Spring statement: highlights of Rishi Sunak’s ‘mini budget’

Chancellor Rishi Sunak has today unveiled his highly anticipated spring statement against a backdrop of rising fuel, energy and food costs. 

Shortly before Sunak’s statement – which has been billed by the national press as a “mini budget” – the challenge facing the chancellor was “laid bare” as the Office for National Statistics confirmed that inflation has reached a 30-year high, rising 6.2% in the 12 months to February, said the BBC.

It seems that for the “umpteenth time” in Sunak’s two years at the Treasury, what should be a rather “modest” fiscal event has been “transformed by events” – such as the cost-of-living crisis exacerbated by the war in Ukraine – into something “much more ambitious”, said Andrew Sparrow in The Guardian, ahead of the statement.

In the end, some eagerly anticipated measures designed to help those dealing with the rising cost of living were introduced by the chancellor, such as a cut in fuel duty, a rise in the National Insurance (NI) threshold and a promise to cut the basic rate of income tax by 2024. But the social care levy, which had many across the political spectrum calling for its delay or removal, has remained. 

Fuel duty cut

The chancellor’s first big headline announcement was a cut in fuel duty of 5p a litre, which he called “the biggest cut to all fuel duty rates ever”. The cut, which Sunak said was worth over £5bn, will be in place for a year until March 2023 and will take effect from 6pm tonight.

The RAC has said that cutting fuel duty by 5p will take “£3.30 off the cost of filling a typical 55-litre family car”.

VAT on energy-saving devices removed

Households will now pay 0% VAT on energy-saving equipment such as solar panels and heat pumps, which the chancellor said could cut the cost of solar panel installation by up to £1,000. He said that the policy highlighted the “deficiencies” in the Northern Ireland Protocol, as it could not be immediately be applied to Northern Ireland – which will nevertheless receive equivalent funding. 

Household support fund doubled

The household support fund will be given £500m of new money, raising support for poorer families to a billion. Councils are set to receive the additional funding in April, said Sunak.

Lifting of NI threshold

The planned National Insurance hike to pay for NHS health and social care was not delayed or removed as many had hoped and called for – Sunak said that the additional funding it would provide for the NHS was “needed now”. But, he said that the increase in NI was “not incompatible with reducing taxes on working families”.

Article source: https://www.theweek.co.uk/news/economy/956183/spring-statement-highlights