Spring statement 2022: RECAP as Rishi Sunak cuts fuel duty and VAT on energy saving devices

Chancellor Rishi Sunak has cut 5p off fuel duty from Wednesday evening and promised to cut income tax by 1p in 2024.
Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of CommonsChancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of Commons
Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of Commons

But he acknowledged the impact of inflation, which is at a 30-year high, and the global economic uncertainty caused by Vladimir Putin’s invasion of Ukraine.

The Office for Budget Responsibility (OBR) downgraded growth in gross domestic product – a measure of the size of the economy – from the 6% forecast for this year at the time of the Budget in October to just 3.8%.

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Mr Sunak said “it is too early to know the full impact of the Ukraine war on the UK economy” but the OBR acknowledged there was “unusually high uncertainty” around the economic outlook.

The cost-of-living crisis driven by rising fuel and energy prices was set to be exacerbated in April by the 1.25 percentage point hike in national insurance to fund the NHS and social care.

But Mr Sunak unveiled a £6 billion plan to increase the threshold at which people start paying national insurance contributions (NICs) by £3,000 to £12,570 from July.

Mr Sunak said it was “a £6 billion personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year”.

Mr Sunak said around 70% of workers would have their tax cut by more than the increase coming in April.

And he promised further support in 2024 with a pledge to cut the basic rate of income tax from 20p in the pound to 19 – “a £5 billion tax cut for over 30 million people”.

Rising energy, goods and food prices helped push inflation to increase 6.2% in the 12 months to February, Office for National Statistics (ONS) figures revealed on Wednesday morning, hours before Mr Sunak’s speech to the Commons.

You can follow live updates from the Spring Statement in our live blog.

Spring statement 2022: Live updates on UK Spring Statement from Rishi Sunak

If you are just joining us, hello, and a reminder that we are expecting the Spring Statement from 12:30.

Labour, branding Rishi Sunak the “high-tax Chancellor”, has joined some Tory MPs in urging Mr Sunak to scrap the 1.25 percentage point hike to NI, which will hit next month just as energy bills soar when the price cap increases.

Chancellor Rishi Sunak is reportedly considering a cut in fuel duty of up to 5p per litre in his spring statement.

Research from the New Economics Foundation suggests the wealthiest fifth of households spend almost five times as much on fuel as the poorest fifth.

The RAC calculated this would reduce the cost of filling a typical 55-litre family petrol car by around £3.

We are expecting the Chancellor imminently to deliver the Spring Statement

Chancellor Rishi Sunak begins by paying tribute to soldiers in the Ukrainian army.

He says the security of the economy is what means the UK is able to fund its army “to maintain our liberty” and impose sanctions against Russia that are proving to be effective.

He says that this statement will secure the future of the UK economy.

Sunak says the UK has a “moral responsibility” to use its “economic strength” to help Ukraine. He says that actions taken against Russia are not “cost-free” and present a “risk to our recovery”.

BREAK: Rishi Sunak has announced there will be a 5p cut to fuel duty - “the biggest cut to all fuel duty rates ever”.

The cut will come into force at 6pm tonight and last until March next year.

Sunak announces that “thanks to Brexit” for the next five years, homeowners will pay 0% VAT on energy saving materials, such as solar panels or heat pumps.

Rishi Sunak said underlying debt is expected to fall steadily from 83.5% of GDP in 2022/23 to 79.8% in 2026/27.

He added borrowing as a percentage of GDP is 5.4% this year, 3.9% next year, then 1.9%, 1.3%, 1.2% and 1.1% in the following years.

Mr Sunak told MPs: “The OBR has not accounted for the full impacts of the war in Ukraine and we should be prepared for the economy and public finances to worsen – potentially significantly. And the cost of borrowing is continuing to rise.

“In the next financial year, we’re forecast to spend £83 billion on debt interest – the highest on record. And almost four times the amount we spent last year.”

Mr Sunak said that is why he will continue to “weigh carefully” calls for additional public spending.