Queen's Speech 2022 - Growing the Economy to address the cost of living

GROWING THE ECONOMY TO ADDRESS THE COST OF LIVING

Economic Growth and Support for Businesses

“My Government will drive economic growth to improve living standards and fund sustainable investment in public services. This will be underpinned by a responsible approach to the public finances, reducing debt while reforming and cutting taxes. My Ministers will support the Bank of England to return inflation to its target."

• ●  The UK economy is resilient and has bounced back from the pandemic with output above pre-pandemic levels. Unemployment is back below pre-pandemic levels and demand for workers remains strong with record vacancies.

• ●  Russia’s invasion of Ukraine has created new challenges for the global economy – highlighting Europe’s dependence on Russian oil and gas. The Government has set out a long-term British Energy Security Strategy to boost homegrown power generation, and create cheaper, cleaner energy in the UK, for the UK. This will ensure we are not dependent on a foreign country to keep our homes warm and lit. This is not only a matter of tackling climate change, it is a matter of national security.

• ●  Our Plan for Growth and Tax Plan will lower taxes, improve productivity and growth and increase living standards by focusing on innovation, skills and infrastructure. The Government is committed to delivering on the Plan for Growth jointly with the private sector.

• ●  The Government is improving the skills system to make technical education more attractive and easier to obtain through apprenticeships, T-Levels, Higher Technical Qualifications and the Lifelong Loan Entitlement. The Government’s ambition is to encourage greater levels of private sector investment in employee training, both for apprentices and for employees more generally. The Government will consider whether further intervention is needed to encourage employers to offer the high-quality employee training the UK needs. This will include examining whether the current tax system – including the operation of the Apprenticeship Levy – is doing enough to incentivise businesses to invest in the right kinds of training.

• ●  The Government is increasing investment in infrastructure through the establishment of the UK Infrastructure Bank and delivering on its ambitious capital plans. We will invest over £600 billion in public sector gross investment over the next five years, reaching the highest sustained levels of public sector net investment as a proportion of GDP since the late 1970s.

• ●  By 2024-25, the Government will be investing £20 billion per year in research and development to drive innovation, including establishing the Advanced Research and Invention Agency. The Government has announced reforms to Research and Development tax reliefs and will continue to reform and improve these tax reliefs at the next Budget.

• ●  The Government is lowering trade barriers and increasing investment through ambitious free trade agreements, taking advantage of the benefits of Brexit to remove non-tariff barriers.

• ●  The Government is supporting energy intensive businesses with their energy costs by extending the Energy Intensive Industries Compensation Scheme, and intends to increase the aid intensity to up to 100 per cent. We will also consider other measures to support business including increasing the renewable obligation exemption to 100 per cent.

• ●  The Brexit Freedoms Bill will ensure that the UK continues to seize the benefits of Brexit and utilises our regulatory freedoms. Future regulation will be in line with our new regulatory principles. Our rules will be proportionate and created in collaboration with business to help spur economic growth.

• ●  As part of their challenge to institutional investors last summer, the Prime Minister and Chancellor have committed to working with industry to identify and remove barriers to long-term investment within the UK.

• ●  The Government is delivering a competitive and dynamic economy, including by planning the introduction of a new digital competition regime as well as new competition and consumer reforms to support free, open and innovative markets with high consumer standards..

• ●  Building on the successes of last year’s Build Back Better Business Council, the Prime Minister’s Business Council brings together a new cohort of business leaders to support the delivery of the Plan for Growth and its three Pillars stimulating collaboration between government and the private sector, and prioritising investment in infrastructure, innovation and skills.

  Employment

• ●  The Government is supporting people into high-skilled, well-paid work through our multi-billion pound Plan for Jobs.

• ●  The Kickstart scheme, which ran from September 2020 - March 2022, has provided 160,000 Kickstart jobs to young people. Youth unemployment has decreased from 11.8 per cent in the three months to February 2020, to 11.3 per cent in the three months to February 2022.

• ●  As Kickstart comes to an end, young people will continue to be supported by the Department for Work and Pensions’ Youth Offer, which has been extended to 2025 and supports young job seekers on Universal Credit into work through its Youth Employment Programme, Youth Hubs, and Youth Employability coaches.

