A Plan for Growth

On 23 September 2022 the Chancellor set out The Growth Plan.

For too long growth has not been as high as it needs to be, making it harder to pay for public services and requiring taxes to rise.

That is why the Conservative government is adopting a new approach for a new era focused on economic growth. We will be bold and unashamed in this pursuit. We will expand the supply side through tax cuts and reform, tackle the immediate energy crisis, remove barriers for business, and build the infrastructure we need to grow the British economy.

Only the Conservatives can be trusted to make the reforms we need to grow our economy – delivering higher wages, lower taxes and more money for our public services.

ENERGY

• Cutting everyone’s energy bills by £1,400 this year protecting the British people and reducing inflation by 5ppts. Energy Bills were due to rise by £6,500 but through the Energy Price Guarantee we will limit the unit price that consumers pay for electricity and gas. For the next two years the typical annual household bill will be £2,500. We will also keep the Energy Bill Support Scheme giving households £400 off their bills this winter. 
• Supporting businesses to get through this Winter. The Energy Bill Relief Scheme will discount wholesale gas and electricity prices for all businesses, charities, schools and hospitals. This will provide a price guarantee equivalent to what has been offered to households. 

A NEW APPROACH FOCUSED ON GROWTH

Achieve a trend growth rate of 2.5 per cent – measuring every policy decision against this defining test. Every government department will be in a sense a growth department and every policy initiative will be measured against a defining test of whether it helps or hinders growth – helping us to achieve a sustainable trend growth rate of 2.5 per cent.

Our Growth Plan will focus on:

• Maintaining responsible public finances
• Reforming the supply-side of the economy
• Cutting taxes to boost growth

PUBLIC FINANCES

• Publishing a Medium-Term Fiscal Plan setting out our responsible fiscal approach. We need a plan for the economy that recognises our focus on growth, and we will set it out in due course ensuring that we take a responsible approach to the public finances. 
• Asking the OBR to publish a full economic and fiscal forecast before the end of the year and one next year. We will publish the costings of all the measures the Government has taken today and include these in the next full OBR forecast.
• Using borrowing powers responsibly to fund our energy intervention just as we did in Covid-19. It is entirely appropriate for the government to use borrowing powers to fund temporary measures to support families and businesses it’s what we did in Covid-19, Second World War and the global financial crisis. 

SUPPLY SIDE REFORM

The government will launch 38 Investment Zones across England, unlocking housing and driving growth through tax incentives. 

• Our new Investment Zones will drive growth and unlock housing across England by liberalising planning, delivering tax incentives and wider support for local economies that have been left behind for too long. Investment Zones will be delivered in partnership with local leaders to secure the right zones across regions like Tees Valley, Norfolk and The Midlands. We will also work with Devolved Administrations to look to establish Investment Zones in Scotland, Wales and Northern Ireland. 
• Stopping Labour-backed strike action from slowing down Britain. We will introduce Minimum Service Levels for transport services in Great Britain, ensuring militant strike action cannot derail economic growth, and union bosses cannot hold working people to ransom. 
• Publishing a list of infrastructure projects that will be accelerated. We will publish a list of infrastructure projects from transport to energy and telecoms that will help to grow our economy.
• Speeding up delivery through a new infrastructure bill to unpick the complex patchwork of restrictions and EU-derived laws. We will streamline a host of assessments, duplications and regulations whilst ensuring essential protections remain in place that will finally get the infrastructure we need built more quickly.
• Bringing forward legislation to implement new obligations on energy suppliers to help hundreds of thousands of people take action to reduce energy bills, delivering an average saving of around £200 a year. Since 2010, the number of EPC band E, F and G homes has fallen from almost 40 per cent of all homes to 10 per cent. Our proposal announced today will be worth £1 billion over the next three years starting from April 2023. 
• Removing the bankers’ bonus cap, making the City of London the global financial centre of the world ahead of Paris, Frankfurt and New York. The Bankers Bonus Cap did nothing to arrest increases in basic pay, it made the UK less competitive and saw talent and capital flee overseas. We want more investment in the UK not less. 
• Increasing housing supply to build a nation of homeowners. We will enable crucial planning reforms and increase the disposal of surplus government land to build new homes.
• Strengthening the Universal Credit sanctions regime, setting clear work expectations and giving more people the security of their own income. We are strengthening the sanctions regime to set clear work expectations for recipients of Universal Credit, including applying for jobs, attending interviews or increasing their hours – incentivising people to take up more work and have the security of their own income. 

