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 21:10 · Liam James]

‘Extremely disappointing’ and ‘light on detail’: business leaders criticise Sunak’s spring statement

British business leaders have branded Rishi Sunak’s spring statement “extremely disappointing” and “light on details”, as the chancellor failed to allay fears about soaring inflation and falling incomes.

The economy is expected to grow significantly slower this year than had been predicted in October, and businesses grappling with huge increases in costs had hoped for help from the chancellor.

Analysts warned that failure to put more money in the pockets of households facing their biggest fall in living standards since at least the 1950s would reduce spending and hold back the economy.

[23 March 2022 21:29 · Liam James]

Rishi Sunak warned more people will be driven to foodbanks

Britain’s largest network of food banks has warned Rishi Sunak’s refusal to bring benefits in line with inflation will drive more people to emergency food parcels and turn the “cost-of-living crisis into an emergency”.

Benefits are set to increase by 3.1 per cent, but with inflation expected to average 7.4 per cent over the next year, campaigners had urged the chancellor to intervene and ease the cost-of-living crisis.

In a statement Emma Revie, the chief executive of the Trussell Trust food bank group, said Mr Sunak had “failed to create any security for people on the lowest incomes by failing to bring benefit payments in line with the true cost of living in the spring statement.”

She said the decision had created a real-terms cut to social security payments, which, she described as “dangerously insufficient”.

After a leading supermarket boss claimed some food bank users were declining potatoes and root vegetable because they cannot afford the energy to boil them, Ms Revie said: “People are already making impossible decisions between heating and eating, and we know people are skipping meals, unable to afford to run cookers and fridges and taking on debt to buy the essentials.”

[23 March 2022 22:00 · Liam James]

Budget fails working people, say unions

Union leaders were quick to criticise the chancellor for “tinkering around the edges” of the cost-of-living crisis.

Working families will be “overwhelmed” by rocketing prices, said Unite.

Sharon Graham, general secretary of the union, said: “With inflation at its highest for 30 years, Rishi Sunak’s spring statement just tinkers around the edges of this shocking cost-of-living crisis.

“Workers will still be facing sleepless nights worrying about how to make ends meet, overwhelmed by rocketing prices.

“His spring statement does nothing to tackle the corporate elite, the billionaires who stash their loot but sack UK workers by Zoom. Once again, ordinary working people bear the broadest burden while the super-rich get off scot-free.”

TUC general secretary Frances O’Grady said: “In the midst of the biggest wages and bills crisis in living memory, Rishi Sunak’s Spring Statement has failed families who need help now.

“We did not get the urgent help with soaring bills that families need, and the rise in the national insurance threshold will mostly benefit better off households.

“The small print shows that pay packets are now expected to fall in value by £11 a week this year. After 12 years of Tory government, Britain needs a pay rise, but this chancellor has no plan to get wages rising and give working people long-term financial security.”

[23 March 2022 22:15 · Liam James]

The Independent’s Daily Cartoon

Here’s cartoonist Dave Brown’s take on Rishi Sunak’s spring statement:

(Dave Brown)

[23 March 2022 22:25 · Liam James]

Nurses ‘short changed’ by Sunak budget says union as household incomes fall

Nurses have been “short changed” by Rishi Sunak’s Spring budget and will be subsidising the NHS every time they buy petrol, unions said (Rebecca Thomas writes).

The Royal College of Nursing said mitigating measures announced by the chancellor would not be enough to prevent frontline NHS workers “having to choose between filling up their cars and feeding their children.”

It comes amid concerns that community nurses have been left out of pocket as they are not properly reimbursed for fuel used when travelling by car to patients.

The Health Foundation said the government had not gone far enough to “protect the most vulnerable families from this latest economic shock.”

[23 March 2022 22:58 · Liam James]

Tomorrow’s papers: ‘Thanks for nothing'

Round-up of tomorrow’s newspaper front pages, all leading on Rishi Sunak’s spring statement.

The Times has gone with “Biggest fall in living standards since 1950s”, an assessment made by the Office for Budget Responisibility due to soaring inflation. The Telegraph, i and The Independent led on the same line.

The Daily Mirror says “Thanks for nothing”, taking the corner of pensioners and families facing energy price hikes, whom it says Mr Sunak has done little to help. The Guardian similarly says the chancellor has not helped the poorest people.

Metro draws on reports that families are refusing fresh food at food banks as they cannot afford to heat it. The budget offers help to struggling families, it says. Elsewhere, the Financial Times leads on the plan for a 1p pre-election tax cut. And the Daily Mail calls for further tax cuts to alleviate pressure on living standards.

[23 March 2022 23:26 · Liam James]

Sunak says ‘patriotic millionaires’ can pay more tax if they want

On an LBC phone-in show Rishi Sunak was asked about the possibility of a wealth tax.

A woman who said she was from a group called Patriotic Millionaires and cited research from the Institute for Policy Studies, Oxfam and the millionaires group that found a wealth tax could raise nearly £45bn a year.

The chancellor responded by directing her to a new website he said the Treasury had set up to allow people to pay more tax if they wish.

[23 March 2022 23:57 · Liam James]

Britain heading for worst fall in living standards since 1950s, despite Sunak’s tax giveaways #ICYMI

Britain is heading for its biggest fall in living standards since the 1950s this year, despite a mini-Budget in which chancellor Rishi Sunak slashed £330 off national insurance for the average worker and took 5p off the tax on a litre of petrol.

The chancellor also promised a 1p cut in the basic rate of income tax in 2024, in what was immediately denounced as a pre-election bribe.

But he did nothing for the poorest, who see welfare benefits far outstripped by inflation which is expected to peak close to 9 per cent this year. And he rejected opposition calls for a windfall tax on the bumper profits of North Sea oil and gas companies to pay for a cut in VAT on energy prices.

An offer of zero-VAT rating for green home improvements, including the installation of solar panels and heat pumps, fell far short of the immediate help sought by households facing an average £600 leap in domestic gas and electricity bills in eight days’ time and a further hike of similar magnitude in the autumn.