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 10:55 · Holly Bancroft]

Keir Starmer: Sunak should ‘cancel tax rise and cut energy bills’

Labour leader Keir Starmer says chancellor Rishi Sunak faces “a choice” in today’s Spring Statement. “Continued with his unfair tax rise at the worse possible time.

“Or, cancel his tax rise and cut energy bills with a windfall tax on oil and gas profits.”

Sir Keir Starmer added: “Labour would act now to ease the cost of living. We are on the side of the working people.”

[23 March 2022 11:08 · Holly Bancroft]

Consumer Price Index: How does 6.2% inflation increase break down?

Britain’s cost of living crisis intensified last month, with a rise of 6.2 per cent in the consumer price index.

Here is how that broke down by consumer category. The following are the percentage price index rises in February:

• Food and non-alcoholic beverages 5.1%

• Alcoholic beverages and tobacco 3.5%

• Clothing and footwear 8.9%

• Housing, water, electricity, gas and other fuels 7.2%

• Furniture, household equipment and maintenance 9.1%

• Health 2.6%

• Transport 11.5%

• Communication 1.1%

• Recreation and culture 4.7%

• Education 4.5%

• Restaurants and hotels 5.0%

• Miscellaneous goods and services 1.9%

[23 March 2022 11:15 · Holly Bancroft]

Chancellor Rishi Sunak pictured leaving Number 11 ahead of the Spring Statement

(EPA)

(Getty Images)

(Getty Images)

(EPA)

[23 March 2022 11:27 · Holly Bancroft]

Analysis: Rishi Sunak has a cost-of-living mountain to climb

“Energy bills can seem like a domestic problem: a bill falling on the household doormat.

In fact, energy costs flood every artery of an economy, so when they rise sharply, it is a shock that goes right to the heart.

Higher oil and natural gas prices are not the only pressure that is driving prices to grow at the fastest pace in thirty years, but they form a significant economic handbrake, the full force of which is only just starting to be felt.”

Read more from Anna Isaac here.

[23 March 2022 11:34 · Holly Bancroft]

Sunak could unveil a separate economic plan alongside Spring Statement - Laura Kuenssberg

Rishi Sunak could unveil a “separate economic plan or strategy” alongside his Spring Statement, BBC’s Laura Kuenssberg has said.

She tweeted: “Look carefully, Sunak is holding 2 documents - whispers he’ll unveil a separate economic plan or strategy alongside the statement...”

(Copyright 2022 The Associated Press. All rights reserved)

[23 March 2022 11:40 · Holly Bancroft]

Analysis: Chancellor under pressure to intervene as Britons face worsening cost of living squeeze

“Wednesday is a big day for Rishi Sunak, the chancellor, who is set to deliver his spring statement to the Commons. With Britons facing the biggest drop in their living standards since the 1970s amid rising fuel, energy and food costs, the chancellor has in the past few weeks come under intense pressure to intervene to help the country’s poorest families with their bills.

“But if the noises coming from the Treasury in recent days are anything to go by, there will be no Covid pandemic-style financial packages and no blank cheques to help with rising prices exacerbated by Vladimir Putin’s invasion of Ukraine.

“Sunak has himself warned that government “can’t solve every problem” and any measures announced today – such as a 5p cut to fuel duty, raising the national insurance contributions threshold or a slight cash injection to benefits – will only tinker around the edges of a cost of living squeeze in which families bills are set to rise by hundreds of pounds.”

Read more from Matt Mathers here:

[23 March 2022 11:50 · Holly Bancroft]

Martin Lewis: ‘UK is on the brink of a personal finance precipice'

Founder of MoneySavingExpert, Martin Lewis, has issued a stark warning to chancellor Rishi Sunak ahead of the Spring Statement.

Writing on Twitter, Mr Lewis said: “Dear Rishi Sunak, the UK is on the brink of a personal finance precipice. Today you, only you, have the tools to pull it back. To save lives. To improve living standards. To reduce millions’ anxiety.

“This is what builds a legacy and makes a great Chancellor. Pls seize the chance.”

[23 March 2022 11:55 · Holly Bancroft]

Boris Johnson heads to prime ministers questions

(REUTERS)

(REUTERS)

[23 March 2022 11:59 · Holly Bancroft]

Angela Rayner hits out at Rishi Sunak’s promise that ‘work begins tomorrow'

Deputy Labour leader Angela Rayner has hit out at Rishi Sunak for promising to bring economic security to people “tomorrow”.

In a social media post from the chancellor last night, Mr Sunak promised to deliver “greater economic security for our people, accelerating growth and productivity.” He added: “That is not the work of any one statement. But that work begins tomorrow.”

Ms Rayner responded: “His Party has governed this country for twelve years. If the work of delivering economic security for Britain only starts today, I can now understand some of the decisions made for the last decade to hammer working people”.

[23 March 2022 12:03 · Holly Bancroft]

Breaking: Rishi Sunak told cabinet that the economic outlook was ‘challenging’ - reports

Breaking: Chancellor Rishi Sunak told Cabinet that the economic outlook was “challenging” given the “global shocks we are facing” from the Ukraine war and rising inflation, Downing Street has said.