Rishi Sunak has announced that the threshold for paying National Insurance will increase and fuel duty will be cut by 5p during his Spring Statement.
He also pledged to cut income tax by 1p in 2024 and scrap VAT on materials such as solar panels, heat pumps and insulation in a bid to help homeowners install more energy saving materials.
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The fuel duty tax cut will come into effect from 6pm on Wednesday (23 March) and will stay in place until next March, the Chancellor said.
The plan to increase the threshold at which people start paying national insurance contributions by £3,000 to £12,570 comes in place from July.
He promised to cut the basic rate of income tax from 20p in the pound to 19 in 2024 – “a £5 billion tax cut for over 30 million people”.
Mr Sunak also said that inflation - which reached a 30-year high in February - is forecast to increase even further this year to 7.4%.
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He said this was due to “disruptions to global supply chains and energy markets, combined with the economic response to Putin’s aggression”.
He said the UK’s actions against Mr Putin’s regime are “not cost-free for us at home” and present a “risk” to the recovery.
Here we take a look at the Chancellor’s pledges and the reaction to his Spring Statement.
Latest updates from Rishi Sunak’s Spring Statement
The measures Rishi Sunak announced in his Spring Statement
These are some of the key announcements the Chancellor has made during his Spring Statement:
- Rishi Sunak has announced that fuel duty will be cut by 5p per litre. The tax cut will come into effect from 6pm tonight and will stay in place until March next year.
- The Chancellor has announced that the National Insurance threshold will be raised by £3,000. He said that from July people will not have to pay either National Insurance or income tax before they start earning £12,570.
- Rishi Sunak announced his intention to cut the basic rate of income tax before the end of the current Parliament in 2024.
- Rishi Sunak announced VAT will be reduced from 5% to zero on materials such as solar panels, heat pumps and insulation in a bid to help homeowners install more energy saving materials
What will Rishi Sunak announce today?
Good morning and welcome to the Spring Statement live blog.
Rishi Sunak will be speaking from around 12.30pm this afternoon - and NationalWorld will have all of the latest updates from his speech.
There has already been a lot of speculation around what he might announce, including:
- A cut to fuel tax with petrol and diesel prices hitting new record highs
- National Insurance - Mr Sunak is said to be considering an increase to the threshold to begin paying the tax
We will find out what else the Chancellor will announce later on today
Fuel prices hit new record highs
Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Tuesday was 167.3p.
The average cost of a litre of diesel was 179.7p.
This comes amid speculation Chancellor Rishi Sunak could announce a temporary cut in fuel duty of up to 5p per litre in Wednesday’s spring statement.
Shadow chancellor: ‘Labour will get our economy firing on all cylinders'
Shadow chancellor Rachel Reeves said “Labour will get our economy firing on all cylinders” as she prepared to respond to Rishi Sunak’s spring statement.
Picture: Rishi Sunak leaving 11 Downing Street ahead of Spring Statement
Chancellor Rishi Sunak has been pictured leaving 11 Downing Street ahead of his Spring Statement this afternoon.
Analysis: Sunak must do something - anything - to alleviate financial peril facing millions
NationalWorld’s editor Nick Mitchell writes:
It’s a big moment for the Chancellor today. He is facing huge pressure to do something - anything - to alleviate the financial peril facing millions of people across the UK.
The New Economics Foundation think tank estimates that 23.4 million people - that’s 34% of the UK population - will be forced to live “below a socially acceptable standard of living” from April, as the cost of living crisis hits hard.
Mr Sunak is facing calls from both his own party and Labour to intervene, whether that’s through scrapping the proposed National Insurance hike, by reinstating the Universal Credit uplift, or by announcing a windfall tax on oil and gas firms.
Martin Lewis has also made some powerful statements to the media over the past few days to demand a meaningful package of support from the Chancellor.
But when even the Money Saving Expert says he’s out of tips to help people, you know how grave the situation is becoming.
While the Treasury has largely kept a tight seal on today’s Spring Statement, the mood in Westminster is that we should not expect any big, dramatic announcements like a U-turn on the NI rise.
Boris Johnson quizzed over P&O sackings in PMQs
Before we get to the Spring Statement, we have PMQs with Boris Johnson answering questions in the Commons.
Labour leader Sir Keir Starmer has begun by questioning the Government’s response to P&O sacking 800 workers over a Zoom call.
He said: “If he can’t stop that, what’s the point of his government?”
Mr Johnson responded by saying he condemned the behaviour of the company.
PM: P&O Ferries has ‘broken the law'
Boris Johnson said it appears to him that P&O Ferries has “broken the law” and the Government will be “taking action” and encouraging workers to do the same.
Starmer asks ‘what’s the point of Boris Johnson’s government’ if PM can’t stop P&O sackings
Labour leader Sir Keir Starmer raised the mass sacking of P&O Ferries workers, asking “what’s the point of his (Boris Johnson’s) Government?”
“800 loyal British workers fired over Zoom, instantly replaced by foreign agency workers shipped in on less than the minimum wage. If the Prime Minister can’t stop that, what’s the point of his Government?”
Boris Johnson replied: “We condemn the callous behaviour of P&O and I think that it is no way to treat hardworking employees and I can tell him that we will not sit by because under section 194 of the Trades Union and Labour Relations Act of 1992 it looks to me as though the company concerned has broken the law, and we will be taking action, therefore, and we will be encouraging workers themselves to take action under the 1996 Employment Rights Act.
“Both acts passed by Conservative governments and if the company is found guilty then they face fines running into millions of pounds, and in addition we will be taking steps to protect all mariners who are working in UK waters and ensure that they are all paid the living wage.”
Sunak admits financial outlook is ‘challenging’ due to soaring inflation and Russian invasion
Chancellor Rishi Sunak has admitted the financial outlook is “challenging” because of soaring inflation and the Russian invasion of Ukraine, Downing Street has said.
No 10 said he provided an update on the economic situation to ministers during Wednesday morning’s Cabinet meeting.
“The Chancellor provided an update on the economic and fiscal picture, and described the outlook as challenging given the global shocks we are facing as a result of the conflict in Ukraine and rising inflation.
“He said that throughout the pandemic, the Government has shown the British people we are on their side and we will continue to stand by them through the uncertainty that we now face.
“He described how the sensible management of the public finances enabled the Government to step in and help people with £9 billion of support for their energy bills in February.
“He said that this Government would continue to take a responsible and sustainable approach in order to be able to grow a stronger, more secure economy for the future.”