Here are the most important announcements from Chancellor Rishi Sunak’s spring statement ‘mini-budget’ speech in the Commons:
• Targeted action on the cost of living with particular help for those who are worse off.
• Fuel duty will be cut by 5p per litre, covering both petrol and diesel, until March next year.
• Change takes effect from 6pm on Wednesday evening.
• For the next five years, there will be no VAT applied to energy-saving materials including solar panels, heat pumps and insulation for five years as energy bills surge. Working with EU to ensure this can apply to Northern Ireland because of current “deficiencies” in the Northern Ireland Protocol.
• There will be extra £500m of funding through a doubling of the Household Support Fund to £1bn. “Local Authorities are best placed to help those in need in their local areas. So they will receive this funding from April,” the chancellor says
• The threshold for paying National Insurance will increase by £3,000 from July. “People will be able to earn £12,570 a year without paying a single penny of income tax or National Insurance”. Chancellor says it is worth £6bn to 30 million people.
• Office for Budget Responsibility: “There is unusually high uncertainty around the outlook” as a result of Russia’s invasion of Ukraine and impact of sanctions.
• OBR forecasts the economy will grow by 3.8% in 2022 – compared to 6% predicted at time of the Budget last October.
• OBR sees inflation (currently 6.2%) averaging 7.4% this year. It had foreseen a figure of 4% five months ago.
• Sunak says the OBR has not accounted for the full impacts of the war in Ukraine… “and we should be prepared for the economy and public finances to worsen – potentially significantly. And the cost of borrowing is continuing to rise.
“In the next financial year, we’re forecast to spend £83bn on debt interest – the highest on record. And almost four times the amount we spent last year.” Highlights need for caution of spending ahead.
• A new “tax plan” to reduce and reform taxes over the term of this parliament will “help families with the cost of living”, “create the conditions for higher growth”, and “share the proceeds of growth fairly”.
• The health and care levy through National Insurance hike from April will stay.
• The basic rate of income tax will be cut from 20 to 19 pence in the pound before the end of this parliament (2024). Says it is fully costed and fully paid for in the plans announced today.
• Chancellor ends his statement saying: “My Tax Plan delivers the biggest net cut to personal taxes in over a quarter of a century.”
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