• ●  The Government has announced more than £1.1 billion of funding over the next three years for programmes that enable people with disabilities or long-term health conditions to find and sustain employment. These include the Access to Work scheme and the Work and Health Programme.

• ●  In 2020, the Government doubled the number of work coaches to 27,000 in just over eight months and is now continuing to invest over £900 million for each year of this Spending Review on work coaches, to ensure Universal Credit claimants receive the best support to find employment. Work coaches are the first point of contact when a claimant loses their job and begins claiming Universal Credit.

• ●  The Government has invested £90 million in the 2021 Spending Review to extend the Job Entry Targeted Support scheme for a further year, to the end of September 2022. So far, over 176,000 jobseekers have been supported by the scheme, and over 43,000 people on the Scheme moved into work.

• ●  The Restart scheme, launched in July 2021 with referrals running to Summer 2024, provides up to 12 months of intensive, tailored employment support to help jobseekers who have been unemployed for over nine months increase their prospects of finding work.

• ●  The new, enhanced 50+ offer, launched in the 2021 Spending Review and worth over £20 million, will support older jobseekers to return to, or remain in, work and benefit from fuller working lives.

• ●  The Government’s Way to Work campaign aims to move 500,000 jobseekers into work by June 2022. This campaign will help to fill record vacancies, supporting job ready people into the labour market, helping them progress into a career. We know work is the best way for people to improve their lives and support their families - households on Universal Credit are at least £6,000 a year better off in full-time work than out of work.

  Trade and Investment

• ●  We are using our Brexit freedoms to deliver an independent trade policy and strengthen our links with the world’s largest and fastest-growing economies.

• ●  Our Trade and Cooperation Agreement with the EU is the world’s biggest zero- tariff, zero-quota free trade deal, allowing businesses in Britain to trade freely with Europe while allowing us to seize new opportunities around the world.

• ●  As an independent trading nation, we have established a new, simpler tariff regime and already secured trade deals with 70 countries plus the EU, partners which accounted for over £808 billion of bilateral trade in 2021.

• ●  We are putting the UK at the centre of a network of modern trade deals spanning the Americas and Pacific. Our Japan deal went further on digital trade supporting future-facing industries where the UK prospers, like services and tech. Our deals with Australia and New Zealand reduce tariffs so British consumers enjoy lower costs and more choice while making British exporters more competitive.

• ●  We’re on track to join the Comprehensive and Progressive Agreement for Trans- Pacific Partnership this year – a free trade area of over 500 million people, with a combined GDP of £9 trillion, covering some of the world’s fastest-growing economies and most reliable supply chains.

• ●  We have resolved costly frictions in our trade relationship with the United States, eliminating unjustified tariffs on Scotch Whisky and other products as well as reaching a resolution for the expansive removal of tariffs on UK steel and aluminium exports. And we are working on further collaboration to strengthen the transatlantic trade relationship.

• ●  The Government has launched a new Export Strategy to address the barriers to exporting, particularly for small and medium sized enterprises, and to transform the way we deliver support to exporters through the Export Support Service, a one-stop shop for exporting guidance. The Government has also expanded UK Export Finance support to help UK exporters to sell overseas.

• ●  The UK remains a top destination for foreign direct investment. By the end of 2020, the UK’s inward foreign direct investment stock levels reached $2.2 trillion, the third highest in the world. We are intent on building on this, including through the Office for Investment which supports attracting high value investment into the UK, such as the recent £10 billion Sovereign Investment Partnership with the United Arab Emirates.

• ●  We have established Freeports as national hubs for international trade, innovation and commerce, regenerating communities across the UK, attracting new businesses, spreading jobs, investment and opportunity to towns and cities across the country. Eight have been announced in England. Two Freeports have been announced for Scotland with the Government committed to deliver at least one in each of Wales and Northern Ireland.

Other Support for Businesses

• ●  The Government recognises that this is also a worrying time for businesses given the global situation. Energy prices have increased globally, while businesses are navigating supply chain issues as the world economy recovers from the pandemic and adapts to the shock of war in Ukraine.

