I recognise the rise in uncertainty caused by the impact of the shocking and horrific Russian invasion of Ukraine and the additional impact that this has had on inflation and the cost of living, so welcome the measures announced by the Chancellor today in his Spring Statement.
The £5 billion, 5p cut in fuel duty and the £6 billion reduction in national insurance by way of an increase in the threshold for payment of NI to £12,500 are particularly helpful, not least for low and middle income households. I also welcome the increased level of the Employment Allowance that will help many businesses to the tune of £1,000 per annum and the announcement that the basic rate of income tax will drop to 19p from 2024.
Overall, a competent and well-considered package of measures that will be welcomed by the vast majority of my constituents.
Key points
The IMF said the UK had the fastest growing economy in the G7 last year – today’s announcement from the Chancellor seeks to remain responsible on public spending and public finances to protect and increase this growth whilst helping families with the cost of living.
Measures set out by the Chancellor include reducing and reforming taxes by:
Slashing fuel duty by 5p for twelve months, delivering a £5 billion tax cut for drivers. Together with the fuel duty freeze, this will save car drivers £100, van drivers £200, and HGV drivers £1,500 this year, coming into effect immediately from 6pm this evening, across the United Kingdom.
Rising the National Insurance personal threshold from £9,500 to £12,570 from July, delivering the largest increase in a starting personal tax threshold in British history. This is equivalent to a £6 billion tax cut for nearly 30 million workers and worth over £330 a year starting in July, across the entire United Kingdom. This is the largest single personal tax cut in a decade.
Helping people keep more of what they earn by cutting the basic rate of income tax to 19 pence in 2024, delivering a tax cut worth £5 billion for over 30 million workers, pensioners and savers – only the second income tax cut in two decades and the first income tax cut for 16 years. This will be worth around £175 for a typical taxpayer.
Raising the employment allowance to £5,000, delivering a £1,000 tax cut for small businesses. The Employment Allowance cuts employers’ national insurance tax bills by increasing the employment allowance even further to £5,000 from April – that’s a new £1,000 tax cut for half a million small businesses.
Doubling the existing Household Support Fund to £1 billion, delivering an additional £500 million to the Household Support Fund. This helps the most vulnerable families with the cost of living. The fund is distributed through local authorities in England, who have discretion over exactly how the funding is used. This is expected to benefit 3 to 4 million vulnerable households.
Chancellor of the Exchequer, Rishi Sunak said:
“It is only because this Conservative Government is taking the tough but responsible decisions that we can announce taxes are being cut and debt is falling. Today’s new Tax Plan will help families with the cost of living, create the conditions for private sector-led growth, and share the proceeds of growth fairly.
“We are delivering the biggest net cut to personal taxes in over a quarter of a century, and that is only possible because of the disciplined approach to public spending that only a Conservative government can provide.”
