Spring Statement: Rishi Sunak and the cost of living crisis

The chancellor Rishi Sunak seeks to tackle the cost of living crisis with his latest Spring Statement.

The costs of energy, food and fuel have increased recently by a worrying amount. This led to calls for the chancellor to scrap plans to increase National Insurance in April.

Rishi Sunak still intends to increase National Insurance as planned, as this was needed for the NHS. Instead, he says he would raise the threshold at which workers will be required to pay NI from £9,600 to £12,570.

Spring Statement: Key Points

• Fuel duty cut by 5p a litre

The RAC said this would decrease £3.30 off the cost of filling a typical 55 litre family car

• Income tax cut in 2024

He pledged to reduce the basic rate of income tax by 1p in the pound before end of the Parliament in 2024.

• National Insurance threshold raised to £12,570

From July, the NI threshold will be increased to the same level as income tax starts being paid. Anyone earning less than around £35,000 per year will pay less NI - this applied to around 70% of workers.

• Help with energy bills

Millions are facing a £693 rise in the typical cost of gas and electric, to around £2,000. There's also a suggestion of a further £541 a year rise in October, before falling back down. A £150 council tax rebate for 80% of households, and a £200 discount on bills in October which would need to be repaid.

• Benefits and state pensions rising

They are set to see a 3.1% rise in April. This is below the rising cost of living, causing charities to call on Mr Sunak to do more.

• VAT reduced on energy saving measures

VAT on solar panels, heat pumps and roof insulation etc. reduced from 5% to 0 for 5 years

• The employment allowance will increase from £4,000 to £5,000

This will allow small businesses to reduce their National Insurance payments

• Green technology exemption from business rates from April

This will save firms £35m in 2022-23

• Councils to receive another £500m for the Household Support Fund from April

This will help vulnerable households with rising costs

 He said that the UK's economic future was uncertain and the impact of the war in Ukraine still unclear. The Office for Budget Responsibility said that living standards are set to take the biggest hit since records began in the 1950s. It also said inflation was set to peak at 8.7% at the end of this year.

Labour's shadow chancellor stated that Mr Sunak failed to appreciate the scale of the crisis facing workers and pensioners.

 

Article by BBC News