Against the backdrop of the recovery from Covid-19 and Russia’s invasion of Ukraine, last week the Chancellor of the Exchequer gave his Spring Statement in Parliament.
The IMF have said Britain was the fastest-growing economy in the G7 last year, although growth will be lower this year due to the situation in Ukraine.
It is notable that while those on the opposition benches were quick to cheer the Government when it introduced coronavirus support, they do not appear to have any plan to pay for the expenditure which has been necessary over the last two years to address the challenges of Covid.
The slashing of fuel duty by 5 pence per litre for twelve months marks the largest fuel duty cut ever, and will deliver a £5 billion tax cut for drivers. Alongside the fuel duty freeze, this will save car drivers £100, van drivers £200, and HGV drivers £1,500 this year, and has already come into effect.
An additional boost will come with the rising of the National Insurance personal threshold from £9,500 to £12,570. This is the equivalent of a £6 billion tax cut for nearly 30 million workers, worth over £330 a year starting in July. This is the largest increase in a starting personal tax threshold in British history, and the largest single personal tax cut in a decade.
Of course, the Chancellor could have gone further by halting the rise in NI contributions, however I note that 70 per cent of people will pay less tax even after this.
As a result of leaving the EU we can now scrap VAT on energy saving materials. This means a £250 million tax cut for energy efficiency. A typical family installing roof top solar panels will save £1,000 on installation, and then £300 annually on energy bills.
The existing Household Support Fund is being doubled, and will now total £1 billion. This support helps the most vulnerable families with the cost of living and is distributed through local councils, who have discretion over exactly how the money is used.
Also announced was the cutting of business employment taxes by raising the Employment Allowance to £5,000; a tax cut for half a million small businesses worth up to £1,000.
A central mission of any government has to be to enable people to keep more of what they earn. In 2024, the basic rate of income tax will be cut to 19 pence. This will deliver a tax cut worth £5 billion for more than 30 million workers, pensioners and savers. The first such cut for 16 years; it will be worth around £175 for a typical taxpayer and the Chancellor has confirmed that this is fully costed.
Henry Smith MP