Photo Credit: Pippa Fowles/10 Downing Street (Flickr)
By Patrick Barlow
Chancellor Rishi Sunak has used his Spring Statement to announce the government’s plans to tackle the ongoing cost of living crisis.
The statement, delivered to the House of Commons today, includes plans to reduce fuel duty by 5p per litre as well as giving an extra £500 million to councils support vulnerable households.
Sunak also committed to reducing income tax by 1% by 2024, as well as increasing the National Insurance threshold to £12,570
In his speech, the Chancellor said: “That is a £6 billion personal tax cut for 30 million people across the UK, a tax cut for employees worth more than £330 a year.
“It’s the largest increase in a basic rate threshold ever and the largest single personal tax cut in a decade.”
Fall in Fuel Duty allows families to save on running their cars
The fuel duty reduction is set to help combat the cost of living by reducing the price of petrol and running vehicles.
In response to the announcement, the RAC have predicted that a full tank in a family car will fall by around £3.
The cost of fuel had been rising throughout the year but has now been exacerbated by the fallout of Russia’s invasion of Ukraine.
While prices will fall by 5p a litre, this pales in comparison to the rise of fuel costs in the last year which are now 40p more expensive than the previous spring.
National Insurance and Council funding aims at targeting the most vulnerable
The commitments in the Spring Statement to increase the National Insurance threshold and provide councils with extra funding are both targeted at helping vulnerable households.
The threshold rise is thought to save employees around £330 a year, which will be most valuable to lower-income households.
Combined with the doubling of the household support fund to £1 billion, this will allow local councils to support the most vulnerable in their areas as well as providing wider tax breaks for the population.
Shadow Chancellor critical as inflation set to rise further
Due to the current rise in the cost of living, the Office for Budget Responsibility revised its economic growth projection from 6% to 3.8%.
Inflation is expected to rise even further to 7.4% by the end of the year, further increasing the prices of goods and energy prices.
Labour Shadow Chancellor Rachel Reeves criticised the planned measures as not going far enough, saying: “The truth is people can no longer afford the Conservatives, working families can’t, pensioners can’t.”
Reeves also suggested that while the National Insurance threshold is set to rise, the plans to increase the rates paid should also be scrapped.
Suggestions were also made that gas and oil companies should be further taxed to target the rising price of energy bills.