon Jack
Business editor
The OBR figures unveiled earlier show a particularly sharp downgrade for economic growth in 2024 and 2025 from previous forecasts.
2024 has gone from 1.8% to 0.7% while 2025 has gone from 2.5% to 1.4%.
The chancellor says he will extend financial incentives for Investment Zones and tax reliefs for Freeports from five to 10 years.
He also says he will set up a new £150m Investment Opportunity Fund for the programme.
Image source, UK ParliamentHunt continues to talk about investment, moving on to money for "strategic manufacturing".
He says this will be an additional £4.5bn of support between 2025 and 2030.
This includes £975m for aerospace firms, £520m for life sciences like medical research companies, and £960m for the new green industry firms, he says.
"Taken together across our fastest-growing innovation sectors, this support for manufacturing alone will attract an estimated £2bn of additional investment a year over the next decade," he says.