Spring Statement 2022: summary of Chancellor Rishi Sunak’s budget speech - and how will it affect me?

Rishi Sunak delivered his Spring Statement 2022 on Wednesday (23 March) after it was revealed inflation had reached its highest level since 1992.

Just five months on from giving an Autumn Budget that was full of tax increases aimed at paying for pandemic public spending, Mr Sunak sought to demonstrate that he could also cut taxes in his speech.

The Chancellor said his intention was to help families through the cost of living crisis while creating the conditions for higher UK economic growth.

However, Labour accused him of failing to provide “support that is needed now” and said the UK public could “no longer afford the Conservatives”.

And public body the Office for Budget Responsibility (OBR) forecast UK households were experiencing the biggest drop in living standards since records began in 1956.

So what cost of living measures did Rishi Sunak announce during his Spring Statement - and what was the reaction to them?

Here’s everything you need to know.

What did Rishi Sunak say?

The Chancellor Rishi Sunak said his intention was to “build a stronger, more secure economy for the United Kingdom”.

He announced five key measures that he believes will achieve this pledge:

Fuel duty cut

The first major announcement of the Spring Statement was one that businesses, Conservative backbenchers and Labour had all called for in the run up to this speech.

Mr Sunak announced fuel duty - the tax you pay when you fill up your car at the petrol pump - would be cut by 5p (9%) from 57.95p per litre to 52.95p per litre.

This measure will came at 6pm on the 23 March and will be in place for the following 12 months.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), Tweeted that this decrease in fuel duty “[was] not huge in context of prices up 20p+ per litre”.

Meanwhile, the RAC said it would take £3.30 off the cost of filling a typical 55-litre family car.

The FairFuelUK Campaign said the tax cut would provide “some respite to millions of motorists”.

But Greenpeace said it would be of greater benefit “to the driver of an expensive gas-guzzling SUV than the average punter”.

The group urged a rethink, arguing Mr Sunak “should only cut fuel duty if he can make an equivalent cut to the costs of public transport”.

National Insurance threshold raised

Since the scale of the cost of living crisis first became apparent, the Government has been urged from all sides to scrap a planned rise in National Insurance (NI) contributions.

Both Boris Johnson and Rishi Sunak have rebuffed these calls but Mr Sunak made a concession in his Spring Statement by raising the threshold of the tax by £3,000.

It means people will be able to earn £12,570 before they pay NI or income tax from July.

The Chancellor said this equated to a £6 billion tax cut for 30 million people and was “the largest single personal tax cut in a decade.”

The 1.25% contributions rise comes in from 1 April.

Labour’s Shadow Chancellor Rachel Reeves said the increase should have been scrapped altogether and once again called for a windfall tax on energy firms.

Money Saving Expert Martin Lewis told the BBC the NI threshold increase would help the poorest paid workers.

Describing it as the most significant announcement from the Spring Statement, he said those earning under £20,000 a year could be up to £400 better off from this measure alone.

However, Mr Lewis said he wanted to see more measures to help people with the cost of living crisis and today’s speech was "not going to lift that many people out of the mire".

Income Tax cut

It was not a concrete proposal, but Rishi Sunak revealed he intends to cut the basic rate of income tax from 20p to 19p in the pound before the next General Election.

Should this tax cut happen, it would be the first change to income tax for 16 years, he said, and would amount to a £5 billion cut for more than 30 million people.

Mr Sunak suggested this cut was contingent on the Office for Budget Responsibility’s forecast that inflation would be back under control, the UK’s debt would have fallen and economic growth would be better.

So while it’s a major sign of intent, this tax cut will not be around to immediately help with the cost of living.

Household Support Fund cash increase

In October 2021, the Government launched the Household Support Fund - a £500 million pot distributed through local authorities that would provide small cash grants for struggling households in England that would help pay for food, clothing and utilities.

Scotland, Wales and Northern Ireland received £79 million of this pot under the Barnett formula.

Mr Sunak said this fund will have its pot doubled to £1 billion from April.

But anti-poverty charity the Joseph Rowntree Foundation (JRF) described this money as “a drop in the ocean” and warned the lack of state benefit support in the Spring Statement would lead to “destitution” for many.

It had been mooted that the Chancellor could adjust the Universal Credit taper rate or reintroduce the £20 uplift that was brought in during the pandemic.

But by making no changes to state benefits or pensions - both of which will rise in line with September’s CPI of 3.1% from 1 April - the IFS said those on the lowest incomes would face a “big cut in living standards”, as inflation is expected to rise above 6.2%.

Oxfam said the lack of an announcement would risk dragging an extra 400,000 people into poverty.

“The UK’s social security safety net is not fit for purpose in the face of runaway inflation,” said Dr Silvia Galandini, Oxfam’s domestic poverty lead.

“If we are to level up and build an economy that works for everyone, the Government must strengthen investment in the system, so it does the job it is intended to do and protects the most vulnerable.”

5% VAT relief on solar panels, heat pumps, insulation

Rishi Sunak announced VAT will be removed from materials like solar panels, heat pumps and insulation.

He claimed that someone installing a solar panel will save “over £1,000” in tax as well as “savings on their energy bill of over £300 per year”.

Greenpeace described this move as “a welcome start” but said £10 billion would be needed to deliver “the help families need to install the clean technologies that will get us off gas”.

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