Spring Statement 2022: Sunak raises NI threshold as OBR warns families face record fall in real income

Vulnerable households will get targeted support with Rishi Sunak announcing a doubling of the household support fund to £1bn.

Chancellor has issued a stark warning for the public, saying that the economy will likely worsen “potentially significantly”.

Rishi Sunak has announced that the National Insurance threshold will go up to £12,570. This is a big increase and will cost £6bn.

It is estimated that this will be a tax cut of around £300 per worker. Announcing the plan in the Commons, Mr Sunak said that the Conservatives’ plan was to raise the point from when workers starting paying National Insurance by £300.

He went further than this, saying: “I’m not going to do that. I’m going to increase it by the full £3,000.”

The chancellor said that this would be a £6bn “personal tax cut” for 30 million people.

Raucous scenes at the end of Rishi Sunak’s Spring Statement. He ends on promises to cut income tax before the next election.

It will be the first time in 16 years that the basic rate has been cut. He said: “A tax cut for workers, for pensioners, for savers.”

He promised that it was “fully costed and fully paid for”.

The UK economy will grow more slowly than expected, according to the first official projections released since Russia invaded Ukraine, Ben Chapman writes.

Growth will be just 3.8 per cent in 2022, down from 6 per cent forecast in October last year, the Office for Budget Responsibility (OBR) estimated.

Giving his mini-budget on Wednesday, Rishi Sunak unveiled more gloomy figures for the UK economy, which has already had a faltering recovery from the pandemic.

Chancellor Rishi Sunak has said he will scrap VAT on energy efficiency measures such as solar panels, heat pumps and insulation installed for the next five years, Adam Forrest writes.

Mr Suank also said he is doubling the Household Support Fund – aimed at allowing local authorities to give extra financial help to poorest families – to £1bn.

The chancellor has also announced a 5p cut per litre to fuel duty until March 2023, saying it represents the “biggest cut to fuel duty rates ever”.

Shadow chancellor Rachel Reeves has opened her response to the Spring Statement by asking why the government has not put a windfall tax on North Sea oil and gas.

Ms Reeves said that Mr Sunak’s choices were “making the cost of living crisis worse, not better”. She also accused the government of “funding crime, not fighting it” because of the large scale Covid furlough fraud.

“People can no longer afford the Conservatives”, she added. “The Conservatives have been in government now for twelve years, not twelve hours, what has taken them so long.”

Shadow chancellor Rachel Reeves has repeated Labour’s line that “the Conservatives have become the party of high taxation because they are the party of low growth,”

Ms Reeves called Rishi Sunak “Ted Heath with an Instagram account”. She told the Commons: “Today was the day that the Chancellor could have put a windfall tax on oil and gas companies to provide real help to families, but he didn’t.

“Today was the day the Chancellor could have set out a proper plan to support businesses and create good jobs. But he didn’t.

“Today was the day he could have properly scrapped his national insurance hike, he didn’t.

“We said it was the wrong tax at the wrong time, the wrong choice. Today, the Chancellor has finally admitted he got that one wrong.

“Inflation is at its highest level for 30 years and rising. Energy prices at record highs. People are worried sick.

“For all his words, it is clear that the Chancellor does not understand the scale of the challenge. He talks about providing security for working families, but his choices are making the cost-of-living crisis worse, not better.”