SUPPLY SIDE REFORM

Cutting the basic rate of income tax to 19p for 31 million people. We will bring forward the income tax cut by one year to April 2023. That’s a tax cut for 31 million people in just a few month's time.

Cutting stamp duty permanently by:

• Doubling the nil-rate band to £250,000 (from £125,000).
• Increasing the nil-rate band for first time buyers to £425,000 (from £300,000).
• Increasing the value of the property which first-time buyers can claim relief to £625,000 from (£500,000).

These steps mean we have taken 200,000 more people out of paying stamp duty altogether – effective from today.

Abolishing the additional rate income tax altogether from April 2023. The 45p rate is higher than the top rate of G7 countries like the US and Italy, and higher than social democracies like Norway. Abolishing the rate will mean we have a much simpler more competitive economy. It will reward enterprise and work and incentivise growth for the benefit of the whole economy. 

Cutting National Insurance Tax contributions by 1.25 per cent, helping the average worker keep £330 a year more. We are scrapping the National Insurance levy a tax cut for 28 million people worth on average £330 a year – helping hard working people to keep more of the money they earn. We confirm that the additional funding for the NHS and social care services will be maintained at the same level. 

Keeping Corporation Tax at 19 per cent, driving economic growth by encouraging business in the UK. We are scrapping plans to increase the UK Corporation Tax rate from 19 per cent to 25 per cent. This move will allow us to maintain a competitive business tax regime – delivering an effective tax cut those ploughs almost £70 billion into the economy, giving businesses the freedom to reinvest, boost wages and create jobs. The lowest corporation tax rate than any major economy in the world.

Maintaining the Annual Investment Allowance at £1 million, supporting economic growth by encouraging businesses to invest. The Annual Investment Allowance gives businesses 100 per cent tax relief in plant and machinery and will not fall to £200,000 as planned – it will remain permanently at £1 million. 

Supporting businesses to raise money and attract talent, encouraging people to start and grow a business in the UK. From April 2023 qualifying companies will be able to raise up to £250,000 in Seed Enterprise Investment (SEIS), helping over 2,000 companies a year to grow thanks to tax reliefs. 

Winding-down the Office of Tax Simplification and charge every government department with simplifying our tax system. Instead of an arms-length body which is separate from the Treasury and HMRC we need to embed tax simplification into the heart of the government. Every tax official will focus on simplifying our tax code.  

Automatically sunset EU regulations by December 2023 requiring departments to review, replace or repeal retained EU Law. This will reduce burdens on business, improve growth and restore the primacy of UK legislation. 

Simplifying IR35 rules to make it easier to remove unnecessary administrative burdens for business. Reforms to off-payroll working have added unnecessary complexity and cost. We will repeal 2017 and 2021 reforms but keep compliance under close review. 

Introducing VAT-free shopping for overseas visitors. We will boost retail and hospitality, restoring a tax cut we have had for many years and supporting some of Britain’s best brands.

Freezing alcohol duty for beer, cider, wine and spirits next year and continue with important reforms which modernise our alcohol duty system. We will freeze alcohol saving 3p off a pint of beer and 12p on a glass of wine. We will also introduce an 18-month transitional measure for wine duty. We will extend draught relief to cover smaller kegs of 20 litres and above to help smaller breweries.