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Chancellor’s spring statement – live

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Here are all the details as they come in of Rishi Sunak’s response to the cost of living crisis

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Government ‘serious about cushioning York families from rising inflation’ says city MP

Julian Sturdy in the Commons. Photograph: Screengrab

Julian Sturdy, the Conservative MP for York Outer, welcomed the measures announced by the Chancellor today.

He said the 5p fuel cut “should save car drivers £100 and van drivers £200 across the next year, and will be particularly valuable for residents of outlying areas and small businesses across York.

“Our Covid-battered small businesses, the lifeblood of our city and source of much local employment, will also receive a £1000 tax cut through increasing the National Insurance Employment Allowance to £5,000, and I am glad lobbying from myself and others on the need to assist them has been listened to.”

Mr Sturdy also welcomed the rise of the threshold at which people pay National Insurance from £9,500 to £12,570.

He went on:

I am encouraged that this will more than offset the previously announced NI rise to fund the NHS and social care reform for 70% of employees, but want to see how this works out in practice.

Rishi Sunak’s announcement he wants to be able to take a penny off income tax in 2024 sets a good direction of travel, but the impact of world events could threaten this.

Having previously lobbied Ministers on ensuring the right support is available for the most vulnerable households through the Universal Credit system, I am glad the NI and fuel measures are being reinforced with targeted assistance for the poorest homes, with the Household Support Fund doubled to £1 billion to help up to 4 million families.

Overall, these steps give me substantial reassurance the government are serious about cushioning York families from rising inflation. However, the developing situation, not least the economic shock of a major European war, means Ministers need to stay ready to go further and faster to protect households financially, and I will be tireless in pressing them on this.

Disposable income to fall by the largest amount since records began

Chancellor Rishi Sunak delivering his statement. Photograph: Screengrab

Households were facing the biggest hit to their living standards since the 1950s as new support measures were announced on Wednesday.

The Office for Budget Responsibility (OBR) outlined a short-term outlook where “real household disposable incomes per person fall by 2.2% in 2022-23, the largest fall in a single financial year since ONS records began in 1956-57.”

The OBR said: “Petrol prices are already up a fifth since our October forecast and household energy bills are set to jump by 54% in April.

“If wholesale energy prices remain as high as markets expect, energy bills are set to rise around another 40% in October, pushing inflation to a 40-year high of 8.7% in the fourth quarter of 2022.”

The OBR added that: “Taking account of both energy and non-energy pressures on household incomes, the policy measures announced since October offset a third of the overall fall in living standards that would otherwise have occurred in the coming 12 months.”

According to the Institute for Fiscal Studies (IFS) think-tank, bringing together the expected changes in earnings, the reforms to taxes, and the energy measures announced in February, a middle earner on £27,500 per year can expect to be about £360 worse off this year than they were last.

‘All my poorest constituents want is food, warmth and shelter’ York MP tells Chancellor

Rachael Maskell in the House of Commons. Photograph: Screengrab

The Labour MP for York Central has said that poorer residents won’t benefit from the Chancellor’s package of measures introduced today.

Rachael Maskell told Mr Sunak:

All my poorest constituents want is food, warmth and shelter, against soaring house prices, all they got was 6p a day from the housing support fund on average.

She later tweeted:

York Lib Dems say Chancellor’s spring statement is a failed opportunity

Cllr Andrew Waller

According to the Lib Dems in York, who run the council in coalition with the Green Party, today’s spring statement didn’t do enough to help struggling residents.

Cllr Andrew Waller, the executive member for the economy, said:

This current cost of living crisis is turning into an emergency. The spring statement could have started to address the underlying pressures on family budgets, and small businesses, but the Chancellor has failed to grasp the opportunity. He has failed to move beyond tinkering around the edges at a time when so many families and businesses need real action.

“We welcome the fuel duty cut, employment allowance increase, household support fund extension and the increase of the national insurance tax thresholds. However, this will not go anywhere near to the support that is needed urgently. The stark figures buried in the small print of today’s Office for Budget Responsibility (OBR) report accompanying the Spring Statement show that in reality Rishi Sunak’s tax hikes will lead to a £44 billion bombshell by 2024, equivalent to almost £1,600 per UK household.
 
