Spring statement 2022: Why Rishi Sunak's tax-cutting won't stop families suffering cost of living blow

Households are facing the biggest fall in living standards in any single financial year since records began in the 1950s.

That extraordinary forecast is contained in the Office for Budget Responsibility’s economic and fiscal outlook, published to coincide with the Spring Statement.

It illustrates the sheer scale of the crisis facing millions of families across the UK.

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Some of the hardest-hitting quotes of the past few days have come courtesy of Martin Lewis, founder of the influential website Money Saving Expert.

Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of Commons, London, to deliver his Spring Statement.

Households are set for a "fiscal punch in the face" from soaring energy bills in April, he warned. Political intervention is needed now.

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Spring statement 2022: Rishi Sunak cuts fuel duty tax for 12 months and raises t...

All eyes were on Chancellor Rishi Sunak as he stood up in Westminster to deliver his Spring Statement, a sort of mini-Budget.

He announced three immediate measures, the most eye-catching of which was cutting fuel duty by 5p per litre.

RAC head of policy Nicholas Lyes described this as “something of a drop in the ocean”, which will only take prices back to where they were just over a week ago.

Other moves included temporarily removing VAT for homeowners installing energy-saving measures such as solar panels, while councils in England will get an extra £500m for the Household Support Fund. Scotland will see additional cash as a result of this.

"Is that it?” came a jeer from the Labour benches.

But the biggest moment was still to come, as Mr Sunak announced National Insurance starting thresholds will rise to £12,570 from July, meaning people will keep more of what they earn before they start paying personal taxes.

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The Treasury said this will benefit 2.4 million working people in Scotland, with a typical employee saving more than £330 a year.

There’s no doubt this will be welcomed by many.

Finally, Mr Sunak pledged to cut the basic rate of income tax from 20p to 19p in the pound before the end of this Parliament.

Income tax is devolved in Scotland and the starter rate here is already 19p.

However, this only applies to taxable income between £12,571 and £14,667. In England, the basic rate goes all the way up to £50,270.

The Scottish Tories are already putting pressure on the SNP to follow the UK Government’s lead.

It’s an interesting issue, given the SNP has pledged to freeze rates and bands for the duration of the current parliamentary term. If it doesn’t act, some extraordinary differences could emerge. Those earning between £43,663 and £50,000 would pay income tax at 41 per cent in Scotland, compared to 19 per cent down south.

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Mr Sunak’s tax-cutting will go down well with the Tory faithful.

But for many, not least those on benefits, his Spring Statement will provide little light in the dark months ahead.

As Paul Johnson, director of the Institute for Fiscal Studies, pointed out, there was nothing for those on Universal Credit or state pensions, as well as no extra money for health, schools or other public services, despite the crippling impact of inflation.

There was also little to make any real difference to soaring energy and fuel costs.

Mr Sunak’s announcements may well mitigate some of the damage.

But nothing he said changes the fact that for families across Scotland and the wider UK, there are some extremely tough times ahead. Brace yourselves.

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