• ●  The Government has reduced the burden of business rates in England and has provided over £17 billion worth of additional rates relief since 2020. Changes announced at the end of the review in October 2021 will reduce the burden of business rates by a further £7 billion over the next five years.

• ●  To help small and medium-sized enterprises gain the skills they need to succeed, the Government is subsidising the cost of high-quality training. Help to Grow: Management offers businesses world class leadership training through the UK’s top business schools, with the Government covering 90 per cent of the cost.

• ●  The Government is helping firms to adopt new digital technologies, with Help to Grow: Digital providing free, impartial advice and offering eligible companies a 50 per cent discount on approved software, worth up to £5,000 per company, to improve their productivity.

• ●  To support the decarbonisation of non-domestic buildings, the Government has introduced targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100 per cent relief for eligible low-carbon heat networks with their own rates bill.

• ●  The Government is supporting small businesses to create jobs with a further increase to the Employment Allowance to £5,000 per year – this is a tax cut worth up to £1,000 per employer.

• ●  The Government has made additional commitments to the British Business Bank to help businesses access the finance they need. This includes £1.6 billion to provide investment funds for Scotland, Wales and Northern Ireland, and the North, Midlands, and South West of England, £150 million to invest alongside business angels across the UK, and resources to provide 33,000 Start-Up Loans over the next three years.

Cost of Living

• ●  The Government understands how the rising cost of living is making life harder for people. These are global challenges, however, the Government is providing support worth over £22 billion in 2022-23 to help families with these pressures. The Government will continue to keep the situation under review, recognising the high level of current uncertainty and continue to monitor the ongoing impact ofRussia’s invasion of Ukraine on the economy. We will be ready to take further steps, if needed, to support households.

• ●  We are boosting the incomes of the lowest paid:

o raising the National Living Wage by 6.6 per cent to £9.50 from April 2022,

meaning an extra £1,000 a year for a full-time worker;

o increasing the National Insurance Threshold in July, worth £330 in the year from July for a typical employee – the single largest personal tax cut for a decade; and

o giving 1.7 million families around an extra £1,000 a year, on average, through our cut to the Universal Credit taper rate and increase to the work allowance.

● We are helping families with their energy costs:

o providing a £150 council tax rebate for those in Bands A-D in England from April and £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax rebate;

o a £200 reduction in households’ energy bills delivered from October. This helps households smooth out the increased costs of energy bills at a time when they are particularly high, with the costs of the reduction spread as widely as possible so that no household pays more than £40 per year through the levy.

o on top of this, we are providing a £150 rebate on the energy bills of three million low-income households from October through the Warm Home Discount;

o providing seasonal cold weather payments of an extra £25 a week for up to four million people during sustained cold periods; and

o giving up to £300 in Winter Fuel Payments to people of State Pension age.

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● We are supporting people with household bills:
o we have cut fuel duty by 5p for 12 months, saving drivers an average of

£100 a year – having already frozen it for twelve consecutive years;

o we have doubled the value of the Household Support Fund to £1 billion, helping local authorities support those on the lowest incomes with their food and utility costs;

o investing £200 million a year to continue the Holiday Activities and Food Programme – which benefited over 600,000 children last summer;

o increased the value of the Healthy Start Vouchers by a third to £4.25 a week; and

o we have doubled free childcare to 30 hours since 2010, worth £5,000 per child per year for the parents of the 330,000 registered children.

● And

we are helping with the cost of housing:

o maintaining the increase to Local Housing Allowance in cash terms – an intervention that was worth an extra £600 on average to 1.5 million households in 2020-21; and

o provided £670 million to help local authorities support households struggling with council tax bills.

● Government decisions since Spending Round 2019 will have benefitted the lowest-income households the most, as a proportion of income. Our modelling also shows that:

o the lowest-income 60 per cent of households receive more in public spending than they contribute in tax;

o households in the lowest income decile will receive more than £4 in public spending for every £1 they pay in tax, on average; and

o the impact of Government policy since the 2019 Spending Round on the lowest-income 40 per cent of households is expected to be worth more than £1,000 a year on average, while there will have been a net benefit on average for the poorest 80 per cent of households.