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
Hunt says the government will invest £500m over the next two years to fund more "innovation centres" to help make the UK an "AI powerhouse".
This, he says, follows "the success of the supercomputing centres in Edinburgh and Bristol".
Hunt turns to pension reforms, announcing he will consult on giving people one pension pot for life.
He says he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension".
He says these reforms could help unlock an "extra £1,000 a year in retirement for an average earner saving from 18".
The chancellor confirms a plan to reform the time it takes for clean energy businesses to access the electricity grid.
He says the government will publish its full response to the Winser review and Connections Action Plan today.
"These measures will cut grid access delays by 90% and offer up to £10,000 off electricity bills over 10 years for those living closest to new transmission infrastructure," he says.
Hunt commits to reforming the planning system to allow for faster planning applications.
He says he will allow local authorities to recover the full costs of major business planning applications, in return for being required to meet guaranteed faster timelines.
If they fail, these fees will be refunded automatically with the application being processed free of charge, Hunt says.
"A prompt service or your money back - just as would be the case in the private sector," the chancellor adds.
Dharshini David
Chief economics correspondent
The chancellor at present looks set to meet his self-imposed rules on borrowing, despite the expected tax cuts, on both the annual deficit and debt in five years, if the Office for Budget Responsibility’s forecasts are right.
But at what cost?
Many people will still see their tax bills on income rise as many income thresholds won’t rise with inflation for a good few years.
And to square the numbers, the chancellor pencilled in some quite modest figures for departmental spending after the Budget.
The inflation in the intervening time makes that harder to stretch.
Some departments look set to see falls in their budgets, once inflation is stripped out, possibly hitting public services. It’s a challenge for whoever the chancellor will be come 2025.
Hunt announces £50m in funding over the next two years to increase the number of apprentices in engineering and "other key growth sectors".
Jeremy Hunt has announced that the UK economy is set to grow by 0.6% in the current year, according to forecasts from the OBR.
It then expects the economy to grow by 0.7% next year.
For 2025, GDP is forecast to rise by 1.4%, then 1.9% in 2026, and 2.0% in 2027.
That's an upgrade for this year, which was expected to see a small contraction.
But it's a big cut in the forecasts for 2024 and 2025.
Those are only forecasts, and the eventual figure will almost certainly be different.
But less growth means less tax revenue for the government, and makes a future chancellor's choices all the harder.
Image source, UK ParliamentHunt says the country needs a “more productive state not a bigger state” - and sets a new target for the public sector to increase productivity by at least 0.5% year.
There is already a plan to reduce the size of the Civil service to pre-pandemic levels and launch a review to see how “bureaucracy is holding the country back”.
These measures will ensure growth in public sector spending “is always lower than growth in the economy”, the chancellor says.
Chris Mason
Political editor
Two early cheers for two things the chancellor chose not to do.
What is known as the "triple lock" on the state pension is maintained at a more generous level than some suggested it might be.
And benefits will go up in April in line with September’s (higher) inflation figure - as is convention - rather than October’s (lower) inflation figure.
Hunt says the UK will meet its Nato commitment to spend 2% of GDP on defence.
He says this is "critical at a time of global threats to the international order most notably from Putin’s evil war in Ukraine".
Headline debt is now predicted to be 94% of GDP by the end of the five year forecast period, Hunt says.
The Office for Budget Responsibility forecasts that underlying debt will be 91.6% of GDP next year, 92.7% in 2024-25, 93.2% in 2026-27, before declining in the final two years of the forecast to 92.8% in 2028-29, he adds.
This means the government will meet its fiscal target of having the debt falling in five years' time.
This was also one of the five priorities the prime minister outlined at the start of the year.
Dharshini David
Chief economics correspondent
Like other forecasters, the OBR is admitting that inflation falling to the 2% target will take longer (until 2025) than previously thought.
It’s why the banks are warning that interest rates won’t fall soon.
The first measure announced by Jeremy Hunt concerned rising antisemitism in the UK following the Hamas attack on Israel and war in Gaza that has followed.
He said up to £7m in the next three years would go to organisations like the Holocaust Education Trust, to tackle antisemitism in schools and universities.
"When it comes to antisemitism, and all forms of racism, we must never allow the clock to be turned back," he said.
Hunt says he will honour the government's commitment to the pensions triple lock in full.
He says from April 2024 the government will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year
"That is one of the largest ever cash increases to the state pension - showing a Conservative government will always back our pensioners," he says.
Hunt increases duty on hand-rolling tobacco by an additional 10% above the tobacco duty escalator.
Meanwhile he freezes all alcohol duty until 1 August next year. "That means no increase in duty on beer, cider, wine or spirits," he says
Kevin Peachey
Cost of living correspondent
Hunt says rent can constitute more than half the living costs of private renters on the lowest incomes
He says he will therefore increase the Local Housing Allowance rate to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year, he says.
Local housing allowance helps people on benefits pay their rent to a private landlord. It has been frozen since 2020 despite rents rising sharply. That freeze has now been lifted.
Benefits will increase next year by 6.7%, the inflation rate for September.
There had been speculation that Hunt would instead use the lower inflation figure for October, when it slowed to 4.6%.
This applies to working-age benefits such as means-tested benefits such as Universal Credit, and disability benefits.
Using October's figures would have cut spending by around £3bn next year, according to the Institute for Fiscal Studies.
State pensions are covered by a different regime, the triple lock, which guarantees they go up with wages, inflation or 2.5% - whichever is highest.
Hunt announces that the OBR - the independent budget watchdog - says the combined impact of his statement will be to raise business investment, get more people into work, reduce inflation next year and increase GDP.
He adds that his party believes a dynamic economy relies on "the energy and enterprise of people".
And so, he says, the Conservatives reward "effort and work".
The OBR says headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025, the chancellor says.
The latest figure for consumer price inflation is 4.6% for October - down from a peak of over 11%.
Chancellor Jeremy Hunt has started his Autumn Statement.
In a light-hearted start, Hunt wishes his wife a "happy birthday" - saying that unlike him she is looking younger each day.
He says he has taken difficult decisions, and instead of entering a recession the UK economy has grown.
"Our plan for the British economy is working. But the work is not done," he says.