Families face near £5,000 bombshell from Autumn Statement

A typical family could face an eye-watering £4,900 triple whammy hit from today’s Autumn Statement, analysis by the Liberal Democrats has revealed.

The research shows the combined impact of expected stealth taxes, energy bill rises and mortgage bill hikes next year. In the year 2022/23, a typical family of two basic rate taxpayers with a mortgage will face a total hit of nearly £5,000. 

The party’s research has shown that there would be an additional £680 a year in income tax, due to the freeze of the personal allowance. Households could also face an increase of £1,200 a year in their energy bill, once the energy price cap is unfrozen in April.

Finally, due to Liz Truss and Kwasi Kwarteng’s disastrous mini-budget, a typical family will see an annual increase of around £3,000 in their mortgage payments, due to soaring interest rates in the aftermath of the mini-budget.

Ahead of the Autumn Statement on Thursday, the Liberal Democrats are calling on the Government to put a proper windfall tax on the profits of the fossil fuel giants. They are also calling for the Introduction of a new Mortgage Protection Fund and to increase pensions and benefits at least in line with inflation.

Commenting Liberal Democrat Treasury Spokesperson Sarah Olney MP said: 

“This budget will bring cold comfort to our country. After inflicting so much chaos, the Conservatives are making the rest of us pay to clear up their mess.

“Under the Conservatives, the squeezed middle is set to be clobbered with a barrage of bills.  

“Mortgages have skyrocketed, the economy has tanked and Downing Street is nothing more than a revolving door of chaos. Every day the Conservatives are in office, families and pensioners across Britain suffer. 

“We need a fair deal, including support for those struggling with their mortgage payments and a boost to pensions and benefits. The government should bring in a proper windfall tax and make sure banks pay their fair share, instead of imposing years of painful stealth taxes on ordinary families.”

ENDS

Notes to Editors: 

Income tax: As a result of the two-year freeze of the Personal Allowance, a basic rate taxpayer will be £340 pounds worse off in 2022-23. Next year the Personal Allowance will remain at £12,570. Whereas without the stealth tax, it would have stood at £14,270. The resulting tax hit is £340 for a single basic rate taxpayer. Full calculations can be found here.

Energy bills: The government has confirmed that their Energy Price Guarantee will end in April 2023 and the price cap mechanism will return. Under the Energy Price Guarantee the average bill is £2,500. Energy experts Cornwall Insight predict that the price cap in Q2 of next year will be £3,702 for the average household. That means that average bills will increase by £1,202. 

Mortgages: In its latest Monetary Policy Report from this month, the Bank of England said that the typical household exiting a fixed-rate deal this year will face a hit of around £3,000. See page 53 of the report here. Around a quarter of mortgages will reach the end of their fixed term between now and the end of 2023. Among those mortgagors, the Bank said that the median outstanding balance is around £130,000, with an average remaining term of around 20 years and an average interest rate of around 2.0%. According to the Bank, a typical increase of 3.5 percentage points in the mortgage rate (taking it to 5.5%) would add £3,000 to the annual bill.