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

Rishi Sunak says UK should prepare for economy to worsen 'potentially significantly'

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”.

Key Points

• Households face 'unprecedented fall in living standards’
• Energy bills may be £1,500 higher by end of year – OBR
• Bottom half of earners only get 1/3 of new support – RF
• Basic rate of income tax to be cut to 19p by 2024, Rishi Sunak says
• Inflation rises to 6.2% in February from 5.5% in January, ONS says
• Charts show how UK inflation has accelerated

[23 March 2022 09:13 · Holly Bancroft]

‘People are choosing between eating and heating’, former Labour Shadow Chancellor John McDonnell says

Former Shadow chancellor John McDonnell has said that people are “choosing between heating and eating”. He called on the government to increase borrowing to “protect” people in the short-term.

Speaking on Sky news, he said: “We’ve got to make sure that we are responsible in everything that we do. The responsible way forward is to recognise that in times like this there is real hardship out there.

“People are suffering. It is true that people are choosing between heating and eating, we are talking about people who have had their wages virtually frozen for nearly twelve years. It’s tough out there.

“Yes we’ve got to protect people in the short-term and that does mean an increase in borrowing in the short-term. The most important thing is you borrow to invest.”

He said that if the government invested further in green energy and insulating homes then they would reap the rewards.

[23 March 2022 09:26 · Holly Bancroft]

High inflation ‘a complete disaster for living standards'

The sharp jump in inflation is a “complete disaster for living standards” and will mean “pay packets continuing to shrink”, a senior economist at the Resolution Foundation has said.

Jack Leslie warned of more prices rises to come, saying: “Another sharp rise inflation last month offers a foretaste of the huge income squeeze coming this year, with inflation likely to hit at least 8 per cent this spring - which could be the highest it’s been in 40 years - along with a second spike this autumn.”

He added that the prolonged period of high price rises will be a “complete disaster for living standards”, saying that “millions of people have simply never experienced [this scale of inflation] before”.

“It will mean pay packets continuing to shrink, along with vital income support such as Universal Credit and the State Pension.”

[23 March 2022 09:35 · Holly Bancroft]

Food bank users saying no to potatoes and root veg because they can’t afford to boil them, boss of Iceland says

The managing director of Iceland supermarket has said that food bank users are saying no to potatoes and root vegetables because they can’t afford the energy required to boil them.

Richard Walker told Radio 4’s Today programme that the cost-of-living crisis was “the single most important domestic issue that we’re facing as a country and it is incredible concerning.”

“You now, we’re hearing about some food bank users declining potatoes and root veg because they can’t afford the energy to boil them,” Mr Walker said.

He added that business was “not an endless sponge that can soak it all up”.

Mr Walkers suggested that the energy price caps for consumers could be extended to businesses.

(Getty Images)

[23 March 2022 09:46 · Holly Bancroft]

5p cut to fuel duty a ‘drop in the ocean’, says RAC

Simon Williams, spokesperson for the RAC, has said that a planned 5p cut to fuel duty would be a “drop in the ocean” and would only take prices back to what they were last week.

Speaking on Sky news Mr Williams said: “The average price of petrol is now at 167p a litre and diesel at 179p a litre - £91 to fill up an average petrol car and £97 for diesel.

“The cost-of-living crisis is being driven very much by the increase of the price at the pumps. We are calling on the chancellor today to take significant action. He’s taking about a 5p cut in duty, which I think will be a drop in the ocean. That will take us back to a price we paid this time last week.

“What use is that really, it’s something but I think he needs to go further. In fact, he might be better off cutting VAT.”

[23 March 2022 09:56 · Holly Bancroft]

ICYMI: Inflation hits 30-year high after rising 6.2% in a year

The squeeze on British households’ budgets has gathered pace ahead of Rishi Sunak’s Spring Statement, which is expected to only offer minor tweaks to ease the cost-of-living crisis, Business editor Anna Isaac writes.

Inflation reached 6.2 per cent in the 12 months to February, according to official figures from the Office for National Statistics (ONS), a fresh 30 year high.

The measure of price growth in the economy, the Consumer Prices Index (CPI) is set top 8 per cent next month when the new energy price cap shoots up by more than 50 per cent, the Bank of England said last week. It could stay at this level for for close to three months.

Read the full story here:

[23 March 2022 10:03 · Holly Bancroft]

Russia sanctions will cost the UK and poorest will be hit hardest, MPs warn

Sanctions against Russia could have a “catastrophic and long lasting” impact on the country but they will come at a cost to the UK, a group of MPs has warned.

A report by the Treasury Select Committee concluded that the poorest households will be hit hardest. It revealed that the UK is not protected against the economic impact of unprecedented sanctions on Russian oil and gas and that soaring prices will intensify the cost-of-living crisis for the whole country, writes Holly Williams.

[23 March 2022 10:19 · Holly Bancroft]

‘Security’ a buzz word in Rishi Sunak’s Spring Statement

The Treasury last night released a short extract from the speech Rishi Sunak will give to deliver his Spring Statement in the Commons today.

“Security” looks to be a big theme in Mr Sunak’s speech, with the chancellor promising to protect the “security for working families as we help with the cost of living.”

He will say: “We will confront this challenge to our values not just in the arms and resources we send to Ukraine but in strengthening our economy here at home. So when I talk about security, yes – I mean responding to the war in Ukraine.

“But I also mean the security of a faster growing economy. The security of more resilient public finances.

“And security for working families as we help with the cost of living.”

(EPA)

[23 March 2022 10:30 · Holly Bancroft]

What time is Rishi Sunak’s Spring Statement?

The chancellor is expected to address the House of Commons from 12:30pm, immediately after prime minister’s questions.

He will offer an update on the progress made since his Autumn budget speech last October. Given the rising cost of living crisis, Mr Sunak is expected to deliver less of an update and more a ‘mini-Budget’ to help working families with their bills.

Read more about what to expect here:

[23 March 2022 10:40 · Holly Bancroft]

Martin Lewis warns against cancelling energy bill direct debits ahead of price surge

Money saving expert Martin Lewis has issued a warning to people thinking of cancelling their energy direct debit bills before April’s price hike, Maryam Zakir-Hussain writes.

The founder of MoneySavingExpert.com urged people to be cautious on Twitter, saying: “Warning! Many talking about cancelling energy Direct Debits to ‘keep in control’ and just pay when billed. Yet be aware that’s usually charged at a higher rate.

“Price cap (for someone with typical use) paying by Monthly DD £1,971 Prepay meter £2,017 Quarterly bills £2,100.”

Read more here:

[23 March 2022 10:46 · Holly Bancroft]

ICYMI: Foodbank users ‘declining potatoes because they can’t afford energy to boil them’, Iceland boss says

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, writes Ashley Cowburn.

Read the full story here: