Spring Statement 2022: Sunak raises NI threshold as OBR warns families face record fall in real income
Chancellor hails his ‘largest ever tax cut’ as OBR projects ‘biggest fall in living standards’ on record
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Your support makes all the difference.Rishi Sunak has delivered his mini-Budget to give people a helping hand with their finances as inflation hits a 30-year high.
The chancellor announced a 5p fuel duty cut and a rise in the National Insurance threshold by £3,000. He also announced that the OBR expects inflation to rise further this year, to 7.4%.
The rate of Consumer Price Index inflation jumped to 6.2 per cent in February, from 5.5 per cent in January, the ONS said on Wednesday morning.
People will have an extra £3,000 that they will not pay national insurance on, under the “largest ever” tax cut announced by Mr Sunak.
He said the government’s cut to fuel duty would represent the “biggest cut to fuel duty rates ever”. Labour criticised Mr Sunak for “not understanding the scale of the challenge.”
The Office for Budget Responsibility revealed that the rise in inflation to a predicted 40-year high this year would trigger “the biggest fall in living standards in any single financial year since ONS records began in 1956-7”.
Analysis: ‘Very disappointing Spring Statement’ and ‘biggest fall in living standards since records began'
ICYMI: Basic rate of income tax to be cut to 19p by 2024, Rishi Sunak says
Rishi Sunak has said he will cut the basic rate of income tax from 20 to 19 pence in the pound before the end of the current Parliament, in 2024, and the next general election, Ashley Cowburn writes.
The chancellor’s announcement at the spring statement came as he again resisted calls to drop a hike to national insurance contributions by 1.25 percentage points from 1 April for the vast majority of workers.
He told MPs: “It would clearly be irresponsible to meet this ambition this year — and yet I refuse to let that ambition wither and drift. By 2024, the OBR currently expects inflation to be back under control, debt falling sustainably, and the economy growing. Our fiscal rules are met with a clear safety margin.”
Basic rate of income tax to be cut to 19p by 2024, Rishi Sunak says
‘What is the possible justification for cutting income tax rate while raising NI rate?’
What did Sunak announce in the Spring Statement?
If you’re just joining now, here are the key announcements from the chancellor’s Spring Statement:
• Fuel duty cut by 5p for one year
• National Insurance threshold increased by £3,000 to £12,750
• VAT scrapped on green home measures
• £500m for local authority hardship funds
• Employment allowance increased to £5,000
• Income tax rate to be cut to 19p by 2024
Labour accused the chancellor of delivering ‘increasingly incredible claims’ in Alice in Wonderland analogy
Shadow chancellor Rachel Reeves used an extensive Alice in Wonderland analogy to criticise Rishi Sunak for saying he is a chancellor of low tax, when he has been increasing taxes.
She told the Commons that the chancellor claims “I believe in lower taxes while at the same time as hiking Alice’s national insurance contributions. So Alice asks the Chancellor ‘when did lower taxes mean high taxes, has down really become the new up?”
Ms Reeves continued: “The Chancellor follows Humpty Dumpty’s advice and says ‘when I use a word, it means just what I choose it to mean - neither more nor less’.
“Alice knows that under the Conservatives taxes are at their highest level in decades as a result of the policies of this very same Chancellor. In fact, this Chancellor is the only G7 finance minister to raise taxes on working people during this crucial year of recovery. Curiouser and curiouser.”
Iceland boss says foodbank users ‘declining potatoes because they can’t afford energy to boil them’
Some foodbank users are declining potatoes and root vegetables because they cannot afford the energy to boil them, the managing director of the Iceland supermarket chain has claimed.
The comments from Richard Walker come amid increasing concern over the imminent hike to the energy price cap on 1 April by more than 50 per cent — from £1,277 to £1,971.
Our politics correspondent Ashley Cowburn reports:
Foodbank users ‘declining potatoes because they can’t afford energy to boil them’
Richard Walker says cost-of-living crisis ‘most important domestic issue we’re facing as a country’
Reeves: Chancellor made ‘wrong choices’ in statement
Chancellor Rishi Sunak made the “wrong choices” in his spring statement, Labour’s Rachel Reeves has said.
Responding to Sunak’s mini-budget in the Commons, the shadow chancellor said: “For all his tax rising on millions in the middle, where is the increased tax contribution for the very wealthiest in society?"
She added “the chancellor has made the wrong choices," adding the "people powering our economy" will be paying more in taxes.
Ms Reeves said: "Who has the chancellor been helping out? Those who have been swindling the taxpayer. The chancellor left open the vaults for widespread waste, crony contracts, and a frenzy of fraud."
She mentioned money spent on unused PPE and "£3.5 billion worth of contracts awarded to friends, donors and pub landlords".
Fuel duty cut will knock £3.30 of cost of filling family car
Rishi Sunak’s slashing of fuel duty will knock £3.30 off the cost of filling up a car.
The chancellor announced in his spring statement a cut of 5p per litre.
Accordion to the RAC, that takes £3.30 off the cost of filling a typical 55-litre family car.
Watch: Rishi Sunak announces basic rate income tax will be cut to 19p
Households face unprecedented fall in living standards - OBR
Rising inflation will drive the biggest fall in living standards since the 1950s, the Office of Budget Responsibility has warned.
The record fall will come “despite the £17.6bn of fiscal support for households announced in this Spring Statement”, they said.
The OBR are predicting a bigger fall in real household disposable income in 2022-23, than was felt after the 2008 financial crash.
They added: “Real incomes have been stagnant since the start of 2019 and this is now expected to continue over the next few years.”
Labour: We won’t stop ‘fighting’ for a windfall tax on oil and gas giants
Labour says it will keep “fighting” for a windfall tax on oil and gas companies to offset the cost of sky-rocketing energy bills.
Ed Miliband, the shadow climate secretary, criticised Rishi Sunak’s spring statement, saying it did not do enough to help families struggling with their bills.
“The rise in energy bills is a national emergency. Rishi Sunak thinks £200 of loans is the answer,” he said.
Miliband added: "He just doesn’t get it. Millions face fuel poverty and the Chancellor shrugs his shoulders.
"We won’t stop fighting for more support, including a windfall tax on oil and gas giants."
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