Spring statement 2022: RECAP as Rishi Sunak cuts fuel duty and VAT on energy saving devices
Chancellor Rishi Sunak has cut 5p off fuel duty from Wednesday evening and promised to cut income tax by 1p in 2024.
But he acknowledged the impact of inflation, which is at a 30-year high, and the global economic uncertainty caused by Vladimir Putin’s invasion of Ukraine.
The Office for Budget Responsibility (OBR) downgraded growth in gross domestic product – a measure of the size of the economy – from the 6% forecast for this year at the time of the Budget in October to just 3.8%.
Mr Sunak said “it is too early to know the full impact of the Ukraine war on the UK economy” but the OBR acknowledged there was “unusually high uncertainty” around the economic outlook.
The cost-of-living crisis driven by rising fuel and energy prices was set to be exacerbated in April by the 1.25 percentage point hike in national insurance to fund the NHS and social care.
But Mr Sunak unveiled a £6 billion plan to increase the threshold at which people start paying national insurance contributions (NICs) by £3,000 to £12,570 from July.
Mr Sunak said it was “a £6 billion personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year”.
Mr Sunak said around 70% of workers would have their tax cut by more than the increase coming in April.
And he promised further support in 2024 with a pledge to cut the basic rate of income tax from 20p in the pound to 19 – “a £5 billion tax cut for over 30 million people”.
Rising energy, goods and food prices helped push inflation to increase 6.2% in the 12 months to February, Office for National Statistics (ONS) figures revealed on Wednesday morning, hours before Mr Sunak’s speech to the Commons.
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