What was missing in today’s statement was real action on supporting struggling households, such as the reversal of the planned tax hikes, introduction of a windfall tax, an increase in universal credit and comprehensive targeted support schemes.

Shadow Chancellor criticises Mr Sunak’s ‘stubborn desire to pursue a national insurance tax rise’

Shadow Chancellor Rachel Reeves responds to the spring statement. Photograph: Screengrab

Shadow chancellor Rachel Reeves said the Government’s plan did nothing for people on the edge of fuel poverty or for pensioners who are facing a “real-terms cut” to their income.

She said increasing energy prices would mean Labour’s plan for a windfall tax on energy companies’ profits would raise twice as much as when it was proposed in January, which could be used to cut VAT and provide a targeted warms home discount.

“When I set out Labour’s plans for a  windfall tax in January we estimated that it would have raised £1.2 billion, now because of the continued rise in global oil and gas prices it would today raise over £3 billion.”

She added:

The actual reality is that this Chancellor’s failure to back a windfall tax and his stubborn desire to pursue a national insurance tax rise are the wrong choices.

In eight days, people’s energy bills will be rising by 54%, two weeks today the Chancellor’s tax hike will start hitting working people and their employers,

His national insurance tax rise was a bad idea last September and he’s admitted it’s an even worse one today.

The Chancellor is making an historic mistake. Today was the day to scrap the tax rise on jobs, today was the day to bring forward a windfall tax, today was the day for the Chancellor to set out a plan to support British businesses.

But, on the basis of the statement today and the misguided choices of this Chancellor, families and businesses will from now on endure significant hardship as a result.

At a glance: Key points from the 2022 spring statement

Rishi Sunak in the Commons. Photograph: Screengrab

Here are the main points from Chancellor Rishi Sunak’s spring statement:

  • Mr Sunak said by the end of the current Parliament in 2024, the Government would cut the basic rate of income tax from 20p in the pound to 19p which he said was “fully costed and fully paid for in the plans announced today”.
  • The Chancellor said he would “stand by” households, and announced fuel duty would be cut by 5p per litre for a year up until March 2023.
  • Mr Sunak said that “thanks to Brexit” he was able to remove VAT on materials such as solar panels, heat pumps or insulation to help bring down energy costs, as well as on wind and water turbines. He told the Commons: “We will abolish all the red tape imposed on us by the EU.”
  • He also said he is doubling the Household Support Fund to £1 billion “to do more to help our most vulnerable households with rising costs” with “targeted support”.
  • The Chancellor said he would publish a “tax plan” as he announced the national insurance contributions (Nics) threshold would rise by £3,000 “to fully equalise the Nics and income tax thresholds not incrementally over many years but in one go this year”.
  • Hoping to prompt a new “culture of enterprise”, Mr Sunak said there would be tax cuts “on business investment and innovation with final decisions to be announced in the autumn Budget” and a reform of research and development tax credits.
  • The employment allowance for small businesses will rise to £5,000, the Chancellor said.
  • Mr Sunak focused on “security”, linking having a strong economy to standing up Russian President Vladimir Putin over his invasion of Ukraine. He said what underpins the security enjoyed in the UK was “the strength of our economy” which he said the Government has a “moral responsibility” to use to support Ukraine.
  • He warned, however that sanctions on Russia “of unprecedented scale and scope” would have an impact on the economy, saying they “are not cost-free for us at home” and were “a risk to our recovery”.
  • He told the Commons that The Office for Budget Responsibility has downgraded the growth forecast for this year to 3.8%.
  • But Mr Sunak said downgraded growth forecasts had “not affected our strong jobs performance” as he said unemployment was back to levels seen before the pandemic.
  • The Government is “meeting all our fiscal rules”, Mr Sunak said, but he added the nation must prepare for “the economy and public finances to worsen, potentially significantly” because of the impacts of Russia’s invasion of Ukraine.
  • The cost of borrowing is set to continue to rise. The Chancellor said £83 billion will be spent on debt interest, “the highest on record and almost four times the amount we spent last year”.
  • Mr Sunak said underlying debt is expected to fall steadily from 83.5% of GDP in 2022/23 to 79.8% in 2026/27. He added borrowing as a percentage of GDP is 5.4% this year, 3.9% next year, then 1.9%, 1.3%, 1.2% and 1.1% in the following years.