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 07:20 · Holly Bancroft]

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

The squeeze on household budget has worsened ahead of the Rishi Sunak’s Spring Statement, which is expected to only offer minor tweaks to ease the cost-of-living crisis.

Inflation reached 6.2 per cent in the 12 months to February, according to official figures from the Office for National Statistics, a fresh 30 year high, Business editor Anna Isaac writes.

Follow this breaking news story here:

[23 March 2022 07:36 · Holly Bancroft]

Rising inflation ‘significant concern’, says chief exec of British Retail Consortium

Rising inflation remains a “significant concern for the economy, squeezing household incomes and increasing cost pressures on retailers,” the chief executive of the British Retail Consortium has said.

Helen Dickinson pointed to rising transport costs driving price rises, saying: “For the second month in a row, transport saw the highest rate of inflation this month, while food inflation rose slower than the headline rate.”

Ms Dickinson added: “Many supermarkets have expanded their value ranges to support individuals and households on lower incomes. Nonetheless, with retailers struggling to absorb these higher costs, shop prices look set to rise in the coming months.

“Many households will also face far higher energy bills and NI contributions from next Friday. As a result, all eyes will be on today’s Spring Statement, to see if the Chancellor will announce any relief for those families most affected by the cost of living squeeze.”

[23 March 2022 07:43 · Holly Bancroft]

Labour: Inflation figures show why Sunak must axe National Insurance hike

Labour has said that the new inflation figures demonstrate why the chancellor must axe the National Insurance hike and bring in a windfall tax on oil and gas companies.

Shadow chancellor, Rachel Reeves, said: “With inflation spiralling even further today, the choice before the chancellor is clear … he can either choose an unfair tax rise on working people and business at the worst possible time.

“Or he can cancel his tax rise, and ease the cost of living hitting families by cutting energy bills by up to £600 through bringing in a one-off windfall tax on oil and gas producer profits.”

(PA)

[23 March 2022 07:54 · Holly Bancroft]

Chicken will cost more because of Ukraine crisis, says minister warning of 8% food inflation

The price of chicken will soon spike at the supermarket because of the Russian invasion of Ukraine, environment secretary George Eustice has warned.

The minister also warned that Britons face food price rises of up to 8 per cent this summer, as chancellor Rishi Sunak comes under pressure to help families struggling with the mounting cost of living crisis, Adam Forrest writes.

Mr Eustice also warned that the impact of global price rises in wheat - with Ukraine a major exporter around the world - would impact on living costs in the UK.

Read the full story here:

[23 March 2022 08:04 · Adam Forrest]

Sunak will need to offer more energy bill help in October, says Tory mayor

Andy Street – Tory mayor of the West Midlands – says that he hopes chancellor Rishi Sunak will reconsider increasing the threshold for income tax and National Insurance.

“I hope he will actually reconsider that because one of the ways we can put money directly into the hands of those who need it is move those thresholds forward,” he told BBC Radio 4’s Today programme.

He also called for a signal of more help with energy bills in October. “I would hope that he will actually say for October, when the next price cap comes, there will be a further move and I hope it will be targeted, particularly through the Warm Homes Discount.”

[23 March 2022 08:15 · Holly Bancroft]

Charts show how UK inflation has accelerated

Furniture and flooring contributed to the rise in inflation as prices started to recover following new year sales, the chief economist at the ONS said (ONS)

Energy prices have spiked. Rishi Sunak is under mounting pressure to use today’s statement to cut petrol duty to help drivers (ONS)

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[23 March 2022 08:23 · Holly Bancroft]

Chancellor faces a ‘very difficult and challenging backdrop’ for today’s Spring Statement, Tory MP says

Mark Harper, Tory MP for the Forest of Dean, has said that Rishi Sunak faces a “very difficult and challenging backdrop” for his Spring Statement after new ONS figures revealed that inflation has risen to a 30-year high.

Speaking on Sky news, Mr Harper said: “We’ve got the economy firing on all cylinders, and thank goodness we did, because it was only a few hours between getting all of those restrictions lifted and then we saw the appalling Russian invasion of Ukraine.

“We’ve gone from one crisis straight into another, which provides obviously a very difficult and challenging backdrop for the Chancellor as he sets out his spring statement later today.”

[23 March 2022 08:38 · Holly Bancroft]

UK and US agree deal to partially end tariffs on British steel and aluminium

The UK government has struck a deal with the US to partially end the tariffs on British steel and aluminium imposed by former president Donald Trump, Andy Gibbons writes.

The Department for International Trade said the US had announced “expansive removal” of section 232 tariffs, which have affected UK exporters, with the changes to take effect on June 1 2022.

In response the UK will suspend rebalancing measures on US products including whiskey, blue jeans and motorcycles, the department said.

Read the full story here:

[23 March 2022 08:48 · Holly Bancroft]

Spring Statement: What can we expect from Rishi Sunak’s mini-Budget?

What announcements might Rishi Sunak make in his Spring Statement later today?

One measure Mr Sunak could unveil would be to cut fuel duty. This would arguably be one of the easiest ways to win over votes and support households with the cost of living crisis.

The chancellor is reportedly gearing up to announce a temporary cut to the duty of up to 5p per litre.

Another option Mr Sunak has would be to hold off the planned national insurance rise. This, however, would represent a major U-turn for the government. They have previously insisted that this will not happen, despite the public protests of several Tory MPs.

There is no talk of the government reducing VAT across the board, but Mr Sunak could give a helping hand to the hospitality sector.

The chancellor could also increase Universal Credit payments to put more money in the pockets of low income households.

Labour are calling on Rishi Sunak to impose a windfall tax on North Sea oil and gas companies to help with rising energy bills. Mr Sunak has already unveiled his plans to help with energy costs, however, giving a £200 loan to every family from October.

Read the full story here:

[23 March 2022 08:57 · Holly Bancroft]

Chancellor needs to ‘shore up confidence in the economy’, says director general of the CBI

Tony Danker, director general of the Confederation of British Industry, has said that Rishi Sunak needs to “shore up confidence in the economy” with his Spring Statement today.

Mr Danker warned that the economy needs to keep growing, “because if we don’t, these problems just get worse”.

He added that in the current climate “there’s a risk that confidence wavers, businesses stop investing, consumers stay at home - so inflation is hard to tackle”.

“If we don’t have tailwinds in our economy, then the headwinds overwhelm us and so the Chancellor has to double down on growth, he has to help hardest-hit households with the cost of living, he has to help lots of businesses who are dealing already with the rising energy costs - there isn’t a price cap - and he needs to encourage businesses to be confident and invest and grow.

“That’s the only way we really get through the year head.”