Chancellor Rishi Sunak has delivered his Spring Statement to Parliament today with cuts to fuel duty and a £3,000 increase to the National Insurance threshold.
The Chancellor had been under mounting pressure to deliver more support despite already announcing a £9bn package to cushion the blow of soaring energy bills.
Borrowing in the first 11 months of the current financial year was £26bn lower than expected, which did provide Sunak some scope for giveaways.
And indeed he was called on to do so by the Leader of the Scottish National Party in the House of Commons Ian Blackford during Prime Minister Questions.
This saw Sunak cut fuel duty by 5p per litre until March next year as of tonight following weeks of skyrocketing pump prices.
Sarah Coles, senior personal finance analyst. Hargreaves Lansdown, said the cuts were not big enough.
She said: “The fuel duty cut is better than a poke in the eye with a sharp stick, but it’s hardly going to be life-changing for hard-pressed motorists.
“Currently fuel duty costs around 58p a litre, and VAT almost 28p per litre. On a 55-litre tank, £47.30 is tax. The cut would mean this drops by just £2.75.
“With the cost of unleaded petrol now almost £1.67 a litre on average it’s still going to mean we need to make some horribly difficult decisions about how and where we travel in future.
“It’s also going to continue inflating the cost of transporting anything to stores, which will gradually feed into the price of everything on the shelves.
“Life is going to keep getting more expensive, and this cut isn’t going to change that.”
Homeowners also saw the 5% VAT relief reduced to 0% extended for the next five years.
Growth
Sunak said economic growth this year, and next year, will be slower than forecast at last autumn’s Budget, as headwinds hit had the economy.
But growth is seen to be picking up in 2024:
2022: 3.8%, down from 6.0% growth forecast in last October’s economic and fiscal outlook
2023: 1.8%, down from 2.1% forecast last October
2024: 2.1%, up from 1.3% last October
2025: 1.8%, up from 1.6% last October
2026: 1.7%, unchanged from last October’s forecast
Sunak added that growth last year was stronger than the 6.5% forecast, with GDP rising 7.5%.
National Insurance and tax
Sunak also announced that 70% of workers will get a tax cut with the NI threshold increased by £3,000 – the threshold was due to go up by £300.
Sunak added that he will cut the basic rate of income tax by 1p in the pound in 2024 – something that has only been done twice in 20 years.
Whilst he said it would be irresponsible to meet the government’s ambition of cutting tax this year it would be done by the end of this Parliament.
